HNI Corp. (NYSE: HNI) reported Q1 EPS of $0.02, $0.01 better than the analyst estimate of $0.01. Revenue for the quarter came in at $479.5 million versus the consensus estimate of $485.33 million.

First Quarter Summary Comments

• Consolidated net sales decreased $25.6 million or 5.1 percent from the prior year quarter to $479.5 million. On an organic basis, sales decreased 3.4 percent. The net impact of closing and divesting small office furniture companies decreased sales $8.5 million compared to the prior year quarter. A reconciliation of organic sales, a non-GAAP measure, follows the financial statements in this release.
• GAAP gross profit margin increased 40 basis points compared to the prior year quarter. Of this increase, 10 basis points were driven by improved productivity and price realization, partially offset by input cost inflation and lower volume. The remaining increase of 30 basis points was due to lower transition costs.
• Selling and administrative expenses increased 60 basis points compared to the prior year quarter. This increase was primarily due to lower sales volume, partially offset by lower Business System Transformation costs and lower core spend.
• Non-GAAP net income per diluted share was $0.02 compared to $0.10 in the prior year. A higher effective tax rate drove $0.04 of the decrease. The remaining $0.04 decline was due to lower volume and input cost inflation, partially offset by improved price realization, productivity, cost savings, and lower Business System Transformation costs.

"Our first quarter results were as expected. As anticipated, demand conditions generally improved throughout the quarter after a slow start. We were able to offset much of the impact from lower volume with cost savings and productivity. We are pleased with the progress on our initiatives and continue to believe our demand and profit results will improve throughout the year," said Jeff Lorenger, HNI Corporation President and Chief Executive Officer.

Outlook
"Our profit outlook for the year is unchanged. Market conditions remain dynamic. Demand has generally improved over the last few months. Our expectation remains that we will drive 2019 profit growth through productivity and cost saving efforts while we continue to invest in new capabilities. I am confident in our strategies and the teams we have in place to execute them," said Mr. Lorenger.

GUIDANCE:

HNI Corp. sees FY2019 EPS of $2.50-$2.90, versus the consensus of $2.66.

• The Corporation expects full year organic sales to be up 2 to 6 percent.
• This compares to the previous organic sales growth expectation of up 3 to 7 percent.
• The change is primarily driven by price realization assumptions related to tariffs. Including the impact of closing and divesting small office furniture companies, full year sales are expected to be up 1 to 5 percent.

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