HNI Corporation Announces Plant Consolidation
May 20 2024 - 4:30PM
Business Wire
HNI Corporation (NYSE: HNI) announced today it will close its
Hickory, North Carolina, manufacturing plant during the first half
of 2025 and consolidate production into its other North American
facilities.
HNI expects the consolidation to improve productivity and
strengthen operations, without sacrificing capacity or creating
disruption. Customers and trade partners will benefit from
production efficiencies, coordinated delivery logistics, and
rigorous quality assurance.
HNI will maintain a commercial presence in Hickory with its HBF
brand of workplace furnishings and textile products. HBF’s brand
headquarters will remain in Hickory as will its marketing, customer
experience, product development, and product engineering members
(employees).
“Closing a facility is a difficult decision and is not a
reflection on the hard work and effort of the Hickory operations
team. We are grateful for their dedication and will work to assist
them through this transition.
“This is a strategic decision to optimize our operational
footprint and improve business performance. We are announcing this
several months in advance as part of our commitment to make the
transition as smooth as possible. We will continue to grow our
premium HBF business with our talented brand team in Hickory. This
move will improve the customer experience for our trade partners
and end-users, and more efficiently deliver on our commitments to
safety, quality, lead-times, and reliability,” said Jeff Lorenger,
HNI’s Chairman, President, and Chief Executive Officer.
Estimated Financial
Impacts
- Cost savings. HNI estimates the consolidation will save
approximately $11 million annually once fully mature in 2026.
Savings realized in 2025 are expected to be $8 to $9 million.
- Savings are incremental to previously announced cost
synergies from the acquisition of Kimball International, Inc.
(“KII”). Moving Hickory production to HNI’s manufacturing
centers of excellence was partially enabled by the strategic
integration of KII, which HNI acquired in June 2023. Total cost
synergies associated with the integration of KII now total an
estimated $50 million, reflecting the previously announced $35
million, $11 million associated with the Hickory consolidation, and
approximately $4 million of new cost synergies related to ongoing
procurement efforts. In addition to these cost synergies, KII
continues to be highly complementary from a product, market, and
cultural perspective. KII’s brands strengthen HNI’s exposure to
several important trends and markets, including ancillary products,
secondary geographies, healthcare, and hospitality.
- Resulting charges. HNI anticipates charges resulting
from the consolidation will impact pre-tax earnings by an estimated
$10.3 million in 2024 and 2025, including $1.5 million of non-cash
charges. The following table lists the estimated composition and
timing of these charges:
(Dollars in millions)
Time Period
Restructuring Costs
(Cash)
Accelerated Depreciation
(Non-Cash)
Other Costs (Cash and
Non-Cash)
Total
Q2 2024
2.5
0.1
1.4
4.1
Q3 2024
0.7
0.4
1.5
2.6
Q4 2024
0.8
0.4
0.7
1.8
2024 Total
8.5
Q1 2025
0.7
0.4
0.4
1.5
Q2 2025
0.2
-
0.1
0.3
2025 Total
1.8
Grand Total
10.3
The decision will impact approximately 200 production and
operations members in Hickory.
About HNI Corporation
HNI Corporation (NYSE: HNI) has been improving where people
live, work, and gather for more than 75 years. HNI is a
manufacturer of workplace furnishings and residential building
products, operating under two segments. The Workplace Furnishings
segment is a leading global designer and provider of commercial
furnishings, going to market under multiple unique brands. The
Residential Building Products segment is the nation's leading
manufacturer and marketer of hearth products, which include a full
array of gas, electric, wood, and pellet-burning fireplaces,
inserts, stoves, facings, and accessories. More information can be
found on the Corporation's website at www.hnicorp.com.
Forward-Looking
Statements
This release contains "forward-looking" statements based on
current expectations regarding future plans, events, outlook,
objectives, financial performance, and expectations for sales
growth, including statements regarding HNI’s ability to achieve the
estimated benefits of the consolidation described above within the
anticipated time period and subject to the costs in the amounts
estimated. 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. Actual results could differ
materially from those anticipated in the forward-looking statements
and from historical results due to the risks and uncertainties
described elsewhere in this release, including but not limited to:
the Corporation’s ultimate realization of the anticipated benefits
of the acquisition of KII; disruptions in the global supply chain;
the effects of prolonged periods of inflation and rising interest
rates; labor shortages; the levels of office furniture needs and
housing starts; overall demand for the Corporation’s products;
general economic and market conditions in the United States and
internationally; industry and competitive conditions; the
consolidation and concentration of the Corporation’s customers; the
Corporation’s reliance on its network of independent dealers;
change in trade policy; changes in raw material, component, or
commodity pricing; market acceptance and demand for the
Corporation’s new products; changing legal, regulatory,
environmental, and healthcare conditions; the risks associated with
international operations; the potential impact of product defects;
the various restrictions on the Corporation’s financing activities;
an inability to protect the Corporation’s intellectual property;
cybersecurity threats, including those posed by potential
ransomware attacks; impacts of tax legislation; and force majeure
events outside the Corporation’s control, including those that may
result from the effects of climate change. 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 assumes no
obligation to update, amend, or clarify forward-looking statements,
except as required by applicable law.
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version on businesswire.com: https://www.businesswire.com/news/home/20240520465333/en/
Marshall H. Bridges, Senior Vice President, and Chief Financial
Officer (563) 272-7400
Matthew S. McCall, Vice President, Investor Relations, and
Corporate Development (563) 275-8898
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