Yahoo Finance HNI Corp (HNI) Q1 2024 Earnings Call Transcript Highlights: Surging Profits Amidst Market Challenges
Non-GAAP EPS: $0.37, up 185% year-over-year
Organic Revenue Decline: 8% decrease, mainly due to housing market softness
Workplace Furnishings Operating Profit Margin: Highest since 2016, improved by 560 basis points year-over-year
Kimball International Operating Profit Margin: 9.3%, contributed $0.1 to non-GAAP EPS
Residential Building Products Operating Margin: 14.4%, despite a 17% revenue decline year-over-year
2024 Revenue Outlook: Low single-digit growth expected in Workplace Furnishings; Residential Building Products revenue flat to slightly down vs. 2023
2024 EPS Outlook: Significant increase expected from 2023, driven by margin expansion and Kimball International accretion
Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you talk about what's left to go in terms of what you control in terms of earnings expansion as the year progresses and into next year? A: (Marshall Bridges - CFO, SVP) We still have the same primary drivers: productivity, cost control in the SG&A line, and price cost. Although price cost will taper off, it will still be a benefit for the remainder of the year, just less so.
Q: On the Building Products side, anything concerning the size of homes or affordability that might create headwinds? A: (Jeffrey Lorenger - Chairman, President, CEO) Affordability has been an issue for a while, but our product pipeline accounts for that. We have newer units in the electric category addressing affordability, so I don't see the headwinds being any more than they've been in the last couple of years.
Q: With rates moving up again, any risk to the SMB side or do other drivers more than offset it on a go-forward basis? A: (Jeffrey Lorenger - Chairman, President, CEO) The business and the drivers are holding pretty solid. Orders in most areas are running at where we expected or slightly up. We see that business as pretty stable.
Q: On the dynamic with Kimball impacting revenue recognition, was this quarter's revenue pulled forward affecting the guide for the next quarter? A: (Marshall Bridges - CFO, SVP) Yes, it's a timing issue and it did pull from the second quarter. The guide for incremental revenue from Kimball International is the same as last quarter, but more of it was realized in the first quarter.
Q: What's the split of your revenue now on the Building Products side between new construction and remodel retrofit? A: (Marshall Bridges - CFO, SVP) It hasn't changed much, very close to 50-50. With the remodel retrofit being down more than new construction, maybe a tad more new construction right now, but it's close enough to 50-50 to not change that ratio.
Q: As you look at mega projects, in what ways does HNI participate and in what ways are there opportunities to win? A: (Jeffrey Lorenger - Chairman, President, CEO) We participate strongly in those projects with corporate account sales teams and well-positioned dealers. We have a lot of activity in that space and exposure to those markets. As leases can't be kicked down the road anymore, people are starting to get active, and we're well-positioned to benefit from that.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
