EAST GREENVILLE, Pa., July 16 /PRNewswire-FirstCall/ -- Knoll, Inc.
(NYSE: KNL) today announced results for the second quarter ended
June 30, 2009. Net sales were $202.2 million for the quarter, a
decrease of 30.9% from the second quarter 2008. Operating profit
was $18.5 million, or 9.1% of net sales, a decrease of 47.3% from
the second quarter 2008. Excluding restructuring charges of $2.1
million, operating profit was $20.6 million during the second
quarter of 2009, or 10.2% of net sales, a decrease of 46.5% when
compared to adjusted operating profit from the second quarter of
2008. Net income was $8.1 million, a decrease of 61.2% over the
second quarter 2008. Adjusted earnings per share was $0.21 compared
to $0.49 adjusted earnings per share in the prior year, a decrease
of 57.1%. Earnings per share was $0.18 compared to $0.44 earnings
per share in the prior year. "While our industry continues to be
severely impacted by the global economic crisis we are pleased that
we were able to report relatively robust profitability," stated
Andrew Cogan, CEO. "Our strategy of diversifying our sources of
revenue into high design content business continued to buffer our
results. The June introduction of our new Generation by Knoll(TM)
work chair at the annual NeoCon tradeshow was one of the most
broadly well received launches in our history. The unique design
and user benefits of this chair were recognized in positive reviews
from clients, specifiers and the general media as well as by our
win of the Best of NeoCon Gold for task seating. I believe that we
succeeded in setting a new reference point for work chair seating
and will, in the coming years, see meaningful revenue and profit
impact from our Generation launch." Second Quarter Results Second
quarter 2009 financial results highlights follow: Dollars in
Millions Except Per Share Data Three Months Ended Percent 6/30/09
6/30/08 Change --------- --------- ------ Net Sales $202.2 $292.5
(30.9) % Gross Profit 70.7 101.1 (30.1) % Operating Expenses 50.1
62.6 (20.0) % Restructuring Charges 2.1 3.4 (38.2) % Operating
Profit 18.5 35.1 (47.3) % Adjusted Operating Profit 20.6 38.5
(46.5) % Net Income 8.1 20.9 (61.2) % Earnings Per Share - Diluted
.18 .44 (59.1) % Adjusted Earnings Per Share - Diluted .21 .49
(57.1) % Backlog 134.1 191.0 (29.8) % Adjusted earnings per share
and adjusted operating profit are calculated by excluding from
earnings per share and operating profit items we believe to be
infrequent or not indicative of our operating performance. For a
reconciliation of adjusted earnings per share and adjusted
operating profit to earnings per share and operating profit,
respectively, see "Reconciliation of Non-GAAP Financial Measures"
below. Net sales for the quarter were $202.2 million, a decrease of
$90.3 million, or 30.9%, over the second quarter of 2008. The
decrease in sales for the quarter was experienced across all
product categories and geographies. Backlog of unfilled orders at
June 30, 2009 was $134.1 million, a decrease of $56.9 million, or
29.8% compared to unfilled orders at June 30, 2008. Gross profit
for the second quarter of 2009 was $70.7 million, a decrease of
$30.4 million or 30.1%, over the same period in 2008. Gross margin
increased to 35.0% in the second quarter of 2009 from 34.6% in the
same quarter of 2008. The increase in gross margin largely resulted
from favorable foreign exchange rates and lower transportation
costs. In addition, we benefited from previously implemented cost
reduction activities and our global sourcing efforts. Operating
expenses for the quarter were $50.1 million, or 24.8% of sales,
compared to $62.6 million, or 21.4% of sales, for the second
quarter of 2008. The decrease in operating expenses during the
second quarter of 2009 was in large part due to decreased spending
in conjunction with our lower sales volumes. Decreased sales and
performance related compensation accounted for approximately $6.0
million of the reduction in operating expenses. Our operating
profit for the second quarter of 2009 was $18.5 million, a decrease
of $16.6 million, or 47.3%, over the same period in 2008. Operating
profit as a percentage of sales was 9.1%. Operating profit for the
second quarter of 2009 includes restructuring charges of $2.1
million. Excluding those restructuring charges, operating profit
would have been $20.6 million or 10.2% as a percent of sales. For a
reconciliation of adjusted operating profit to GAAP operating
profit, see "Reconciliation of Non-GAAP Financial Measures" below.
Interest expense decreased $1.1 million over the second quarter
2008 due to lower average borrowing rates. Other expense for the
second quarter 2009 was $2.7 million which included $2.8 million of
foreign exchange losses and $0.1 million of miscellaneous income.
Other expense for the second quarter 2008 was $0.1 million. The
effective tax rate was 37.5% for the quarter, as compared to 32.7%
for the same period last year. This increase is primarily due to a
net operating loss tax credit of $1.4 million that we benefited
from during the second quarter of 2008. Without this benefit, our
tax rate for the second quarter of 2008 would have been 37.2%. Net
income for the second quarter 2009 was $8.1 million, or $0.21
adjusted earnings per share, as compared to $20.9 million, or $0.49
adjusted earnings per share, for the same quarter in 2008. Cash
generated from operations during the second quarter 2009 was $27.8
million, compared to $41.0 million in the same period of 2008.
Capital expenditures for the second quarter 2009 totaled $5.1
million compared to $4.3 million for 2008. We repaid $23.0 million
of debt during the second quarter of 2009 compared to $9.6 million
during 2008. We also paid a quarterly dividend of $0.9 million, or
$0.02 per share, in the second quarter of 2009 compared to $5.6
million, or $0.12 per share, in the second quarter of 2008. "Our
working capital and spending reduction programs, allowed us to
reduce our bank debt by approximately $23 million. Maintaining a
strong balance sheet and aggressively freeing up working capital
remains a top priority," stated Barry McCabe, CFO. Reconciliation
of Non-GAAP Financial Measures This release contains adjusted
earnings per share and adjusted operating profit measures, which
are both non-GAAP financial measures. Adjusted earnings per share
and adjusted operating profit are calculated by excluding from
earnings per share and operating profit items that we believe to be
infrequent or not indicative of our operating performance. For the
periods covered by this release such items consist of expenses
associated with restructuring charges. We present adjusted earnings
per share and adjusted operating profit because we consider them to
be important supplemental measures of our performance and believe
them to be useful to show ongoing results from operations distinct
from items that are infrequent or not indicative of our operating
performance. Adjusted earnings per share and adjusted operating
profit are not measurements of our financial performance under GAAP
and should not be considered as an alternative to earnings per
share or operating profit under GAAP. Adjusted earnings per share
and adjusted operating profit have limitations as analytical tools,
and you should not consider them in isolation or as a substitute
for analysis of our results as reported under GAAP. In addition, in
evaluating adjusted earnings per share and adjusted operating
profit, you should be aware that in the future we may incur
expenses similar to the adjustments in this presentation. Our
presentation of adjusted earnings per share and adjusted operating
profit should not be construed as an inference that our future
results will be unaffected by unusual or infrequent items. We
compensate for these limitations by providing equal prominence of
our GAAP results and using adjusted earnings per share and adjusted
operating profit only supplementally. The following table
reconciles Adjusted Earnings Per Share to Earnings Per Share for
the periods indicated. Three Months Ended June 30, -------- 2009
2008 ---- ---- Earnings per Share - Diluted $0.18 $0.44 Add back:
Restructuring 0.03 0.05 ---- ---- Adjusted Earnings per Share -
Diluted $0.21 $0.49 ===== ===== The following table reconciles
Adjusted Operating Profit to Operating Profit for the periods
indicated. Three Months Ended June 30, -------- 2009 2008 ---- ----
Operating Profit ($mm) $18.5 $35.1 Add back: Restructuring 2.1 3.4
--- --- Adjusted Operating Profit $20.6 $38.5 ===== =====
Conference Call Information Knoll will host a conference call on
Thursday, July 16, 2009 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 866 314-5050 International 617 213-8051 Passcode
69253281 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 July 23, 2009 by dialing 888 286-8010. International
replay: 617 801-6888 (Passcode: 16536310). 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. 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 Six Months Ended June 30, June 30,
-------- -------- 2009 2008 2009 2008 ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) -----------
----------- ----------- ----------- Sales $202,197 $292,536
$414,806 $560,344 Cost of sales 131,468 191,449 269,310 368,934
------- ------- ------- ------- Gross profit 70,729 101,087 145,496
191,410 Selling, general, and administrative expenses 50,142 62,557
101,905 120,979 Restructuring and other charges 2,073 3,432 8,312
3,432 ----- ----- ----- ----- Operating income 18,514 35,098 35,279
66,999 Interest expense 2,856 3,963 5,627 8,898 Other expense, net
2,747 64 1,423 258 ----- -- ----- --- Income before income tax
expense 12,911 31,071 28,229 57,843 Income tax expense 4,837 10,154
10,630 19,648 ----- ------ ------ ------ Net income $8,074 $20,917
$17,599 $38,195 ------ ------- ------- ------- Earnings per share:
Basic $.18 $.44 $.39 $.81 Diluted $.18 $.44 $.39 $.80
Weighted-average shares outstanding: Basic 45,386,945 47,032,982
45,344,388 47,379,463 Diluted 45,389,692 47,112,672 45,345,762
47,509,276 KNOLL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data) June 30, December 31,
2009 2008 ---- ---- (Unaudited) ASSETS Current assets: Cash and
cash equivalents $13,766 $14,903 Customer receivables, net 120,166
126,051 Inventories 86,966 100,225 Prepaid and other current assets
19,392 19,069 ------ ------ Total current assets 240,290 260,248
Property, plant, and equipment, net 136,541 132,168 Intangible
assets, net 299,009 299,120 Other noncurrent assets 5,323 6,124
----- ----- Total Assets $681,163 $697,660 -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current
maturities of long-term debt $134 $121 Accounts payable 68,024
78,442 Other current liabilities 83,229 116,457 ------ -------
Total current liabilities 151,387 195,020 Long-term debt 338,286
337,258 Other noncurrent liabilities 125,062 120,763 -------
------- Total liabilities 614,735 653,041 ------- -------
Stockholders' equity 66,428 44,619 ------ ------ Total Liabilities
and Stockholders' Equity $681,163 $697,660 -------- -------- KNOLL,
INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in
thousands) Six Months Ended June 30, ------------------------- 2009
2008 ---- ---- (Unaudited) (Unaudited) Net income $17,599 $38,195
------- ------- Cash Flows provided by Operating Activities 12,923
47,192 Cash Flows used in Investing Activities (10,233) (6,644)
Cash Flows used in Financing Activities (6,000) (36,200) Effect of
exchange rate changes on cash and cash equivalents 2,173 371 -----
--- (Decrease) increase in cash and cash equivalents (1,137) 4,719
Cash and cash equivalents at beginning of period 14,903 17,975
------ ------ Cash and cash equivalents at end of period $13,766
$22,694 ------- ------- DATASOURCE: Knoll, Inc. CONTACT: Investors,
Barry L. McCabe, Executive Vice President and Chief Financial
Officer, +1-215-679-1301, ; or media, David E. Bright, Senior Vice
President, Communications, +1-212-343-4135, , both of Knoll, Inc.
Web Site: http://www.knoll.com/
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