Business Wire | Jul 29, 2021 07:30AM EDT

HNI Corporation Reports Earnings for Second Quarter Fiscal Year 2021

Jul. 29, 2021

MUSCATINE, Iowa--(BUSINESS WIRE)--Jul. 29, 2021--HNI Corporation (NYSE: HNI) today announced sales for the second quarter ended July 3, 2021 of $510.5 million and net income of $17.4 million. GAAP net income per diluted share was $0.39, compared to $0.29 in the prior year. Non-GAAP net income per diluted share was $0.40, compared to $0.20 in the prior year. GAAP to non-GAAP reconciliations follow the financial statements in this release.

Second Quarter Highlights

* Non-GAAP EPS doubled vs. prior year: Second quarter 2021 non-GAAP EPS increased 100 percent year-over-year despite a challenging inflationary environment and the return of costs related to temporary actions taken in the prior-year quarter. The profit growth was driven by increased volume and higher productivity. * Exceptional performance in Residential Building Products: Second quarter 2021 revenue grew 51 percent, organically, on a year-over-year basis, and operating margin expanded 530 basis points from prior-year quarter. Segment operating profit more than doubled versus second quarter 2020 levels. * Recovery in Workplace Furnishings: Second quarter 2021 revenue was up approximately nine percent from the second quarter of 2020, on an organic basis. Segment non-GAAP operating profit increased more than 20 percent year-over-year.

"Our members again executed at a high level during the second quarter-delivering substantial year-over-year profit improvement. Our industry leading Residential Building Products platform continues to drive exceptional growth, and we are capitalizing on the beginnings of the post-pandemic recovery in Workplace Furnishings. Our strong growth and the macro-economic environment presented new challenges related to labor availability, supply chain capacity, and inflation. Our teams managed through those challenges to deliver strong results. Overall, the second quarter shows the power of our diversified revenue streams, our ability to react quickly to changing market dynamics, and our overall operational capability," stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.

HNI Corporation - Financial Performance

(Dollars in millions, except per share data)

Three Months Ended

July 3, June 27, Change 2021 2020

GAAP

Net Sales $510.5 $417.5 22.3 %

Gross Profit % 36.8 % 36.1 % 70 bps

SG&A % 32.0 % 32.6 % -60 bps

Operating Income $24.7 $14.8 66.3 %

Operating Income % 4.8 % 3.6 % 120 bps

Effective Tax Rate 23.7 % 2.7 %

Net Income % 3.4 % 3.0 % 40 bps

EPS - diluted $0.39 $0.29 34.5 %



Non-GAAP

Gross Profit % 36.8 % 36.1 % 70 bps

Operating Income $25.3 $14.8 70.7 %

Operating Income % 5.0 % 3.6 % 140 bps

EPS - diluted $0.40 $0.20 100.0 %

Second Quarter Summary Comments

* Consolidated net sales increased 22.3 percent from the prior-year quarter to $510.5 million. On an organic basis, sales increased 19.8 percent year-over-year. The acquisition of Design Public Group ("DPG") in the fourth quarter of 2020 increased year-over-year sales by $8.7 million, and the acquisition of residential building products distributors in 2020 and 2021 increased year-over-year sales by $1.5 million. A reconciliation of organic sales, a non-GAAP measure, follows the financial statements in this release. * Gross profit margin expanded 70 basis points compared to the prior-year quarter. This increase was primarily driven by higher volume and improved net productivity, partially offset by unfavorable price-cost and the return of costs related to temporary actions taken in the prior-year quarter. * Selling and administrative expenses as a percent of sales decreased 60 basis points compared to the prior-year quarter. The decrease was driven by improved leverage from higher volume, partially offset by the return of costs related to temporary actions taken in the prior-year quarter, higher investment spend, increased freight costs, and normalized variable compensation. Included in current-year quarter SG&A was $0.6 million of one-time costs from exiting Workplace Furnishings showrooms. * Non-GAAP net income per diluted share was $0.40 compared to $0.20 in the prior-year quarter. The $0.20 increase was due to higher volume and improved net productivity, partially offset by unfavorable price-cost, the return of costs related to temporary actions taken in the prior-year quarter, higher investment spend, and normalized variable compensation. * Non-GAAP EPS in the prior-year quarter included an effective tax rate of 32.5 percent, compared to a GAAP tax rate of 2.7 percent. The higher non-GAAP tax rate was related to timing of the tax impact from one-time charges recorded in first quarter 2020.

Second Quarter Orders

* Orders in the Workplace Furnishings segment increased more than 30 percent year-over-year, led by activity with small to mid-sized customers. Public sector demand remained strong, and domestic contract orders recovered-increasing more than 23 percent from second quarter 2020 levels. * Normalized orders in the Residential Building Products segment increased more than 50 percent compared to the prior-year quarter, with the trend moderating somewhat as the quarter progressed as year-ago comparisons increased. Remodel-retrofit and new construction were both strong throughout the quarter.

Workplace Furnishings - Financial Performance

(Dollars in millions)

Three Months Ended

July 3, June 27, Change 2021 2020

GAAP

Net Sales $344.1 $308.1 11.7 %

Operating Profit $8.8 $7.8 12.5 %

Operating Profit % 2.5 % 2.5 % 0 bps



Non-GAAP

Operating Profit $9.4 $7.8 20.8 %

Operating Profit % 2.7 % 2.5 % 20 bps

* Workplace Furnishings net sales increased 11.7 percent from the prior-year quarter to $344.1 million. On an organic basis, sales increased 8.9 percent year-over-year. The acquisition of DPG in the fourth quarter of 2020 increased sales by $8.7 million compared to the prior-year quarter. * Workplace Furnishings GAAP operating profit margin was flat versus the prior-year quarter. On a non-GAAP basis, segment operating margin expanded 20 basis points year-over-year driven by higher volume and improved productivity, partially offset by unfavorable price-cost and the return of costs related to temporary actions taken in the prior-year quarter. * The Workplace Furnishings segment recorded $0.6 million of one-time costs in the current-year quarter from exiting showrooms.

Residential Building Products - Financial Performance

(Dollars in millions)

Three Months Ended

July 3, June 27, Change 2021 2020

GAAP

Net Sales $166.3 $109.4 52.1 %

Operating Profit $30.5 $14.4 112.5 %

Operating Profit % 18.4 % 13.1 % 530 bps



Non-GAAP

Operating Profit $30.5 $14.4 112.5 %

Operating Profit % 18.4 % 13.1 % 530 bps

* Residential Building Products net sales increased 52.1 percent from the prior-year quarter to $166.3 million. On an organic basis, sales increased 50.7 percent year-over-year. The impact of building products distributors acquired in 2020 and 2021 increased sales $1.5 million compared to the prior-year quarter. * Residential Building Products operating profit margin expanded 530 basis points, primarily driven by strong volume growth, partially offset by unfavorable price-cost, normalized variable compensation, the return of costs related to temporary actions taken in the prior-year quarter, and higher investment spend.

Third Quarter 2021 Outlook

* Strong consolidated growth: The Corporation expects consolidated revenue to grow in the mid-20 percent range compared to the prior-year quarter. This outlook includes the impact of headwinds from labor availability and supply chain constraints. * Residential Building Products revenue:Recent order trends, new home construction activity, the outlook for remodel/retrofit demand, and expected benefits tied to multiple growth initiatives, combine to suggest growth rates in the mid-to-high 20 percent range compared to the prior-year quarter, including the impact of constraints. * Workplace Furnishings revenue:Strong second quarter order trends, continued momentum with office re-entry activity, and a low prior-year comparable suggest a growth rate, including acquisition impacts, in the low-to-mid-20 percent range on a year-over-year basis, net of the impact from constraints. * Profitability drivers: Compared to the prior-year quarter, the Corporation expects the impact of strong volume growth to be mostly offset by cost challenges related to inflationary pressures, increased growth investments, and the return of costs associated with temporary actions taken in the prior year. The Corporation expects profit growth to accelerate after the third quarter as recent price actions become effective and temporary cost actions taken during the pandemic are anniversaried.

Concluding Remarks

"Looking to the remainder of 2021 and into 2022, we remain optimistic about our businesses and our markets. We continue to gain momentum in Workplace Furnishings, where our winning customer experiences, multiple strategic investments, and operational excellence provide a competitive advantage as the market recovers. In addition, our unique, industry-leading Residential Building Products platform is positioned for sustained long-term growth. Our growth strategies in this segment continue to gain traction, and we see strong demand supported by demographics and low housing inventories.

I am extremely proud of and grateful for the efforts of all HNI members. As we move through the next stage of the recovery, we do so positioned to grow revenue, expand margins, and increase cash flow," Mr. Lorenger concluded.

Conference Call

HNI Corporation will host a conference call on Thursday, July 29, 2021 at 10:00 a.m. (Central) to discuss second quarter fiscal year 2021 results. To participate, call 1-833-522-0258 - conference ID number 9696837. A live webcast of the call will be available on HNI Corporation's website at https://investors.hnicorp.com/events-and-presentations. A replay of the webcast and call will be made available from Thursday, July 29, 2021 at 1:00 p.m. (Central) through Thursday, August 5, 2021, 10:59 p.m. (Central). To replay the webcast, go to the link above. To replay the call, dial 1-800-585-8367 or 416-621-4642 - Conference ID: 9696837.

About HNI Corporation

HNI Corporation (NYSE: HNI) is a manufacturer of workplace furnishings and residential building products, operating under two segments. The Workplace Furnishings segment is a leading global designer and provider of commercial furnishings, going to market under multiple unique brands. The Residential Building Products segment is the nation's leading manufacturer and marketer of hearth products, which include a full array of gas, electric, wood, and pellet-burning fireplaces, inserts, stoves, facings, and accessories. More information can be found on the Corporation's website at www.hnicorp.com.

Forward-Looking Statements

This release contains "forward-looking" statements based on current expectations regarding future plans, events, outlook, objectives, financial performance, expectations for sales growth, and earnings per diluted share (GAAP and non-GAAP), including statements regarding the expected effects on our business, financial condition and results of operations from the COVID-19 pandemic. Forward-looking statements can be identified by words including "expect," "believe," "anticipate," "estimate," "may," "will," "would," "could," "confident", or other similar words, phrases, or expressions. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation's actual future results and performance to differ materially from expected results. These risks include but are not limited to: the duration and scope of the COVID-19 pandemic, and its effect on people and the economy; the levels of office furniture needs and housing starts; overall demand for the Corporation's products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of the Corporation's customers; the Corporation's reliance on its network of independent dealers; change in trade policy; changes in raw material, component, or commodity pricing; market acceptance and demand for the Corporation's new products; changing legal, regulatory, environmental, and healthcare conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on the Corporation's financing activities; an inability to protect the Corporation's intellectual property; impacts of tax legislation; and force majeure events outside the Corporation's control. A description of these risks and additional risks can be found in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q. The Corporation assumes no obligation to update, amend, or clarify forward-looking statements, except as required by applicable law.

HNI Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(In thousands, except per share data)

(Unaudited)

Three Months Ended Six Months Ended July 3, June 27, July 3, June 27, 2021 2020 2021 2020

Net sales $ 510,455 $ 417,456 $ 994,748 $ 886,161

Cost of sales 322,593 266,551 626,940 559,238

Gross profit 187,862 150,905 367,808 326,923

Selling andadministrative 163,175 136,063 320,521 303,148 expenses

Impairment - - - 32,661 charges

Operating income 24,687 14,842 47,287 (8,886 ) (loss)

Interest expense, 1,857 1,943 3,612 3,754 net

Income (loss)before income 22,830 12,899 43,675 (12,640 ) taxes

Income taxes 5,418 345 11,245 (1,299 )

Net income (loss) 17,412 12,554 32,430 (11,341 )

Less: Net lossattributable to (2 ) (2 ) (3 ) (2 ) non-controllinginterest

Net income (loss)attributable to $ 17,414 $ 12,556 $ 32,433 $ (11,339 ) HNI Corporation



Average number ofcommon shares 43,776 42,640 43,469 42,634 outstanding -basic

Net income (loss)attributable toHNI Corporation $ 0.40 $ 0.29 $ 0.75 $ (0.27 ) per common share- basic

Average number ofcommon shares 44,481 42,929 43,986 42,634 outstanding -diluted

Net income (loss)attributable toHNI Corporation $ 0.39 $ 0.29 $ 0.74 $ (0.27 ) per common share- diluted



Foreign currencytranslation $ 194 $ 45 $ 62 $ (555 ) adjustments

Change inunrealized gains(losses) on (25 ) 244 (125 ) 302 marketablesecurities, netof tax

Change inderivativefinancial 143 (283 ) 406 (2,499 ) instruments, netof tax

Othercomprehensive 312 6 343 (2,752 ) income (loss),net of tax

Comprehensive 17,724 12,560 32,773 (14,093 ) income (loss)

Less:Comprehensiveloss attributable (2 ) (2 ) (3 ) (2 ) tonon-controllinginterest

Comprehensiveincome (loss) $ 17,726 $ 12,562 $ 32,776 $ (14,091 ) attributable toHNI Corporation

HNI Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

July 3, 2021

January 2, 2021

Assets

Current Assets:

Cash and cash equivalents

$

118,498

$

116,120

Short-term investments

102

1,687

Receivables

213,925

207,971

Allowance for doubtful accounts

(4,365

)

(5,514

)

Inventories

187,467

137,811

Prepaid expenses and other current assets

47,571

37,660

Total Current Assets

563,198

495,735

Property, Plant, and Equipment:

Land and land improvements

29,974

29,691

Buildings

293,842

293,708

Machinery and equipment

580,730

578,643

Construction in progress

24,310

17,750

928,856

919,792

Less accumulated depreciation

568,551

553,835

Net Property, Plant, and Equipment

360,305

365,957

Right-of-use Finance Leases

9,671

6,095

Right-of-use Operating Leases

66,254

70,219

Goodwill and Other Intangible Assets

451,624

458,896

Other Assets

26,136

21,130

Total Assets

$

1,477,188

$

1,418,032

Liabilities and Equity

Current Liabilities:

Accounts payable and accrued expenses

$

420,706

$

413,638

Current maturities of long-term debt

3,955

841

Current maturities of other long-term obligations

4,119

2,990

Current lease obligations - Finance

2,439

1,589

Current lease obligations - Operating

19,680

19,970

Total Current Liabilities

450,899

439,028

Long-Term Debt

174,566

174,524

Long-Term Lease Obligations - Finance

7,193

4,516

Long-Term Lease Obligations - Operating

50,710

53,249

Other Long-Term Liabilities

85,710

81,264

Deferred Income Taxes

73,327

74,706

Total Liabilities

842,405

827,287

Equity:

HNI Corporation shareholders' equity

634,460

590,419

Non-controlling interest

323

326

Total Equity

634,783

590,745

Total Liabilities and Equity

$

1,477,188

$

1,418,032

HNI Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

July 3, January 2, 2021 2021

Assets

Current Assets:

Cash and cash equivalents $ 118,498 $ 116,120

Short-term investments 102 1,687

Receivables 213,925 207,971

Allowance for doubtful accounts (4,365 ) (5,514 )

Inventories 187,467 137,811

Prepaid expenses and other current assets 47,571 37,660

Total Current Assets 563,198 495,735

Property, Plant, and Equipment:

Land and land improvements 29,974 29,691

Buildings 293,842 293,708

Machinery and equipment 580,730 578,643

Construction in progress 24,310 17,750

928,856 919,792

Less accumulated depreciation 568,551 553,835

Net Property, Plant, and Equipment 360,305 365,957

Right-of-use Finance Leases 9,671 6,095

Right-of-use Operating Leases 66,254 70,219

Goodwill and Other Intangible Assets 451,624 458,896

Other Assets 26,136 21,130

Total Assets $ 1,477,188 $ 1,418,032

Liabilities and Equity

Current Liabilities:

Accounts payable and accrued expenses $ 420,706 $ 413,638

Current maturities of long-term debt 3,955 841

Current maturities of other long-term 4,119 2,990 obligations

Current lease obligations - Finance 2,439 1,589

Current lease obligations - Operating 19,680 19,970

Total Current Liabilities 450,899 439,028

Long-Term Debt 174,566 174,524

Long-Term Lease Obligations - Finance 7,193 4,516

Long-Term Lease Obligations - Operating 50,710 53,249

Other Long-Term Liabilities 85,710 81,264

Deferred Income Taxes 73,327 74,706

Total Liabilities 842,405 827,287

Equity:

HNI Corporation shareholders' equity 634,460 590,419

Non-controlling interest 323 326

Total Equity 634,783 590,745

Total Liabilities and Equity $ 1,477,188 $ 1,418,032

HNI Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Six Months Ended

July 3, 2021

June 27, 2020

Net Cash Flows From (To) Operating Activities:

Net income (loss)

$

32,430

$

(11,341

)

Non-cash items included in net income:

Depreciation and amortization

41,139

38,605

Other post-retirement and post-employment benefits

664

736

Stock-based compensation

7,788

5,659

Reduction in carrying amount of right-of-use assets

13,081

11,342

Deferred income taxes

(1,430

)

1,092

Impairment of goodwill and intangible assets

-

32,661

Other - net

3,211

(284

)

Net increase (decrease) in operating assets and liabilities

(62,905

)

(49,631

)

Increase (decrease) in other liabilities

3,305

(1,019

)

Net cash flows from (to) operating activities

37,283

27,820

Net Cash Flows From (To) Investing Activities:

Capital expenditures

(26,215

)

(15,739

)

Proceeds from sale of property, plant, and equipment

151

69

Acquisition spending, net of cash acquired

(1,529

)

(10,857

)

Capitalized software

(6,078

)

(5,037

)

Purchase of investments

(2,375

)

(1,631

)

Sales or maturities of investments

2,393

1,043

Net cash flows from (to) investing activities

(33,653

)

(32,152

)

Net Cash Flows From (To) Financing Activities:

Payments of long-term debt

(648

)

(73,828

)

Proceeds from long-term debt

3,785

82,129

Dividends paid

(26,841

)

(26,040

)

Purchase of HNI Corporation common stock

(6,543

)

(6,764

)

Proceeds from sales of HNI Corporation common stock

29,320

1,294

Other - net

(325

)

1,672

Net cash flows from (to) financing activities

(1,252

)

(21,537

)

Net increase (decrease) in cash and cash equivalents

2,378

(25,869

)

Cash and cash equivalents at beginning of period

116,120

52,073

Cash and cash equivalents at end of period

$

118,498

$

26,204

HNI Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Six Months Ended

July 3, June 27, 2021 2020

Net Cash Flows From (To) Operating Activities:

Net income (loss) $ 32,430 $ (11,341 )

Non-cash items included in net income:

Depreciation and amortization 41,139 38,605

Other post-retirement and post-employment benefits 664 736

Stock-based compensation 7,788 5,659

Reduction in carrying amount of right-of-use 13,081 11,342 assets

Deferred income taxes (1,430 ) 1,092

Impairment of goodwill and intangible assets - 32,661

Other - net 3,211 (284 )

Net increase (decrease) in operating assets and (62,905 ) (49,631 ) liabilities

Increase (decrease) in other liabilities 3,305 (1,019 )

Net cash flows from (to) operating activities 37,283 27,820



Net Cash Flows From (To) Investing Activities:

Capital expenditures (26,215 ) (15,739 )

Proceeds from sale of property, plant, and 151 69 equipment

Acquisition spending, net of cash acquired (1,529 ) (10,857 )

Capitalized software (6,078 ) (5,037 )

Purchase of investments (2,375 ) (1,631 )

Sales or maturities of investments 2,393 1,043

Net cash flows from (to) investing activities (33,653 ) (32,152 )



Net Cash Flows From (To) Financing Activities:

Payments of long-term debt (648 ) (73,828 )

Proceeds from long-term debt 3,785 82,129

Dividends paid (26,841 ) (26,040 )

Purchase of HNI Corporation common stock (6,543 ) (6,764 )

Proceeds from sales of HNI Corporation common 29,320 1,294 stock

Other - net (325 ) 1,672

Net cash flows from (to) financing activities (1,252 ) (21,537 )



Net increase (decrease) in cash and cash 2,378 (25,869 ) equivalents

Cash and cash equivalents at beginning of period 116,120 52,073

Cash and cash equivalents at end of period $ 118,498 $ 26,204

HNI Corporation and Subsidiaries

Reportable Segment Data

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

July 3, 2021

June 27, 2020

July 3, 2021

June 27, 2020

Net Sales:

Workplace furnishings

$

344,137

$

308,081

$

646,885

$

646,467

Residential building products

166,318

109,375

347,863

239,694

Total

$

510,455

$

417,456

$

994,748

$

886,161

Income (Loss) Before Income Taxes:

Workplace furnishings

$

8,756

$

7,785

$

5,685

$

(25,446

)

Residential building products

30,525

14,365

70,374

35,036

General corporate

(14,594

)

(7,308

)

(28,772

)

(18,476

)

Operating Income (Loss)

24,687

14,842

47,287

(8,886

)

Interest expense, net

1,857

1,943

3,612

3,754

Total

$

22,830

$

12,899

$

43,675

$

(12,640

)

Depreciation and Amortization Expense:

Workplace furnishings

$

12,051

$

10,782

$

24,035

$

22,113

Residential building products

2,448

2,318

4,858

4,624

General corporate

6,177

6,019

12,246

11,868

Total

$

20,676

$

19,119

$

41,139

$

38,605

Capital Expenditures (including capitalized software):

Workplace furnishings

$

7,017

$

4,293

$

17,504

$

11,394

Residential building products

1,947

206

6,657

3,179

General corporate

4,365

3,118

8,132

6,203

Total

$

13,329

$

7,617

$

32,293

$

20,776

As of

July 3, 2021

As of

January 2, 2021

Identifiable Assets:

Workplace furnishings

$

784,880

$

762,780

Residential building products

408,333

381,550

General corporate

283,975

273,702

Total

$

1,477,188

$

1,418,032

Non-GAAP Financial Measures

This earnings release includes certain non-GAAP financial information as defined by Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of this non-GAAP financial information to HNI's financial statements as prepared in accordance with GAAP are included below and throughout this earnings release. This information gives investors additional insights into HNI's financial performance and operations. While HNI's management believes the non-GAAP financial measures are useful in evaluating HNI's operations, this information should be considered supplemental and not in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

To supplement condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, this earnings release uses the following non-GAAP financial measures: organic sales, gross profit, operating income (loss), operating profit (loss), income taxes, net income (loss), and net income (loss) per diluted share (i.e., EPS). These measures are adjusted from the comparable GAAP measures to exclude the impacts of the selected items as summarized in the table below. Generally, non-GAAP EPS is calculated using HNI's overall effective tax rate for the year, as this rate is reflective of the tax applicable to most non-GAAP adjustments.

The sales adjustments to arrive at the non-GAAP organic sales information included in this earnings release excludes the impact of acquiring DPG and residential building products distributors. The transactions excluded for purposes of our other non-GAAP financial information included in this earnings release include non-recurring costs related to the COVID-19 pandemic.

HNI Corporation and Subsidiaries

Reportable Segment Data

(In thousands)

(Unaudited)

Three Months Ended Six Months Ended

July 3, June 27, July 3, June 27, 2021 2020 2021 2020

Net Sales:

Workplace $ 344,137 $ 308,081 $ 646,885 $ 646,467 furnishings

Residentialbuilding 166,318 109,375 347,863 239,694 products

Total $ 510,455 $ 417,456 $ 994,748 $ 886,161



Income (Loss)Before Income Taxes:

Workplace $ 8,756 $ 7,785 $ 5,685 $ (25,446 ) furnishings

Residentialbuilding 30,525 14,365 70,374 35,036 products

General (14,594 ) (7,308 ) (28,772 ) (18,476 ) corporate

Operating 24,687 14,842 47,287 (8,886 ) Income (Loss)

Interest 1,857 1,943 3,612 3,754 expense, net

Total $ 22,830 $ 12,899 $ 43,675 $ (12,640 )



Depreciationand AmortizationExpense:

Workplace $ 12,051 $ 10,782 $ 24,035 $ 22,113 furnishings

Residentialbuilding 2,448 2,318 4,858 4,624 products

General 6,177 6,019 12,246 11,868 corporate

Total $ 20,676 $ 19,119 $ 41,139 $ 38,605



CapitalExpenditures(including capitalizedsoftware):

Workplace $ 7,017 $ 4,293 $ 17,504 $ 11,394 furnishings

Residentialbuilding 1,947 206 6,657 3,179 products

General 4,365 3,118 8,132 6,203 corporate

Total $ 13,329 $ 7,617 $ 32,293 $ 20,776



As of As of July 3, 2021 January 2, 2021

Identifiable Assets:

Workplace $ 784,880 $ 762,780 furnishings

Residentialbuilding 408,333 381,550 products

General 283,975 273,702 corporate

Total $ 1,477,188 $ 1,418,032

Non-GAAP Financial Measures

This earnings release includes certain non-GAAP financial information as defined by Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of this non-GAAP financial information to HNI's financial statements as prepared in accordance with GAAP are included below and throughout this earnings release. This information gives investors additional insights into HNI's financial performance and operations. While HNI's management believes the non-GAAP financial measures are useful in evaluating HNI's operations, this information should be considered supplemental and not in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

To supplement condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, this earnings release uses the following non-GAAP financial measures: organic sales, gross profit, operating income (loss), operating profit (loss), income taxes, net income (loss), and net income (loss) per diluted share (i.e., EPS). These measures are adjusted from the comparable GAAP measures to exclude the impacts of the selected items as summarized in the table below. Generally, non-GAAP EPS is calculated using HNI's overall effective tax rate for the year, as this rate is reflective of the tax applicable to most non-GAAP adjustments.

The sales adjustments to arrive at the non-GAAP organic sales information included in this earnings release excludes the impact of acquiring DPG and residential building products distributors. The transactions excluded for purposes of our other non-GAAP financial information included in this earnings release include non-recurring costs related to the COVID-19 pandemic.

HNI Corporation Reconciliation

(Dollars in millions)

Three Months Ended

July 3, 2021 June 27, 2020

Workplace Residential Workplace Residential Furnishings Building Total Furnishings Building Total Products Products

Sales asreported $ 344.1 $ 166.3 $ 510.5 $ 308.1 $ 109.4 $ 417.5 (GAAP)

% change 11.7 % 52.1 % 22.3 % from PY



Less: 8.7 1.5 10.2 - - - Acquisitions



OrganicSales $ 335.4 $ 164.8 $ 500.2 $ 308.1 $ 109.4 $ 417.5 (non-GAAP)

% change 8.9 % 50.7 % 19.8 % from PY

HNI Corporation Reconciliation

(Dollars in millions, except per share data)

Three Months Ended

July 3, 2021

Gross Profit

Operating Income

Tax

Net Income

EPS

As reported (GAAP)

$

187.9

$

24.7

$

5.4

$

17.4

$

0.39

% of net sales

36.8

%

4.8

%

3.4

%

Tax %

23.7

%

COVID-19 costs

-

0.6

0.2

0.5

0.01

Results (non-GAAP)

$

187.9

$

25.3

$

5.6

$

17.9

$

0.40

% of net sales

36.8

%

5.0

%

3.5

%

Tax %

23.7

%

HNI Corporation Reconciliation

(Dollars in millions, except per share data)

Three Months Ended July 3, 2021

Gross Operating Tax Net EPS Profit Income Income

As reported (GAAP) $ 187.9 $ 24.7 $ 5.4 $ 17.4 $ 0.39

% of net sales 36.8 % 4.8 % 3.4 %

Tax % 23.7 %



COVID-19 costs - 0.6 0.2 0.5 0.01



Results (non-GAAP) $ 187.9 $ 25.3 $ 5.6 $ 17.9 $ 0.40

% of net sales 36.8 % 5.0 % 3.5 %

Tax % 23.7 %

HNI Corporation Reconciliation

(Dollars in millions, except per share data)

Three Months Ended

June 27, 2020

Gross Profit

Operating Income

Tax

Net Income

EPS

As reported (GAAP)

$

150.9

$

14.8

$

0.3

$

12.6

$

0.29

% of net sales

36.1

%

3.6

%

3.0

%

Tax %

2.7

%

Income tax adjustment

-

-

3.8

(3.8)

(0.09)

Results (non-GAAP)

$

150.9

$

14.8

$

4.2

$

8.7

$

0.20

% of net sales

36.1

%

3.6

%

2.1

%

Tax %

32.5

%

HNI Corporation Reconciliation

(Dollars in millions, except per share data)

Three Months Ended June 27, 2020

Gross Operating Tax Net EPS Profit Income Income

As reported (GAAP) $ 150.9 $ 14.8 $ 0.3 $ 12.6 $ 0.29

% of net sales 36.1 % 3.6 % 3.0 %

Tax % 2.7 %



Income tax adjustment - - 3.8 (3.8) (0.09)



Results (non-GAAP) $ 150.9 $ 14.8 $ 4.2 $ 8.7 $ 0.20

% of net sales 36.1 % 3.6 % 2.1 %

Tax % 32.5 %

Workplace Furnishings Reconciliation

(Dollars in millions)

Three Months Ended

July 3, 2021

June 27, 2020

Percent Change

Operating profit as reported (GAAP)

$

8.8

$

7.8

12.5

%

% of net sales

2.5

%

2.5

%

COVID-19 costs

0.6

-

Operating profit (non-GAAP)

$

9.4

$

7.8

20.8

%

% of net sales

2.7

%

2.5

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005072/en/

CONTACT: Marshall H. Bridges, Senior Vice President and Chief Financial Officer (563) 272-7400 Matthew S. McCall, Vice President, Investor Relations and Corporate Development (563) 275-8898