HNI Corporation (HNI) today announced sales for the fourth quarter ended January 2, 2016, of $596.9 million and net income of $32.2 million, or$0.71 per diluted share. Non-GAAP net income per diluted share improved 40 percent from the prior year quarter to $0.91, which excludes restructuring, goodwill and intangible impairment and transition costs.

Fourth Quarter and Year End Summary Comments

"We delivered double digit earnings growth in the fourth quarter despite a challenging economic environment. I'm pleased with our results in 2015 and the strong profit growth we've delivered over the last several years of modest economic recovery. We continue to compete well in our markets. We remain focused on executing operational performance improvements and reducing structural costs to drive long-term shareholder value," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

Consolidated net sales decreased $49.8 million or 7.7 percent to $596.9 million.
Non-GAAP gross margin increased 220 basis points compared to prior year driven by strong operational performance, structural cost reductions, favorable material costs and price realization, partially offset by lower volume.
Selling and administrative expenses, as a percentage of sales, decreased 40 basis points due to costreductions and lower incentive based compensation.
The Corporation recorded $12.7 million of restructuring and impairment charges and transition costs. These costs included goodwill and intangible impairment charges of $11.2 million related to a small office furniture business and $1.5 million of restructuring and transition costs in connection with previously announced closures, acquisition integration and structural realignment. Fourth quarter 2014 included $24.5 million of restructuring and impairment charges and transition costs.

Full Year Summary Comments

Consolidated net sales increased $81.7 million or 3.7 percent to $2.3 billion. Compared to prior year, the Vermont Castings Group acquisition increased sales $62.7 million. On an organic basis, sales increased 0.9 percent.
Non-GAAP gross margin increased 130 basis points compared to prior year driven by strong operational performance, structural cost reductions, favorable material costs and price realization, partially offset by lower volume and unfavorable product mix.
Selling and administrative expenses, as a percentage of sales, were flat to the prior year. Higher freight costs, strategic investments and acquisition impact were offset by lower incentive based compensation and cost reductions.
The Corporation recorded $17.3 million of restructuring and impairment charges and transition costs. These costs included goodwill and intangible impairment charges of $11.2 million related to a small office furniture business and $6.1 million of restructuring and transition costs in connection with previously announced closures, acquisition integration and structural realignment. 2014 included $43.1 million of restructuring and impairment charges and transition costs.
Fourth quarter sales decreased $24.8 million or 5.3 percent to $443.8 million. Sales for the quarter decreased in both our supplies-driven and contract channels.
Fourth quarter non-GAAP operating profit increased $7.8 million or 23.4 percent. Strong operational performance, structural cost reductions, favorable material costs and price realization were partially offset by lower volume.
Fourth quarter sales decreased $24.9 million or 14.0 percent to $153.1 million. Significantly lower biomass sales in the remodel/retrofit channel were partially offset by continued growth in the new construction channel.
For the quarter, non-GAAP operating profit decreased $2.0 million or 6.0 percent due to lower volume partially offset by cost reductions, favorable material costs and price realization.

Outlook

"I am pleased with our performance and believe we are competing well. Our markets have slowed and we are aggressively moving to reduce structural costs while continuing to invest for long-term profitable growth. I remain confident in our ability to create long-term shareholder value," said Mr. Askren.

The Corporation estimates sales to be down 3 to 7 percent in the first quarter over the same period in the prior year. Non-GAAP earnings per share are anticipated to be in the range of $0.16 to $0.21 for the first quarter and $2.20 to $2.60 for the full year, which excludes restructuring and transition costs.