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Jul 02, 2022
HNI Q2 2022 Earnings Report
HNI Corporation reported strong earnings growth in Q2 2022, driven by solid organic volume growth and positive price-cost.
Key Takeaways
HNI Corporation announced sales of $621.7 million and net income of $30.3 million for the second quarter ended July 2, 2022. The company experienced strong earnings growth, driven by solid organic volume growth and positive price-cost. They also divested Lamex and continued investment and capital deployment.
Delivered 23 percent operating income growth.
Increased non-GAAP earnings per share 30 percent year-over-year.
Sold its China- and Hong Kong-based Lamex office furniture business for $75 million.
Returned over $53 million to its shareholders in the form of dividends and share repurchases.
HNI
HNI
HNI Revenue by Segment
Revenue by Segment
Workplace Furnishings Revenue
CapyFin.comResidential Building Products Revenue
CapyFin.com Forward Guidance
Given signs that broader macroeconomic and recession concerns are negatively impacting demand in key markets, the Corporation is lowering its 2022 outlook. Compared to its previous outlook, the Corporation now expects lower second half profit expansion due to slowing volume growth and the divestiture of Lamex, partially offset by improved price-cost and reduced expenses. Despite the increasingly challenging environment, the Corporation still expects strong revenue and profit growth compared to the prior year.
Positive Outlook
- Pricing benefits are expected to drive third quarter revenue growth rates in the high single-digits to low-teens.
- Low leverage and continued free cash flow generation are expected to provide ample capacity for continued investment, M&A, dividend payments, and share buyback activity.
- Pricing benefits, inorganic revenue from acquisitions, and continued benefits from multiple growth initiatives are expected to fuel growth rates in the high teens for 2022 in Residential Building Products.
- The Corporation expects third quarter earnings to improve sequentially from second quarter 2022 levels and be above prior year results primarily due to favorable price-cost.
- The Corporation expects strong earnings growth in 2022 while maintaining a strong balance sheet.
Challenges Ahead
- Slower volume growth and the Lamex divestiture are driving the reduction in Workplace Furnishings 2022 revenue.
- The Corporation now expects lower second half profit expansion due to slowing volume growth and the divestiture of Lamex.
- Broader macroeconomic and recession concerns are negatively impacting demand in key markets.
- Earnings seasonality is now expected to be less weighted to the back half than in recent years when approximately 70 percent of total profit was generated during the second half.
- Segment growth is now expected to be softer in the second half of 2022 in Residential Building Products.
Revenue & Expenses
Visualization of income flow from segment revenue to net income