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Sep 30, 2023
HNI Q3 2023 Earnings Report
HNI Corporation reported earnings for the third quarter of fiscal year 2023, with sales of $711.6 million and net income of $37.8 million.
Key Takeaways
HNI Corporation's Q3 2023 results showed a mix of growth and challenges. While consolidated net sales increased by 18.8% to $711.6 million, organic sales decreased by 7.1%. The acquisition of Kimball International contributed significantly to sales growth. Profitability improved, with gross profit margin expanding by 510 basis points. The company is focused on expanding margins in Workplace Furnishings and driving long-term revenue growth in Residential Building Products.
Strong profit growth with non-GAAP earnings per diluted share growing 31% year-over-year despite a 7.1% organic revenue decline.
Substantial margin expansion in Workplace Furnishings, with segment GAAP operating margin expanding 730 basis points year-over-year to 8.8%.
Kimball International (KII) was accretive, adding approximately $15.2 million in GAAP operating profit.
Residential Building Products margin remained resilient at 17.7% despite a 21.8% decrease in net sales, supported by cost reduction actions.
HNI
HNI
HNI Revenue by Segment
Revenue by Segment
Workplace Furnishings Revenue
CapyFin.comResidential Building Products Revenue
CapyFin.com Forward Guidance
Fourth quarter non-GAAP earnings per share are expected to increase solidly year-over-year and be modestly below just-reported third quarter of 2023 results, consistent with normal seasonal patterns.
Positive Outlook
- Workplace Furnishings segment organic revenue to be approximately flat versus the same quarter of 2022.
- KII is expected to add $140 to $150 million of revenue to fourth quarter results.
- KII expected to be accretive to non-GAAP EPS, consistent with third quarter results.
- Expect continued year-over-year profit and margin improvement in the Workplace Furnishings segment.
- Moderating year-over-year revenue declines in Residential Building Products.
Challenges Ahead
- Residential Building Products revenue expected to be down year-over-year at a rate in the high-single digit to low-teens range.
- Demand environment remains dynamic.
- Near term remains uncertain for Residential Building Products.
- Unspecified risks and uncertainties could affect actual results.
- Normal seasonal patterns expected to impact Q4 results.
Revenue & Expenses
Visualization of income flow from segment revenue to net income