HNI Corporation Q1 FY2026 earnings call

• First quarter results exceeded internal expectations despite geopolitical and macro uncertainty; momentum of strategies, diversified revenue and profit streams, focus on controllables, and customer-first model delivered strong shareholder value. • Remainder of 2026: Expect net sales to grow with another year of double-digit non-GAAP EPS growth; legacy workplace furnishings expected to have low single-digit segment revenue increase for full year with high single-digit growth in back half, Steelcase full-year revenue expected to grow slightly; residential building products expected to have modest price-driven revenue growth in second half and both businesses to expand margins. • Outlook beyond 2026: Project double-digit EPS growth in 2027 driven by synergies from Steelcase and legacy network optimization projects; multiple years of elevated earnings growth visibility beyond 2027; terminated Steelcase's multi-year ERP implementation project, began managing costs across all businesses in response to softer start to year, remain focused on minimizing front end disruption in workplace furnishings businesses, and expect additional savings from network optimization in legacy workplace furnishing businesses over next three years.

Workplace Furnishings: First quarter net sales down ~5% year over year organic basis; including Steelcase, workplace furnishings segment non-GAAP operating profit in first quarter totaled almost $49 million, nearly double prior year level; expect segment revenue to increase at low single-digit pace for full year 2026, with high single-digit growth in back half; Steelcase full-year revenue expected to grow slightly. Residential Building Products: Revenue increased more than 2% versus prior year period; new construction revenue down mid-single digits year over year, remodel retrofit revenue up 13% year over year; first quarter segment operating profit margin expanded 190 basis points year over year to 17.6%; expect modest price-driven revenue growth in second half of 2026, and both businesses to expand margins in 2026.

• Expect a strong year in 2026 with fifth straight year of double digit earnings improvement and modest revenue growth in both segments. • Net sales expected to grow in 2026 with another year of double-digit non-GAAP EPS growth anticipated. • Project double-digit EPS growth again in 2027 driven primarily by expected synergies from Steelcase and legacy network optimization projects; maintain multiple years of elevated earnings visibility beyond 2027. • Second quarter 2026 net sales in legacy workplace furnishings expected to increase at low single-digit rate year-over-year, including Steelcase, total workplace furnishings net sales expected to grow approximately 155 to 160 percent versus prior year period; residential building products second quarter net sales expected to decrease at low single-digit rate; non-GAAP diluted earnings per share in second quarter of 2026 expected to decline modestly from 2025 levels, but addition of Steelcase expected to be net neutral to modestly accretive; 2026 full-year earnings outlook supported by productivity, cost management, network optimization initiatives, Steelcase accretion, and price-cost benefits; 2027 expected to have double-digit non-GAAP EPS growth driven by synergies from Steelcase and legacy network optimization projects, with savings exceeding $70 million in 2027 and more than $150 million when fully mature.

• Ongoing geopolitical and macro uncertainty could impact revenue and earnings. • Soft start to the year driven by current geopolitical backdrop could require further cost management actions. • Timing of revenue recognition for Steelcase and other projects could be affected by factors like project delays and order book dynamics. • Potential impact of inflation on costs, including transportation and energy, which may require offsetting through pricing tactics.

Q: Change in workplace outlook for full year, progression of orders through Q1 and April, and if there's conservatism.

A: First quarter legacy workplace side down 3%, contract side off more; slower start but March picked up and momentum continued in last five weeks; second quarter expected to pivot to growth with low single digits, back half expected to have strong high single-digit growth.

Q: Near-term price cost noise from transportation and energy situation and pricing tactics.

A: About $2 million headwind in Q2, will catch back up in Q3 and Q4 through price surcharge.

Q: Cost management efforts and termination of Steelcase's ERP project.

A: Cost management in all business segments, including adjusting headcount and discretionary spend; terminated ERP project to reset and focus on customer-centric growth initiatives, redeploy assets to other areas.

Q: Impact of war in Middle East on office business.

A: Broad-based macro slowdown in January and February, but now optimism returning.

Q: Order cancellations and repricing of backlog orders.

A: No significant order cancellations; not repricing backlog orders, confirm orders and cover headwind in short term.

Q: International and profitability actions for Steelcase.

A: Getting up to speed on Steelcase's go-to markets, they had profit improvement plans and expected to drive shareholder value.

Q: Brand consolidation in RBP business and inventory clearance.

A: Brand consolidation with Forge and Flame over biomass products going well, no downside, taking time, and no inventory clearance needed.

Q: Demand trends for non-office verticals, geography, and re-industrialization.

A: Positive trends in health and education, international orders up, positioned well to pivot with breadth and depth, and using co-development for dynamic market.

Q: Cannibalization between Steelcase and AllSteel.

A: Haven't seen cannibalization, both in contract space but complementary with different customer focus.

Q: Second half comps and government shutdown impact.

A: Second half expected to have strong comps, including from government, SMB, and large accounts; government shutdown could be a source of benefit.

Q: Follow up on second half comps and cannibalization.

A: Second half has favorable comps, and no cannibalization seen between Steelcase and AllSteel