HNI Corporation Q4 FY2025 earnings call

• 2025 was a seminal year for HNI with a fourth straight year of double-digit non-GAAP EPS growth despite persistent soft and uncertain macro conditions. - The acquisition of Steelcase was completed late in 2025, uniting two industry leaders. Integration efforts are underway, and the company is confident in delivering targeted synergies. - Workplace Furnishings margins have been reset through multiple improvement initiatives. - Residential Building Products shifted focus to the front end of the business to drive top line growth with structural changes implemented.

Workplace Furnishings: Three years ago, the legacy Workplace Furnishings business launched a profitability improvement initiative. In 2023, price/cost recovery following elevated inflation drove the first phase of operating margin expansion. Since then, multiple portfolio management moves, ongoing network optimization efforts, KII synergies, and the benefits of ramping the Mexico facility have supported consistent profitability improvement. In 2025, legacy Workplace Furnishings organic net sales grew 6% year-over-year, and full year non-GAAP operating profit margin expanded 100 basis points year-over-year to 10.5%. Residential Building Products: Since the great financial crisis, the business has adjusted its cost structure, embraced lean manufacturing, and pursued a vertically integrated business model. Over the decade post-2009, operating margin expanded over 1,000 basis points. In 2025, segment revenue grew 6% despite continued weakness in the new home market, and segment non-GAAP operating profit margin expanded 60 basis points year-over-year to 18.1%.

• Expect a fifth year of double-digit non-GAAP EPS growth in 2026. - Revenue growth is expected while driving bottom line improvement. - Network optimization efforts are expected to yield an incremental $0.25 to $0.30 over the next three years, with approximately $0.10 recognized in 2026. - Modest EPS accretion from Steelcase in 2026 excluding the impact of purchased accounting. - First quarter 2026 total net sales expected to increase by more than 130% year-over-year, non-GAAP EPS slightly decrease; mid-single digits revenue growth for the full year. - Building Products revenue expected to be up low single digits in the first quarter and full year, with adjusted earnings per share to return in the second quarter and accelerate as the year progresses. - Post Steelcase acquisition, the net debt-to-EBITDA ratio is 2x, and leverage is expected to return to the 1 to 1.5x range in the next 18 to 24 months.

Q: Clarification about the outlook for 2026, specifically whether revenue and double-digit earnings growth comments are off the base without Steelcase or with Steelcase.

A: $3.53 (excluding purchase accounting and the Steelcase stub period) is the basis for future growth.

Q: Workplace Furnishings in the first quarter, including weather impact and backlog/order numbers.

A: Weather can have an impact, but bid counts and funnel metrics in the contract and Steelcase business are up.

Q: Synergy number, potential upside, and Steelcase International.

A: The $120 million synergy is Americas focused with a disciplined approach, and the international business is not a negative offset, with more to be shared as learned.

Q: Resi growth investments, margin profile, and related investments.

A: It's a three-year journey with front-end structure, product innovation, and investments in new categories.

Q: Profit headwinds in the first quarter and hospitality market update.

A: Timing of revenue and expense causes first quarter headwinds, and the hospitality market is solid.

Q: Demand for design support, pipeline, and timing to orders.

A: There is a lot of activity in the pipeline with volatile timing from spec to order.