HNI 2025 Q1 Earnings Revenue Growth but Net Income Declines

Hni(HNI) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company delivered mixed results with revenue growth and a decline in net income compared to the previous year. Despite the decrease in net income, the company maintained its earnings outlook for 2025, driven by strategic initiatives and productivity gains. The outlook remains unchanged, indicating solid revenue growth across both business segments and expected double-digit EPS growth through 2026.

Revenue
Hni's revenue for Q1 2025 increased by 2.0% year-over-year, reaching $599.80 million, up from $588 million in the same period in 2024. The Workplace Furnishings segment contributed $441.10 million, demonstrating slight growth, while the Residential Building Products segment showed a 7.1% increase, reaching $158.70 million. General corporate revenue remained unchanged, and net sales totaled $599.80 million.

Earnings/Net Income
Hni experienced a decline in EPS, dropping 21.1% to $0.30 in Q1 2025 from $0.38 in Q1 2024. The company's net income also decreased by 21.5%, falling to $13.90 million from $17.70 million in the previous year. The EPS performance indicates challenges in maintaining profitability.

Post-Earnings Price Action Review
The strategy of purchasing HNI shares after experiencing a quarterly revenue drop and holding them for 30 days has historically resulted in a 26.62% return over the past five years. This performance is notably below the benchmark return of 84.08%, reflecting an excess return of -57.46%. The strategy's compound annual growth rate (CAGR) stands at 4.85%. It has demonstrated a Sharpe ratio of 0.37, indicating modest risk-adjusted returns, and has endured a maximum drawdown of -15.87%. The approach saw a volatility level of 13.25%, signifying fluctuations in the share price during the holding period.

CEO Commentary
“Our members delivered an excellent start to 2025, despite tariff-driven volatility. Our first quarter results demonstrate the strength of our strategies, the benefits of our diversified revenue streams, and the merits of our customer-first business model. In the Workplace Furnishings segment, we saw slight net sales growth driven by improving demand and increased backlog levels. However, larger projects and government customers impacted our operating margins. In Residential Building Products, revenue growth returned, with our remodel-retrofit business performing well despite housing market challenges. We remain focused on future growth while managing through macroeconomic variability,” stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.

Guidance
The company anticipates continued net sales growth for 2025, driven by a strong order backlog and increased contract orders in Workplace Furnishings. HNI expects earnings per share contributions of $0.70 to $0.80 from synergies related to the Kimball International acquisition and ramp-up of the Mexico facility in 2025 and 2026. Although macroeconomic headwinds and demand volatility are expected, the company remains optimistic about margin expansion and volume growth, supported by positive leading indicators.

Additional News
HNI Corporation recently announced plans to close its manufacturing facility in Hickory, North Carolina, as part of its profit transformation strategy. This move is expected to save the company $11 million annually by 2026. The closure, attributed to competitive pressures from Chinese furniture manufacturers, will affect approximately 200 employees. Additionally, HNI has engaged in stock repurchase activities, deploying $40 million in the first quarter to buy back shares while maintaining its quarterly dividend. The company continues to explore M&A opportunities to strengthen its market position and drive growth.