Hni Corporation · NYSE:HNI
Hni — Q4 2020 Earnings Presentation
21 slides from Hni's earnings presentation, Mar 1, 2021
Slide 1: Fourth Quarter Fiscal 2020 Results
Fourth Quarter Fiscal 2020 Results March 1, 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation 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 regardi
Slide 3: Conference Call Agenda
Q4 2020 Conference Call Agenda I. Q4 2020 highlights II. Q1 2021 outlook III. Design Public Group Acquisition IV. ESG achievements and goals V. Q&A 3
Slide 4: Q4 2020 Highlights
Q4 2020 Highlights • Residential Building Products operating profit grew 11% on a year-over-year basis in the fourth quarter, and total revenue increased 18% year-over-year • Workplace Furnishings segment operating profit exceeded $11 million in the fourth quarter, despite a 19% year-over-year decre
Slide 5: Secular Trends and HNI-Specific Opportunities
Secular Trends and HNI-Specific Opportunities Two differentiated business segments each well positioned with cyclical, secular, and HNI-specific growth drivers. We have diversified revenue streams, and clear opportunities to drive revenue growth and shareholder value. Workplace Furnishings Residenti
Slide 6: Q4 2020 Review
Q4 2020 Review • Total revenue -9% YoY organically • Residential Building Products revenue +16% YoY organically - New construction +17% YoY organically - Remodel/retrofit +15% YoY • Workplace Furnishings revenue -19% YoY Workplace Furnishings Revenue/Organic Growth Residential Building Products Reve
Slide 7: Q4 2020 Review (cont.)
Q4 2020 Review (cont.) • Gross margin contracted 90 bps year-over-year to 37.1% • Operating income (non-GAAP) decreased 39% year-over-year • Operating margin (non-GAAP) contracted 350 bps year-over-year to 7.0% • Reported EPS (non-GAAP) of $0.66 compared to $1.12 in the prior-year Non-GAAP Net Incom
Slide 8: Cash Flow and Liquidity
Cash Flow and Liquidity • Quarter-ending debt levels: $175 million • Quarter-ending gross leverage ratio: 1.0x TTM EBITDA* • Existing lending agreements gross leverage covenant: 3.5x TTM EBITDA* • Quarter-ending liquidity (cash plus borrowing availability): >$490 million • Funded $58 million of acqu
Slide 9: Design Public Group Acquisition
Design Public Group Acquisition Acquired digitally-native organization Design Public Group • Closed in December • Accelerates ongoing strategic initiatives • Approximately 50% of DPG's revenue comes from individual consumers through www.DesignPublic.com and www.DanishDesignStore.com • Approximately
Slide 10: Q1 2021 Commentary
Q1 2021 Commentary Sales and profit outlook: • Residential Building Products revenue growth in the mid-twenties range year-over-year • Workplace Furnishings revenue decline in the high-single digits to low- teens range year-over-year • Expect positive profit, but below prior year levels, primarily d
Slide 11: Environmental Social and Governance
Environmental Social and Governance Achievements and goals: • Achieved 10% energy reduction goal • Began sourcing 100% renewable electricity, which reduced Scope 1 and Scope 2 greenhouse gas emissions by over 35% • Diverted over 90% of waste away from landfill at two facilities • Become a signatory
Slide 12: Appendix
Appendix 12
Slide 13: Q4 2020 Details – Segments
Q4 2020 Details – Segments $ change % change Segment Breakdown 4Q20 4Q19 F/(U) Basis Pt Change Sales Workplace Furnishings $365.9 $449.4 ($83.5) (18.6%) (1) Residential Building Products $196.3 $166.7 $29.6 17.8% Total $562.1 $616.1 ($53.9) (8.8%) Operating Profit Workplace Furnishings (2) $3.6 $35.
Slide 14: Q4 2020 Details
Q4 2020 Details $ change % change Income Statement 4Q20 4Q19 F/(U) Basis Pt Change Net Sales $562.1 $616.1 ($53.9) (8.8%) Non-GAAP Gross Profit 208.6 233.9 (25.2) (10.8%) % of Net Sales (1) 37.1% 38.0% -90 Gross Profit $208.6 $233.9 ($25.2) (10.8%) % of Net Sales 37.1% 38.0% -90 Freight & Distributi
Slide 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures This earnings presentation 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
Slide 16: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended 1/2/2021 Three Months Ended 12/28/2019 Residential Residential Workplace Building Workplace Building (Dollars in millions) Furnishings Products Total Furnishings Products Total Sales as reported (GAAP) $365.9 $196.3 $562.1 $449.4 $166.7 $616.1 % change fro
Slide 17: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) Three Months Ended 1/2/2021 Gross Operating Net Diluted (Dollars in millions, except per share data) Profit Income Tax Income EPS As reported (GAAP) $208.6 $31.5 $7.2 $22.6 $0.52 % of net sales 37.1% 5.6% 4.0% Tax % 24.2% Impairment charges - 6.2 1.6 4.6 0.11 COVID-1
Slide 18: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) Twelve Months Ended 1/2/2021 Gross Operating Net Diluted (Dollars in millions, except per share data) Profit Income Tax Income EPS As reported (GAAP) $721.1 $61.4 $12.5 $41.9 $0.98 % of net sales 36.9% 3.1% 2.1% Tax % 22.9% Impairment charges - 38.8 8.9 29.9 0.70 COV
Slide 19: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) Workplace Furnishings Residential Building Products Three Months Ended Percent Three Months Ended Percent (Dollars in millions) 1/2/2021 12/28/2019 Change 1/2/2021 12/28/2019 Change Operating profit as reported (GAAP) $3.6 $35.7 (89.8%) $44.1 $39.6 11.4% % of net sal
Slide 20: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) HNI Corporation Reconciliation (Dollars in millions) Operating Income (EBIT) 2019 2020 (Dollars in millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 As reported (GAAP) $ 3.7 $ 23.2 $ 60.7 $ 63.8 $ (23.7) $ 14.8 $ 38.8 $ 31.5 Restructuring and impairment charges - 0.9 0.3 1.2 32.7 -
Slide 21: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) Segment Reconciliation (Dollars in millions) Residential Building Products Sales 2019 2020 (Dollars in millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 As reported (GAAP) $ 125.9 $ 116.5 $ 140.6 $ 166.7 $ 130.3 $ 109.4 $ 153.7 $ 196.3 Less: Impact of Acquisitions - - - - 1.1 2.9 2.