HNI Corp. Reports Operating Results (10-Q)
Hni Corp. has a market cap of $1.36 billion; its shares were traded at around $30.05 with a P/E ratio of 42.9 and P/S ratio of 0.9. The dividend yield of Hni Corp. stocks is 2.8%.HNI is in the portfolios of First Pacific Advisors of First Pacific Advisors, LLC, Chuck Royce of Royce& Associates, Jeremy Grantham of GMO LLC.
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 Salisbury, North Carolina and consolidate production into existing office furniture manufacturing facilities. In connection with the closure of the Salisbury location the Corporation recorded $1.6 million of charges during the quarter ended April 3, 2010 which included $1.3 million of severance costs for approximately 125 members and $0.3 million of accelerated depreciation recorded in cost of sales. The closure and consolidation will be substantially completed by the end of 2010. In connection with other office furniture plant closures announced in 2009, the Corporation recorded $1.5 million of restructuring and transition charges during the first quarter which included $0.3 million of accelerated depreciation and $0.8 million of other transition costs recorded in cost of sales and $0.4 million of other costs which were recorded as restructuring costs. The Corporation recorded a gain of $0.5 million on the sale of one of the closed office furniture manufacturing facilities during the first quarter. The Corporation's hearth products segment recorded $0.2 million of charges during the first quarter related to the consolidation of production and shutdown of distribution centers announced in 2009. These charges included
The Corporation experienced a net loss from continuing operations of ($4.1) million or ($0.09) per diluted share in the first quarter of 2010 compared to a net loss of ($11.7) million or ($0.26) per diluted share in the first quarter of 2009. Net interest expense decreased $0.4 million during the quarter due to lower borrowing.
First quarter 2010 sales for the office furniture segment decreased 9.3 percent or $30.8 million to $300.0 million from $330.8 million for the same quarter last year driven by declines in all channels of the office furniture industry. Operating profit prior to unallocated corporate expenses increased $5.6 million to $6.2 million as a result of lower material costs, improved distribution efficiencies, cost reduction initiatives and a $0.5 million gain on the sale of a facility. These were partially offset by lower volume and decreased price realization. First quarter 2010 included $3.1 million of restructuring and transition costs including accelerated depreciation compared to $3.0 million of restructuring costs in first quarter 2009.
First quarter 2010 net sales for the hearth products segment decreased 3.9 percent or $2.6 million to $63.5 million from $66.0 million for the same quarter last year driven by a decline in the remodel-retrofit channel partially offset by an increase in the new construction channel. Operating profit prior to unallocated corporate expenses increased $8.4 million to a $2.9 million loss due to cost reduction initiatives and lower material and restructuring costs partially offset by lower volume and decreased price realization. First quarter 2010 included $0.2 million of restructuring and transition costs compared to $2.1 million of restructuring costs in first quarter 2009.
Operating activities used $25.4 million of cash in the first quarter 2010 compared to generating $5.6 million of cash in the first quarter 2009. Working capital performance resulted in a $43.1 million use of cash in the current fiscal year compared to $6.1 million use of cash in the prior year. Working capital performance in the first quarter of 2009 was positively impacted by reductions in accounts receivable due to a significant decrease in revenue. The Corporation's first quarter is historically the lowest quarter for operating cash flow due to seasonal business patterns and funding requirements. Cash flow from operating activities is expected to be positive for the year.
Capital expenditures including capitalized software for the first three months of fiscal 2010 were $4.8 million compared to $4.6 million in the same period of fiscal 2009 and were primarily for tooling and equipment for new products. For the full year 2010, capital expenditures are expected to be $25 to $30 million primarily focused on new product development and related tooling.
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