HNI Corp. (NYSE:HNI) filed Quarterly Report for the period ended 2009-10-03.
HNI Corp has two reportable core operating segments: office furniture and hearth products. They are the second largest office furniture manufacturer in the United States and the nation's leading manufacturer and marketer of gas- and wood-burning fireplaces. Hni Corp. has a market cap of $1.21 billion; its shares were traded at around $26.97 with a P/E ratio of 36 and P/S ratio of 0.5. The dividend yield of Hni Corp. stocks is 3.2%. Hni Corp. had an annual average earning growth of 5.7% over the past 10 years.
Highlight of Business Operations:As a result of challenging market conditions and the Corporation's ongoing business simplification and cost reduction strategies, management made the decision to close an office furniture manufacturing facility located in Owensboro, Kentucky and consolidate production into existing office furniture manufacturing facilities. In connection with the closure of the Owensboro facility the Corporation recorded $0.5 million of severance costs for approximately 30 non-bargaining unit members and $1.7 million of costs to withdraw from the multi-employer pension plan during the quarter ended October 3, 2009. The Corporation anticipates the closure and consolidation of this facility will be substantially complete by the end of the second quarter of 2010. In connection with the closure of two office furniture facilities announced earlier this year, the Corporation recorded $2.0 million of charges during the third quarter which included $0.8 million of accelerated depreciation and $0.2 million of other transition costs recorded in cost of sales, $0.8 million of costs recorded as restructuring costs and $0.2 million of other transition costs recorded in selling and administrative expense. The Corporation anticipates the closure and consolidation of these two facilities will be substantially complete by the end of 2009. The Corporation made the decision to consolidate significant production from its hearth product Mount Pleasant, Iowa plant to other
existing hearth products manufacturing facilities. Additionally, the Corporation will close hearth products distribution centers in Alsip, Illinois and Lake City, Minnesota and transfer operations to its Mount Pleasant facility. In connection with the hearth restructuring the Corporation recorded $2.1 million of charges during the third quarter which included $0.6 million of accelerated depreciation recorded in cost of sales and $1.3 million of severance costs for approximately 160 members and $0.2 million of other costs which were recorded as restructuring costs. The Corporation expects these changes will be substantially complete during the first quarter of 2010. The Corporation anticipates additional restructuring and transition charges of approximately $9.2 million related to the various closures of which $4.2 million will impact the remainder of 2009 and $5.0 million will impact the first two quarters of 2010. The Corporation is currently in negotiations with the union representing the bargaining unit at the Owensboro facility and therefore is not able to estimate all of the charges associated with that closure until the negotiations conclude.
Net income attributable to parent company for the third quarter of 2009 was $17.6 million or $0.39 per diluted share compared to net income of $19.5 million or $0.44 per diluted share in third quarter 2008. Net interest expense decreased $0.9 million during the quarter as compared to third quarter 2008 due to reduced borrowing.
For the first nine months of 2009, consolidated net sales decreased $0.6 billion, or 32.5 percent, to $1.2 billion compared to $1.8 billion for the same period in the prior year. Acquisitions added $10.2 million or 0.6 percentage points of sales. Gross margins increased to 33.9 percent compared to 33.6 percent for the same period last year. Operating income was $16.5 million for the first nine months of 2009 compared to $69.1 million for the first nine months of 2008. Earnings per share decreased to $0.10 per diluted share compared to $0.83 per diluted share for the same period last year.
Third quarter sales for the office furniture segment decreased 32.2 percent or $180.7 million to $379.9 million from $560.7 million for the same quarter last year driven by substantial weakness in both the supplies-driven and contract channels of the office furniture industry. Operating profit prior to unallocated corporate expenses for the quarter decreased $1.4 million to $38.1 million when compared to the same period last year as a result of lower volume and increased restructuring and transition costs partially offset by price realization, lower input costs, distribution efficiencies and cost control initiatives. Third quarter 2009 included $4.1 million of restructuring and transition costs including accelerated depreciation compared to $1.1 million of restructuring costs in third quarter 2008.
Net sales for the first nine months of 2009 decreased 32.4 percent or $0.5 billion to $1.0 billion compared to $1.5 billion for the same period in 2008. Acquisitions added $10.2 million or 0.7 percentage points of sales. Operating profit decreased 37.1 percent or $32.8 million to $55.6 million over the first nine months of 2009 when compared to the same period in 2008.
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