HNI (HNI) - 2024 Q4 - Annual Results

Financial Performance - HNI Corporation reported full-year net sales of $2.526 billion, a 3.8% increase from the previous year, with fourth-quarter net sales at$ 642.5 million, down 5.5% year-over-year[3][12][18]. - Full-year GAAP EPS reached $2.88, a 164% increase year-over-year, while non-GAAP EPS was$ 3.06, up 15.5% from the prior year[5][14][19]. - Operating cash flow exceeded $225 million in 2024, with a year-ending gross debt leverage ratio of 1.1x, indicating a strong balance sheet[5][6]. - Net income attributable to HNI Corporation for the twelve months ended December 28, 2024, was$ 139.5 million, compared to $49.2 million in 2023, marking a 183.5% increase[42]. - The company reported a net income of$ 38.3 million for the three months ended December 28, 2024, resulting in an earnings per share (EPS) of $0.79, compared to$ 0.63 in the same period last year[55]. - For the twelve months ended December 28, 2024, the consolidated net income was $139.5 million, with an EPS of$ 2.88, and a gross profit margin of 40.9%[60]. Segment Performance - The Workplace Furnishings segment saw an 8.5% increase in full-year net sales to $1.888 billion, with a significant operating income growth of 146%[20]. - Residential Building Products net sales decreased 8.0% year-over-year to$ 638.4 million, with remodel-retrofit sales declining at a higher rate than new construction[31]. - Operating income for Workplace Furnishings was $169.1 million, with an operating margin of 9.0%, an improvement of 510 basis points year-over-year[28]. - Operating profit margin for Residential Building Products increased 60 basis points to 17.4%, driven by improved net productivity and favorable price-cost dynamics[31]. - Non-GAAP operating income for Residential Building Products decreased by 5.0% to$ 111.9 million compared to $117.8 million for the previous year[67]. Cost Management and Efficiency - The consolidated operating income margin expanded by 450 basis points on a GAAP basis and 130 basis points on a non-GAAP basis compared to 2023, driven by profit transformation initiatives and synergy benefits[5][14]. - The gross profit margin for the full year improved by 190 basis points to 40.9%, driven by enhanced productivity and favorable price-cost dynamics[14][18]. - The company incurred restructuring and impairment charges of$ 2.5 million for the three months ended December 28, 2024, significantly lower than $31.4 million in the same period last year[50]. - Restructuring and impairment charges for the year totaled$ 6.2 million, significantly lower than the previous year's $44.8 million, reflecting improved operational efficiency[18]. - The company is focusing on cost reduction initiatives, with a noted impact of$ 0.1 million in the Legacy Workplace segment[67]. Future Outlook - The company anticipates a return to net sales growth in 2025, supported by encouraging order rates and backlog levels in both segments[5][12]. - The Corporation anticipates double-digit EPS growth in 2025, driven by synergies from the Kimball International acquisition and increased profits from net sales growth[31]. - The Corporation expects year-over-year net sales growth in the low-to-mid single digits for both segments in 2025, with improving growth rates as the year progresses[31]. - For Q1 2025, Workplace Furnishings net sales are expected to decrease at a low-to-mid single-digit rate year-over-year, while Residential Building Products are projected to increase mid-single digits[31]. Shareholder Returns - The company maintained its quarterly dividend while accelerating stock repurchase activity, with total buybacks and dividends paid amounting to $129 million for the year[5][6]. - The balance sheet remains strong, with low leverage and substantial capacity for capital deployment, focusing on reinvestment, dividends, share buybacks, and M&A opportunities[31].