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HNI Corporation to close North Carolina plant, consolidate operations

EditorNatashya Angelica
Published 05/20/2024, 06:44 PM
HNI
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MUSCATINE, Iowa - HNI Corporation (NYSE: NYSE:HNI), a manufacturer of workplace furnishings and residential building products, has announced its plan to shut down its manufacturing plant in Hickory, North Carolina, by the first half of 2025. The decision is part of a strategic move to consolidate production into other North American facilities.

The company expects this consolidation to yield approximately $11 million in annual savings once fully realized in 2026, with an anticipated $8 to $9 million saved in 2025. These savings are in addition to the previously announced cost synergies from the acquisition of Kimball International, Inc. in June 2023, bringing the total estimated cost synergies to $50 million.

The closure of the Hickory plant will affect roughly 200 production and operations employees. However, HNI will retain a commercial presence in the area with its HBF brand of workplace furnishings and textile products. The HBF brand headquarters, along with its marketing, customer experience, product development, and product engineering teams, will continue to operate in Hickory.

HNI anticipates the consolidation will enhance productivity, maintain capacity, and improve the customer experience through more efficient production and delivery logistics. Jeff Lorenger, HNI’s Chairman, President, and CEO, stated that the move aims to optimize the company's operational footprint and business performance while ensuring a smooth transition for affected employees.

The company foresees pre-tax earnings to be impacted by estimated charges of $10.3 million over 2024 and 2025, which includes $1.5 million in non-cash charges. The estimated charges are broken down into restructuring costs, accelerated depreciation, and other costs, with the majority occurring in 2024.

HNI Corporation, with a history spanning over 75 years, operates under two segments: Workplace Furnishings and Residential Building Products. The Workplace Furnishings segment is known for its commercial furnishings, while the Residential Building Products segment leads in manufacturing and marketing hearth products.

This consolidation is part of HNI's forward-looking strategy to improve efficiency and business outcomes, with the information based on a press release statement. The company has not provided any further details on the potential impact of this decision beyond the stated financial implications.

InvestingPro Insights

As HNI Corporation navigates through its strategic consolidation, real-time data and insights from InvestingPro provide a deeper understanding of the company's financial health and market position. With a market cap of $2.14 billion and a price-to-earnings (P/E) ratio of 31.91, HNI is indicative of a company that is trading at a significant earnings multiple. Still, a more adjusted P/E ratio of 16.36 for the last twelve months as of Q1 2024 shows a potentially more favorable valuation in a longer-term context.

InvestingPro Tips highlight that HNI has a track record of maintaining dividend payments for over half a century, with the last twelve months showing a dividend yield of 2.87% and a dividend growth of 3.12%. This consistent return to shareholders is complemented by an impressive one-year price total return of 80.09%, suggesting that investors have enjoyed significant capital appreciation alongside dividend income. Moreover, analysts have a positive outlook, predicting that the company will remain profitable this year, with net income expected to grow.

While HNI is set to face costs associated with its plant closure and restructuring, the company's robust revenue growth of 22.73% in Q1 2024 and a gross profit margin of 39.63% for the last twelve months as of Q1 2024, indicate a strong operational performance that could support its strategic initiatives.

To gain further insights into HNI Corporation's financials and market performance, interested investors can explore additional InvestingPro Tips by visiting https://www.investing.com/pro/HNI. There are currently 9 more tips available, which could provide valuable context for investment decisions. For those looking to subscribe to InvestingPro for a more in-depth analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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