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» HNI's CEO Discusses Q3 2011 Results - Earnings Call Transcript
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» HNI Corporation CEO Discusses Q4 2010 Results - Earnings Call Transcript
Joining me today on the line for HNI Corporation are Kurt Tjaden, Vice President and Chief Financial Officer, and Stan Askren, Chairman, President and CEO. Stan and Kurt will review the results and then open the call for questions.Before we begin, please be advised that statements made by the corporation during this call that are not strictly historical facts are forward-looking statements. Forward-looking statements are subject to known and unknown risks. Actual results could differ materially from expected results. Additional information concerning factors that could affect actual results can be found in the conference call presentation posted to the HNI Corporation website. The corporation assumes no obligation to update any forward-looking statements made during this call. I now have the pleasure of turning the call over to Stan Askren. Stan? Stan Askren Thank you, Derek. I’ll start out by wishing everybody a good morning. Pleased with our performance in 2011, it was a strong year of profitable growth for HNI Corporation. Our strategic investments and market initiatives delivered solid 8% top line growth. Outstanding execution across all businesses resulted in a 40% improvement in operating income. Very strong working capital performance drove strong operating cash flow in excess of $131 million. We accelerated our growth investments, strengthened our competitive position, and made significant progress on our long-term strategies. Growth and profit improvement in the fourth quarter was solid, and we ended the year with strong momentum. Sales in our Office Furniture, Contract and international businesses remain strong with 7% with top line growth. Our Supply driven business grew 3%, small business confidence is improving, and our strong brands are well positioned for profitable growth. Our Hearth business executed well and exceeded expectations. Remodel and retrofit sales increased 8% on stronger remodeling activity. The new construction channel was up 6%, as homebuilders sentiment continued to improve.
I’ll turn the call over to Kurt, to review the specific financial data for the fourth quarter.Kurt Tjaden Thank you, Stan. For the fourth quarter 2011, consolidated net sales increased 7.3% to $500 million, or 5.5% on an organic basis. Sales for the Office Furniture segment increased 7.4% to $402 million, or 5.2% on an organic basis. Net sales for the Hearth Products segment increased 7.1% to $98 million. Consolidated gross margins increased to 35.6% compared to 35.2% in the prior year quarter due to higher volume and improved price realization, which was partially offset by increased material cost. As a percent of net sales, total selling and administrative expenses, including restructuring and impairment charges, improved 1.4 percentage points due to higher volume and lower restructuring and impairment charges, partially offset by increased fuel costs, higher incentive-based compensation, and acquisition-related cost. We ended the year with $73 million of cash, and operating activities generated $134 million of cash during 2011, up 42% from last year. Stan? Stan Askren Looking forward, we enter 2012 with strong momentum, and we’re on track to deliver sales growth and profit improvement in all businesses. Our strategy remains focused. We’re investing in our core North American businesses to capture new growth opportunities, and aggressively pursuing attractive prospects and key vertical and fast growing international markets. I’m pleased to announce that we successfully completed the acquisition of Sagus International, last quarter. HNI is now the industry leader in the K-12 education furniture market. In the short-term growth in this business, we’ll likely be restrained by reduced state and local government funding. However, we are excited about the long-term value creation prospect this investment offers our shareholders. Our office furniture contract brands continue to compete well in their markets. Year-over-year growth rates within the contract channel are expected to ease against strong prior year comparisons. Improved corporate spending is projected to drive moderate single-digit growth in the channel.
Our international business remains a significant growth opportunity, particularly in China where we are well positioned to outperform the market. Growth in our supply driven channels is expected to improve as small business comp strengthens, our investments in branding, product development and selling capabilities is projected to drive solid growth.Read the rest of this transcript for free on seekingalpha.com