Financial Data and Key Metrics Changes - Non-GAAP earnings per share increased by 7% year-over-year, reaching $1.10, driven by a record third quarter non-GAAP operating margin of 10.8% [3][5] - Total net sales in the third quarter increased by 3% organically compared to the same period last year [5] - Non-GAAP operating margin expanded by 10 basis points year-over-year, marking the highest EBIT margin for the third quarter [5] Business Line Data and Key Metrics Changes - In the workplace furnishings segment, organic net sales increased by 3% year-over-year, with a non-GAAP segment operating profit margin exceeding 12% [5][6] - Residential building products revenue was roughly unchanged year-over-year, with new construction revenue down slightly and remodel retrofit sales growing modestly [6][7] - Orders in the residential building products segment increased by 2% year-over-year, with remodel retrofit orders up mid-single digits [9] Market Data and Key Metrics Changes - Builder sentiment has weakened recently, reflecting elevated interest rates and affordability issues, with permits moving lower [9][10] - The office space market is showing signs of recovery, with net absorption expected to be the highest since 2019, indicating improved demand for office furniture [12] - 18 of the largest U.S. markets are exceeding pre-pandemic leasing activity, suggesting a positive trend for workplace furnishings [12] Company Strategy and Development Direction - The company remains focused on margin expansion efforts and continued revenue growth while investing for future growth [8][10] - The pending acquisition of Steelcase is expected to create synergies of $120 million and accretion of $1.20 per share when fully mature [19] - The company is optimistic about long-term market fundamentals in residential building products, despite a soft new construction environment [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit non-GAAP EPS growth for the fourth consecutive year, despite ongoing macroeconomic uncertainties [18] - The company anticipates strong results driven by margin expansion and continued volume growth, with a focus on investing in growth initiatives [8][15] - Management highlighted the positive trends in the workplace furnishings market, particularly related to return-to-office dynamics [11][13] Other Important Information - The company expects fourth quarter revenue in workplace furnishings to increase at a high single-digit rate year-over-year, with residential building products also projected to grow at a high single-digit rate [16] - The anticipated post-closing net leverage is expected to approximate 2.1x, with a return to the targeted range of 1x-1.5x within 18-24 months [17] Q&A Session Summary Question: Clarification on Steelcase accretion - The $1.20 of accretion from Steelcase is based on the previously outlined synergies of $120 million, with confidence in achieving this figure [22][24] Question: Update on KI and Mexico contributions - The company expects to recognize $45 million-$50 million from KI and Mexico between 2025 and 2026, with more expected in 2025 than 2026 [25] Question: Industry volume relative to pre-pandemic levels - The company estimates that industry-wide volumes are still down by 30%-35% compared to pre-pandemic levels, indicating potential for mid-single-digit volume growth in the coming years [28][29] Question: Full-year guidance comparison - Revenue expectations for both workplace and residential segments remain in line with prior expectations, with some pressure on product mix and timing of investments [32] Question: Growth potential in residential building products - The company believes it can outperform the market despite a challenging environment, supported by ongoing investments and strong relationships with builders [34][36] Question: Risks associated with Steelcase integration - The company plans to maintain dealer partnerships and brand distribution during the integration, ensuring continued focus on unique brand positions [38][39]

Financial Data and Key Metrics Changes - Non-GAAP earnings per share increased by 7% year over year, reaching $1.10, driven by a record third quarter non-GAAP operating margin of 10.8% [3][5] - Total net sales in the third quarter increased by 3% organically compared to the same period last year [5] - Non-GAAP operating margin expanded by 10 basis points year over year, marking the highest EBIT margin for the third quarter [5] Business Line Data and Key Metrics Changes - In the workplace furnishings segment, organic net sales increased by 3% year over year, with a non-GAAP segment operating profit margin exceeding 12% [5][6] - Residential building products revenue remained roughly unchanged year over year, with new construction revenue down slightly and remodel retrofit sales growing modestly [6][7] - Orders in the residential building products segment increased by 2% year over year, with remodel retrofit orders up mid-single digits [9] Market Data and Key Metrics Changes - Builder sentiment has weakened recently, reflecting elevated interest rates and weaker consumer confidence, impacting housing trends [9][10] - The office space market is showing signs of recovery, with net absorption of office space expected to be the highest since 2019, indicating improved demand for office furniture [12][13] Company Strategy and Development Direction - The company remains focused on margin expansion efforts and continued revenue growth while investing for future growth [8][10] - The pending acquisition of Steelcase is expected to create synergies of $120 million and accretion of $1.20 per share when fully mature, enhancing the company's strategic position [19][20] - The company is optimistic about long-term market fundamentals in residential building products, despite a challenging new construction environment [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit non-GAAP EPS growth for the fourth consecutive year, despite ongoing macroeconomic uncertainties [18] - The company anticipates strong results driven by margin expansion and continued volume growth, with a positive outlook for both workplace furnishings and residential building products [8][16] - Management highlighted the importance of maintaining financial discipline while pursuing revenue growth amid macro-related risks [18] Other Important Information - The company expects fourth quarter revenue in workplace furnishings to increase at a high single-digit rate year over year, with residential building products also projected to grow at a high single-digit rate [16][17] - The anticipated strong free cash flow will aid in quickly deleveraging the balance sheet post-acquisition [19] Q&A Session Summary Question: Is the $1.20 of accretion from Steelcase considering just the synergies outlined? - Yes, the $1.20 in accretion is based on the $120 million in synergies previously discussed [22] Question: Where are you in terms of the $0.75 to $0.80 from KI and Mexico? - The company expects to recognize $45 to $50 million between 2025 and 2026, with more expected in 2025 than 2026 [25] Question: Can you compare your full-year guidance now versus a few months ago? - Revenue expectations remain in line with prior expectations, but there is some pressure on product mix and timing of investments [32] Question: How much runway do you have to outperform the market in residential building products? - The company believes it can outperform the market due to ongoing investments and strong performance in specific product lines [34] Question: What risks are associated with integrating Steelcase? - The company plans to maintain dealer partnerships and brand distribution intact, which should allow it to participate in any demand upswing [38]

Financial Data and Key Metrics Changes - Non-GAAP earnings per share increased by 7% year over year, reaching $1.10, driven by a record third quarter non-GAAP operating margin of 10.8% [4][5] - Total net sales in the third quarter increased by 3% organically compared to the same period last year [5] - Non-GAAP operating margin expanded by 10 basis points year over year, marking the highest EBIT margin for the third quarter [5] Business Line Data and Key Metrics Changes - In the workplace furnishings segment, organic net sales increased by 3% year over year, with a non-GAAP segment operating profit margin exceeding 12% [5][6] - Residential building products revenue was roughly unchanged year over year, with new construction revenue down slightly and remodel retrofit sales growing modestly [6] - Orders in the residential building products segment increased by 2% year over year, with remodel retrofit orders up mid-single digits [8] Market Data and Key Metrics Changes - Builder sentiment has weakened recently, reflecting elevated interest rates and affordability issues, with permits moving lower [8] - The office space market is showing signs of recovery, with net absorption expected to be the highest since 2019, indicating improved demand for office furniture [11] - 18 of the largest U.S. markets are exceeding pre-pandemic leasing activity, suggesting a positive trend for workplace furnishings [11] Company Strategy and Development Direction - The company remains focused on margin expansion efforts and continued revenue growth while investing for future growth [7][15] - The pending acquisition of Steelcase is expected to create synergies of $120 million and accretion of $1.20 per share when fully mature [19] - The company is optimistic about long-term market fundamentals in residential building products, despite a soft new construction environment [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a fourth consecutive year of double-digit non-GAAP EPS growth, supported by strong third quarter performance and ongoing visibility [18] - The macro and industry backdrops are improving, with expectations for the contract business to benefit from these trends [12] - Management remains cautious about ongoing macro-related risks and tariff-driven volatility but is optimistic about future growth opportunities [18] Other Important Information - The company anticipates fourth quarter revenue in workplace furnishings to increase at a high single-digit rate year over year, with residential building products also projected to grow at a high single-digit rate [16] - The company is committed to maintaining its dividend while investing in business growth [17] Q&A Session Summary Question: Is the $1.20 of accretion from Steelcase considering just the synergies outlined? - Yes, the $120 million in synergies translates to about $1.20 in accretion based on share count [23][25] Question: Where are you in terms of the $0.75 to $0.80 from KI and Mexico? - The company expects to recognize $45 to $50 million between 2025 and 2026, with more expected in 2025 than 2026 [28] Question: How does the current industry volume compare to pre-pandemic levels? - The company estimates that industry-wide volumes are still down by 30% to 35% compared to pre-pandemic levels, but there is potential for mid-single-digit volume growth in the coming years [31][32] Question: Can you compare your full-year guidance with previous expectations? - Revenue expectations remain in line with prior expectations, but there is some pressure on product mix and timing of investments [34][36] Question: How much runway do you have for growth in residential building products? - The company believes it can outperform the market due to ongoing investments and strong relationships with builders [37] Question: What risks are associated with integrating Steelcase? - The company plans to maintain dealer partnerships and brand distribution intact, which should allow for participation in any demand upswing [39]

Core Insights - HNI reported quarterly earnings of $1.1 per share, exceeding the Zacks Consensus Estimate of $1.07 per share, and showing an increase from $1.03 per share a year ago, resulting in an earnings surprise of +2.80% [1] - The company posted revenues of $683.8 million for the quarter ended September 2025, which was a slight miss against the Zacks Consensus Estimate by 0.76%, but an increase from $672.2 million year-over-year [2] - HNI has surpassed consensus EPS estimates in all four of the last quarters, while it has topped revenue estimates twice during the same period [2] Future Outlook - The immediate price movement of HNI's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.95 on revenues of $704.75 million, and for the current fiscal year, it is $3.55 on revenues of $2.66 billion [7] - HNI's stock has underperformed the market, losing about 10.8% since the beginning of the year, compared to the S&P 500's gain of 16.9% [3] Industry Context - The Business - Office Products industry, to which HNI belongs, is currently ranked in the top 7% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% of ranked industries [8] - The correlation between near-term stock movements and trends in earnings estimate revisions suggests that investors should monitor these revisions closely [5][6]

Financial Performance - HNI Corporation reported net sales of $683.8 million for Q3 2025, a 1.7% increase year-over-year, with organic net sales up 2.6%[3][15] - GAAP diluted EPS was $0.88, down 10% YoY, while non-GAAP diluted EPS increased by 7% to $1.10[6][19] - The consolidated operating margin was 9.4% on a GAAP basis, contracting by 80 basis points, but expanded to 10.8% on a non-GAAP basis, reaching the highest level for a third quarter[6][12] - HNI Corporation reported net sales of $683.8 million for the three months ended September 27, 2025, an increase of 1.9% compared to $672.2 million for the same period in 2024[37] - Operating income decreased to $64.6 million for the three months ended September 27, 2025, down from $68.9 million in the same period last year, reflecting a decline of 4.9%[37] - Net income attributable to HNI Corporation for the three months ended September 27, 2025, was $41.2 million, a decrease of 13.9% from $47.5 million in the prior year[37] - Operating income for the three months ended September 27, 2025, was $64.6 million, down from $68.9 million in the previous year, indicating a decrease of 3.3%[44] - The company reported a net income of $41.2 million for the three months ended September 27, 2025, with an EPS of $0.88, compared to $47.5 million and $0.98 EPS in the prior year[50] Segment Performance - Workplace Furnishings segment net sales increased by 2.3% to $516.9 million, with organic net sales growth of 3.5%[20] - Residential Building Products segment net sales decreased by 0.1% to $166.9 million, with slight growth in remodel-retrofit sales offsetting declines in new construction[23] - Total operating income for Workplace Furnishings increased to $62.5 million, up 8.2% from $57.7 million year-over-year[51] - Non-GAAP operating income for Workplace Furnishings rose to $63.5 million, reflecting a 5.8% increase compared to $60.0 million in the previous year[51] - Operating income as reported (GAAP) for Residential Building Products was $30.0 million, a slight increase of 0.3% from $29.9 million year-over-year[51] - Non-GAAP operating income for Residential Building Products decreased to $30.0 million, down 3.3% from $31.0 million in the previous year[51] - The percentage of net sales for Workplace Furnishings operating income (GAAP) improved to 12.1% from 11.4% year-over-year[51] - The percentage of net sales for Residential Building Products operating income (GAAP) increased to 18.0% from 17.9% year-over-year[51] Cash Flow and Capital Expenditures - The company reported net cash flows from operating activities of $198.9 million for the nine months ended September 27, 2025, compared to $175.5 million for the same period in 2024[42] - HNI Corporation's capital expenditures for the nine months ended September 27, 2025, were $49.6 million, an increase from $41.2 million in the prior year[42] - Capital expenditures for the three months ended September 27, 2025, totaled $19.6 million, compared to $14.5 million in the prior year, marking a 35.2% increase[44] Debt and Financial Outlook - The corporation reduced debt by $120 million during the quarter, resulting in a gross debt leverage of 0.9x[11] - The outlook for 2025 reflects expectations for mid-teens percent diluted non-GAAP EPS growth, with elevated earnings growth visibility through 2026[23][25] - Significant savings from the Kimball International acquisition and ramp-up of the Mexico facility are projected to contribute $0.75 to $0.80 to diluted non-GAAP EPS in 2025-2026[6][23] Acquisitions and Restructuring - The Steelcase acquisition is anticipated to close before the end of 2025, expected to enhance capabilities and customer value[11][26] - The company is currently undergoing restructuring and has incurred $0.8 million in restructuring charges for the three months ended September 27, 2025[44] - Restructuring charges for Workplace Furnishings were $1.0 million, down from $2.3 million in the previous year[51] - Restructuring charges for Residential Building Products were $1.1 million in the previous year, with no charges reported this year[51] Assets and Liabilities - HNI Corporation's total assets decreased to $1,843.0 million as of September 27, 2025, down from $1,875.1 million as of December 28, 2024[39] - Total liabilities decreased to $1,007.1 million as of September 27, 2025, compared to $1,034.7 million as of December 28, 2024[39]

Core Viewpoint - HNI Corporation has announced a definitive agreement to acquire Steelcase, Inc. in a cash and stock transaction, which includes an offer to exchange existing Steelcase Notes for new HNI Notes [1][4]. Acquisition Details - The acquisition is subject to shareholder approvals from both HNI and Steelcase, antitrust approvals, and other customary closing conditions [4]. - HNI has initiated an exchange offer for up to $450,000,000 of existing Steelcase Notes, with a current tender amount of $350,767,000, representing 77.95% of the total [1][8]. Exchange Offer and Consent Solicitation - The expiration date for the exchange offer and related consent solicitation has been extended to December 5, 2025 [2]. - HNI received sufficient consents to amend the existing Steelcase Indenture on October 9, 2025, and the amendments will take effect upon the settlement date of the exchange offer [3]. Conditions and Extensions - The completion of the acquisition is not contingent upon the exchange offer or consent solicitation, but the exchange offer is subject to the acquisition's consummation [4][5]. - If the acquisition is not expected to close by the anticipated settlement date, HNI plans to extend the expiration date accordingly [5]. Eligible Holders and Documentation - The exchange offer and consent solicitation are directed towards "Eligible Holders," defined as qualified institutional buyers or non-U.S. persons outside the United States [9].

Group 1 - The article does not provide any specific content related to a company or industry [1]

Core Viewpoint - HNI Corporation has announced a definitive agreement to acquire Steelcase, Inc. in a cash and stock transaction, which includes an exchange offer for existing Steelcase notes [1]. Group 1: Acquisition Details - The acquisition of Steelcase is structured as a cash and stock transaction [1]. - HNI has initiated an offer to exchange up to $450 million of existing Steelcase notes for new HNI notes [1]. - As of October 9, 2025, HNI received consents from holders representing 77.83% of the existing Steelcase notes [2]. Group 2: Exchange Offer and Consent Solicitation - The withdrawal deadline for the exchange offer expired on October 9, 2025, and holders can no longer withdraw their notes [3]. - HNI has received sufficient consents to amend the existing Steelcase indenture, which will become operative upon the settlement date of the exchange offer [4]. - Eligible holders who tender their existing Steelcase notes by the early tender date will receive $1,000 principal amount of new HNI notes plus a consent payment of $2.50 in cash [6]. Group 3: Financial Terms - For each $1,000 principal amount of existing Steelcase notes tendered by the early tender date, holders will receive a total exchange consideration of $1,000 in new HNI notes and a cash payment [6]. - After the early tender date, holders will receive $970 principal amount of new HNI notes without the consent payment [6]. - The total amount of existing Steelcase notes outstanding is $450 million, with $350.23 million tendered by the early tender date, representing 77.83% [7]. Group 4: Settlement and Timing - The settlement date for the exchange offer is expected to occur within five business days after the expiration date [10]. - HNI may extend the expiration date if the acquisition is not expected to close by the anticipated settlement date [10]. Group 5: Company Background - HNI Corporation has been in operation for over 75 years, focusing on workplace furnishings and residential building products [14]. - The company operates under two segments: Workplace Furnishings and Residential Building Products, with a strong market presence in both areas [14].

Core Insights - HNI Corporation reported its third quarter fiscal 2025 results, highlighting significant financial performance and strategic initiatives [1] Financial Performance - The company achieved a revenue of $XXX million for the third quarter, representing a Y% increase compared to the same period last year [1] - Net income for the quarter was reported at $XX million, reflecting a Z% growth year-over-year [1] - Earnings per share (EPS) increased to $X.XX, up from $X.XX in the previous year [1] Strategic Initiatives - HNI Corporation emphasized its focus on innovation and product development to drive future growth [1] - The company is investing in sustainability initiatives, aiming to reduce its carbon footprint and enhance operational efficiency [1] - Management discussed plans to expand market presence through strategic acquisitions and partnerships [1]

Group 1: Company Performance - Middle Coast Investing's collective portfolio outperformed the S&P 500 in Q3 2025, with a return of 9.6% compared to 7.8% for the S&P 500 [1] - The Core U.S. portfolios returned 10%, while the Russell 2000 returned 12%, the S&P 600 returned 8.7%, and the Nasdaq generated 11.2% during the same period [1] - European Portfolios appreciated by 5.5% in Q3 2025 [1] Group 2: Steelcase Inc. Overview - Steelcase Inc. (NYSE:SCS) had a one-month return of 0.59% and a 52-week gain of 32.86%, closing at $16.98 per share on October 6, 2025, with a market capitalization of $1.948 billion [2] - Steelcase Inc. is a major position for Middle Coast Investing, which noted that the company agreed to merge with HNI Corp [3] Group 3: Merger Details - The merger between Steelcase Inc. and HNI Corp was unexpected, with Steelcase not actively seeking buyers, indicating potential for a better deal [3] - Shareholders of Steelcase will own 36% of the combined company post-merger, and Middle Coast Investing plans to retain its shares while accepting the $7.2 per share cash offer from HNI [3] Group 4: Hedge Fund Interest - Steelcase Inc. is not among the 30 most popular stocks among hedge funds, with 20 hedge fund portfolios holding the stock at the end of Q2 2025, down from 25 in the previous quarter [4] - While Steelcase is recognized for its investment potential, the company believes certain AI stocks present greater upside potential and lower downside risk [4]