HNI Corp. posts 4Q, year-end earnings

By Jennifer DeWitt | Monday, February 11, 2008

MUSCATINE, Iowa — Office furniture maker HNI Corp. reported improved fourth-quarter earnings amid strong furniture sales and despite a hearth business that remains challenged by the housing market.

HNI, which produces products under the Hon, Allsteel, and Hearth and Home brands, said Wednesday that income from continuing operations rose to $37.5 million, or 82 cents per share, in the quarter ended Dec. 29. That compares to $36.5 million, or 75 cents per share, for the same period last year.

In reporting year-end results, the Muscatine manufacturer reported income from continuing operations fell 7.6 percent to $119.9 million, or $2.55 per share, down from $129.7 million, or $2.57 per share, a year ago.

Sales for the year were $2.57 billion, a decrease of 4 percent from last year’s $2.67 billion.

HNI’s office furniture sales rose 1 percent in the fourth quarter to $548.2 million and 1.5 percent for the year to $2.1 billion. The company’s fireplace sales declined 13.8 percent to $120.3 million in the quarter from $139.6 million. The division’s sales declined 23.3 percent to $462 million from $602.8 million for the year.

In a news release, Stan Askren, HNI Corp.’s chairman, president and CEO, attributed the revenue decline to “an unprecedented contraction in new home construction.”

Askren said the company worked to resize its hearth business to reflect lower demand for its products. “We aggressively implemented cost reduction initiatives that included reducing employment levels more than 35 percent, and consolidating and divesting several service and distribution locations.”

HNI recorded $3.8 million in restructuring charges that included the previously announced closing of a Richmond, Va., factory, and final costs from the shutdown of a Monterrey, Mexico, facility. The company also incurred $1.3 million in costs related to transitioning production from Richmond to it other office furniture facilities. The hearth division also recorded $1.1 million in restructuring costs associated with the consolidation of some of its service and distribution locations.

Askren said the company expects the housing market to worsen in 2008, which will impact the hearth business. In addition, market conditions in the office furniture business have softened.

Jennifer DeWitt can be contacted at (563) 383-2318 or jdewitt@qctimes.com. Comment on this story at  qctimes.com.