HNI Corp (HNI, Financial) announced its Q3 2023 earnings on October 31, 2023. The company reported sales of $711.6 million and net income of $37.8 million. Despite a 7.1 percent year-over-year organic revenue decline, non-GAAP earnings per diluted share grew 31 percent compared to the prior-year period.
Financial Performance
According to the earnings report, HNI Corp (HNI, Financial) saw a substantial margin expansion in its Workplace Furnishings segment. The GAAP operating margin expanded 730 basis points on a year-over-year basis to 8.8 percent. Excluding Kimball International and Poppin, third quarter non-GAAP operating profit margin for legacy HNI workplace furnishings was 10.7 percent, an improvement of 820 basis points year-on-year.
The company completed the divestiture of Poppin during the third quarter, eliminating an annual operating loss of nearly $20 million and improving strategic focus. The Residential Building Products segment's operating margin remained unchanged year-over-year at 17.7 percent despite 21.8 percent lower net sales.
Key Financial Tables
Consolidated net sales increased 18.8 percent from the prior-year quarter to $711.6 million. Gross profit margin expanded 510 basis points compared to the prior-year quarter. This increase was driven by favorable price-cost, improved net productivity, and the impact of the Kimball International acquisition, partially offset by lower organic volume.
Workplace Furnishings net sales increased 43.1 percent from the prior-year quarter to $536.8 million. On an organic basis, sales increased 1.7 percent year-over-year. The impact of the Kimball International acquisition increased sales by $158.0 million over the prior-year quarter.
Outlook
For the fourth quarter of 2023, HNI Corp (HNI, Financial) expects non-GAAP earnings per share to increase solidly year-over-year and be modestly below just-reported third quarter of 2023 results, consistent with normal seasonal patterns. The Corporation expects Workplace Furnishings segment organic revenue to be approximately flat versus the same quarter of 2022. In Residential Building Products, the Corporation expects fourth quarter revenue to be down year-over-year at a rate in the high-single digit to low-teens range.
The integration of Kimball International is going well. KII is already strengthening the business and delivering earnings accretion, which will only increase as the synergies mature. KII better positions HNI Corp (HNI, Financial) to lead in the evolving workplace environment and provides new opportunities for profit growth.
Explore the complete 8-K earnings release (here) from HNI Corp for further details.
