HNI Corporation Reports Second Quarter 2025 Results

August 17, 2025  by Karen Parrish in Business Strategy, Industry   

Highlights

- Volume growth drove strong year-over-year earnings improvement

- GAAP diluted EPS $1.02 (+36% YoY) / non-GAAP diluted EPS $1.11 (+41% YoY)

- Q2 GAAP operating margin 10.2%; non-GAAP operating margin 11.0% reaches highest Q2 level on record

- Elevated earnings growth visibility remains through 2026 from initiatives already underway

- Volume growth anticipated for full year 2025 in both segments
 

Strong second quarter results—revenue, margins, and earnings. On a year-over-year basis in the second quarter, total net sales increased seven percent and organic net sales increased nearly eight percent. Consolidated operating margin expanded 160 basis points on a GAAP basis and 200 basis points on a non-GAAP basis versus the second quarter of 2024. The improvement was driven by volume growth, profit transformation initiatives, and synergy benefits. Non-GAAP to GAAP reconciliations follow the financial statements in this release.

Elevated earnings visibility through 2026. The Corporation continues to realize significant savings from the Kimball International (“KII”) acquisition synergies and from the ramp-up of its Mexico facility. These two initiatives contributed approximately $0.24 of EPS benefit in the first half of 2025 and are expected to contribute an additional $0.50 to $0.60 of EPS over the next 18 months.

Recent demand activity continues to support the Corporation’s outlook for net sales growth in 2025. Workplace Furnishings contract orders were up five percent year-over-year. This excludes hospitality, which saw a significant tariff-related demand pause during the second quarter of 2025. Total Workplace Furnishings segment orders grew one percent year-over-year organically, while quarter-ending backlog was up five percent versus the same period of 2024. Second quarter Residential Building Products segment orders declined slightly compared to the prior year following some pull-forward activity late in the first quarter of 2025. Order patterns improved through the second quarter as the pull-forward impact abated.

Strong balance sheet. Gross debt leverage at the end of the second quarter was 1.4x, as calculated in accordance with the Corporation’s debt agreements. The Corporation continued to deploy cash flow through nearly $40 million of stock repurchase activity in the second quarter, while maintaining its longstanding quarterly dividend.

Jeff Lorenger, chairman, president, and CEO stated, “Our members delivered another excellent quarter, despite ongoing tariff-driven volatility. The strength of our strategies, the benefits of our diversified revenue streams, and the merits of our customer-first business model continue to deliver strong shareholder value.”

“In the Workplace Furnishings segment, organic net sales increased more than eight percent year-over-year, fueled by growth across all major brands. This includes a return to growth in our brands focused on small-and-medium sized businesses and noteworthy strength in our contract brands. Second quarter orders increased year-on-year, and quarter-ending backlog levels are up versus the same period of 2024, including the impact of some pull-forward activity ahead of announced pricing actions.”

“We continue to expect year-over-year revenue growth in the segment over the remainder of 2025. Second quarter results benefited from solid volume growth, our profit transformation efforts, and recognition of KII synergies—driving solid year-over-year profit margin expansion, with GAAP and non-GAAP segment operating profit margin at 12.8 percent and 13.1 percent respectively. We continue to expect margin expansion in 2025, while we remain focused on our investments aimed at driving growth in this segment.”

“In Residential Building Products, net sales growth exceeded five percent and segment operating profit margin expanded 190 basis points year-over-year in the quarter. New construction was up more than four percent and remodel-retrofit grew over seven percent, both on a year-over-year basis. We delivered this top line growth in the face of continued challenging housing market dynamics. Despite expectations of ongoing housing uncertainty, we remain encouraged about the long-term opportunities tied to the broader housing market. The strength of our market-leading positions and operating model support our expectations of continued revenue and profit growth in the back half of 2025 as we continue to invest to drive future growth.”

“Our second quarter revenue growth and profit improvement demonstrate the strength of our strategies and our ability to manage through varying macroeconomic conditions, while remaining focused on investing for the future. We expect strong results to continue, driven by our margin expansion efforts and continued volume growth.”

HNI Corporation — Second Quarter Summary Comments
Consolidated net sales increased 7.0 percent from the prior-year quarter to $667.1 million, driven by strong volume growth in the workplace furnishings segment and pricing actions in both segments. On an organic basis, net sales increased 7.7 percent year-over-year. The divestiture of HNI India in the second quarter of the current year decreased year-over-year sales by $4.5 million. A reconciliation of organic net sales, a non-GAAP measure, to net sales follows the financial statements in this release.

Gross profit margin expanded 100 basis points compared to the prior-year quarter. This increase was driven by improved net productivity, partially offset by unfavorable price-cost.

Selling, general, and administrative expenses as a percentage of net sales decreased 70 basis points compared to the prior-year quarter. The decrease was driven by higher net sales, partially offset by $2.7 million to settle a previously frozen pension plan, and wage inflation.

Restructuring, impairments, and loss on divestiture charges of $2.5 million were incurred in the current quarter, primarily related to the Corporation's network optimization program. In the prior-year quarter $2.0 million was incurred primarily in connection with a Workplace Furnishings factory consolidation initiative.

Net income per diluted share was $1.02 compared to $0.75 in the prior-year quarter. On a non-GAAP basis, net income per diluted share increased to $1.11 from $0.79 in the prior-year quarter, driven by higher net sales volume and improved net productivity, partially offset by unfavorable price-cost.

Workplace Furnishings — Second Quarter Summary Comments

Workplace Furnishings net sales increased 7.4 percent from the prior-year quarter to $516.0 million. On an organic basis, net sales increased 8.5% year-over-year. The divestiture of HNI India in the second quarter of the current year decreased year-over-year sales by $4.5 million.

Workplace Furnishings operating profit margin of 12.8 percent expanded by 150 basis points versus the prior-year quarter, driven by improved net productivity and higher net sales, partially offset by unfavorable price-cost. On a non-GAAP basis, segment operating profit margin of 13.1 percent expanded 120 basis points year-over-year.

Residential Building Products — Second Quarter Summary Comments

Residential Building Products net sales increased 5.3 percent from the prior-year quarter to $151.1 million. Remodel-retrofit net sales increased at a higher rate than new construction.

Residential Building Products operating profit margin of 15.7 percent expanded 190 basis points year-over-year driven by favorable price-cost and higher net productivity, partially offset by unfavorable product mix and higher variable compensation.

Concluding Remarks
“We delivered strong results in the second quarter of 2025, with revenue growth in both segments; and non-GAAP operating margin expanding to the strongest second quarter-level on record. As we look at the full year, our earnings outlook increases modestly, demonstrating the benefits of a stronger-than-expected second quarter, our visibility story, and our ability to manage through changing economic conditions. For the full year 2025, we expect solid mid-single digit revenue growth in both segments, a modestly higher non-GAAP operating margin versus the year-ago period, and double-digit non-GAAP diluted earnings per share growth for the fourth consecutive year. We remain optimistic about the balance of 2025.”

“Our members remain focused on driving growth and expanding margins. Our balance sheet is in great shape, and our cash flow remains consistent and strong. We will continue to invest for the future with confidence,” concluded Mr. Lorenger.

Conference Call
The webcast replay will be available on HNI Corporation’s website at https://investors.hnicorp.com/events-and-presentations.