HNI (HNI) - 2025 Q2 - Quarterly Results

HNI Corporation Second Quarter 2025 Results Financial Highlights HNI Corporation reported strong Q2 2025 growth with net sales up 7.0% to $667.1 million and GAAP diluted EPS rising 36% to $1.02, driven by strategic initiatives Q2 2025 Key Financial Metrics (YoY) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $667.1M | $623.7M | +7.0% | | GAAP Diluted EPS | $1.02 | $0.75 | +36.0% | | Non-GAAP Diluted EPS | $1.11 | $0.79 | +40.5% | | GAAP Operating Margin | 10.2% | 8.6% | +160 bps | | Non-GAAP Operating Margin | 11.0% | 9.0% | +200 bps | - Earnings growth visibility is elevated through 2026, with two key initiatives—KII acquisition synergies and the Mexico facility ramp-up—expected to contribute an additional $0.50 to $0.60 of EPS over the next 18 months, having already added approximately $0.24 of EPS benefit in the first half of 2025[4] - The company maintained a strong balance sheet with gross debt leverage at 1.4x and deployed nearly $40 million for stock repurchases in the second quarter while continuing its quarterly dividend[4][5] - Recent demand activity supports the 2025 outlook, with Workplace Furnishings contract orders up 5% YoY and total segment orders growing 1% organically[4] Segment Performance HNI's segments, Workplace Furnishings and Residential Building Products, both achieved strong Q2 sales growth and operating margin expansion Workplace Furnishings The Workplace Furnishings segment achieved strong net sales growth and significant GAAP operating margin expansion, driven by improved productivity and higher sales volume Workplace Furnishings Q2 Financial Performance (YoY) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $516.0M | $480.2M | +7.4% | | GAAP Operating Income | $65.8M | $54.3M | +21.1% | | GAAP Operating Margin | 12.8% | 11.3% | +150 bps | | Non-GAAP Operating Margin | 13.1% | 11.9% | +120 bps | - Organic net sales for the segment increased by 8.5% year-over-year, fueled by growth across all major brands, including those focused on small-and-medium-sized businesses and contract brands[6][16] Residential Building Products The Residential Building Products segment reported increased net sales and substantial operating margin expansion, driven by growth in both new construction and remodel-retrofit channels Residential Building Products Q2 Financial Performance (YoY) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $151.1M | $143.5M | +5.3% | | GAAP Operating Income | $23.7M | $19.8M | +19.9% | | GAAP Operating Margin | 15.7% | 13.8% | +190 bps | - Sales growth was strong in both key channels, with new construction up more than 4% and remodel-retrofit growing over 7% year-over-year[7] - Operating margin expansion was driven by favorable price-cost and higher net productivity, which were partially offset by unfavorable product mix and higher variable compensation[17] Business Outlook HNI Corporation modestly improved its full-year 2025 outlook, projecting mid-single-digit net sales growth and double-digit EPS growth, while maintaining strategic capital deployment priorities - Q3 2025 Outlook: - Workplace Furnishings: Net sales to increase at a low-single-digit rate YoY - Residential Building Products: Net sales to increase at a low-single-digit rate YoY - Non-GAAP diluted EPS: Expected to increase slightly from 2024 levels[21] - Full Year 2025 Outlook: - Workplace Furnishings: Mid-single-digit net sales growth (excluding extra week) - Residential Building Products: Mid-single-digit net sales growth (excluding extra week) - Consolidated: Double-digit percent EPS growth expected[21][22] - The company expects to offset the majority of any tariff-driven pressures for the full year 2025[21] - Capital deployment priorities are reinvesting in the business, funding dividends, pursuing share buybacks, and exploring M&A opportunities, supported by low leverage and strong cash flow[21] Financial Statements and Reconciliations Condensed Consolidated Statements of Comprehensive Income HNI's Q2 2025 comprehensive income statement shows increased net sales, operating income, and net income attributable to HNI Corporation compared to the prior year Q2 2025 Income Statement Summary (in millions, except EPS) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net sales | $667.1 | $623.7 | | Gross profit | $286.2 | $261.3 | | Operating income | $68.2 | $53.4 | | Net income attributable to HNI | $48.2 | $36.0 | | Diluted EPS | $1.02 | $0.75 | Condensed Consolidated Balance Sheets As of June 28, 2025, HNI's balance sheet reflects increased total assets and liabilities, primarily due to higher long-term debt, impacting shareholders' equity Balance Sheet Summary (in millions) | Account | June 28, 2025 | Dec 28, 2024 | | :--- | :--- | :--- | | Total Current Assets | $597.6 | $524.5 | | Total Assets | $1,912.0 | $1,875.1 | | Total Current Liabilities | $410.7 | $477.5 | | Long-Term Debt | $444.4 | $294.3 | | Total Liabilities | $1,101.0 | $1,034.7 | | Total HNI Shareholders' Equity | $811.0 | $840.1 | Condensed Consolidated Statements of Cash Flows For the six months ended June 28, 2025, HNI generated positive net cash from operating activities, with net outflows from investing and financing activities Six-Month Cash Flow Summary (in millions) | Activity | Six Months Ended June 28, 2025 | | :--- | :--- | | Net cash from operating activities | $43.7 | | Net cash from investing activities | $(18.4) | | Net cash from financing activities | $(15.8) | | Net increase in cash | $9.5 | | Cash at end of period | $32.0 | Non-GAAP Financial Measures This section reconciles GAAP to non-GAAP financial measures, providing additional insight into HNI's performance by adjusting for specific non-recurring items in Q2 2025 Q2 2025 GAAP to Non-GAAP EPS Reconciliation | Item | Per Share Amount | | :--- | :--- | | As reported (GAAP) EPS | $1.02 | | Restructuring charges | $0.03 | | Loss on divestiture of HNI India | $0.01 | | Pension settlement | $0.04 | | Results (non-GAAP) EPS | $1.11 | - Organic net sales, a non-GAAP measure, increased 7.7% year-over-year for the consolidated company, calculated by excluding the impact of the HNI India divestiture[11][42] - Non-GAAP adjustments for the quarter excluded restructuring charges, costs from factory consolidation, the gain on a facility sale, a pension plan settlement payout, and the loss on the sale of the HNI India business[40]