HNI CORP Q1 FY27 Results

“Our members continued to focus on controlling the controllables in the first quarter of fiscal 2026. Through focused cost management and benefits of price-cost and productivity, we managed the middle of the income statement and were able to deliver solid first quarter results. This was despite demand softness to begin the year, especially in Workplace Furnishings, amid concerns related to the conflict in the Middle East, the U.S. economy broadly, and the impacts of tariffs specifically. The positive momentum of our on-going strategies, the benefits of our diversified revenue streams, and the merits of our customer-first business model will continue to deliver strong shareholder value. “In our legacy Workplace Furnishings businesses, first quarter net sales were down about five percent year-over-year on an organic basis, with modest organic growth in our businesses focused on small- and medium-sized workplace customers. The impacts of global macro uncertainty were most prevalent during January and February. Including Steelcase, operating profit was nearly double the prior-year level. Looking ahead, we expect modest organic revenue growth for the full year and solid margin expansion in our legacy Workplace Furnishings businesses, while we continue to invest to drive growth. “In Residential Building Products, revenue increased slightly more than two percent versus the prior-year period. These are strong results given the ongoing weakness in the new home construction market. First quarter segment operating profit margin expanded 190 basis points year-over-year, reaching 17.6 percent. New construction revenue was down mid-single digits, while remodel-retrofit was up 13 percent, both on a year-over-year basis. Despite expectations of ongoing uncertainty, we remain encouraged about the opportunities tied to the broader housing market and we continue to invest to grow our operating model and revenue streams. “Our first quarter performance demonstrates the strength of our strategies and our ability to manage daily uncertainty through varying macroeconomic conditions, all while remaining focused on investing for the future. We expect strong results to continue in 2026, driven by our margin expansion efforts and modest organic revenue growth.” “Our members remain focused on our strategies, we managed our businesses well, and the Corporation delivered a solid quarter that modestly exceeded our expectations. This was despite order and shipment patterns in our Workplace Furnishings segment that saw clear impact from the geopolitical landscape and resulting uncertainty, and ongoing housing market weakness. As we look forward, we expect volume pressure to persist in the second quarter as macro pressures tied to the conflict in the Middle East and tariffs linger. "Our current outlook for the remainder of 2026, which is supported by both external macro and industry metrics and by our internal pipeline data, points to accelerating revenue growth in our Workplace Furnishings segment. In Residential Building Products, we expect modest price-driven revenue growth in the second half, despite expectations of ongoing housing market softness. From a profitability perspective, we anticipate both our legacy Workplace Furnishings and our Residential Building Products segments to expand margins in 2026. While we are optimistic about the year and expect another year of double-digit non-GAAP EPS growth, we will remain focused, conservative, and ready to adjust as required. Our outlook demonstrates the anticipated benefits of our ongoing visibility story and our proven ability to manage through changing economic conditions. “The integration of Steelcase is going well, synergy capture and accretion are on track, and our cultures are melding nicely. We continue to expect modest accretion in 2026, with total non-GAAP EPS benefit reaching $1.20 when fully mature. The benefits of the Steelcase acquisition, the strength of our strategies, and our financial discipline are expected to drive strong free cash flow, which will help us quickly deleverage our balance sheet over the next couple of years. “Our HNI members remain focused on driving growth and expanding margins. And we will continue to invest for the future with confidence.”