HNI (US:HNI)2022-04-29 00:03Financial 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]