Slide 1: Second Quarter Fiscal 2020 Results
Second Quarter Fiscal 2020 Results July 23, 2020 1
Slide 2: Forward-Looking Statements
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 th
Slide 3: Q2 2020 Conference Call Agenda
I. Highlights – salaries restored, investments accelerated Q2 2020 II. Demand picture – orders and supportive trends Conference Call III. Q2 detail/H2 outlook – income statement, balance sheet and cash flow; incremental/decremental margin Agenda IV. Closing thoughts and Q&A 3
Slide 4: Q2/H1 2020 Highlights
Q2/H1 2020 Highlights • Operating cash flows increased $20 million or 49% from Q2 2019 levels. • Residential Building Products segment operating profit increased, and segment operating margin expanded on a year-over-year basis in the second quarter 2020. • Workplace Furnishings segment generated sec
Slide 5: Q2 2020 Highlights; Opportunities
Q2 2020 Highlights; Opportunities Q2 2020 Order Patterns - Year-Over-Year Domestic Workplace Furnishings -36% eCommerce +114% Residential Building Products +2% Secular and Company-Specific Opportunities Workplace Furnishings Residential Building Products --Floorplate resets --Deurbanization --Archit
Slide 6: Q2 2020 Review
Q2 2020 Review • Organic revenue -21.2% YoY organically • Workplace Furnishings -24.8% YoY and Residential Building Products - 8.6% YoY organically • Gross margin contracted 50 bps (non-GAAP) year-over-year to 36.1% • Operating income (non-GAAP) decreased 39% year-over-year • Operating margin (non-G
Slide 7: Liquidity and Leverage
Liquidity and Leverage • Quarter-ending debt levels: $183 million • Quarter-ending gross leverage ratio: ~0.8x • Existing lending agreements gross leverage covenant: 3.5x TTM EBITDA • First debt maturity: 2023 • Quarter-ending liquidity (cash plus borrowing availability): >$390 million 7
Slide 8: H2 2020 Commentary
H2 2020 Commentary Tax rate: • Q2 2020 non-GAAP tax rate 32.5%; FY 2020 non-GAAP estimate 22.5%-23.0% Cash flow and debt: • Year-end 2020 net debt levels below year-end 2019 levels • 2020 free cash flow significantly above $52 million dividend H2 2020 sales and profit outlook: • Q3 2020 sales and pr
Slide 9: Appendix
Appendix 9
Slide 10: Q2 2020 Details – Segments
Q2 2020 Details – Segments $ change % change Segment Breakdown 2Q20 2Q19 F/(U) Basis Pt Change Sales Workplace Furnishings $308.1 $409.5 ($101.4) (24.8%) Residential Building Products (1) $109.4 $116.5 ($7.1) (6.1%) Total $417.5 $526.0 ($108.6) (20.6%) Operating Profit Workplace Furnishings (2) $7.8
Slide 11: Q2 2020 Details
Q2 2020 Details $ change % change Income Statement 2Q20 2Q19 F/(U) Basis Pt Change Net Sales $417.5 $526.0 ($108.6) (20.6%) Non-GAAP Gross Profit (excluding restructuring and transition costs) 150.9 192.6 (41.7) (21.6%) % of Net Sales (1) 36.1% 36.6% -50 GAAP Gross Profit $150.9 $192.6 ($41.7) (21.6
Slide 12: Non-GAAP Financial Measures
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 pr
Slide 13: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended 6/27/2020 Three Months Ended 6/29/2019 Residential Residential Workplace Workplace (Dollars in millions) Building Building Furnishings Total Furnishings Total Products Products Sales as reported (GAAP) $308.1 $109.4 $417.5 $409.5 $116.5 $526.0 % change fro
Slide 14: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) Three Months Ended 6/27/2020 Gross Operating Net Diluted (Dollars in millions, except per share data) Profit Income Tax 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) Re
Slide 15: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) Workplace Furnishings Residential Building Products Three Months Ended Percent Three Months Ended Percent (Dollars in millions) 6/27/2020 6/29/2019 Change 6/27/2020 6/29/2019 Change Operating profit as reported (GAAP) $7.8 $18.7 (58.5%) $14.4 $13.4 7.5% % of net sale
Slide 16: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) HNI Corporation Reconciliation (Dollars in millions) Operating Income (EBIT) 2018 2019 2020 (Dollars in millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 As reported (GAAP) $ 3.7 $ 27.1 $ 53.6 $ 43.8 $ 3.7 $ 23.2 $ 60.7 $ 63.8 $ (23.7) $ 14.8 Restructuring and impairment charg