Knoll, Inc. (NYSE:KNL), a leading designer and manufacturer of
furnishings, textiles and fine leathers for the workplace and home,
today announced results for the first quarter ended March 31,
2018. Net sales were $296.6 million for the quarter, an increase of
15.5%, from the first quarter of 2017. Operating profit for the
quarter was $22.5 million, an increase of 8.8%, compared to
operating profit of $20.6 million for the first quarter of
2017. Adjusted operating profit was $24.0 million, an
increase of 16.3% when compared to adjusted operating profit of
$20.6 million in the first quarter of 2017. Net earnings for the
quarter were $15.3 million, a decrease of 0.9% when compared to the
first quarter of 2017. Adjusted net earnings for the quarter were
$17.4 million, an increase of 13.2% when compared to the first
quarter of 2017. Adjusted EBITDA was $36.8 million, an increase of
14.1% when compared to $32.3 million in the first quarter of 2017.
Diluted earnings per share was $0.31 and $0.31 for the first
quarter of 2018 and 2017, respectively. Diluted earnings per share
was negatively impacted by a loss on extinguishment of debt,
acquisition expenses and restructuring charges in the first quarter
of 2018. Adjusted diluted earnings per share was $0.35 and $0.31
for the first quarter of 2018 and 2017, respectively.
“We are very pleased with our strong start to
2018,” commented Knoll President and CEO Andrew Cogan. “Our efforts
to diversify our sources of revenue, expand our selling capacity,
respond to the changing design trends and allocation of space
within the workplace as well as improve our margins are beginning
to come together. Furthermore, with an increasing mix of revenue
and profits coming from the international and high design
residentially oriented businesses in our Lifestyle segment we are
building a stronger, differentiated and more sustainably profitable
enterprise.” Cogan added, “Looking ahead to the balance of the year
we would expect these initiatives to continue to drive top line
growth and margin expansion.”
First Quarter Results
First quarter 2018 financial results highlights
are as follows:
|
Dollars in Millions, Except Per Share Data |
|
Three Months Ended March 31, |
|
Percent |
|
|
|
2018 |
|
2017 |
|
Change |
|
Net Sales |
|
$ |
296.6 |
|
|
$ |
256.8 |
|
|
15.5 |
% |
|
Gross Profit |
|
107.7 |
|
|
95.7 |
|
|
12.6 |
% |
|
Gross Profit % |
|
36.3 |
% |
|
37.3 |
% |
|
(2.7 |
)% |
|
Operating Expenses |
|
85.2 |
|
|
75.1 |
|
|
13.6 |
% |
|
Acquisition Expenses |
|
1.0 |
|
|
— |
|
|
100.0 |
% |
|
Restructuring Charges |
|
0.5 |
|
|
— |
|
|
100.0 |
% |
|
Adjusted Operating Expenses (1) |
|
83.7 |
|
|
75.1 |
|
|
11.6 |
% |
|
Operating Profit |
|
22.5 |
|
|
20.6 |
|
|
8.8 |
% |
|
Operating Profit % |
|
7.6 |
% |
|
8.0 |
% |
|
(5.0 |
)% |
|
Adjusted Operating Profit (1) |
|
24.0 |
|
|
20.6 |
|
|
16.3 |
% |
|
Adjusted Operating Profit % (1) |
|
8.1 |
% |
|
8.0 |
% |
|
1.2 |
% |
|
Loss on Extinguishment of Debt |
|
1.4 |
|
|
— |
|
|
100.0 |
% |
|
Net Earnings |
|
15.3 |
|
|
15.4 |
|
|
(0.9 |
)% |
|
Adjusted Net Earnings (1) |
|
17.4 |
|
|
15.4 |
|
|
13.2 |
% |
|
Adjusted EBITDA (1) |
|
36.8 |
|
|
32.3 |
|
|
14.1 |
% |
|
Adjusted EBITDA % (1) |
|
12.4 |
% |
|
12.6 |
% |
|
(1.6 |
)% |
|
Diluted Earnings Per Share |
|
$ |
0.31 |
|
|
$ |
0.31 |
|
|
— |
% |
|
Adjusted Diluted Earnings Per Share (1) |
|
$ |
0.35 |
|
|
$ |
0.31 |
|
|
12.9 |
% |
(1) For a reconciliation of Non-GAAP financial
measures, see “Reconciliation of Non-GAAP Financial Measures”
below.
Net sales were $296.6 million for the first
quarter of 2018, an increase of 15.5%, from the first quarter of
2017. Net sales for the Office segment were $181.6 million during
the first quarter of 2018, an increase of 15.0%, when compared with
the first quarter of 2017. The increase in the Office segment was a
result of strong growth in commercial sales in both North America
and Europe. Newer workplace platforms and complimentary products
drove sales growth, while legacy system sales were consistent with
the first quarter of 2017. Net sales for the Lifestyle segment were
$115.0 million during the first quarter of 2017, an increase of
16.3%, when compared with the first quarter of 2017. This increase
was primarily driven by the inclusion of two months of sales from
Muuto, which was acquired on January 25, 2018, as well as higher
sales at DatesWeiser.
Gross profit for the first quarter of 2018 was
$107.7 million, an increase of $12.0 million, or 12.6%, when
compared with the first quarter of 2017. During the first quarter
of 2018, gross margin decreased to 36.3% from 37.3% in the first
quarter of 2017. This decrease was driven mainly by the Office
segment, where higher volume and a favorable shift of mix towards
new product platforms were offset by unfavorable commodity and
transportation inflation when compared to the first quarter of
2017.
Operating expenses were $85.2 million for the
first quarter of 2018, or 28.7% of net sales, compared to $75.1
million, or 29.2% of net sales, for the first quarter of 2017.
Operating expenses in the first quarter of 2018 included
acquisition expenses of $1.0 million related to the Muuto
acquisition, and restructuring charges of $0.5 million. The
restructuring charges were related to an organizational realignment
that will result in greater operational efficiency and control.
Excluding these items, adjusted operating expenses were $83.7
million for the first quarter of 2018, or 28.2% of net sales
compared to $75.1 million for the first quarter of 2017. The
increase in adjusted operating expenses was related primarily to
incremental operating expenses from Muuto as well as the expansion
of our sales force.
During the first quarter of 2018, interest
expense was $5.5 million, compared to $1.7 million in the first
quarter of 2017. Interest expense for the first quarter of 2018
included a loss on extinguishment of debt of $1.4 million resulting
from the refinancing of the Company's credit facility.
Excluding the loss on extinguishment of debt, interest expense for
the first quarter of 2018 increased $2.4 million compared to the
first quarter of 2017. This increase was due primarily to
increased debt levels as a result of the Muuto acquisition and
higher interest rates.
During the first quarter of 2018, other income
was $4.0 million compared to $2.2 million for the first quarter of
2017. The increase in the first quarter of 2018 was due primarily
to favorable foreign exchange gains. Other income is primarily
related to foreign exchange gains and net periodic benefit income
from the Company's pension and other post-employment benefit plans
in both 2018 and 2017. In accordance with the adoption of ASU
2017-07, which was effective for the Company on January 1, 2018,
the Company reclassified the net periodic benefit income recognized
on the Company's pension and other post-employment benefit plans
from selling, general, and administrative expense to other income
for all periods presented.
Net earnings for the first quarter of 2018 was
$15.3 million, or $0.31 diluted earnings per share, compared to
$15.4 million, or $0.31 diluted earnings per share, for the first
quarter of 2017. Excluding the impact of acquisition expenses,
restructuring charges, and the loss on extinguishment of debt,
adjusted net earnings for the first quarter of 2018 was $17.4
million, or $0.35 adjusted diluted earnings per share, compared to
$15.4 million, or $0.31 adjusted diluted earnings per share for the
first quarter of 2017.
The effective tax rate for the first quarter of
2018 was 27.1%. The effective tax rate for the quarter was
favorable compared to the Company's average annual historical
effective tax rate as a result of the passage of the U.S. Tax Cuts
and Jobs Act (“Tax Reform”) in 2017. Excluding the impact of Tax
Reform during 2017, the Company's average annual historical
effective tax rate was approximately 37.0% over the past 5 years.
The effective tax rate for the first quarter of 2017 was 27.2%, and
was impacted by favorable tax treatment related to the vesting of a
large quantity of equity awards. The Company expects its full year
effective tax rate will be between 25% and 26% for fiscal year
2018. The mix of pretax income and the varying effective tax rates
in the countries and states in which we operate directly affects
our consolidated effective tax rate.
Capital expenditures for the first quarter of
2018 totaled $8.5 million compared to $10.7 million in the first
quarter of 2017. During the first quarter of 2018, the Company paid
a quarterly dividend of $7.4 million, or $0.15 per share, and
payment of accrued dividends on vested shares of $0.3 million,
compared to payment of a quarterly dividend of $7.3 million, or
$0.15 per share, and the payment of accrued dividends on vested
shares of $1.1 million during the first quarter of 2017.
Business Segment Results
The Company manages its business through its
reportable segments: Office and Lifestyle. All unallocated expenses
are included within Corporate.
The Office segment includes a complete range of
workplace products that address diverse workplace planning
paradigms in North America and Europe. These products include:
systems furniture, seating, storage, tables, desks and KnollExtra®
accessories as well as the international sales of our Office
products.
The Lifestyle segment includes KnollStudio®,
HOLLY HUNT®, DatesWeiser, Muuto, KnollTextiles®, Spinneybeck®
(including Filzfelt®), and Edelman® Leather. KnollStudio products,
which are distributed in North America and Europe, include iconic
seating, lounge furniture, side, cafe and dining chairs as well as
conference, training and dining and occasional tables. HOLLY HUNT®
is known for high quality residential furniture, lighting, rugs,
textiles and leathers. In addition, HOLLY HUNT® also includes
Vladimir Kagan Design Group, a renowned collection of modern luxury
furnishings. DatesWeiser, known for its sophisticated meeting and
conference tables and credenzas, sets a standard for design,
quality and technology integration. The KnollTextiles®,
Spinneybeck® (including Filzfelt®), and Edelman® Leather businesses
provide a wide range of customers with high-quality fabrics, felt,
leather and related architectural products. The acquisition of
Muuto rounds out the Lifestyle segment with its ancillary products
and affordable luxury furnishings to make the Lifestyle
segment an all-encompassing “resimercial”, high-performance
workplace, from uber-luxury living spaces to affordable luxury
residential living.
In 2018, the Company revised its segment
presentation by aggregating the former Studio and Coverings
segments with Muuto. Additionally, the Office segment now includes
our office business in Europe which was historically reported in
Studio. The Company believes this revised presentation better
aligns the segments with how management views and operates the
Company.
The tables below present the Company’s segment
information with Corporate costs excluded from operating segment
results. Prior year amounts have been recast to conform to the
current presentation (in thousands).
| |
|
|
| |
|
Three Months Ended March 31, |
| Net Sales
|
|
2018 |
|
2017 |
| Office |
|
$ |
181,619 |
|
|
$ |
157,997 |
|
| Lifestyle |
|
114,940 |
|
|
98,823 |
|
| Total Net Sales |
|
$ |
296,559 |
|
|
$ |
256,820 |
|
| |
|
|
| |
|
Three Months Ended March 31, |
| Operating
Profit (Loss) |
|
2018 |
|
2017 |
| Office |
|
$ |
8,866 |
|
|
$ |
8,828 |
|
| Lifestyle |
|
20,176 |
|
|
18,411 |
|
| Corporate |
|
(6,582 |
) |
|
(6,603 |
) |
| Total Operating
Profit |
|
$ |
22,460 |
|
|
$ |
20,636 |
|
| |
|
|
|
|
| |
|
Three Months Ended March 31, |
| Adjusted
EBITDA |
|
2018 |
|
2017 |
| Office |
|
$ |
16,453 |
|
|
$ |
14,260 |
|
| Lifestyle |
|
23,845 |
|
|
20,912 |
|
| Corporate |
|
(3,463 |
) |
|
(2,886 |
) |
| Total Adjusted
EBITDA |
|
$ |
36,835 |
|
|
$ |
32,286 |
|
| |
|
|
|
|
|
|
|
|
The tables below include prior year segment
information by quarter, that has been recast to conform to the
Company's current segment presentation for comparative purposes (in
thousands).
| |
|
|
| |
|
Three Months Ended |
| Net
Sales |
|
March 31, 2017 |
|
June 30, 2017 |
|
September 30, 2017 |
|
December 31, 2017 |
| Office |
|
$ |
157,997 |
|
|
$ |
162,599 |
|
|
$ |
192,308 |
|
|
$ |
210,078 |
|
| Lifestyle |
|
|
98,823 |
|
|
|
106,095 |
|
|
|
98,948 |
|
|
|
106,044 |
|
| Total Net Sales |
|
$ |
256,820 |
|
|
$ |
268,694 |
|
|
$ |
291,256 |
|
|
$ |
316,122 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
| Operating
Profit (Loss) |
|
March 31, 2017 |
|
June 30, 2017 |
|
September 30, 2017 |
|
December 31, 2017 |
| Office |
|
$ |
8,828 |
|
|
$ |
4,812 |
|
|
$ |
15,802 |
|
|
$ |
(1,633 |
) |
| Lifestyle |
|
|
18,411 |
|
|
|
20,584 |
|
|
|
17,578 |
|
|
|
20,205 |
|
| Corporate |
|
|
(6,603 |
) |
|
|
(5,564 |
) |
|
|
(5,653 |
) |
|
|
(6,230 |
) |
| Total Operating
Profit |
|
$ |
20,636 |
|
|
$ |
19,832 |
|
|
$ |
27,727 |
|
|
$ |
12,342 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
| Adjusted
EBITDA |
|
March 31, 2017 |
|
June 30, 2017 |
|
September 30, 2017 |
|
December 31, 2017 |
| Office |
|
$ |
14,260 |
|
|
$ |
12,931 |
|
|
$ |
21,918 |
|
|
$ |
21,888 |
|
| Lifestyle |
|
|
20,912 |
|
|
|
22,902 |
|
|
|
20,166 |
|
|
|
22,241 |
|
| Corporate |
|
|
(2,886 |
) |
|
|
(3,565 |
) |
|
|
(3,104 |
) |
|
|
(3,149 |
) |
| Total Adjusted
EBITDA |
|
$ |
32,286 |
|
|
$ |
32,268 |
|
|
$ |
38,980 |
|
|
$ |
40,980 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial
Measures
This press release contains certain non-GAAP
financial measures. A “non-GAAP financial measure” is a numerical
measure of a company's financial performance that excludes or
includes amounts so as to be different than the most directly
comparable measure calculated and presented in accordance with U.S.
generally accepted accounting principles (“GAAP”) in the statements
of income, balance sheets, or statements of cash flows of the
company. We present non-GAAP measures because we consider them to
be important supplemental measures of our performance and believe
them to be useful to display ongoing results from operations
distinct from items that are infrequent or not indicative of our
operating performance. Pursuant to applicable reporting
requirements, the company has provided reconciliations below of
non-GAAP financial measures to the most directly comparable GAAP
measure.
The non-GAAP financial measures presented within
this press release are Adjusted Operating Expenses, Adjusted
Operating Profit, Adjusted Interest Expense, Adjusted Net Earnings,
EBITDA, Adjusted EBITDA, and Adjusted Diluted Earnings Per Share.
These non-GAAP measures are not indicators of our financial
performance under GAAP and should not be considered as an
alternative to the applicable GAAP measure. These non-GAAP measures
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 these non-GAAP
measures, you should be aware that in the future we may incur
expenses similar to the adjustments in this presentation. Our
presentation of these non-GAAP measures 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 non-GAAP
measures only as supplemental presentations.
The following table reconciles Operating
Expenses to Adjusted Operating Expenses for the periods
indicated.
| |
|
|
| |
|
Three Months Ended March 31, |
| |
|
2018 |
|
2017 |
| |
|
|
|
|
|
|
|
|
| |
|
($ in millions) |
| Knoll
Inc. |
|
|
|
|
| Operating Expenses |
|
$ |
85.2 |
|
|
$ |
75.1 |
|
| Less: |
|
|
|
|
|
Acquisition expenses |
|
1.0 |
|
|
— |
|
|
Restructuring charges |
|
0.5 |
|
|
— |
|
| Adjusted Operating
Expenses |
|
$ |
83.7 |
|
|
$ |
75.1 |
|
| |
|
|
|
|
|
|
The following tables reconcile Operating Profit
to Adjusted Operating Profit and Adjusted EBITDA by business
segment for the periods indicated.
| |
|
|
| |
|
Three Months Ended March 31,
2018 |
| |
|
Office |
|
Lifestyle |
|
Corporate |
|
Knoll, Inc. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
($ in millions) |
| |
|
|
|
|
|
|
|
|
| Operating Profit
(Loss) |
|
$ |
8.9 |
|
|
$ |
20.2 |
|
|
$ |
(6.6 |
) |
|
$ |
22.5 |
|
| Add Back: |
|
|
|
|
|
|
|
|
|
Acquisition expenses |
|
— |
|
|
— |
|
|
1.0 |
|
|
1.0 |
|
|
Restructuring charges |
|
0.5 |
|
|
— |
|
|
— |
|
|
0.5 |
|
| Adjusted Operating
Profit (Loss) |
|
$ |
9.4 |
|
|
$ |
20.2 |
|
|
$ |
(5.6 |
) |
|
$ |
24.0 |
|
| Add
Back: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
5.0 |
|
|
3.0 |
|
|
0.2 |
|
|
8.2 |
|
| Stock
compensation |
|
0.4 |
|
|
0.7 |
|
|
1.4 |
|
|
2.5 |
|
| Other
non-cash items |
|
1.7 |
|
|
(0.1 |
) |
|
0.5 |
|
|
2.1 |
|
| Adjusted EBITDA |
|
$ |
16.5 |
|
|
$ |
23.8 |
|
|
$ |
(3.5 |
) |
|
$ |
36.8 |
|
| Net Sales |
|
$ |
181.6 |
|
|
$ |
115.0 |
|
|
N/A |
|
|
$ |
296.6 |
|
| Operating Profit % |
|
4.9 |
% |
|
17.6 |
% |
|
N/A |
|
|
7.6 |
% |
| Adjusted Operating
Profit % |
|
5.2 |
% |
|
17.6 |
% |
|
N/A |
|
|
8.1 |
% |
| Adjusted EBITDA % |
|
9.1 |
% |
|
20.7 |
% |
|
N/A |
|
|
12.4 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31,
2017 |
| |
|
Office |
|
Lifestyle |
|
Corporate |
|
Knoll, Inc. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
($ in millions) |
| |
|
|
|
|
|
|
|
|
| Operating Profit
(Loss) |
|
$ |
8.8 |
|
|
$ |
18.4 |
|
|
$ |
(6.6 |
) |
|
$ |
20.6 |
|
| Add Back: |
|
|
|
|
|
|
|
|
|
Acquisition expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Restructuring charges |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Adjusted Operating
Profit (Loss) |
|
$ |
8.8 |
|
|
$ |
18.4 |
|
|
$ |
(6.6 |
) |
|
$ |
20.6 |
|
| Add
Back: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
4.1 |
|
|
1.7 |
|
|
0.2 |
|
|
6.0 |
|
| Stock
compensation |
|
0.6 |
|
|
0.5 |
|
|
2.4 |
|
|
3.5 |
|
| Other
non-cash items |
|
0.8 |
|
|
0.3 |
|
|
1.1 |
|
|
2.2 |
|
| Adjusted EBITDA |
|
$ |
14.3 |
|
|
$ |
20.9 |
|
|
$ |
(2.9 |
) |
|
$ |
32.3 |
|
| Net Sales |
|
$ |
158.0 |
|
|
$ |
98.8 |
|
|
N/A |
|
|
$ |
256.8 |
|
| Operating Profit % |
|
5.6 |
% |
|
18.6 |
% |
|
N/A |
|
|
8.0 |
% |
| Adjusted Operating
Profit % |
|
5.6 |
% |
|
18.6 |
% |
|
N/A |
|
|
8.0 |
% |
| Adjusted EBITDA % |
|
9.0 |
% |
|
21.2 |
% |
|
N/A |
|
|
12.6 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended June 30, 2017 |
| |
|
Office |
|
Lifestyle |
|
Corporate |
|
Knoll, Inc. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
($ in millions) |
| |
|
|
|
|
|
|
|
|
| Operating Profit
(Loss) |
|
$ |
4.8 |
|
|
$ |
20.6 |
|
|
$ |
(5.6 |
) |
|
$ |
19.8 |
|
| Add Back: |
|
|
|
|
|
|
|
|
|
Acquisition expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Restructuring charges |
|
2.2 |
|
|
— |
|
|
— |
|
|
2.2 |
|
| Adjusted Operating
Profit (Loss) |
|
$ |
7.0 |
|
|
$ |
20.6 |
|
|
$ |
(5.6 |
) |
|
$ |
22.0 |
|
| Add
Back: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
4.6 |
|
|
1.6 |
|
|
0.2 |
|
|
6.4 |
|
| Stock
compensation |
|
0.5 |
|
|
0.5 |
|
|
0.7 |
|
|
1.7 |
|
| Other
non-cash items |
|
0.9 |
|
|
0.2 |
|
|
1.1 |
|
|
2.2 |
|
| Adjusted EBITDA |
|
$ |
13.0 |
|
|
$ |
22.9 |
|
|
$ |
(3.6 |
) |
|
$ |
32.3 |
|
| Net Sales |
|
$ |
162.6 |
|
|
$ |
106.1 |
|
|
N/A |
|
|
$ |
268.7 |
|
| Operating Profit % |
|
3.0 |
% |
|
19.4 |
% |
|
N/A |
|
|
7.4 |
% |
| Adjusted Operating
Profit % |
|
4.3 |
% |
|
19.4 |
% |
|
N/A |
|
|
8.2 |
% |
| Adjusted EBITDA % |
|
8.0 |
% |
|
21.6 |
% |
|
N/A |
|
|
12.0 |
% |
| |
|
|
| |
|
Three Months Ended September 30,
2017 |
| |
|
Office |
|
Lifestyle |
|
Corporate |
|
Knoll, Inc. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
($ in millions) |
| |
|
|
|
|
|
|
|
|
| Operating Profit
(Loss) |
|
$ |
15.8 |
|
|
$ |
17.6 |
|
|
$ |
(5.7 |
) |
|
$ |
27.7 |
|
| Add Back: |
|
|
|
|
|
|
|
|
|
Acquisition expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Restructuring charges |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Adjusted Operating
Profit (Loss) |
|
$ |
15.8 |
|
|
$ |
17.6 |
|
|
$ |
(5.7 |
) |
|
$ |
27.7 |
|
| Add
Back: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
4.3 |
|
|
1.8 |
|
|
0.2 |
|
|
6.3 |
|
| Stock
compensation |
|
0.5 |
|
|
0.6 |
|
|
1.2 |
|
|
2.3 |
|
| Other
non-cash items |
|
1.3 |
|
|
0.2 |
|
|
1.2 |
|
|
2.7 |
|
| Adjusted EBITDA |
|
$ |
21.9 |
|
|
$ |
20.2 |
|
|
$ |
(3.1 |
) |
|
$ |
39.0 |
|
| Net Sales |
|
$ |
192.3 |
|
|
$ |
98.9 |
|
|
N/A |
|
|
$ |
291.2 |
|
| Operating Profit % |
|
8.2 |
% |
|
17.8 |
% |
|
N/A |
|
|
9.5 |
% |
| Adjusted Operating
Profit % |
|
8.2 |
% |
|
17.8 |
% |
|
N/A |
|
|
9.5 |
% |
| Adjusted EBITDA % |
|
11.4 |
% |
|
20.4 |
% |
|
N/A |
|
|
13.4 |
% |
| |
|
|
| |
|
Three Months Ended December 31,
2017 |
| |
|
Office |
|
Lifestyle |
|
Corporate |
|
Knoll, Inc. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
($ in millions) |
| |
|
|
|
|
|
|
|
|
| Operating Profit
(Loss) |
|
$ |
(1.7 |
) |
|
$ |
20.2 |
|
|
$ |
(6.2 |
) |
|
$ |
12.3 |
|
| Add Back: |
|
|
|
|
|
|
|
|
| Asset
impairment charge |
|
16.3 |
|
|
— |
|
|
— |
|
|
16.3 |
|
| Pension
settlement charge |
|
2.2 |
|
|
— |
|
|
— |
|
|
2.2 |
|
|
Acquisition expenses |
|
— |
|
|
— |
|
|
0.5 |
|
|
0.5 |
|
|
Restructuring charges |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Adjusted Operating
Profit (Loss) |
|
$ |
16.8 |
|
|
$ |
20.2 |
|
|
$ |
(5.7 |
) |
|
$ |
31.3 |
|
| Add
Back: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
5.5 |
|
|
1.7 |
|
|
0.2 |
|
|
7.4 |
|
| Stock
compensation |
|
0.5 |
|
|
0.6 |
|
|
1.2 |
|
|
2.3 |
|
| Other
non-cash items |
|
(0.9 |
) |
|
(0.3 |
) |
|
1.2 |
|
|
— |
|
| Adjusted EBITDA |
|
$ |
21.9 |
|
|
$ |
22.2 |
|
|
$ |
(3.1 |
) |
|
$ |
41.0 |
|
| Net Sales |
|
$ |
210.1 |
|
|
$ |
106.0 |
|
|
N/A |
|
|
$ |
316.1 |
|
| Operating Profit % |
|
(0.8 |
)% |
|
19.1 |
% |
|
N/A |
|
|
3.9 |
% |
| Adjusted Operating
Profit % |
|
8.0 |
% |
|
19.1 |
% |
|
N/A |
|
|
9.9 |
% |
| Adjusted EBITDA % |
|
10.4 |
% |
|
21.0 |
% |
|
N/A |
|
|
13.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles Interest Expense
to Adjusted Interest Expense for the periods indicated.
| |
|
|
| |
|
Three Months Ended March 31, |
| |
|
2018 |
|
2017 |
| |
|
|
|
|
|
|
|
|
| |
|
($ in millions) |
| Knoll
Inc. |
|
|
|
|
| Interest Expense |
|
$ |
5.5 |
|
|
$ |
1.7 |
|
| Less: |
|
|
|
|
| Loss on
extinguishment of debt |
|
1.4 |
|
|
— |
|
| Adjusted Interest
Expense |
|
$ |
4.1 |
|
|
$ |
1.7 |
|
| |
|
|
|
|
|
|
|
|
The following table reconciles Net Earnings to
EBITDA and Adjusted EBITDA for the periods indicated.
| |
|
|
| |
|
Three Months Ended March 31, |
| |
|
2018 |
|
2017 |
| |
|
|
|
|
|
|
|
|
| |
|
($ in millions) |
| Knoll
Inc. |
|
|
|
|
| Net Earnings |
|
$ |
15.3 |
|
|
$ |
15.4 |
|
| Add back: |
|
|
|
|
| Income
tax expense |
|
5.7 |
|
|
5.8 |
|
| Interest
expense |
|
5.5 |
|
|
1.7 |
|
|
Depreciation and amortization |
|
8.2 |
|
|
6.0 |
|
| EBITDA |
|
$ |
34.7 |
|
|
$ |
28.9 |
|
| Add back: |
|
|
|
|
| Stock
compensation |
|
2.5 |
|
|
3.5 |
|
| Other
non-cash items |
|
(1.9 |
) |
|
(0.1 |
) |
|
Acquisition expenses |
|
1.0 |
|
|
— |
|
|
Restructuring charges |
|
0.5 |
|
|
— |
|
| Adjusted EBITDA |
|
$ |
36.8 |
|
|
$ |
32.3 |
|
| Net Sales |
|
$ |
296.6 |
|
|
$ |
256.8 |
|
| Adjusted EBITDA % |
|
12.4 |
% |
|
12.6 |
% |
| |
|
|
|
|
|
|
The following table reconciles Net Earnings to
Adjusted Net Earnings for the periods indicated.
| |
|
|
| |
|
Three Months Ended March 31, |
| |
|
2018 |
|
2017 |
| |
|
|
|
|
|
|
|
|
| |
|
($ in millions) |
| Knoll
Inc. |
|
|
|
|
| Net Earnings |
|
$ |
15.3 |
|
|
$ |
15.4 |
|
| Add back: |
|
|
|
|
| Loss on
extinguishment of debt |
|
1.4 |
|
|
— |
|
|
Acquisition expenses |
|
1.0 |
|
|
— |
|
|
Restructuring charges |
|
0.5 |
|
|
— |
|
| Less: |
|
|
|
|
| Tax
effect of non-GAAP adjustments |
|
0.8 |
|
|
— |
|
| Adjusted Net
Earnings |
|
$ |
17.4 |
|
|
$ |
15.4 |
|
| |
| Tax effect
of non-GAAP adjustments was calculated using the Knoll, Inc.
consolidated effective tax rate for the period. |
| |
|
|
|
|
|
|
|
|
The following table reconciles Diluted Earnings
Per Share to Adjusted Diluted Earnings Per Share for the periods
indicated.
| |
|
|
| |
|
Three Months Ended March 31, |
| |
|
2018 |
|
2017 |
| Knoll
Inc. |
|
|
|
|
| Diluted Earnings per
Share |
|
$ |
0.31 |
|
|
$ |
0.31 |
|
| Add back: |
|
|
|
|
| Loss on
extinguishment of debt |
|
0.03 |
|
|
— |
|
|
Acquisition expenses |
|
0.02 |
|
|
— |
|
|
Restructuring charges |
|
0.01 |
|
|
— |
|
| Less: |
|
|
|
|
| Tax
effect of non-GAAP adjustments |
|
0.02 |
|
|
— |
|
| Adjusted Diluted
Earnings per Share |
|
$ |
0.35 |
|
|
$ |
0.31 |
|
| |
|
|
|
|
|
|
|
|
| Tax effect
of non-GAAP adjustments was calculated using the Knoll, Inc.
consolidated effective tax rate for the period. |
| |
|
|
|
|
|
|
|
|
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
and profit 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, our publicly announced
plans for increased capital and investment spending to achieve our
long-term revenue and profitability growth goals, our integration
of acquired businesses, and our expectations with respect to
leverage. 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 furniture solutions, changes
in the competitive marketplace, changes in the trends in the market
for furniture or coverings, the financial strength and stability of
our suppliers, customers and dealers, access to capital, our
success in designing and implementing our new enterprise resource
planning system, our ability to successfully integrate
acquired businesses, 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.
Contacts
Investors:
Charles RayfieldSenior Vice President and Chief
Financial OfficerTel 215 679-1703crayfield@knoll.com
Media:
David E. BrightSenior Vice President,
CommunicationsTel 212 343-4135dbright@knoll.com
Conference Call Information
Knoll will host a conference call on Thursday,
April 26, 2018 at 10:00 A.M. ET to discuss its financial
results.
The call will include slides; participants are
encouraged to listen and view the presentation via webcast at
http://www.knoll.com; go to “Discover Knoll” and click on “Investor
Relations.”
The conference call may also be accessed by
dialing:
North America (844) 778-4138
International (661)
378-9550
Passcode 956
5766
A replay of the webcast can be viewed by
visiting the Investor Relations section of the Knoll, Inc.
corporate website. In addition, an audio replay of the conference
call will be available through May 3, 2018 by dialing (855)
859-2056. International replay: (404) 537-3406 (Passcode: 956
5766).
About Knoll
Knoll, Inc. is a constellation of design-driven
brands and people, working together with our clients to create
inspired modern interiors. Our internationally recognized portfolio
includes furniture, textiles, leathers, accessories, and
architectural and acoustical elements brands. These brands - Knoll
Office, KnollStudio, KnollTextiles, KnollExtra, Spinneybeck |
FilzFelt, Edelman Leather, HOLLY HUNT, DatesWeiser and Muuto -
reflect our commitment to modern design that meets the diverse
requirements of high performance workplaces and luxury interiors. A
recipient of the National Design Award for Corporate and
Institutional Achievement from the Smithsonian`s Cooper-Hewitt,
National Design Museum, Knoll, Inc. is aligned with the U.S. Green
Building Council and the Canadian Green Building Council and can
help organizations achieve the Leadership in Energy and
Environmental Design (LEED) workplace certification. Knoll, Inc. is
the founding sponsor of the World Monuments Fund Modernism at Risk
program.
KNOLL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars in thousands, except per share
data)
(Unaudited)
| |
|
Three Months Ended March 31, |
| |
|
2018 |
|
2017 |
| |
|
|
|
|
| Net sales |
|
$ |
296,559 |
|
|
$ |
256,820 |
|
| Cost of sales |
|
188,848 |
|
|
161,146 |
|
| Gross profit |
|
107,711 |
|
|
95,674 |
|
| Selling, general, and
administrative expenses |
|
84,725 |
|
|
75,038 |
|
| Restructuring
charges |
|
526 |
|
|
— |
|
| Operating profit |
|
22,460 |
|
|
20,636 |
|
| Interest expense |
|
5,528 |
|
|
1,671 |
|
| Other income, net |
|
(4,002 |
) |
|
(2,195 |
) |
| Income before income
tax expense |
|
20,934 |
|
|
21,160 |
|
| Income tax expense |
|
5,667 |
|
|
5,764 |
|
| Net earnings |
|
15,267 |
|
|
15,396 |
|
| Net earnings (loss)
attributable to noncontrolling interests |
|
8 |
|
|
(8 |
) |
| Net earnings
attributable to Knoll, Inc. stockholders |
|
$ |
15,259 |
|
|
$ |
15,404 |
|
| |
|
|
|
|
| Earnings per share
attributable to Knoll, Inc. stockholders: |
|
|
|
|
| Basic |
|
$ |
0.31 |
|
|
$ |
0.32 |
|
| Diluted |
|
$ |
0.31 |
|
|
$ |
0.31 |
|
| |
|
|
|
|
| Weighted-average shares
outstanding: |
|
|
|
|
| Basic |
|
48,556,686 |
|
|
48,456,225 |
|
| Diluted |
|
49,204,776 |
|
|
49,382,892 |
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
KNOLL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollars in thousands)
| |
|
March 31, 2018 |
|
December 31, 2017 |
| |
|
(Unaudited) |
|
|
|
ASSETS |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash
equivalents |
|
$ |
16,154 |
|
|
$ |
2,203 |
|
| Customer receivables,
net |
|
101,156 |
|
|
86,687 |
|
| Inventories, net |
|
167,973 |
|
|
144,945 |
|
| Prepaid and other
current assets |
|
42,188 |
|
|
44,435 |
|
| Total current
assets |
|
327,471 |
|
|
278,270 |
|
| Property, plant, and
equipment, net |
|
201,515 |
|
|
200,630 |
|
| Goodwill |
|
343,543 |
|
|
142,113 |
|
| Intangible assets,
net |
|
361,542 |
|
|
238,581 |
|
| Other non-current
assets |
|
1,431 |
|
|
1,447 |
|
| Total assets |
|
$ |
1,235,502 |
|
|
$ |
861,041 |
|
| LIABILITIES AND
EQUITY |
|
|
|
|
| Current
liabilities: |
|
|
|
|
| Current maturities of
long-term debt |
|
$ |
16,267 |
|
|
$ |
10,000 |
|
| Accounts payable |
|
109,219 |
|
|
108,922 |
|
| Other current
liabilities |
|
106,249 |
|
|
104,158 |
|
| Total current
liabilities |
|
231,735 |
|
|
223,080 |
|
| Long-term debt |
|
506,420 |
|
|
181,048 |
|
| Deferred income
taxes |
|
84,601 |
|
|
54,671 |
|
| Post-employment
benefits other than pensions |
|
3,605 |
|
|
3,575 |
|
| Pension liability |
|
20,177 |
|
|
21,671 |
|
| Other non-current
liabilities |
|
22,570 |
|
|
18,267 |
|
| Total liabilities |
|
869,108 |
|
|
502,312 |
|
| Total equity |
|
366,394 |
|
|
358,729 |
|
| Total liabilities and
equity |
|
$ |
1,235,502 |
|
|
$ |
861,041 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
KNOLL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Dollars in thousands)
(Unaudited)
| |
|
Three Months Ended March 31, |
| |
|
2018 |
|
2017 |
| |
|
|
|
|
| Net earnings |
|
$ |
15,267 |
|
|
$ |
15,396 |
|
| Cash provided by
operating activities |
|
5,601 |
|
|
3,825 |
|
| Cash used in investing
activities |
|
(312,216 |
) |
|
(10,650 |
) |
| Cash provided by (used
in) financing activities |
|
320,345 |
|
|
(249 |
) |
| Effect of exchange rate
changes on cash and cash equivalents |
|
221 |
|
|
255 |
|
| Increase (decrease) in
cash and cash equivalents |
|
13,951 |
|
|
(6,819 |
) |
| Cash and cash
equivalents at beginning of period |
|
2,203 |
|
|
9,854 |
|
| Cash and cash
equivalents at end of period |
|
$ |
16,154 |
|
|
$ |
3,035 |
|
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