[HNI Corporation Earnings Report Overview](index=1&type=section&id=HNI%20Corporation%20Earnings%20Report%20Overview) HNI Corporation reported strong full-year 2023 sales and significant Q4 earnings growth, driven by the Kimball International acquisition and margin expansion across segments [Executive Summary](index=1&type=section&id=Executive%20Summary) HNI Corporation reported full-year 2023 sales of $2.434 billion and net income of $49.2 million, with non-GAAP diluted EPS increasing to $2.65, and Q4 sales up 19% year-over-year with non-GAAP diluted EPS at $0.98 | Metric | 2023 (GAAP) | 2022 (GAAP) | Change | | :----- | :---------- | :---------- | :----- | | Sales | $2.434 billion | $2.361 billion | 3.1% | | Net Income | $49.2 million | $123.9 million | (60.3%) | | GAAP EPS Diluted | $1.09 | $2.94 | (62.9%) | | Non-GAAP EPS Diluted | $2.65 | $2.20 | 20.5% | | Metric | Q4 2023 (GAAP) | Q4 2022 (GAAP) | Change | | :----- | :------------- | :------------- | :----- | | Sales | $679.8 million | $568.9 million | 19.5% | | Net Income | $22.7 million | $16.3 million | 39.2% | | GAAP EPS Diluted | $0.48 | $0.39 | 23.1% | | Non-GAAP EPS Diluted | $0.98 | $0.63 | 55.6% | [Fourth Quarter Highlights](index=1&type=section&id=Fourth%20Quarter%20Highlights) The fourth quarter saw strong earnings growth, significant margin expansion in Workplace Furnishings, and the Kimball International acquisition proving solidly accretive with increased synergy expectations - Strong earnings growth: Q4 GAAP EPS increased **23% year-over-year**, and non-GAAP diluted EPS was **56% higher** despite a **6.4% year-over-year organic revenue decline**[6](index=6&type=chunk) - Workplace Furnishings margin expansion: Segment GAAP operating margin expanded **410 basis points** year-over-year, with Legacy HNI non-GAAP operating profit margin increasing **480 basis points** due to price-cost improvement, productivity gains, and cost savings initiatives[6](index=6&type=chunk) - Kimball International (KII) accretion: KII added approximately **$16 million** to fourth quarter operating profit (**11% operating profit margin**) and an estimated **$0.07** to fourth quarter non-GAAP EPS, with total annual cost synergies now expected to be **$35 million**[6](index=6&type=chunk) - Residential Building Products margins improve: Segment GAAP operating margin expanded **310 basis points** year-over-year to **22.3%**, and non-GAAP operating margin improved **240 basis points** to **22.3%** despite a **13.1% year-over-year revenue decline**[6](index=6&type=chunk)[7](index=7&type=chunk) - Balance sheet strengthened: Reduced debt by **$73 million** in the fourth quarter and by **$162 million** during the second half of 2023, ending Q4 with **$436 million** in total debt and a gross leverage ratio of **1.9x**[7](index=7&type=chunk) [Financial Performance - Fourth Quarter 2023](index=3&type=section&id=Financial%20Performance%20-%20Fourth%20Quarter%202023) HNI Corporation's Q4 2023 financial performance was significantly boosted by the Kimball International acquisition, leading to increased sales and improved operating margins [Consolidated Fourth Quarter Financial Performance (GAAP & Non-GAAP)](index=3&type=section&id=Consolidated%20Fourth%20Quarter%20Financial%20Performance%20(GAAP%20%26%20Non-GAAP)) HNI Corporation's Q4 2023 consolidated financial performance showed significant growth in net sales and operating income, both on a GAAP and non-GAAP basis, largely driven by the Kimball International acquisition | Metric | Q4 2023 (GAAP) | Q4 2022 (GAAP) | Change (GAAP) | Q4 2023 (Non-GAAP) | Q4 2022 (Non-GAAP) | Change (Non-GAAP) | | :-------------------- | :------------- | :------------- | :-------------- | :----------------- | :----------------- | :------------------ | | Net Sales | $679.8M | $568.9M | 19.5% | $679.8M | $568.9M | 19.5% | | Gross Profit % | 40.2% | 36.6% | 360 bps | 40.2% | 37.4% | 280 bps | | Operating Income | $30.7M | $23.0M | 33.6% | $66.1M | $36.2M | 82.6% | | Operating Income % | 4.5% | 4.0% | 50 bps | 9.7% | 6.4% | 330 bps | | EPS – diluted | $0.48 | $0.39 | 23.1% | $0.98 | $0.63 | 55.6% | [Impact of Kimball International Acquisition on Q4](index=4&type=section&id=Impact%20of%20Kimball%20International%20Acquisition%20on%20Q4) The Kimball International acquisition significantly boosted HNI's consolidated Q4 performance, contributing substantially to net sales, gross profit, and operating income, despite a decline in Legacy HNI's organic sales | Metric | Legacy HNI (GAAP) | KII (GAAP) | Consolidated HNI (GAAP) | Consolidated HNI (Q4 2022 GAAP) | Legacy HNI (Non-GAAP) | KII (Non-GAAP) | Consolidated HNI (Non-GAAP) | Consolidated HNI (Q4 2022 Non-GAAP) | | :-------------------- | :---------------- | :--------- | :---------------------- | :-------------------------- | :-------------------- | :--------- | :---------------------- | :-------------------------- | | Net Sales | $532.4M | $147.4M | $679.8M | $568.9M | $532.4M | $147.4M | $679.8M | $568.9M | | Net Sales Change YoY | (6.4%) | N/A | 19.5% | N/A | (6.4%) | N/A | 19.5% | N/A | | Gross Profit % | 39.8% | 41.6% | 40.2% | 36.6% | 39.8% | 41.6% | 40.2% | 37.4% | | Operating Income | $14.5M | $16.2M | $30.7M | $23.0M | $50.3M | $15.7M | $66.1M | $36.2M | | Operating Income % | 2.7% | 11.0% | 4.5% | 4.0% | 9.5% | 10.7% | 9.7% | 6.4% | | EPS - diluted | N/A | N/A | $0.48 | $0.39 | $0.91 | N/A | $0.98 | $0.63 | [Fourth Quarter Summary Comments](index=4&type=section&id=Fourth%20Quarter%20Summary%20Comments) Consolidated net sales increased by **19.5%** due to the Kimball International acquisition, offsetting a **6.4% organic sales decrease**, while gross profit margin expanded by **360 basis points** - Consolidated net sales increased **19.5%** from the prior-year quarter to **$679.8 million**, with the acquisition of Kimball International increasing sales by **$147.4 million**, while organic sales decreased **6.4%**[13](index=13&type=chunk) - Gross profit margin expanded **360 basis points** compared to the prior-year quarter, driven by favorable price-cost, improved net productivity, lower restructuring costs, and the impact of the Kimball International acquisition[13](index=13&type=chunk) - Restructuring and impairment charges totaled **$31.4 million** in the current-year quarter, primarily from goodwill and intangible asset impairments related to small business units in the Workplace Furnishings segment[13](index=13&type=chunk) - Non-GAAP net income per diluted share was **$0.98** compared to **$0.63** in the prior-year quarter, primarily driven by improved net productivity, favorable price-cost, lower core SG&A, and the net impact of the Kimball International acquisition[13](index=13&type=chunk) - The GAAP tax rate in the current-year period was **0.0 percent**, impacted by the effects of the Kimball International acquisition and impairment charges, while non-GAAP net income per diluted share included an effective tax rate of **19.5 percent**[14](index=14&type=chunk) [Financial Performance - Full Year 2023](index=5&type=section&id=Financial%20Performance%20-%20Full%20Year%202023) HNI Corporation's full-year 2023 financial performance showed sales growth driven by acquisitions, with non-GAAP metrics indicating improved profitability despite GAAP declines [Consolidated Full Year Financial Performance (GAAP & Non-GAAP)](index=5&type=section&id=Consolidated%20Full%20Year%20Financial%20Performance%20(GAAP%20%26%20Non-GAAP)) For the full year 2023, HNI Corporation reported a **3.1%** increase in GAAP net sales, reaching **$2.434 billion**, with non-GAAP operating income and diluted EPS showing significant growth | Metric | FY 2023 (GAAP) | FY 2022 (GAAP) | Change (GAAP) | FY 2023 (Non-GAAP) | FY 2022 (Non-GAAP) | Change (Non-GAAP) | | :-------------------- | :------------- | :------------- | :--------------

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State of Incorporation) Iowa 42-0617510 600 East Second Street P.O. Box 1109 Muscatine , Iowa 52761-0071 ( 563 ) 272-7400 (I.R.S. Employer Identification No.) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock HNI New York Stock Exchange ...

Financial Data and Key Metrics Changes - Non-GAAP EPS grew by 6% year-over-year despite a 15% decline in organic sales, indicating effective profit transformation efforts [4][19] - Non-GAAP gross margin expanded by 270 basis points and non-GAAP operating margin expanded by 150 basis points, driven by the profit transformation plan [17][19] - The company ended Q2 2023 with a debt to EBITDA ratio of 2.3 times, which would have been approximately 1.6 times if private notes were repaid [13][27] Business Line Data and Key Metrics Changes - Workplace Furnishings segment saw a 3% year-over-year growth in orders for the first half of 2023, with non-GAAP operating margin expanding by 550 basis points to 8.5% [7][19] - Residential Building Products segment experienced a 16% decline in orders compared to Q2 2022, but this was an improvement from a 37% decline in Q1 2023 [10][46] - The company expects Residential Building Products revenue to decline in the high teens during the second half of 2023, with a moderation in year-over-year declines [11][46] Market Data and Key Metrics Changes - The company noted strong demand trends in Workplace Furnishings, particularly among small to midsized customers, which are expected to continue [7][39] - The housing market remains undersupplied, with demographic trends indicating robust future construction growth, despite current volume pressures [42][49] Company Strategy and Development Direction - The company is focused on profit transformation and margin improvement, particularly in Workplace Furnishings, and is committed to expanding margins in both legacy HNI and Kimball International [19][49] - The divestiture of Poppin is expected to enhance annual operating profit by $20 million while reducing annual revenue by $56 million, allowing for a clearer focus on core business strengths [21][28] - The company is investing in initiatives aimed at expanding market presence, including new product innovation and online capabilities [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the benefits of the Kimball International acquisition, anticipating significant synergies and improved market positioning [8][28] - The company expects organic revenue growth rates in Workplace Furnishings to be in the low single-digits for the second half of 2023, with a positive outlook for the fourth quarter [24][26] - Management acknowledged the challenges in the Residential Building Products segment but remains optimistic about long-term growth prospects [49] Other Important Information - The company has increased its cost reduction efforts to a total of $40 million to $45 million, up from $35 million previously announced [22] - The divestiture of Poppin is expected to negatively impact non-GAAP EPS until finalized, with an estimated operating loss of $3.5 million to $4 million for the quarter [12] Q&A Session Summary Question: Can you discuss demand trends in Workplace Furnishings? - Management noted solid positive orders in Workplace Furnishings since the start of Q3, running ahead of the first half rate of 3% [31] Question: What is the target margin for Residential Building Products? - Management indicated that they are focused on improving profitability in the Residential Building Products segment, with expectations for improved margins in the future [32] Question: What drove the decision to divest Poppin? - The decision was made to streamline the business and focus on core profitable growth areas, as Poppin's operating losses masked the strength of Kimball International's core businesses [58][68] Question: How do you expect margins to trend in the second half? - Management expects margins to improve significantly in the second half, aiming for mid to upper teens range [52][66] Question: What are the expectations for the impact of Kimball International? - The company anticipates Kimball International to add $290 million to $320 million in revenue and $0.10 to $0.15 to non-GAAP EPS in the second half, excluding Poppin [44]

Financial Data and Key Metrics Changes - The first quarter of 2023 marked the fourth consecutive quarter of year-over-year profit improvement in Workplace Furnishings, with a seasonal non-GAAP operating loss narrowing by more than 40% year-over-year and segment gross margin expanding by 190 basis points [7][8] - Consolidated second quarter revenue for HNI is expected to decline at a rate in the high teens to low 20s, with organic revenue expected to be down at a mid to high teens rate [25][26] - Approximately 80% of annual non-GAAP earnings per share is expected to be generated in the second half of 2023, compared to approximately 60% in the second half of 2022 [22][87] Business Line Data and Key Metrics Changes - In the Workplace Furnishings segment, organic orders grew by 13% year-over-year, driven by improving market demand trends and price increases implemented during the quarter [10] - The Residential Building Products segment experienced a decline in orders due to weakening macroeconomic conditions, but operating margin remained in the mid-teens, marking the 11th consecutive quarter with an operating margin exceeding 15% [11][12] - The sale of Lamex is expected to lower growth in Workplace Furnishings by 6 percentage points or $27 million in the second quarter [15] Market Data and Key Metrics Changes - Recent Workplace Furnishings demand trends are encouraging, with actual first quarter organic sales down only 11%, compared to previous expectations of a high teens decline [17] - The company anticipates that new construction will be more negatively impacted than remodel/retrofit for the year, despite the first quarter showing unexpected results in remodel/retrofit [41][43] - The housing market's strong fundamentals are expected to drive robust future construction growth, with unique growth opportunities identified in product innovation and market expansion [19] Company Strategy and Development Direction - The company is focused on profit improvement actions in Workplace Furnishings, emphasizing simplification of business and cost structure streamlining [9] - The acquisition of Kimball International is expected to create a market leader with pro forma revenue of approximately $3 billion and combined EBITDA of approximately $305 million, enhancing the company's market position [20] - The company remains committed to investing in long-term growth despite short-term demand challenges in Residential Building Products [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to drive profit growth in Workplace Furnishings despite macroeconomic uncertainties [16] - The company is optimistic about mid to long-term growth due to strong housing market fundamentals and demographic trends [19] - Management noted that while macro conditions are uncertain, they expect to maintain reasonable leverage levels and strong free cash flow [27] Other Important Information - The company has replaced initial bridge loan financing with a new term loan facility for the Kimball International transaction, maintaining a focus on reasonable leverage levels [27] - The company expects to provide more commentary on guidance following the completion of the Kimball acquisition [91] Q&A Session All Questions and Answers Question: Order growth in Workplace Furnishings seems higher than industry trends - Management noted that order growth was driven by price increases and improving market demand, particularly in the mid-market segment [34][35] Question: Impact of price increases on order trends - Management confirmed that the price increase implemented in March had a significant impact, with approximately 50% of order growth attributed to pull-forward activity ahead of the price increase [38][40] Question: Performance in Residential Building Products and acquisition appetite - Management indicated that they continue to invest in Residential Building Products and are open to acquisition opportunities, maintaining a proactive posture in the market [42][46] Question: Changes in gross profit and SG&A margins - Management highlighted that gross profit margin expanded due to favorable price cost and cost savings programs, while SG&A as a percentage of sales increased due to volume decline [50][51] Question: Trends in Workplace Furnishings and competition - Management acknowledged that the SMB segment is performing better than the contract segment, but competition remains strong across the board [77] Question: Long-term margin expectations for Residential Building Products - Management expressed confidence in returning to previous margin levels and driving topline growth in the long term [82]

Part I [Business](index=4&type=section&id=Item%201.%20Business) HNI Corporation provides workplace furnishings and residential building products through two primary segments | Segment | 2022 Net Sales (Billions) | Percentage of Total | | :--- | :--- | :--- | | Workplace Furnishings | $1.5 | 63% | | Residential Building Products | $0.9 | 37% | | **Total** | **$2.4** | **100%** | - The company's strategy is founded on its member-owner culture and executed through three pillars: a **Customer-First Mindset**, creating **Effortless Winning Experiences**, and **Owning Operational Excellence** through lean principles[32](index=32&type=chunk)[34](index=34&type=chunk) - The workplace furnishings market is divided into the contract channel and the SMB channel, where HNI is a **market leader**[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - HNI is the **market leader** in hearth products within the residential building products industry[28](index=28&type=chunk)[30](index=30&type=chunk) - In fiscal 2022, the Corporation's five largest customers accounted for approximately **18% of consolidated net sales**, with no single customer representing 10% or more[39](index=39&type=chunk) - As of December 31, 2022, the Corporation employed **approximately 7,300 people**, including about 200 temporary personnel[53](index=53&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces a range of industry, economic, strategic, operational, legal, and financing risks [Industry and Economic Risks](index=11&type=section&id=INDUSTRY%20AND%20ECONOMIC%20RISKS) Performance is susceptible to macroeconomic factors, intense competition, and international trade policy uncertainty - Sales are impacted by service-sector employment, corporate profits, office occupancy levels, housing starts, and interest rates[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - Both business segments operate in **highly competitive industries**, facing pressure on pricing that could impact profit margins[68](index=68&type=chunk)[70](index=70&type=chunk) - The company relies on a network of independent dealers, and the **loss of a significant number of these partners** could adversely affect sales[71](index=71&type=chunk)[72](index=72&type=chunk) - Increases in **raw material and commodity costs**, along with transportation challenges, could adversely affect profitability[80](index=80&type=chunk)[81](index=81&type=chunk) [Strategic and Operational Risks](index=13&type=section&id=STRATEGIC%20AND%20OPERATIONAL%20RISKS) Key risks include brand reputation, new product failures, pandemic effects, labor shortages, and M&A integration challenges - The **COVID-19 pandemic** has had and may continue to have adverse effects, including labor shortages and supply chain disruptions[86](index=86&type=chunk) - A continued **shortage of qualified labor** could negatively affect production capacity, increase wage costs, and reduce earnings[89](index=89&type=chunk) - The company's growth strategy includes acquisitions, which carry risks such as **failing to successfully integrate** acquired businesses[91](index=91&type=chunk)[93](index=93&type=chunk) - **Goodwill and other intangible assets** represent a significant portion of total assets, and an impairment charge would adversely affect financial results[94](index=94&type=chunk) [Legal and Regulatory Risks](index=18&type=section&id=LEGAL%20AND%20REGULATORY%20RISKS) The company is subject to environmental regulations, product defect liabilities, and intellectual property risks - The company is subject to extensive environmental laws, and compliance with more stringent future regulations could require **material expenditures**[111](index=111&type=chunk) - Costs related to **product defects**, including warranty, recall, and liability costs, could adversely affect profitability[112](index=112&type=chunk) - An inability to **protect intellectual property rights** or facing claims of infringement could harm the business[116](index=116&type=chunk)[118](index=118&type=chunk) [Financing Risks](index=19&type=section&id=FINANCING%20RISKS) Financing risks stem from restrictive debt covenants and the potential need for future capital - The company's debt agreements contain **restrictive covenants** that limit its operational flexibility, and failure to comply could result in default[119](index=119&type=chunk)[120](index=120&type=chunk) - Future capital requirements may necessitate raising additional funds, which **may not be available** or could be on unfavorable terms[122](index=122&type=chunk)[123](index=123&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[124](index=124&type=chunk) [Properties](index=20&type=section&id=Item%202.%20Properties) The Corporation operates approximately 8.4 million square feet of space across the US, India, and Mexico | Location | Workplace Furnishings Facilities | Residential Building Products Facilities | Owned (sq ft, thousands) | Leased (sq ft, thousands) | | :--- | :--- | :--- | :--- | :--- | | Muscatine, IA | 6 | — | 2,211 | — | | Lake City, MN | — | 2 | 342 | — | | Other U.S. | 9 | 6 | 1,966 | 1,556 | | Outside U.S. | 2 | — | 355 | 159 | [Legal Proceedings](index=20&type=section&id=Item%203.%20Legal%20Proceedings) Management does not expect liabilities from ordinary course legal proceedings to have a material adverse effect - The Corporation is involved in various disputes and legal proceedings but believes any resulting liabilities are **not expected to have a material adverse effect**[128](index=128&type=chunk) [Mine Safety Disclosures](index=20&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Corporation - Not applicable[129](index=129&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE, with a history of paying dividends and an active share repurchase program - The Corporation has paid dividends each quarter since 1955, with an average payout for the last three years of **75% of prior year earnings**[136](index=136&type=chunk) - As of December 31, 2022, **$234.0 million remained authorized** and available for share repurchases under its plan[138](index=138&type=chunk) [[Reserved]](index=23&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - Item 6 is reserved[139](index=139&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales grew 8.1% in 2022, driven by price realization, with net income significantly boosted by a subsidiary sale - In 2022, the Corporation achieved **solid gross and operating margin improvement** and strong earnings growth[142](index=142&type=chunk) - Consolidated net sales for 2022 increased **8.1% to $2.362 billion**, while net income rose to **$123.9 million**, including a **$49.4 million net gain** from the sale of the Lamex business[143](index=143&type=chunk)[144](index=144&type=chunk) - The company initiated cost savings actions estimated to save approximately **$30 million annually**[145](index=145&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Net sales increased 8.1%, operating income surged 81.7% boosted by the Lamex sale, and net income grew 107.1% | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,361.8M | $2,184.4M | 8.1% | | Gross Profit | $834.9M | $757.4M | 10.2% | | Operating Income | $155.2M | $85.4M | 81.7% | | Net Income | $123.9M | $59.8M | 107.1% | - The 2022 results include a pre-tax gain of **$50.4 million** from the divestiture of the Lamex subsidiary[152](index=152&type=chunk) - The effective tax rate for 2022 was **15.4%**, down from 23.6% in 2021, primarily due to tax benefits related to the Lamex sale[156](index=156&type=chunk) [Segment Analysis](index=28&type=section&id=Segment%20Analysis) Workplace Furnishings sales grew 3.6% while Residential Building Products sales increased 16.7% [Workplace Furnishings](index=28&type=section&id=Workplace%20Furnishings) Net sales increased 3.6% to $1.486 billion, with operating profit turning positive due to favorable price-cost | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,486.2M | $1,434.0M | 3.6% | | Operating Profit (Loss) | $3.4M | $(0.5)M | 734.6% | | Operating Profit % | 0.2% | (0.0)% | +20 bps | [Residential Building Products](index=28&type=section&id=Residential%20Building%20Products) Net sales grew 16.7% to $875.6 million, driven by price realization and volume growth | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $875.6M | $750.4M | 16.7% | | Operating Profit | $158.7M | $141.9M | 11.9% | | Operating Profit % | 18.1% | 18.9% | -80 bps | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow decreased due to working capital changes, while the company maintained a solid balance sheet - Cash from operating activities decreased to **$81.2 million** in 2022 from $131.6 million in 2021, primarily due to a **$72.7 million use of cash** from changes in working capital[164](index=164&type=chunk) - Capital expenditures were **$68.4 million** in 2022, with **$60 million to $70 million** anticipated for 2023[166](index=166&type=chunk) - In Q2 2022, the company amended its revolving credit facility, extending the maturity to June 2027 with a maximum borrowing capacity of **$400 million**[167](index=167&type=chunk) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Dividends per common share | $1.270 | $1.235 | [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Corporation is primarily exposed to interest rate risk on variable-rate debt and price risk for raw materials - The company is subject to interest rate risk from its **$89 million of variable-rate debt** outstanding as of December 31, 2022[188](index=188&type=chunk) - The Corporation is exposed to price risk for key materials such as **steel, plastics, textiles, and wood particleboard**[191](index=191&type=chunk) [Financial Statements and Supplementary Data](index=32&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the financial statements listed under Item 15 - The financial statements are filed as part of this report under Item 15(a)(1) and (2)[192](index=192&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=32&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[193](index=193&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures are effective as of year-end 2022 - As of December 31, 2022, the CEO and CFO concluded that the Corporation's **disclosure controls and procedures are effective**[197](index=197&type=chunk) - **No material changes** in internal control over financial reporting occurred during the fourth quarter of 2022[198](index=198&type=chunk) [Other Information](index=34&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[200](index=200&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspection](index=34&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspection) This item is not applicable to the Corporation - Not applicable[201](index=201&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=35&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Required information is incorporated by reference from the company's 2023 Definitive Proxy Statement - Information required by this item is **incorporated by reference** from the Corporation's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 17, 2023[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) [Executive Compensation](index=35&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the 2023 Proxy Statement - Information required by this item is **incorporated by reference** from the Corporation's 2023 Proxy Statement[206](index=206&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=35&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information regarding security ownership is incorporated by reference from the 2023 Proxy Statement - Information required by this item is **incorporated by reference** from the Corporation's 2023 Proxy Statement[207](index=207&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=35&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related transactions and director independence is incorporated by reference from the 2023 Proxy Statement - Information required by this item is **incorporated by reference** from the Corporation's 2023 Proxy Statement[208](index=208&type=chunk) [Principal Accounting Fees and Services](index=35&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding accounting fees is incorporated by reference from the 2023 Proxy Statement - The Corporation's independent registered public accounting firm is **KPMG LLP**[209](index=209&type=chunk) - Information regarding audit and non-audit fees is **incorporated by reference** from the 2023 Proxy Statement[210](index=210&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=36&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the report - The consolidated financial statements, including the Report of Independent Registered Public Accounting Firm and Notes to Consolidated Financial Statements, are **filed as part of this report**[212](index=212&type=chunk) [Form 10-K Summary](index=38&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary for its Form 10-K - None[216](index=216&type=chunk) Financial Statements and Notes [Financial Statements](index=43&type=section&id=Financial%20Statements) The statements show 2022 net sales of $2.36 billion, net income of $123.9 million, and total assets of $1.41 billion | (In millions, except per share data) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net sales | $2,361.8 | $2,184.4 | $1,955.4 | | Operating income | $155.2 | $85.4 | $61.4 | | Net income attributable to HNI Corporation | $123.9 | $59.8 | $41.9 | | Net income per common share – diluted | $2.94 | $1.36 | $0.98 | | (In millions) | Dec 31, 2022 | Jan 1, 2022 | | :--- | :--- | :--- | | Total Current Assets | $469.2 | $523.5 | | Total Assets | $1,414.5 | $1,497.9 | | Total Current Liabilities | $395.1 | $506.4 | | Total Liabilities | $797.7 | $907.9 | | Total Equity | $616.8 | $590.0 | [Notes to Consolidated Financial Statements](index=48&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including LIFO inventory valuation, goodwill testing, and revenue recognition [Note 2. Summary of Significant Accounting Policies](index=48&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) Key policies include LIFO for inventories, annual impairment testing, and expensing R&D costs as incurred - The majority of inventories (**91% in 2022**) are valued using the last-in, first-out (LIFO) method; if FIFO had been used, inventories would have been **$53.7 million higher**[269](index=269&type=chunk) - The company is primarily self-insured for various liabilities, with total estimated liabilities of **$23.8 million** as of December 31, 2022[294](index=294&type=chunk) | Expense (in millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Research and development costs | $47.8 | $39.4 | $35.3 | | Freight expense | $142.0 | $118.2 | $98.4 | [Note 3. Revenue from Contracts with Customers](index=55&type=section&id=Note%203.%20Revenue%20from%20Contracts%20with%20Customers) This note disaggregates revenue by major product category for each business segment | Revenue (in millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Workplace Furnishings** | | | | | Systems and storage | $889.6 | $833.2 | $741.2 | | Seating | $473.7 | $481.7 | $489.3 | | Other | $123.0 | $119.0 | $135.2 | | **Total Workplace Furnishings** | **$1,486.2** | **$1,434.0** | **$1,365.7** | | **Residential Building Products** | **$875.6** | **$750.4** | **$589.7** | | **Total Net Sales** | **$2,361.8** | **$2,184.4** | **$1,955.4** | [Note 4. Acquisitions and Divestitures](index=56&type=section&id=Note%204.%20Acquisitions%20and%20Divestitures) The company sold its Lamex business for ~$75 million and made several acquisitions in residential building products - In July 2022, the Corporation sold its Lamex office furniture business for approximately **$75 million**, recording a pre-tax gain of **$50.4 million**[303](index=303&type=chunk) - The company acquired Dickerson Hearth Products for **~$8 million** in June 2022, The Outdoor GreatRoom Company for **~$15 million** in December 2021, and Trinity Hearth & Home for **~$31 million** in October 2021[305](index=305&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk) [Note 6. Goodwill and Other Intangible Assets](index=58&type=section&id=Note%206.%20Goodwill%20and%20Other%20Intangible%20Assets) The company held $305.9 million in goodwill at year-end, with no material impairments identified in 2022 | (in millions) | Workplace Furnishings | Residential Building Products | Total | | :--- | :--- | :--- | :--- | | Net Goodwill Balance as of Jan 1, 2022 | $83.6 | $213.7 | $297.3 | | Goodwill acquired (disposed) / adjustments | $(13.6) | $8.6 | $(5.0) | | Accumulated impairment losses disposed | $13.6 | — | $13.6 | | **Net Goodwill Balance as of Dec 31, 2022** | **$83.6** | **$222.3** | **$305.9** | - The annual impairment testing for goodwill and indefinite-lived intangible assets in Q4 2022 resulted in **no identified impairments**[321](index=321&type=chunk)[323](index=323&type=chunk) [Note 7. Debt](index=62&type=section&id=Note%207.%20Debt) Total debt was $190.1 million, consisting of a revolving credit facility and fixed-rate notes | Debt Component (as of Dec 31, 2022) | Amount (in millions) | Interest Rate/Maturity | | :--- | :--- | :--- | | Revolving credit facility | $89.1 | Variable (5.6%), due 2027 | | Fixed rate notes | $50.0 | 4.22%, due 2025 | | Fixed rate notes | $50.0 | 4.40%, due 2028 | | Other | $1.3 | N/A | | **Total Debt** | **$190.4** | | - The company's **$400 million** revolving credit facility matures in June 2027, with **$311 million** of borrowing capacity available at year-end[326](index=326&type=chunk)[327](index=327&type=chunk) [Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity](index=66&type=section&id=Note%2010.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)%20and%20Shareholders'%20Equity) This note details changes in shareholders' equity, the stock repurchase program, and dividends paid | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Shares repurchased (millions) | 1.7 | 1.5 | 0.2 | | Average price per share | $38.11 | $39.89 | $29.83 | | Cash purchase price (millions) | $(63.9) | $(60.4) | $(6.4) | | Year | Dividends per common share | | :--- | :--- | | 2022 | $1.27 | | 2021 | $1.24 | | 2020 | $1.22 | [Note 11. Stock-Based Compensation](index=69&type=section&id=Note%2011.%20Stock-Based%20Compensation) Total stock-based compensation cost was $9.0 million in 2022, with no stock options granted | (in millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Compensation cost | $9.0 | $12.9 | $7.8 | - **No stock options** were granted in 2022, 2021, or 2020[364](index=364&type=chunk) - As of December 31, 2022, there was **$4.5 million** of unrecognized compensation cost related to RSUs and **$2.3 million** related to PSUs[360](index=360&type=chunk)[361](index=361&type=chunk) [Note 16. Reportable Segment Information](index=76&type=section&id=Note%2016.%20Reportable%20Segment%20Information) This note provides key financial data for the Workplace Furnishings and Residential Building Products segments | (in millions) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Net Sales** | | | | | Workplace furnishings | $1,486.2 | $1,434.0 | $1,365.7 | | Residential building products | $875.6 | $750.4 | $589.7 | | **Income (Loss) Before Income Taxes** | | | | | Workplace furnishings | $3.4 | $(0.5) | $(5.0) | | Residential building products | $158.7 | $141.9 | $109.3 | | **Identifiable Assets** | | | | | Workplace furnishings | $761.5 | $809.0 | $762.8 | | Residential building products | $493.0 | $479.5 | $381.6 |

HNI Corporation (NYSE:HNI) Q3 2022 Earnings Conference Call October 24, 2022 11:00 AM ET Company Participants Matthew McCall - Vice President, Investor Relations and Corporate Development Jeffrey Lorenger - Chairman, President and CEO Marshall Bridges - SVP and CFO Conference Call Participants Reuben Garner - The Benchmark Company Rex Henderson - Water Tower Research Gregory Burns - Sidoti & Company Steven Ramsey - Thompson Research Group Operator Good morning. My name is Chris, and I will be your conferenc ...

HNI Corporation (NYSE:HNI) Q2 2022 Earnings Conference Call July 28, 2022 11:00 AM ET Company Participants Matthew McCall - Vice President, Investor Relations and Corporate Development Jeffrey Lorenger - Chairman, President and CEO Marshall Bridges - SVP and CFO Conference Call Participants Reuben Garner - Benchmark Company Gregory Burns - Sidoti Rex Henderson - Water Tower Research Steven Ramsey - Thompson Research Group Operator Good morning. My name is Emma, and I will be your conference operator today. ...

HNI Corporation Investor Presentation HNI Forward-Looking Statements This presentation contains "forward-looking" statements based on current expectations regarding future plans, events, outlook, objectives, financial performance, expectations for sales growth, and earnings per diluted share (GAAP and non-GAAP), including statements regarding the expected effects on the Corporation's business, financial condition and results of operations from the COVID-19 pandemic. Forward-looking statements can be identif ...

Financial Data and Key Metrics Changes - The company reported a positive price/cost impact of $2 million in Q1 2022, with input costs increasing by approximately $60 million compared to the prior year [37] - The outlook for price/cost improvement is expected to yield a net benefit to operating profit of $45 million to $55 million for the year [22][47] Business Line Data and Key Metrics Changes - Revenue from residential building products grew 13% organically, with incoming orders up 25% year-over-year [13][14] - Workplace furnishings revenue increased nearly 25% year-over-year, with a backlog up more than 50% from the same period last year [16][17] Market Data and Key Metrics Changes - The company noted strong demand in both new construction and remodel/retrofit channels, despite concerns over rising mortgage rates and affordability [14][15] - The backlog in residential building products is nearly double compared to last year, indicating strong market demand [77] Company Strategy and Development Direction - The company is focused on improving long-term profitability through margin expansion in workplace furnishings and strong top-line growth in residential building products [27] - Strategic initiatives include opening a new seating facility in Mexico and enhancing labor capacity to support volume growth [12][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2022, citing strong market demand and effective pricing actions to counter inflationary pressures [6][11] - The company expects to maintain a strong balance sheet and generate significant free cash flow for investments and shareholder returns [25] Other Important Information - The company anticipates that approximately 70% of its full-year profit will be generated in the second half of the year, driven by pricing improvements and capacity additions [23] Q&A Session Summary Question: Insights on workplace furnishings and larger customers - Management noted that bid activity is nearly double compared to the fourth quarter, with strong activity from small to midsize customers and improving trends in larger contracts [30][31] Question: Impact of affordability on residential building products - Management acknowledged concerns over affordability but emphasized strong backlog visibility and ongoing strength in the remodel market [34][50] Question: Clarification on price/cost dynamics - Management provided details on the positive price/cost impact and expected future improvements, with a significant portion benefiting workplace furnishings [38][47] Question: Trends in order rates and backlogs - Management confirmed that order rates remain solid, with a notable backlog in both workplace furnishings and residential building products [58][77] Question: Long-term impact of the new facility in Mexico - Management indicated that the facility is a capacity play and will contribute to shorter supply chains and improved inventory management over the next few years [71][73]

HNI Corporation (NYSE:HNI) Q4 2021 Earnings Conference Call February 28, 2022 11:00 AM ET Company Participants Matt McCall - VP, IR and Corporate Development Jeffrey Lorenger - Chairman, President and CEO Marshall Bridges - SVP and CFO Conference Call Participants Reuben Garner - The Benchmark Company Budd Bugatch - Water Tower Research Greg Burns - Sidoti & Company Steven Ramsey - Thompson Research Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this pa ...