Investor Presentation 4 th Quarter 2017

Transcription

1 Investor Presentation 4 th Quarter 2017

2 Forward Looking Statements This presentation contains "forward-looking" statements based on current expectations regarding future plans, events, outlook, objectives and financial performance, expectations for future sales growth and earnings per diluted share (GAAP and non-gaap). Forward-looking statements can be identified by words including expect, believe, anticipate, estimate, may, will, would, could, confident or other similar words, phrases or expressions. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation's actual future results and performance to differ materially from expected results. These risks include but are not limited to: general economic conditions in the United States and internationally; unfavorable changes in the United States housing market; industry and competitive conditions; a decline in corporate spending on office furniture; changes in raw material, component or commodity pricing; future acquisitions, divestitures or investments; the cost of energy; changing legal, regulatory, environmental and healthcare conditions; the Corporation s ability to successfully complete its business software system implementation; the Corporation s ability to implement price increases; changes in the sales mix of products; the Corporation's ability to achieve the anticipated benefits from closures and structural alignment initiatives; and force majeure events outside the Corporation s control. A description of these risks and additional risks can be found in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements.

3 Market Leader Office Furniture Hearth #2 Market Position #1 76% $2.2B Sales 24% 3

4 Sales Channels Office Furniture 76% Hearth 24% Office Furniture Hearth Supplies Driven New Construction Contract & Other Retail Wood & Gas Products 4

5 Market Drivers Office Furniture Small Business Confidence CEO Confidence yr. avg: Line represents overall positive vs negative sentiment 80 0 Source: National Federation of Independent Business Source: The Conference Board 86 Service Sector Employment 100 Total Construction Spending: Office Millions Billions Source: Bureau of Labor Statistics CES Industries: Financial Activities, State and Local Government, Federal Government, Other Services, Professional Business Services, Information, and Education and Health Services Source: U.S. Bureau of the Census 5

6 Market Drivers Hearth Products Single Family Housing Starts Residential Remodeling Index 1, Seasonally Adj. Annual Rate (K) 1,200 1, Source: U.S. Census Bureau Source: Hanley Wood 8 US Temperatures Variance from Average $5 Oil Prices $150 Degree Average Dollars per Gallon $4 $3 $2 $1 $120 $90 $60 $30 Dollars per Barrel -2 $0 $0-4 Heating Oil Crude-Brent Source: U.S. NOAA Source: U.S. EIA 6

7 Breadth and Depth Brands Tuned and tailored Distribution Broadest coverage Products Solutions for every need Price Points High to low 7

8 Split and Focus House Of Brands Leverage Member Owner Culture with Lean 8

9 Market Coverage Office Furniture Supplies--Driven Channel North America Contract Channel Retail Commercial Contract Image Retail less than 1% HNI Brands Asian Imports Key Competitors Global Steelcase Haworth Herman Miller Knoll Core, sweet spot 9

10 Market Coverage Hearth Products New Construction Channel Remodel/Retrofit Channel Installing Distributors Specialty Dealer DIY HNI Brands ` ` ` ` Innovative Hearth Products (IHP) Key Competitors Napoleon Travis Niche Competitors Core, sweet spot 10

11 Financial Strength Solid financial position Conservative leverage: Debt/EBITDA 1.4x Significant cash flow generation Economic profit focus/alignment $ in millions $350 $300 $250 $200 $150 $100 $50 $- Operating Cash Flow Committed to strong dividend Sustainable and increasing $0.28 $0.26 $0.24 $0.22 $0.20 $0.18 $0.16 Dividends 11

12 Current Outlook FY17 Outlook FY18 Outlook HNI Earnings Per Share Non-GAAP EPS $1.88 to $1.95 (PY $2.62) Non-GAAP EPS $2.15 to $2.65 Office Furniture Net Sales Up 1 to 4 percent, organically Down 2 to 5 percent Up 1 to 4 percent Hearth Net Sales Up 2 to 5 percent Up 3 to 6 percent 12

13 2018 Guidance Bridge Incremental Profit Office 25% Hearth 30% Price offsetting inflation Amortization & Comp reset Core productivity & Structural cost 13

14 Long-Term Earnings Growth Other Businesses $ Growth opportunities $ $0.60 Structural Cost Benefits $ Structural cost savings +$0.20 Hearth New Construction $ Continued growth in single family housing $ $0.65 North America Office Furniture $ Core growth $ $