When it comes to short-term investing or trading, they say "the trend is your friend." And there's no denying that this is the most profitable strategy. But making sure of the sustainability of a trend to profit from it is easier said than done. The trend often reverses before exiting the trade, leading to a short-term capital loss for investors. So, for a profitable trade, one should confirm factors such as sound fundamentals, positive earnings estimate revisions, etc. that could keep the momentum in the s ...

While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us. Below, we take a look at HNI (HNI) , which currently has a Momentum Style Score of B. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings ...

Have you been paying attention to shares of HNI (HNI) ? Shares have been on the move with the stock up 8.8% over the past month. The stock hit a new 52-week high of $46.02 in the previous session. HNI has gained 9.8% since the start of the year compared to the 6.1% move for the Zacks Business Services sector and the 4.9% return for the Zacks Business - Office Products industry.What's Driving the Outperformance?The stock has a great record of positive earnings surprises, as it hasn't missed our earnings cons ...

Investors interested in Business Services stocks should always be looking to find the best-performing companies in the group. HNI (HNI) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? A quick glance at the company's year-to-date performance in comparison to the rest of the Business Services sector should help us answer this question.HNI is one of 315 individual stocks in the Business Services sector. Collectively, thes ...

Most of us have heard the dictum "the trend is your friend." And this is undeniably the key to success when it comes to short-term investing or trading. But it isn't easy to ensure the sustainability of a trend and profit from it.Often, the direction of a stock's price movement reverses quickly after taking a position in it, making investors incur a short-term capital loss. So, it's important to ensure that there are enough factors -- such as sound fundamentals, positive earnings estimate revisions, etc. -- ...

HNI (HNI) came out with quarterly earnings of $0.37 per share, beating the Zacks Consensus Estimate of $0.18 per share. This compares to earnings of $0.13 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 105.56%. A quarter ago, it was expected that this maker of office furniture and fireplaces would post earnings of $0.80 per share when it actually produced earnings of $0.98, delivering a surprise of 22.50%.Over the last four q ...

[First Quarter 2024 Results Overview](index=1&type=section&id=HNI%20CORPORATION%20REPORTS%20FIRST%20QUARTER%202024%20RESULTS) HNI Corporation reported strong Q1 2024 results with significant EPS growth and margin expansion, driven by strategic initiatives [Highlights](index=1&type=section&id=Highlights) HNI Corporation achieved strong Q1 2024 results with significant EPS growth and margin expansion, driven by Workplace Furnishings and KII acquisition Key Financial Highlights (YoY Change) | Metric | Q1 2024 | Change YoY | | :------------------------------------ | :------ | :--------- | | EPS (GAAP) ($) | $0.37 | 825% | | EPS (non-GAAP) ($) | $0.37 | 185% | | Workplace Furnishings Operating Margin (GAAP) (%) | - | Expanded 730 bps | | Workplace Furnishings Operating Margin (non-GAAP) (%) | - | Expanded 720 bps | - Kimball International (KII) generated an operating profit margin of **9.3%** and added an estimated **$0.10** to non-GAAP EPS[4](index=4&type=chunk) - Residential Building Products posted solid profit of **$21.4 million** with a **14.4%** operating margin despite a soft housing market[4](index=4&type=chunk) - Gross leverage remained strong at **1.9x**, unchanged from Q4 2023[4](index=4&type=chunk) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) CEO Jeff Lorenger highlighted HNI's strong Q1 2024, attributing record earnings and margins to Workplace Furnishings transformation and KII integration - Delivered earnings nearly **triple** the prior-year period, with EPS and operating margin reaching first quarter levels not seen since **2007**[5](index=5&type=chunk) - Workplace Furnishings profit margin reached its **highest first quarter level since 2016**, fueled by profit transformation and Kimball International[5](index=5&type=chunk) - Residential Building Products' profitability was supported by recent cost actions despite ongoing market weakness[6](index=6&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=HNI%20Corporation%20%E2%80%93%20First%20Quarter%20Financial%20Performance) HNI Corporation achieved robust consolidated financial performance in Q1 2024, with significant GAAP and non-GAAP sales and operating income growth [GAAP and Non-GAAP Summary](index=2&type=section&id=GAAP%20and%20Non-GAAP%20Summary) Consolidated GAAP net sales increased 22.7% to $588.0 million, with operating income up 362%, while non-GAAP results also showed strong growth Consolidated Financial Performance (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :-------------------- | :------ | :------ | :----- | | **GAAP** | | | | | Net Sales ($M) | $588.0M | $479.1M | 22.7% | | Gross Profit (%) | 39.6% | 36.4% | 320 bps | | Operating Income ($M) | $29.7M | $6.4M | 362% | | Operating Income (%) | 5.0% | 1.3% | 370 bps | | EPS – diluted ($) | $0.37 | $0.04 | 825% | | **Non-GAAP** | | | | | Gross Profit (%) | 39.6% | 36.5% | 310 bps | | Operating Income ($M) | $29.9M | $10.3M | 191% | | Operating Income (%) | 5.1% | 2.1% | 300 bps | | EPS – diluted ($) | $0.37 | $0.13 | 185% | [Impact of Kimball International Acquisition](index=3&type=section&id=HNI%20Corporation%20%E2%80%93%20First%20Quarter%20Impact%20of%20Kimball%20International%20Acquisition) The Kimball International acquisition significantly boosted HNI's Q1 2024 consolidated performance, adding $147.5 million to net sales despite organic revenue decline Consolidated Impact of Kimball International Acquisition (Q1 2024) | Metric (GAAP) | Legacy HNI | KII | Consolidated HNI (2024) | Consolidated HNI (2023) | Legacy Change | Consolidated Change | | :---------------------- | :--------- | :---- | :---------------------- | :---------------------- | :------------ | :------------------ | | Net Sales (GAAP) ($M) | $440.5M | $147.5M | $588.0M | $479.1M | (8.1%) | 22.7% | | Gross Profit (GAAP) (%) | 39.9% | 38.7% | 39.6% | 36.4% | 350 bps | 320 bps | | Operating Income (GAAP) (%) | 3.6% | 9.2% | 5.0% | 1.3% | 230 bps | 370 bps | | Operating Income (Non-GAAP) (%) | 3.7% | 9.3% | 5.1% | 2.1% | 160 bps | 300 bps | [Summary Comments](index=3&type=section&id=HNI%20Corporation%20%E2%80%94%20First%20Quarter%20Summary%20Comments) Consolidated net sales rose 22.7% to $588.0 million, driven by the KII acquisition, with gross profit margin expanding 320 basis points - Consolidated net sales increased **22.7%** to **$588.0 million**, with the KII acquisition contributing **$147.5 million**, while organic sales decreased **8.1%** year-over-year[12](index=12&type=chunk) - Gross profit margin expanded **320 basis points**, driven by favorable price-cost, improved net productivity, and the impact of the KII acquisition[12](index=12&type=chunk) - Selling and administrative expenses as a percent of sales decreased **50 basis points**, due to lower non-repeating KII acquisition-related fees, dilution from price realization, lower legacy core SG&A, and KII acquisition-related administrative cost synergies[12](index=12&type=chunk) - GAAP and non-GAAP net income per diluted share was **$0.37**, significantly up from **$0.04** and **$0.13** respectively in the prior-year quarter[12](index=12&type=chunk) [Segment Performance](index=4&type=section&id=Workplace%20Furnishings%20%E2%80%93%20First%20Quarter%20Financial%20Performance) This section details the financial performance of HNI's Workplace Furnishings and Residential Building Products segments in Q1 2024 [Workplace Furnishings](index=4&type=section&id=Workplace%20Furnishings) Workplace Furnishings achieved strong Q1 2024 growth, with net sales up 46.8% and operating income surging 759%, driven by KII acquisition and profit transformation [Financial Performance](index=4&type=section&id=Workplace%20Furnishings%20%E2%80%93%20First%20Quarter%20Financial%20Performance%20Table) Workplace Furnishings net sales increased 46.8% to $439.8 million, with GAAP operating income improving to $26.3 million and margin expanding 730 basis points Workplace Furnishings Financial Performance (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :-------------------------- | :------ | :------ | :----- | | **GAAP** | | | | | Net Sales ($M) | $439.8M | $299.6M | 46.8% | | Operating Income (Loss) ($M) | $26.3M | ($4.0)M | 759% | | Operating Income (Loss) (%) | 6.0% | (1.3%) | 730 bps | | **Non-GAAP** | | | | | Operating Income (Loss) ($M) | $26.5M | ($3.6)M | 841% | | Operating Income (Loss) (%) | 6.0% | (1.2%) | 720 bps | [Impact of Kimball International Acquisition](index=4&type=section&id=Workplace%20Furnishings%20%E2%80%93%20First%20Quarter%20Impact%20of%20Kimball%20International%20Acquisition%20Table) KII acquisition added $147.5 million to Workplace Furnishings net sales, with its strong operating margin significantly boosting segment profitability Workplace Furnishings Impact of Kimball International Acquisition (Q1 2024) | Metric (GAAP) | Legacy Workplace | KII | Total Workplace (2024) | Total Workplace (2023) | Legacy Change | Total Change | | :---------------------- | :--------------- | :---- | :--------------------- | :--------------------- | :------------ | :----------- | | Net Sales ($M) | $292.3M | $147.5M | $439.8M | $299.6M | (2.5%) | 46.8% | | Operating Income (Loss) ($M) | $12.7M | $13.6M | $26.3M | ($4.0)M | 418% | 759% | | Operating Income (Loss) (%) | 4.3% | 9.2% | 6.0% | (1.3%) | 560 bps | 730 bps | [Summary](index=4&type=section&id=Workplace%20Furnishings%20Summary) Workplace Furnishings net sales rose 46.8% to $439.8 million, driven by KII, with GAAP operating margin improving 730 basis points to 6.0% - Workplace Furnishings net sales increased **46.8%** to **$439.8 million**, with organic sales decreasing **2.5%** year-over-year. The KII acquisition increased sales by **$147.5 million**[16](index=16&type=chunk) - GAAP operating margin improved **730 basis points** to **6.0%**, driven by favorable price-cost, improved net productivity, favorable impacts from KII, and lower legacy core SG&A[16](index=16&type=chunk) - Excluding the impact of KII, first quarter GAAP operating profit margin for Legacy Workplace was **4.3%**, an improvement of **560 basis points** year-over-year[16](index=16&type=chunk) [Residential Building Products](index=5&type=section&id=Residential%20Building%20Products) Residential Building Products net sales declined 17.4% to $148.2 million due to housing market weakness, yet maintained a solid 14.4% operating margin [Financial Performance](index=5&type=section&id=Residential%20Building%20Products%20%E2%80%93%20First%20Quarter%20Financial%20Performance%20Table) Residential Building Products net sales decreased 17.4% to $148.2 million, with operating income declining 23.9% and margin compressing 120 basis points Residential Building Products Financial Performance (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :---------------- | :------ | :------ | :----- | | Net Sales ($M) | $148.2M | $179.4M | (17.4%) | | Operating Income ($M) | $21.4M | $28.1M | (23.9%) | | Operating Income (%) | 14.4% | 15.6% | -120 bps | [Summary](index=5&type=section&id=Residential%20Building%20Products%20Summary) Residential Building Products net sales decreased 17.4% to $148.2 million due to housing market weakness, with operating margin compressing 120 basis points to 14.4% - Residential Building Products net sales decreased **17.4%** to **$148.2 million**, primarily due to housing market weakness, with remodel/retrofit (R&R) sales declining at a higher rate than new construction[20](index=20&type=chunk) - Operating profit margin compressed **120 basis points** year-over-year to **14.4%**, driven by lower volume, partially offset by improved net productivity, favorable price-cost, lower variable compensation, and lower core SG&A[20](index=20&type=chunk) [Order Rates](index=5&type=section&id=First%20Quarter%20Order%20Rates) Workplace Furnishings orders increased 2% in Q1 2024, while Residential Building Products orders decreased 12% due to R&R market dynamics - Workplace Furnishings segment orders increased **two percent** versus the prior-year period, with similar growth from both small-to-medium sized customers and contract customers[20](index=20&type=chunk) - Orders in the Residential Building Products segment decreased **12%** compared to the first quarter of 2023, with new construction outperforming R&R[20](index=20&type=chunk) - Reduced channel backlogs and shortened lead times resulted in R&R orders returning to normal patterns, negatively impacting year-over-year growth[20](index=20&type=chunk) [Outlook](index=5&type=section&id=Outlook) HNI Corporation provides its financial outlook for Q2 and full-year 2024, anticipating strong earnings growth driven by strategic initiatives and market adjustments [Second Quarter 2024 Outlook](index=5&type=section&id=Second%20Quarter%202024%20Outlook) HNI projects solid Q2 2024 non-GAAP EPS growth, driven by KII and Workplace Furnishings transformation, despite slight organic revenue declines - Second quarter non-GAAP earnings per share is expected to increase **solidly** year-over-year, driven by KII benefits and continued profit transformation in Legacy Workplace Furnishings[20](index=20&type=chunk) - Workplace Furnishings organic segment revenue is expected to be down **slightly** compared to the same quarter of 2023[20](index=20&type=chunk) - Residential Building Products revenue is projected to decline at a **low-single digit rate** versus the year-ago period, with year-over-year declines expected to moderate[20](index=20&type=chunk) - KII is expected to be accretive to non-GAAP EPS in Q2, generally in line with Q1 results, and add **$75 to $80 million** of incremental revenue[20](index=20&type=chunk) [Full-Year 2024 Outlook](index=6&type=section&id=2024%20outlook%20commentary) HNI expects strong full-year earnings growth from Workplace Furnishings and KII, with Residential Building Products revenue projected flat-to-slightly down - Full-year earnings are expected to increase **strongly** from 2023 levels, driven by continued margin expansion in Workplace Furnishings and the full-year benefit of accretion from KII[21](index=21&type=chunk) - Workplace Furnishings organic revenue is expected to increase at a **low-single digit rate**[21](index=21&type=chunk) - Residential Building Products full-year revenue is expected to be **flat-to-slightly down** versus 2023 levels, a modest reduction from the previous outlook due to softer R&R and a slower start in new construction[21](index=21&type=chunk) - Residential Building Products segment revenue trends are expected to improve as the year progresses, with year-over-year growth returning in the **second half**[21](index=21&type=chunk) [Concluding Remarks](index=6&type=section&id=Concluding%20Remarks) CEO Jeff Lorenger highlighted an excellent start to 2024, driven by Workplace Furnishings transformation and KII, with optimism for Residential Building Products - HNI had an **excellent start to 2024**, with strategies delivering outstanding earnings growth[22](index=22&type=chunk) - Workplace Furnishings profit transformation initiatives maintained momentum, pushing margins to **multi-year highs**[22](index=22&type=chunk) - The integration of Kimball International continues to build momentum, strengthening the business strategically and financially and providing new growth opportunities[23](index=23&type=chunk) - Despite housing-driven weakness, HNI remains **bullish** on Residential Building Products, having adjusted its cost structure and invested in growth strategies, expecting demand trends to improve in the **back half of 2024**[24](index=24&type=chunk) [Additional Information](index=6&type=section&id=Conference%20Call) This section provides details on the Q1 2024 conference call, an overview of HNI Corporation, and important forward-looking statements [Conference Call](index=6&type=section&id=Conference%20Call) HNI Corporation hosted a conference call on April 29, 2024, to discuss its first quarter fiscal year 2024 results - HNI Corporation hosted a conference call on **Monday, April 29, 2024**, at **10:00 a.m. (Central)** to discuss first quarter fiscal year 2024 results[26](index=26&type=chunk) - A live webcast of the call was available on HNI Corporation's website, with a replay available through **May 6, 2024**[26](index=26&type=chunk) [About HNI Corporation](index=6&type=section&id=About%20HNI%20Corporation) HNI Corporation is a leading manufacturer of workplace furnishings and residential building products, operating through two distinct segments - HNI Corporation (NYSE: HNI) is a manufacturer of workplace furnishings and residential building products, operating under **two segments**[27](index=27&type=chunk) - The Workplace Furnishings segment is a leading global designer and provider of commercial furnishings[27](index=27&type=chunk) - The Residential Building Products segment is the nation's leading manufacturer and marketer of hearth products[27](index=27&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements based on current expectations, involving known and unknown risks that may cause actual results to differ materially - The release contains forward-looking statements based on current expectations regarding future plans, events, financial performance, and sales growth[29](index=29&type=chunk) - Forward-looking statements involve known and unknown risks and uncertainties, which may cause actual future results and performance to differ materially from expected results[29](index=29&type=chunk) - Risks include disruptions in the global supply chain, inflation, rising interest rates, labor shortages, demand levels, and the anticipated benefits of the Kimball International acquisition[29](index=29&type=chunk) - The Corporation assumes no obligation to update, amend, or clarify forward-looking statements, except as required by applicable law[29](index=29&type=chunk) [Condensed Consolidated Financial Statements](index=8&type=section&id=HNI%20Corporation%20and%20Subsidiaries%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents HNI Corporation's condensed consolidated statements of comprehensive income, balance sheets, and cash flows for Q1 2024 [Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) HNI Corporation reported Q1 2024 net sales of $588.0 million, gross profit of $232.8 million, operating income of $29.7 million, and diluted EPS of $0.37 Condensed Consolidated Statements of Comprehensive Income (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :------------------------------------------ | :------ | :------ | | Net sales ($M) | $588.0M | $479.1M | | Cost of sales ($M) | $355.1M | $304.8M | | Gross profit ($M) | $232.8M | $174.3M | | Selling and administrative expenses ($M) | $203.1M | $167.9M | | Operating income ($M) | $29.7M | $6.4M | | Net income attributable to HNI Corporation ($M) | $17.7M | $1.6M | | Diluted EPS ($) | $0.37 | $0.04 | [Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 30, 2024, HNI Corporation's total assets were $1,912.6 million, with total liabilities at $1,140.8 million and total equity at $771.8 million Condensed Consolidated Balance Sheets (March 30, 2024 vs. December 30, 2023) | Metric | March 30, 2024 | December 30, 2023 | | :---------------------------------- | :------------- | :---------------- | | Total Current Assets ($M) | $527.2M | $535.9M | | Net Property, Plant, and Equipment ($M) | $552.2M | $555.2M | | Goodwill and Other Intangible Assets, net ($M) | $645.9M | $651.9M | | Total Assets ($M) | $1,912.6M | $1,928.8M | | Total Current Liabilities ($M) | $407.7M | $463.7M | | Long-Term Debt ($M) | $460.2M | $428.3M | | Total Liabilities ($M) | $1,140.8M | $1,167.0M | | Total Equity ($M) | $771.8M | $761.8M | [Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2024, HNI Corporation reported net cash outflow from operating activities of ($4.3) million, with net cash inflow from financing activities of $12.9 million Condensed Consolidated Statements of Cash Flows (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :---------------------------------- | :------ | :------ | | Net cash flows from (to) operating activities ($M) | ($4.3)M | $17.3M | | Net cash flows from (to) investing activities ($M) | ($10.6)M | ($20.0)M | | Net cash flows from (to) financing activities ($M) | $12.9M | $2.1M | | Net decrease in cash and cash equivalents ($M) | ($2.0)M | ($0.6)M | | Cash and cash equivalents at end of period ($M) | $27.0M | $16.8M | [Reportable Segment Data](index=11&type=section&id=Reportable%20Segment%20Data) In Q1 2024, Workplace Furnishings generated $439.8 million in net sales, while Residential Building Products reported $148.2 million in net sales Reportable Segment Data (Q1 2024) | Segment | Net Sales ($M) | Income (Loss) Before Income Taxes ($M) | | :------------------------ | :-------- | :-------------------------------- | | Workplace furnishings | $439.8M | $26.3M | | Residential building products | $148.2M | $21.4M | | General corporate | - | ($18.0)M | | Total | $588.0M | $22.0M | [Non-GAAP Financial Measures Reconciliation](index=12&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles HNI Corporation's non-GAAP financial measures to their most directly comparable GAAP counterparts, providing adjusted performance insights [Explanation of Non-GAAP Measures](index=12&type=section&id=Explanation%20of%20Non-GAAP%20Measures) HNI Corporation uses non-GAAP measures to provide additional insights by excluding specific items like acquisition costs, restructuring charges, and Poppin exit costs - Non-GAAP financial measures (organic sales, gross profit, operating income, net income, and EPS) are used to provide additional insights into HNI's financial performance and operations[41](index=41&type=chunk)[42](index=42&type=chunk) - Adjustments to GAAP measures exclude impacts from the Kimball International acquisition (professional fees, other costs), restructuring charges, costs associated with the exit of Poppin, and prior period cost reduction initiatives[43](index=43&type=chunk) - Non-GAAP EPS is generally calculated using HNI's overall effective tax rate for the period[42](index=42&type=chunk) [Organic Sales Reconciliation](index=12&type=section&id=HNI%20Corporation%20Reconciliation%20(Organic%20Sales)) In Q1 2024, HNI's consolidated GAAP sales increased 22.7%, but organic sales decreased 8.1% to $440.5 million after excluding the KII acquisition HNI Corporation Organic Sales Reconciliation (Q1 2024) | Segment | Sales as reported (GAAP) ($M) | Less: Kimball International acquisition ($M) | Organic Sales (non-GAAP) ($M) | % change from PY (Organic) | | :-------------------- | :----------------------- | :------------------------------------ | :----------------------- | :------------------------- | | Workplace Furnishings | $439.8M | $147.5M | $292.3M | (2.5%) | | Residential Building Products | $148.2M | — | $148.2M | (17.4%) | | Total | $588.0M | $147.5M | $440.5M | (8.1%) | [Consolidated Reconciliation](index=13&type=section&id=HNI%20Corporation%20Reconciliation%20(Consolidated)) For Q1 2024, HNI's non-GAAP gross profit was $233.0 million (39.6%) and operating income was $29.9 million (5.1%), slightly higher than GAAP HNI Corporation Consolidated Non-GAAP Reconciliation (Q1 2024) | Metric | As reported (GAAP) | Restructuring charges | Acquisition costs | Results (non-GAAP) | | :---------------- | :----------------- | :-------------------- | :---------------- | :----------------- | | Gross Profit ($M) | $232.8M | $0.1M | — | $233.0M | | Gross Profit % | 39.6% | - | - | 39.6% | | Operating Income ($M) | $29.7M | $0.2M | $0.0M | $29.9M | | Operating Income % | 5.0% | - | - | 5.1% | | Net Income ($M) | $17.7M | $0.2M | $0.0M | $17.9M | | EPS ($) | $0.37 | $0.00 | $0.00 | $0.37 | [Legacy HNI EPS Reconciliation](index=14&type=section&id=HNI%20Corporation%20Reconciliation%20(Legacy%20HNI%20EPS)) Legacy HNI's diluted EPS for Q1 2024 was $0.27 (GAAP and non-GAAP), excluding impacts from new shares issued for the Kimball International acquisition Legacy HNI EPS Reconciliation (Q1 2024) | Metric | GAAP (Legacy HNI) | Non-GAAP (Legacy HNI) | | :------------------------------------------ | :---------------- | :-------------------- | | Operating income ($M) | $16.1M | $16.2M | | Net income ($M) | $11.5M | $11.6M | | Average number of common shares outstanding – diluted (M shares) | 43.3M | 43.3M | | EPS - Diluted ($) | $0.27 | $0.27 | - The average number of common shares outstanding – diluted for the Legacy HNI business is calculated by excluding the average impacts of new issuances of HNI common stock (**4.7 million**) and dilutive HNI restricted stock units (**0.1 million**) as a result of the acquisition of Kimball International[46](index=46&type=chunk) [Prior Year Non-GAAP Reconciliation](index=14&type=section&id=HNI%20Corporation%20Reconciliation%20(Prior%20Year%20Non-GAAP)) For Q1 2023, HNI's non-GAAP operating income was $10.3 million (2.1%) and diluted EPS was $0.13, adjusted from GAAP for various charges HNI Corporation Non-GAAP Reconciliation (Q1 2023) | Metric | As reported (GAAP) | Restructuring charges | Cost reduction initiative | Acquisition costs | Results (non-GAAP) | | :---------------- | :----------------- | :-------------------- | :------------------------ | :---------------- | :----------------- | | Gross Profit ($M) | $174.3M | $0.5M | — | — | $174.8M | | Gross Profit % | 36.4% | - | - | - | 36.5% | | Operating Income ($M) | $6.4M | $0.5M | ($0.1)M | $3.4M | $10.3M | | Operating Income % | 1.3% | - | - | - | 2.1% | | Net Income ($M) | $1.6M | $0.3M | ($0.0)M | $3.4M | $5.3M | | EPS ($) | $0.04 | $0.01 | ($0.00) | $0.08 | $0.13 | [Workplace Furnishings Reconciliation](index=15&type=section&id=Workplace%20Furnishings%20Reconciliation) In Q1 2024, Workplace Furnishings reported non-GAAP operating income of $26.5 million (6.0%), while Q1 2023 showed a non-GAAP operating loss of ($3.6) million Workplace Furnishings Non-GAAP Reconciliation (Q1 2024 vs. Q1 2023) | Metric | GAAP (Q1 2024) | Non-GAAP (Q1 2024) | GAAP (Q1 2023) | Non-GAAP (Q1 2023) | | :-------------------------- | :------------- | :--------------- | :------------- | :--------------- | | Operating income (loss) ($M) | $26.3M | $26.5M | ($4.0)M | ($3.6)M | | Operating income (loss) % | 6.0% | 6.0% | (1.3%) | (1.2%) | [Contact Information](index=15&type=section&id=For%20Information%20Contact:) This section provides contact details for investor relations and corporate development inquiries at HNI Corporation - For information, contact Marshall H. Bridges, Senior Vice President and Chief Financial Officer, at (563) 272-7400[49](index=49&type=chunk) - Alternatively, contact Matthew S. McCall, Vice President, Investor Relations and Corporate Development, at (563) 275-8898[49](index=49&type=chunk)

Most of us have heard the dictum "the trend is your friend." And this is undeniably the key to success when it comes to short-term investing or trading. But it isn't easy to ensure the sustainability of a trend and profit from it.The trend often reverses before exiting the trade, leading to a short-term capital loss for investors. So, for a profitable trade, one should confirm factors such as sound fundamentals, positive earnings estimate revisions, etc. that could keep the momentum in the stock alive.Our " ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) HNI Corporation provides workplace furnishings and residential building products, with fiscal 2023 net sales of **$2.4 billion**, significantly impacted by the Kimball International acquisition - HNI Corporation operates in two reportable segments: workplace furnishings and residential building products[20](index=20&type=chunk) Fiscal 2023 Net Sales by Segment | Segment | Net Sales (Billion USD) | Percentage of Total | | :--- | :--- | :--- | | Workplace Furnishings | $1.7 | 71% | | Residential Building Products | $0.7 | 29% | | **Total** | **$2.4** | **100%** | - On June 1, 2023, the Corporation acquired Kimball International, Inc. in a cash and stock transaction valued at **$503.7 million**[22](index=22&type=chunk) - The company's strategy is based on a customer-first mindset, creating effortless winning experiences, and owning operational excellence through Rapid Continuous Improvement (RCI)[33](index=33&type=chunk)[34](index=34&type=chunk) [Markets](index=4&type=section&id=Item%201.%20Business%20-%20Markets) The company competes in the workplace furnishings market through contract and SMB channels and is the North American leader in hearth products - The North American workplace furnishings market consists of two primary channels: the contract channel (large corporations) and the small and medium-sized business (SMB) channel, where HNI is a market leader[25](index=25&type=chunk)[27](index=27&type=chunk) - Key competitors in workplace furnishings include MillerKnoll, Inc., Steelcase, Inc., and Haworth, Inc[29](index=29&type=chunk) - HNI is the North American market leader in hearth products, which are sold for both new home construction and renovation of existing homes[30](index=30&type=chunk) - Competitors in the hearth products market include Travis Industries, Inc., Innovative Hearth Products, and Wolf Steel Ltd. (Napoleon)[31](index=31&type=chunk) [Sales](index=6&type=section&id=Item%201.%20Business%20-%20Sales) Workplace furnishings are sold under brands like HON and Kimball, while residential products include Heatilator and Heat & Glo - Workplace furnishings are sold under multiple brands, including HON®, Allsteel®, Gunlocke®, and the newly acquired Kimball® and National® brands[36](index=36&type=chunk) - Residential building products are sold under widely recognized brands such as Heatilator®, Heat & Glo®, and Majestic®[39](index=39&type=chunk) - In fiscal 2023, the Corporation's five largest customers represented approximately **17% of its consolidated net sales**, with no single customer accounting for **10% or more**[41](index=41&type=chunk) [Resources](index=8&type=section&id=Item%201.%20Business%20-%20Resources) HNI operates manufacturing facilities in the U.S., India, and Mexico, holding numerous patents and trademarks critical to its business - Manufacturing facilities for workplace furnishings are in Georgia, Indiana, Iowa, Kentucky, New York, North Carolina, India, and Mexico, while hearth products are manufactured in Iowa, Minnesota, Pennsylvania, and Vermont[42](index=42&type=chunk) - As of December 30, 2023, the Corporation owned **183 U.S.** and **127 foreign patents**, and **281 U.S.** and **420 foreign trademark registrations**[46](index=46&type=chunk) - The company considers the HON®, Allsteel®, Kimball®, National®, Heat & Glo®, and Heatilator® trademarks to be material to its business[48](index=48&type=chunk) [Human Capital and Sustainability](index=9&type=section&id=Item%201.%20Business%20-%20Human%20Capital%20and%20Sustainability) HNI employed approximately 8,200 people as of December 2023, committed to diversity, development, and 100% renewable electricity by 2030 - The Corporation employed approximately **8,200 persons** as of December 30, 2023[52](index=52&type=chunk) - HNI has committed to **100% renewable electricity annually by 2030** and has set science-based carbon emission reduction goals[51](index=51&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces economic, strategic, operational, financing, legal, and regulatory risks, including challenges from the Kimball International acquisition - **Industry/Economic Risks:** Unfavorable economic conditions, such as lower office occupancy, high interest rates, and slowdowns in homebuilding, could decrease demand for the Corporation's products[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - **Strategic/Operational Risks:** The company may not achieve the intended benefits of its merger with Kimball International due to integration challenges, alongside risks like supply chain disruptions, labor shortages, and potential cybersecurity threats[90](index=90&type=chunk)[85](index=85&type=chunk)[113](index=113&type=chunk) - **Financing Risks:** The company incurred significant new indebtedness to finance the Kimball International merger, which contains restrictive covenants and increases exposure to rising interest rates[96](index=96&type=chunk)[124](index=124&type=chunk)[127](index=127&type=chunk) - **Legal/Regulatory Risks:** The business is subject to extensive environmental regulations, potential product defect liabilities, and risks related to protecting its intellectual property, particularly key trademarks[115](index=115&type=chunk)[116](index=116&type=chunk)[119](index=119&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - None[131](index=131&type=chunk) [Cybersecurity](index=25&type=section&id=Item%201C.%20Cybersecurity) HNI's cybersecurity program, aligned with NIST and overseen by the Audit Committee, has not identified material threats to date - The cybersecurity risk management program is generally based on the framework established by the National Institute of Standards and Technology (NIST)[132](index=132&type=chunk) - Oversight of cybersecurity risks is delegated to the Audit Committee of the Board of Directors, with day-to-day management handled by the Chief Information and Digital Officer (CIDO)[135](index=135&type=chunk)[137](index=137&type=chunk) - The Corporation has not identified any cybersecurity threats that have materially affected or are reasonably likely to affect the Corporation[140](index=140&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties) The company operates approximately 11.6 million square feet of well-maintained facilities in the U.S., India, and Mexico Principal Manufacturing and Distribution Facilities (100,000 sq. ft. or larger) | Location | Workplace Furnishings Facilities | Residential Building Products Facilities | Owned Sq. Ft. (thousands) | Leased Sq. Ft. (thousands) | | :--- | :--- | :--- | :--- | :--- | | Muscatine, IA | 6 | — | 2,211 | — | | Jasper, IN | 5 | — | 1,223 | — | | Santa Claus, IN | 2 | — | 684 | — | | Lake City, MN | — | 2 | 342 | — | | Other U.S. | 11 | 6 | 2,669 | 1,554 | | Outside U.S. | 2 | — | 355 | 540 | [Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) The Corporation is involved in various legal proceedings, but management expects no material adverse effect on its financial condition - After consultation with legal counsel, the Corporation does not expect liabilities from various disputes and legal proceedings to have a material adverse effect on its financial condition or results[146](index=146&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Corporation - Not applicable[147](index=147&type=chunk) [Information about our Executive Officers](index=28&type=section&id=Table%20I%20-%20Information%20about%20our%20Executive%20Officers) This section provides a table listing the Corporation's executive officers, their ages, positions, and business experience - The table lists key executive officers including Jeffrey D. Lorenger (Chairman, President, and CEO), Marshall H. Bridges (SVP and CFO), and presidents of the major business units like The HON Company and Allsteel LLC[149](index=149&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) HNI common stock trades on NYSE, with a regular dividend policy and an active share repurchase program - The Corporation's common stock is listed on the New York Stock Exchange (NYSE) under the trading symbol HNI[151](index=151&type=chunk) - As of December 30, 2023, **$233.5 million** was authorized and available for the repurchase of shares[154](index=154&type=chunk) Share Repurchase Activity - Q4 2023 | Period | Total Shares Purchased (thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | 10/01/23 - 10/28/23 | — | $ — | | 10/29/23 - 11/25/23 | — | $ — | | 11/26/23 - 12/30/23 | 10.0 | $41.98 | | **Total** | **10.0** | | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, net sales increased to **$2.434 billion** due to the Kimball acquisition, while net income decreased due to acquisition and impairment costs - Significant developments in 2023 included the acquisition of Kimball International and the divestiture of Poppin Furniture, Inc[160](index=160&type=chunk) Consolidated Results of Operations (2023 vs. 2022) | Metric | 2023 (in millions) | 2022 (in millions) | Change | Change (bps) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $2,434.0 | $2,361.8 | 3.1% | | | Gross profit | $948.3 | $834.9 | 13.6% | | | Gross profit % | 39.0% | 35.4% | | 360 bps | | Operating income | $90.3 | $155.2 | (41.8)% | | | Operating income % | 3.7% | 6.6% | | -290 bps | | Net income attributable to HNI | $49.2 | $123.9 | (60.3)% | | - The decrease in net income was primarily due to a **$50.4 million** pre-tax gain on the sale of Lamex in 2022, compared to **$41.2 million** in acquisition costs and **$31.0 million** in impairment charges in 2023[162](index=162&type=chunk) [Segment Results](index=34&type=section&id=Item%207.%20MD%26A%20-%20Segment%20Results) Workplace Furnishings sales increased due to the Kimball acquisition, while Residential Building Products sales decreased due to housing market weakness Workplace Furnishings Segment Performance (2023 vs. 2022) | Metric | 2023 (in millions) | 2022 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net sales | $1,740.3 | $1,486.2 | 17.1% | | Operating profit | $68.6 | $3.4 | NM | | Operating profit % | 3.9% | 0.2% | 370 bps | - The increase in Workplace Furnishings sales was driven by the **$361.4 million** impact from the Kimball International acquisition, partially offset by a **$46.9 million** decrease from the Lamex divestiture[179](index=179&type=chunk) Residential Building Products Segment Performance (2023 vs. 2022) | Metric | 2023 (in millions) | 2022 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net sales | $693.7 | $875.6 | (20.8%) | | Operating profit | $116.6 | $158.7 | (26.5%) | | Operating profit % | 16.8% | 18.1% | -130 bps | - The sales decrease in Residential Building Products was driven by lower volume in both new construction and existing home channels due to housing market weakness and reduced remodeling activity[181](index=181&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Item%207.%20MD%26A%20-%20Liquidity%20and%20Capital%20Resources) Operating cash flow significantly increased to **$267.5 million** in 2023, while investing activities were dominated by the Kimball acquisition - Cash from operating activities increased to **$267.5 million** in 2023 from **$81.2 million** in 2022, mainly due to favorable changes in working capital, including lower inventory[185](index=185&type=chunk) - Investing activities included **$369.7 million** for the Kimball International acquisition and capital expenditures of **$79.1 million**[187](index=187&type=chunk)[188](index=188&type=chunk) - Financing activities included borrowing **$300 million** via a term loan to support the Kimball acquisition and paying **$58.5 million** in dividends[189](index=189&type=chunk)[190](index=190&type=chunk) - The Corporation anticipates capital expenditures for 2024 to be in an estimated range of **$90 million to $100 million**[187](index=187&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Item%207.%20MD%26A%20-%20Critical%20Accounting%20Policies%20and%20Estimates) Goodwill and Intangible Assets and Self-Insurance are critical accounting policies, with a **$27.6 million** goodwill impairment charge in 2023 - Goodwill is tested for impairment annually in the fourth quarter, with a quantitative test in 2023 for a small workplace furnishings reporting unit resulting in a pretax goodwill impairment charge of **$27.6 million**[205](index=205&type=chunk)[374](index=374&type=chunk) - The company is primarily self-insured for general, auto, product liability, and workers' compensation, with estimated liabilities of **$24.8 million** as of December 30, 2023, determined by actuarial valuations[214](index=214&type=chunk) - The acquisition of Kimball International resulted in the recognition of approximately **$110 million** in intangible assets, with the largest being customer lists valued at **$47 million**[212](index=212&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Corporation faces market risk from variable-rate debt and material price changes, with foreign currency exposure not significant - The Corporation has variable interest rate risk on its **$425 million** revolving credit facility and **$300 million** term loan, with an interest rate swap fixing the rate on **$100 million** of the term loan at **4.7%**[220](index=220&type=chunk) - The Corporation is exposed to price risk for direct materials such as steel, plastics, textiles, and wood particleboard[223](index=223&type=chunk) - Foreign currency exposure is currently not significant[222](index=222&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were effective as of December 2023, but Kimball International was excluded from the internal control assessment due to acquisition timing - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective as of December 30, 2023[227](index=227&type=chunk) - Kimball International was excluded from the annual assessment of the effectiveness of internal control over financial reporting due to the timing of the acquisition[231](index=231&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2023 that materially affected, or are reasonably likely to materially affect, internal controls[229](index=229&type=chunk) [Other Information](index=43&type=section&id=Item%209B.%20Other%20Information) Several directors and officers adopted Rule 10b5-1 trading arrangements during the fourth quarter of 2023 - During the fourth quarter of 2023, five directors and officers, including Donna D. Meade, Larry B. Porcellato, Miguel M. Calado, Vincent P. Berger, and Mary A. Bell, adopted Rule 10b5-1 trading arrangements[232](index=232&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=44&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - Information required for this item is incorporated by reference from the company's Definitive Proxy Statement for the Annual Meeting on May 16, 2024[236](index=236&type=chunk) [Executive Compensation](index=44&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the 2024 Proxy Statement - Information required for this item is incorporated by reference from the company's 2024 Proxy Statement[239](index=239&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=44&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the 2024 Proxy Statement - Information required for this item is incorporated by reference from the company's 2024 Proxy Statement[240](index=240&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=44&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2024 Proxy Statement - Information required for this item is incorporated by reference from the company's 2024 Proxy Statement[241](index=241&type=chunk) [Principal Accountant Fees and Services](index=44&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) KPMG LLP is the independent registered public accounting firm, with fee information incorporated by reference from the 2024 Proxy Statement - The Corporation's independent registered public accounting firm is KPMG LLP, Chicago, IL[242](index=242&type=chunk) - Information regarding accountant fees and services is incorporated by reference from the company's 2024 Proxy Statement[243](index=243&type=chunk) Part IV [Exhibit and Financial Statement Schedules](index=45&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed as part of the Form 10-K report, including merger and credit agreements - This section lists all financial statements, schedules, and exhibits filed with the report, including the Consolidated Statements of Comprehensive Income, Balance Sheets, Equity, and Cash Flows[246](index=246&type=chunk) [Management Report on Internal Control Over Financial Reporting](index=49&type=section&id=Management%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) Management concluded that HNI maintained effective internal control over financial reporting as of December 2023, excluding Kimball International - Management concluded that HNI Corporation maintained effective internal control over financial reporting as of December 30, 2023[262](index=262&type=chunk) - The assessment of internal controls excluded Kimball International, which was acquired in the second quarter of 2023, representing approximately **32% of consolidated total assets** and **15% of net sales** for the year[260](index=260&type=chunk) [Report of Independent Registered Public Accounting Firm](index=50&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on HNI's financial statements and internal controls, identifying critical audit matters related to Kimball acquisition intangibles and self-insurance liabilities - The auditor, KPMG LLP, issued an unqualified opinion on both the consolidated financial statements and the effectiveness of internal control over financial reporting[266](index=266&type=chunk) - The audit of internal control over financial reporting excluded an evaluation of Kimball International, consistent with management's exclusion[267](index=267&type=chunk) - Critical Audit Matters included: 1) The fair value of the customer relationship intangible asset acquired in the Kimball acquisition, due to the subjective judgment required for the customer retention rate assumption 2) The valuation of workers' compensation and product liabilities, due to the inherent uncertainty in estimating ultimate settlement costs[276](index=276&type=chunk)[279](index=279&type=chunk)

Financial Data and Key Metrics Changes - For Q4 2023, non-GAAP earnings per share increased by 56% year-over-year despite a 6% organic revenue decline, primarily due to housing market weakness [12][14] - The company achieved a gross leverage ratio of 1.9 times, down from over two times just two quarters after the Kimball International acquisition [39][40] - Non-GAAP EPS for 2023 increased by more than 20% year-over-year, building on a 35% increase in the prior year [14] Business Line Data and Key Metrics Changes - In Workplace Furnishings, the non-GAAP operating profit margin for legacy HNI was 7.2%, representing a 480 basis point year-over-year expansion [6][12] - The residential building products segment saw a non-GAAP operating margin improvement to over 22%, a 240 basis point increase year-over-year, despite a 13% revenue decline [21][22] - Orders from legacy contract customers were down 2% for the year but were flat in Q4 year-over-year, indicating stabilization [9][37] Market Data and Key Metrics Changes - The housing market showed signs of improvement, particularly in single-family permits and starts, which grew healthily in Q4 [23] - The company expects low single-digit organic revenue growth in both Workplace Furnishings and residential building products for 2024 [24] - The addition of Kimball International is projected to contribute $215 million to $225 million in incremental revenue in 2024 [25] Company Strategy and Development Direction - The company is focused on margin expansion in Workplace Furnishings and driving high-margin revenue growth in residential building products [31] - The integration of Kimball International is ahead of schedule, with expected annual cost synergies now projected at $35 million [30][36] - The company plans to continue investing in productivity improvements and cost reduction initiatives [7][16] Management's Comments on Operating Environment and Future Outlook - Management noted that demand remains choppy but stable, with encouraging trends in return-to-office metrics and lease expirations [17][18] - The company anticipates continued margin expansion and profitability improvements despite macroeconomic pressures [16][54] - Management expressed confidence in the long-term demand fundamentals for housing and renovation activities [38] Other Important Information - The company exceeded its initial $30 million corporate-wide cost savings target, achieving a run rate savings of $50 million by the end of 2023 [32] - The company is committed to reinvesting in the business, funding dividends, and pursuing share buybacks and M&A opportunities [43] Q&A Session Summary Question: Can you help us put together the moving pieces for 2024? - Management expects EPS growth in the high single digits to low teens, driven by margin expansion and accretion from Kimball International [48] Question: What are your expectations for the Residential Building Products segment? - Management anticipates new construction growth in the mid-single digits, with remodel retrofit expected to improve gradually [78] Question: Are you seeing any pickup in customer activity in the office market? - Management noted stabilization in the office market, with positive signs for small project business and furniture events [71][73] Question: How do you see the normal seasonality of earnings and revenues returning? - Management confirmed a return to normal seasonality, expecting roughly 30% of profit in the first half and 70% in the second half [87] Question: What are your long-term strategic plans post-Kimball International acquisition? - Management sees significant runway for profit and margin expansion, focusing on integrating Kimball International and driving growth in high-margin segments [88][89]