HNI Corporation Reports 2% Net Sales Increase but 21% Drop in Net Income for Q1 2025

HNI Corporation reported a net sales increase of 2.0% for the first quarter of 2025, reaching $599.8 million compared to $588.0 million in the same period last year. The growth was primarily driven by a 7.1% rise in the residential building products segment, which generated $158.7 million in sales, while the workplace furnishings segment saw a modest increase of 0.3%, totaling $441.1 million. However, net income attributable to HNI Corporation decreased by 21.3% to $13.9 million, or $0.29 per diluted share, down from $17.7 million, or $0.37 per diluted share, in the prior year. This decline was attributed to restructuring and impairment charges totaling $6.4 million, primarily related to the impairment of the HNI India business, which is now classified as held for sale.

The company's gross profit for the quarter was $238.4 million, reflecting a 2.4% increase from $232.8 million in the previous year. The gross profit margin improved slightly to 39.7% from 39.6%, driven by enhanced productivity, although this was partially offset by higher restructuring costs and unfavorable price-cost dynamics. Selling and administrative expenses rose to $207.6 million, up 2.2% from $203.1 million, primarily due to wage inflation and increased investments in the business. Operating income fell to $24.4 million, a decrease of 17.7% from $29.7 million in the prior year, largely due to the aforementioned restructuring charges.

In terms of operational developments, HNI Corporation's total assets decreased to $1.858 billion as of March 29, 2025, down from $1.875 billion at the end of 2024. The company reported a reduction in current liabilities, which fell to $443.7 million from $477.5 million, while long-term debt increased to $354.7 million from $294.3 million. The company also executed a stock repurchase program, spending $40.4 million to buy back 0.9 million shares during the quarter, with $126.4 million remaining authorized for future repurchases.

Looking ahead, HNI Corporation remains focused on its strategic priorities, including the integration of Kimball International and optimizing its manufacturing capabilities. Despite facing challenges such as cyclical housing market softness and inflationary pressures, management is optimistic about long-term growth prospects in both the workplace furnishings and residential building products segments. The company anticipates continued investments in technology and capabilities to support future growth, while navigating the uncertainties in the macroeconomic environment.