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Dec 30, 2023
HNI Q4 2023 Earnings Report
HNI Corporation reported strong earnings growth and margin expansion in Workplace Furnishings and Residential Building Products, with the Kimball International acquisition proving accretive and synergy expectations moving higher.
Key Takeaways
HNI Corporation reported a 19 percent increase in fourth-quarter sales to $679.8 million and net income of $22.7 million. GAAP earnings per share were $0.48, and non-GAAP earnings per share were $0.98. The company saw margin expansion in Workplace Furnishings and Residential Building Products, with the Kimball International acquisition contributing positively to earnings.
GAAP earnings per share increased 23 percent year-over-year.
Workplace Furnishings segment GAAP operating margin expanded 410 basis points year-over-year.
Kimball International added approximately $16 million to fourth quarter operating profit and an estimated $0.07 to fourth quarter non-GAAP EPS.
Residential Building Products segment GAAP operating margin expanded 310 basis points year-over-year to 22.3 percent.
HNI
HNI
HNI Revenue by Segment
Revenue by Segment
Workplace Furnishings Revenue
CapyFin.comResidential Building Products Revenue
CapyFin.com Forward Guidance
2024 non-GAAP earnings per share are expected to increase solidly year-over-year primarily driven by continued margin expansion in Workplace Furnishings and accretion from Kimball International.
Positive Outlook
- 2024 organic revenue to grow at a low-single-digit rate in both Workplace Furnishings and Residential Building Products.
- KII to add $215 to $225 million of incremental revenue to 2024 and be solidly accretive to earnings.
- Further reduce leverage and improve its already strong balance sheet during 2024 through modest debt reduction and continued EBITDA growth.
- Low leverage and consistent cash flow generation will provide the Corporation with substantial capacity for capital deployment.
- First quarter non-GAAP earnings per share are expected to increase year-over-year, with margin expansion and accretion from Kimball International more than offsetting macro-driven top line pressure.
Challenges Ahead
- For Workplace Furnishings, this outlook assumes demand conditions remain generally in-line with those experienced in the second-half 2023.
- In Residential Building Products, the Corporation expects growth in new construction to be partially offset by continued declines in remodel/retrofit.
- First quarter Workplace Furnishings organic revenue to be down in the low-single digits versus the same quarter of 2023.
- In Residential Building Products, the Corporation expects first quarter revenue to be down in the low- to mid-teens year-over-year.
- This primarily reflects the impact from unwinding the elevated remodel-retrofit backlog in the year-ago period, partially offset by forecasted growth in new construction.
Revenue & Expenses
Visualization of income flow from segment revenue to net income