HNI (US:HNI)2022-02-28 18:09Financial Data and Key Metrics Changes - In 2021, the Workplace Furnishings segment's profit was negatively impacted by over $80 million due to rapid input cost inflation and labor constraints, resulting in a decrease of approximately 550 basis points in segment operating margin [9][12] - The Residential Building Products segment saw revenue growth of over 27% and operating profit increased by 30% to $142 million in 2021 [13] Business Line Data and Key Metrics Changes - Workplace Furnishings experienced significant challenges in 2021, but actions taken are expected to improve profitability, with production anticipated to increase by 10% to 15% in 2022 [11] - The Residential Building Products segment is expected to continue strong growth in 2022, driven by new home construction and remodeling activities, with elevated backlog levels entering the year [14][15] Market Data and Key Metrics Changes - The company noted that while large urban markets have been slower to reopen, they are beginning to show signs of increased activity, presenting opportunities for growth [12] - The company reported that orders in the Residential Building Products segment are up 20% year-to-date, indicating strong demand despite mixed housing indicators [41] Company Strategy and Development Direction - The company is focused on improving long-term profitability through pricing actions, addressing labor constraints, and restructuring initiatives [6][10] - Strategic acquisitions, such as The Outdoor GreatRoom Company and Trinity Hearth & Home, are aimed at expanding market presence and capitalizing on growth trends in outdoor living and hearth products [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, expecting strong revenue growth and profit improvement driven by pricing actions and added capacity [22] - The company anticipates that the first quarter of 2022 will see profits below the previous year due to ongoing supply chain and labor challenges, but expects strong profit growth for the full year [26][27] Other Important Information - The company celebrated its 75th anniversary, emphasizing its commitment to customer focus and community support as it moves into its next 75 years [29][30] - The company has paid $54 million in dividends in 2021 and has a remaining share repurchase authorization of approximately $100 million [19][20] Q&A Session Summary Question: Order rates in Workplace Furnishings - Management noted that while there was some softness due to Omicron, orders are up 10% year-over-year, with an elevated backlog encouraging optimism [36][37] Question: Price-cost pressure in Workplace - Management expects price-cost to be neutral in the first half of 2022, with a recovery of $40 million to $50 million of the previous year's negative price-cost gap anticipated in the second half [39] Question: Visibility in the Hearth segment - Management indicated that the Hearth segment has an elevated backlog and year-to-date orders are up 20%, with confidence in growth driven by specific initiatives [41] Question: Restructuring of the online channel - The restructuring was focused on the OFM side, exiting low-margin segments to concentrate on more profitable areas like gaming [62] Question: Operating margins in Workplace - Management expects to recover some margin in 2022 but anticipates that full recovery of the previous year's pressures will take longer [63]