Knoll (KNL, Financial) is an internationally recognized brand whose designs inspire, evolve and endure. Its portfolio has an array of products like furniture, textile, leather and accessories brands, including Knoll, KnollStudio, KnollTextiles, KnollExtra, Spinneybeck, FilzFelt, Edelman Leather and Holly Hunt.
The company is going to continue its momentum. Adding this company to their portfolios, investors may reap great benefits. 2015 was a good year for this company. It increased its adjusted EBITDA by 25% and paid down $36 million of debt, resulting in a reduction in debt leverage from 2.41 to 1.67 times EBITDA while increasing dividends by 25%.
It has a strong balance sheet. It reported strong fourth-quarter growth and margin expansion. Its revenue is going to get even better with time. The company fared well in most of the segments with improved operating margins. The company's investments are going to deliver in the near future.
Fourth-quarter results
Net sales were $305.7 million for the fourth quarter (an increase of 6.7%, or 8.4% on a constant currency basis, from the prior-year quarter).
Operating profit for the quarter increased to $21.8 million, or 9.2% ($20 million during the prior-year quarter).
Adjusted operating profit for the quarter was $33.9 million (an increase of $6.2 million, or 22.4%, from the prior-year quarter).
Net earnings for the fourth quarter of 2015 were $13.4 million (an increase of 8.9% from the prior-year quarter).
Diluted earnings per share were 28 cents for the quarter (26 cents during the prior-year quarter). Adjusted diluted earnings per share were 43 cents for the quarter (35 cents in the prior-year quarter).
Gross profit for the fourth quarter of 2015 was $114.4 million (an increase of $11.5 million, or 11.2%, from the prior-year quarter).
During the fourth quarter of 2015, gross margin increased to 37.4% (35.9% in the prior-year quarter).
Adjusted gross profit for the fourth quarter of 2015 was $115.3 million (an increase of $12.4 million, or 12.1%, from the prior-year quarter).
During the fourth quarter of 2015, adjusted gross margin improved 180 basis points from 35.9% to 37.7%.
Total operating expenses were $92.6 million, or 30.3% of net sales ($82.9 million, or 28.9% of net sales, during the prior-year quarter).
During the fourth quarter of 2015, other income was $500,000 ($3.2 million during the prior-year quarter).
Capex for the fourth quarter of 2015 was $9.8 million ($9.6 million in the prior-year quarter).
During the fourth quarter of 2015, the company paid a quarterly dividend of $7.2 million, or 15 cents per share ($5.7 million, or 12 cents per share, in the prior-year quarter).
(Source: Company website)
Strong attributes of fourth quarter
- Improved profitability.
- Reduced debt levels.
Focus
The company is currently focused on the following:
- It is on track to deliver the upper end of its full-year goal of improving operating margins by 100 to 200 basis points.
- Quality.
- Innovation.
- Maximize office segment profitability and growth.
- Build a responsive and efficient customer-centric service and technology culture and infrastructure across businesses.
On a concluding note
CEO Andrew Cogan commented, "We are very pleased to be reporting the highest level of quarterly operating profits since 2008."
A long history of collaborations, with pioneering modernists to bold contemporary designers, defines not only the past but the future of Knoll through active, recent and future partnerships with Antenna Design, Formway Design, Don Chadwick, David Adjaye and Rem Koolhaas.
A recipient of the National Design Award for Corporate and Institutional Achievement from the Smithsonian's Cooper-Hewitt, National Design Museum, Knoll is aligned with the U.S. Green Building Council and the Canadian Green Building Council and can help organizations achieve Leadership in Energy and Environmental Design (LEED) workplace certification.
The company maintained a strong and flexible balance sheet. The company has a strategy of diversifying its sources of revenue and profitability across workplace and high design residential setting is delivering the kind of improved profitability and double-digit margins results.
In 2014, it achieved greater than 20% top-line growth with sales of $1,050,300,000, and nearly 10% organic growth, outpacing its markets. The company is trying to position itself as the go-to resource for high-design workplaces and homes, including the commercial contract, decorator to the trade and direct-to-consumer markets.
The company has a new product pipeline full of exciting and design-driven innovations. It is committed to a multiyear plan of increasing operating margins by 80 to 100 basis points annually.
Disclosure: I do not hold any position in the company.
