HNI Corporation Provides Business Update
September 23 2021 - 4:15PM
Business Wire
HNI Corporation (NYSE: HNI) today provided an update on
recent business conditions. Specifically, the Corporation is
reporting strong order trends; however, labor availability, supply
chain challenges, and input cost inflation are creating
greater-than-expected capacity constraints and negatively impacting
near-term revenue growth and profit levels.
Order Growth
QTD Q3:21
vs. 2020
vs. 2019
Orders
Backlog
Orders
Backlog
Workplace Furnishings
+29%
+99%
+3%
+83%
Residential Building Products
+41%
+168%
+57%
+217%
Third quarter Workplace Furnishings orders through September 17,
2021 grew 29 percent versus the prior-year period. Order levels for
the segment have exceeded 2019 pre-pandemic levels led by strong
growth from both contract and small-to-mid sized customers.
Quarter-to-date Residential Building Products orders remain
elevated and are up 41 percent versus the prior-year period. Order
activity in both new construction and remodel-retrofit continues to
be strong.
Production Capacity and Revenue
Labor availability and supply chain challenges are creating
greater-than-expected capacity constraints. As a result, the
Corporation now expects third quarter revenue to grow 16 percent to
18 percent versus the prior-year period. The Corporation had
previously expected third quarter year-over-year revenue growth in
the mid-20 percent range. That outlook, which was provided during
the Corporation’s second quarter earnings conference call, assumed
modest improvement in staffing levels and supply chain capacity as
compared to the second quarter. As the third quarter has
progressed, the Corporation has seen additional challenges,
including greater port congestion and increasing COVID-19 cases in
its facilities. These new challenges when combined with continued
staffing shortages, both at HNI internally and at its suppliers,
are limiting production capacity growth.
The Corporation expects these challenges to continue through the
remainder of 2021 and is taking action to mitigate them. Actions
include the recently announced opening of a new manufacturing
facility in Saltillo, Mexico, increased insourcing and strengthened
resourcing of critical parts, and accelerated efforts to drive
productivity through process changes and automation to reduce labor
requirements.
Profit Impact
Labor availability and supply chain constraints, along with
rising input costs, are negatively impacting profitability. The
Corporation now expects third quarter operating income to be 25 to
35 percent below prior year levels. Previous expectations were for
a modest year-over-year increase in third quarter operating income
with volume growth more than offsetting cost pressures.
Outlook
Strong orders combined with capacity constraints have resulted
in backlog levels well above both prior year and 2019 levels. The
Corporation expects backlog to remain elevated through the
remainder of 2021 and to support strong revenue growth in 2022.
Historically, revenue in the Workplace Furnishings segment is
seasonal—peaking in the third quarter and then declining through
the first quarter. Given the strong backlog, HNI expects minimal
revenue seasonality and strong first half revenue growth in
Workplace Furnishings in 2022.
CEO Comment
“First, I want to thank our dedicated members who are working
harder than ever as we manage through unprecedented challenges to
meet the needs of our customers.
“Labor shortages and supply chain disruptions are well
documented, and we are not immune to these pressures. With this in
mind, earlier this month we announced plans to open a new seating
manufacturing plant in Saltillo, Mexico in 2022. While the new
facility is an important addition to our North American footprint,
we remain focused on increasing staffing levels and capacity at all
our other manufacturing locations in North America.
“As we look to 2022, we see significant opportunity. Our
competitive positions continue to improve. Both the new
construction and remodel-retrofit markets in Residential Building
Products remain strong—supported by an undersupplied housing
market. The Workplace Furnishings market recovery is underway and
growing. We have taken and will continue to take pricing actions to
help offset the inflationary pressures we are absorbing in 2021,
and we will begin 2022 with an elevated backlog. There is much to
be optimistic about as we look forward,” stated Jeff Lorenger,
Chairman, President, and Chief Executive Officer.
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 https://www.hnicorp.com.
Forward-Looking
Statements
This release contains "forward-looking" statements based on
current expectations regarding future plans, events, outlook,
objectives, financial performance, and expectations for sales
growth. 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. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210923005719/en/
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
HNI (NYSE:HNI)
Historical Stock Chart
From Mar 2024 to Apr 2024
HNI (NYSE:HNI)
Historical Stock Chart
From Apr 2023 to Apr 2024