EAST GREENVILLE, Pa.,
Oct. 15 /PRNewswire-FirstCall/ --
Knoll, Inc. (NYSE: KNL) today announced results for the third
quarter ended September 30, 2010.
Net sales were $202.1 million
for the quarter, an increase of 11.5% over the third quarter 2009.
Operating profit was $19.1
million, an increase of 13.7% over the third quarter 2009.
Sequentially, net sales increased $9.8
million, or 5.1%, and operating profit increased
$7.2 million, or 60.0%, when compared
with the second quarter of 2010. Operating profit as a
percent of net sales increased 20 basis points from the third
quarter of 2009 and 330 basis points from the second quarter of
2010. Net income was $6.3 million, an
increase of 10.5% over the third quarter 2009. Earnings per
share for the third quarter of 2010 was $0.14, a slight increase from earnings per share
of $0.13 for the third quarter of
2009. During the quarter earnings per share was negatively
impacted by $0.06 of non-cash other
expense from foreign exchange related to the Canadian Dollar and
Euro and the mark to market cost related to the ineffective portion
of our interest rate swaps.
"We are in the midst of a genuine recovery in demand," commented
Andrew Cogan, CEO. "While we are
benefiting from improved demand conditions, it is encouraging to
see our rate of growth accelerating relative to the overall
industry as our new product initiatives gain significant traction
led by our innovative Generation by Knoll work chair. Our team did
a nice job of sequentially leveraging this growth to improve on our
industry leading levels of profitability. With all our leading
indicators continuing to show double digit year over year growth we
look forward to ending 2010 on a positive note."
Third Quarter Results
Third quarter 2010 financial results highlights follow:
|
|
Dollars in Millions Except Per
Share Data
|
|
Three Months
Ended
|
|
Percent
|
|
|
|
|
9/30/10
|
|
9/30/09
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
202.1
|
|
$
|
181.3
|
|
11.5
|
%
|
|
Gross Profit
|
|
|
67.5
|
|
|
61.3
|
|
10.1
|
%
|
|
Operating Expenses
|
|
|
48.3
|
|
|
44.5
|
|
8.5
|
%
|
|
Operating Profit
|
|
|
19.1
|
|
|
16.8
|
|
13.7
|
%
|
|
Net Income
|
|
|
6.3
|
|
|
5.7
|
|
10.5
|
%
|
|
Earnings Per Share –
Diluted
|
|
|
.14
|
|
|
.13
|
|
7.7
|
%
|
|
Backlog
|
|
|
160.5
|
|
|
121.7
|
|
31.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales for the quarter were $202.1
million, an increase of $20.8
million, or 11.5%, over the third quarter of 2009.
During the quarter we experienced increased volumes across
all product categories and geographies. Sales in Europe outpaced our growth in North America. Seating continues to have
the largest percentage growth rate as it experienced its third
consecutive year-over-year growth during the quarter as sales
continue to increase for our Generation by Knoll
Chair®. The third quarter of 2010 marked
the first quarter in eleven quarters that we experienced growth in
sales of our office systems product category. Systems
continues to represent the largest percentage of our overall
revenue.
Backlog of unfilled orders at September
30, 2010 was $160.5 million,
an increase of $38.8 million, or
31.9% compared to unfilled orders at September 30, 2009.
Gross profit for the third quarter of 2010 was $67.5 million, an increase of $6.2 million, or 10.1%, over the same period in
2009. Gross profit as a percentage of net sales decreased to
33.4% in the third quarter of 2010 from 33.8% in the same quarter
of 2009. Sequentially, gross profit as a percentage of net
sales increased to 33.4% from 32.8% in the second quarter of 2010.
The decrease in gross margin from the third quarter of 2009
largely resulted from price deterioration and unfavorable movements
in foreign exchange.
Operating expenses for the quarter were $48.3 million, or 23.9% of net sales, compared to
$44.5 million, or 24.5% of net sales,
for the third quarter of 2009. The increase in operating
expenses during the third quarter of 2010 was in large part due to
increased commissions and incentive compensation in conjunction
with our higher sales volumes.
We generated operating profit for the third quarter of 2010 of
$19.1 million, an increase of
$2.3 million, or 13.7%, over the same
period in 2009. Operating profit as a percentage of net sales
was 9.5% for the third quarter of 2010. Operating profit as a
percentage of net sales was 9.3% for the third quarter of 2009.
Interest expense increased $0.8
million over the third quarter 2009. The increase in
interest expense is due to interest rate swap agreements that we
entered into during 2008. These agreements expire
June 9, 2011. Other expense for
the third quarter of 2010 was $4.3
million. During the third quarter 2010 we recorded a
$1.2 million non-cash expense related
to the ineffective portion of our interest rate swaps. Also
included in other expense is $3.6
million of foreign exchange losses and $0.5 million of miscellaneous income. Other
expense for the third quarter 2009 was $3.1
million which included $3.2
million of foreign exchange losses offset by $0.1 million of miscellaneous income.
The effective tax rate was 36.3% for the quarter, as compared to
40.5% for the same period last year. The decrease in the
effective tax rate is largely due to the mix of pretax income in
the countries in which we operate. Net income for the third
quarter 2010 was $6.3 million, or
$0.14 diluted earnings per share, as
compared to $5.7 million, or
$0.13 diluted earnings per share, for
the same quarter in 2009.
Cash generated from operations during the third quarter 2010 was
$20.2 million, compared to
$29.5 million in the same period of
2009. Capital expenditures for the third quarter 2010 totaled
$1.1 million compared to $1.2 million for 2009. We repaid $22.1 million of debt during the third quarter of
2010 compared to $28.1 million during
2009. We also paid a quarterly dividend of $0.9 million, or $0.02 per share, in the third quarter of 2009 and
2010.
This quarter we reduced our bank debt by $22.1 million and by $55.1
million from a year ago. We are comfortably in
compliance with our bank covenants. "The progress we have
made in debt paydown and working capital management during this
terrible economic environment is a testimony to how this company
and its associates respond to challenges," commented Barry L. McCabe, EVP & CFO.
Conference Call Information
Knoll will host a conference call on Friday, October 15, 2010 at 10:00 A.M. EDT to discuss its financial
results.
The call will include slides; participants are encouraged to
listen to and view the presentation via webcast at
http://www.knoll.com; go to "About Knoll" and click on "Investor
Relations."
The conference call may also be
accessed by dialing:
|
|
|
|
|
North America
|
888 396-2384
|
|
International
|
617 847-8711
|
|
Passcode
|
38316150
|
|
|
|
A replay of the webcast can be viewed by visiting the Investor
Relations section of the Knoll corporate website.
In addition, an audio replay of the conference call will be
available through October 22, 2010 by
dialing 888 286-8010. International replay: 617 801-6888 (Passcode:
10583415).
About Knoll
Since 1938, Knoll has been recognized internationally for
creating workplace and residential furnishings that inspire, evolve
and endure. Today, our commitment to modern design, our
understanding of the workplace and our dedication to sustainable
design has yielded a unique portfolio of products that respond and
adapt to changing needs. Knoll is aligned with the U.S. Green
Building Council and can help companies, healthcare organizations
and educational institutions achieve Leadership in Energy and
Environmental Design (LEED®) workplace certification. Knoll
is the contract furniture industry's first member of the Chicago
Climate Exchange (CCX®) and is the founding sponsor of the
World Monuments Fund Modernism at Risk program.
Cautionary Statement Regarding Forward-Looking Information
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements regarding Knoll, Inc.'s expected future
financial position, results of operations, revenue levels, cash
flows, business strategy, budgets, projected costs, capital
expenditures, products, competitive positions, growth
opportunities, plans and objectives of management for future
operations, as well as statements that include words such as
"anticipate," "if," "believe," "plan," "goals, " "estimate,"
"expect," "intend," "may," "could," "should," "will," and other
similar expressions are forward- looking statements. This includes,
without limitation, our statements and expectations regarding any
current or future recovery in our industry. Such
forward-looking statements are inherently uncertain, and readers
must recognize that actual results may differ materially from the
expectations of Knoll management. Knoll does not undertake a duty
to update such forward-looking statements. Factors that may cause
actual results to differ materially from those in the
forward-looking statements include corporate spending and
service-sector employment, price competition, acceptance of Knoll's
new products, the pricing and availability of raw materials and
components, foreign currency exchange, transportation costs, demand
for high quality, well designed office furniture solutions, changes
in the competitive marketplace, changes in the trends in the market
for office furniture, the financial strength and stability of our
suppliers, customers and dealers, access to capital, and other
risks identified in Knoll's annual report on Form 10-K, and other
filings with the Securities and Exchange Commission. Many of these
factors are outside of Knoll's control.
KNOLL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in
thousands, except per share data)
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
2009
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
202,149
|
|
|
$
|
181,282
|
|
|
$
|
569,683
|
|
$
|
596,088
|
|
|
Cost of sales
|
|
|
134,697
|
|
|
|
120,009
|
|
|
|
382,530
|
|
|
389,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
67,452
|
|
|
|
61,273
|
|
|
|
187,153
|
|
|
206,769
|
|
|
Selling, general, and
administrative expenses
|
|
|
48,223
|
|
|
|
44,366
|
|
|
|
140,821
|
|
|
146,271
|
|
|
Restructuring and other
charges
|
|
|
120
|
|
|
|
110
|
|
|
|
5,875
|
|
|
8,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
19,109
|
|
|
|
16,797
|
|
|
|
40,457
|
|
|
52,076
|
|
|
Interest expense
|
|
|
4,877
|
|
|
|
4,054
|
|
|
|
13,440
|
|
|
9,681
|
|
|
Other expense, net
|
|
|
4,274
|
|
|
|
3,112
|
|
|
|
3,369
|
|
|
4,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax
expense
|
|
|
9,958
|
|
|
|
9,631
|
|
|
|
23,648
|
|
|
37,860
|
|
|
Income tax expense
|
|
|
3,618
|
|
|
|
3,905
|
|
|
|
6,417
|
|
|
14,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
6,340
|
|
|
$
|
5,726
|
|
|
$
|
17,231
|
|
$
|
23,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
.14
|
|
|
$
|
.13
|
|
|
$
|
.38
|
|
$
|
.51
|
|
|
Diluted
|
|
$
|
.14
|
|
|
$
|
.13
|
|
|
$
|
.37
|
|
$
|
.51
|
|
|
Weighted-average shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
45,636,771
|
|
|
|
45,408,555
|
|
|
|
45,631,910
|
|
|
45,366,081
|
|
|
Diluted
|
|
|
46,154,165
|
|
|
|
45,417,593
|
|
|
|
46,020,432
|
|
|
45,370,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KNOLL,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Dollars in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
2010
|
|
December
31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
7,814
|
|
$
|
5,961
|
|
|
Customer receivables,
net
|
|
|
116,735
|
|
|
113,652
|
|
|
Inventories
|
|
|
80,722
|
|
|
79,964
|
|
|
Prepaid and other current
assets
|
|
|
17,101
|
|
|
14,300
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
222,372
|
|
|
213,877
|
|
|
Property, plant, and equipment,
net
|
|
|
121,194
|
|
|
135,045
|
|
|
Intangible assets,
net
|
|
|
298,140
|
|
|
299,162
|
|
|
Other noncurrent
assets
|
|
|
7,370
|
|
|
7,536
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
649,076
|
|
$
|
655,620
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Current maturities of long-term
debt
|
|
$
|
132
|
|
$
|
149
|
|
|
Accounts payable
|
|
|
75,008
|
|
|
74,687
|
|
|
Other current
liabilities
|
|
|
88,824
|
|
|
78,428
|
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
163,964
|
|
|
153,264
|
|
|
Long-term debt
|
|
|
255,000
|
|
|
295,156
|
|
|
Other noncurrent
liabilities
|
|
|
119,307
|
|
|
117,638
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
538,271
|
|
|
566,058
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
110,805
|
|
|
89,562
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
649,076
|
|
$
|
655,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KNOLL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in
thousands)
|
|
|
|
Nine Months
Ended September 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
17,231
|
|
|
$
|
23,325
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows provided by Operating
Activities
|
|
|
51,519
|
|
|
|
42,462
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows used in Investing
Activities
|
|
|
(4,249)
|
|
|
|
(12,247)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows used in Financing
Activities
|
|
|
(42,668)
|
|
|
|
(35,108)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
|
|
(2,749)
|
|
|
|
3,616
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
|
|
1,853
|
|
|
|
(1,277)
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period
|
|
|
5,961
|
|
|
|
14,903
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period
|
|
$
|
7,814
|
|
|
$
|
13,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Knoll, Inc.
Copyright . 15 PR Newswire