HNI Corporation Reports Strong Sales Growth For First Quarter Fiscal Year 2018

MUSCATINE, Iowa, April 20, 2018

This news release is being issued earlier than previously scheduled to coincide with the announcement of the leadership change communicated today.  As previously scheduled, HNI Corporation will host a conference call on Tuesday, May 1, 2018 at 10:00 a.m. (Central) to discuss first quarter fiscal year 2018 results.

Summary Comments
"First quarter results exceeded our expectations led by strong organic sales growth.  All of our businesses,  supplies-driven, contract, and Hearth, performed well and delivered significant top-line improvement.  We achieved a significant milestone with the successful go-live of our Business Systems Transformation initiative.  This, combined with the completion of our operational transformations, makes us a stronger company, well positioned to drive long-term profitable growth for our shareholders," said Stan Askren, HNI Corporation Chairman and Chief Executive Officer.

HNI Corporation - Financial Performance
(Dollars in millions, except per share data)
	Three Months Ended
	March 31,  2018 ARIVA.DE Börsen-Geflüster Kurse Hni 39,80 € +2,84%		April 1,  2017		Change
GAAP
Net Sales	$505.1		$477.7		5.7%
Gross Profit %	35.0%		36.4%		-140 bps
SG&A %	34.0%		34.3%		-30 bps
Restructuring charges %	0.3%		0.4%		-10 bps
Operating Income	$3.7		$7.9		(53.5%)
Operating Income %	0.7%		1.7%		-100 bps
Effective Tax Rate	(66.1%)		31.0%
Net Income %	0.5%		1.0%		-50 bps
EPS – diluted	$0.06		$0.11		(45.5%)
Non-GAAP
Gross Profit %	35.3%		38.0%		-270 bps
Operating Income	$6.3		$18.1		(65.3%)
Operating Income %	1.2%		3.8%		-260 bps
EPS – diluted	$0.10		$0.26		(61.5%)

First Quarter Summary Comments

• Consolidated net sales increased $27.4 million or 5.7 percent from the prior year quarter to $505.1 million. On an organic basis, sales increased 8.6 percent. The net impact of closing and divesting small office furniture companies decreased sales $12.4 million compared to the prior year quarter.
• GAAP gross profit margin decreased 140 basis points compared to the prior year quarter. Of this decline, 270 basis points were driven by unfavorable business and product mix and input cost inflation, partially offset by higher sales volume. This decline was partially offset by 130 basis points due to lower restructuring and transition costs.
• Selling and administrative expenses primarily increased due to impacts from the Business Systems Transformation initiative, partially offset by cost management and the impact of closing and divesting small office furniture companies.
• The Corporation recorded $1.3 million of restructuring costs and $1.3 million of transition costs in the first quarter in connection with previously announced closures and structural realignments. Of these charges, $1.3 million was included in cost of sales. Specific items include severance and production move costs.
• The Corporation released a valuation allowance for certain foreign tax items in the first quarter, which resulted in a favorable effective tax rate.

• First quarter office furniture net sales increased $20.9 million or 5.8 percent from the prior year quarter to $380.9 million. On an organic basis, sales increased 9.7 percent driven by increases in the North American contract, supplies-driven, and international businesses. The net impact of closing and divesting small office furniture companies decreased sales $12.4 million compared to the prior year quarter.
• First quarter office furniture GAAP operating profit margin decreased 190 basis points. Of this decline, 310 basis points were driven by impacts from the Business Systems Transformation initiative, input cost inflation, and unfavorable business and product mix, partially offset by higher sales volume. This decline was partially offset by 120 basis points due to lower restructuring and transition costs.

Hearth Products – Financial Performance
(Dollars in millions)
	Three Months Ended
	March 31,  2018		April 1,  2017		Change
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