HNI

Image source: The Motley Fool. Thursday, July 30, 2026 at 10:00 a.m. ET Vice President, Investor Relations and Corporate Development - Matthew McCall Chairman, President and Chief Executive Officer - Jeffrey Lorenger Executive Vice President and Chief Financial Officer - Vincent P. Berger Operator: Good day, and thank you for standing by. Welcome to the HNI Corporation Second Quarter Fiscal Year 2026 Results Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Matt McCall. Please go ahead. Matthew McCall: Good morning. My name is Matt McCall. I'm Vice President, Investor Relations and Corporate Development for HNI Corporation. Thank you for joining us to discuss our second quarter 2026 results. With me today are Jeff Lorenger, Chairman, President and CEO; and VP. Berger, Executive Vice President and CFO. Copies of our financial news release and non-GAAP reconciliations are posted on our website. Statements made during this call that are not strictly historical facts are forward-looking statements, which are subject to known and unknown risks. Actual results could differ materially. The financial news release posted on our website includes additional factors that could affect actual results. The corporation assumes no obligation to update any forward-looking statements made during the call. I'm now pleased to turn the call over to Jeff Lorenger. Jeff? Jeffrey Lorenger: Good morning. Thank you for joining us. Second quarter demonstrates the focus of our members, indicates an improving demand environment and supports expectations of stronger 2026 earnings growth. Through focused cost management and the net benefits of price cost and productivity, we were able to deliver second quarter results that were in line with our expectations. And encouragingly, our internal leading indicators improved further in the quarter. The positive momentum of our strategies, both revenue and cost focused, the benefits of our diversified revenue streams, the merits of our customer-first business model and the integration of Steelcase are delivering significant shareholder value. And we continue to expect a strong year in 2026 with a fifth straight year of double-digit earnings improvement and revenue growth in the low single digits in both segments. On today's call, I'll break my comments into 3 sections. First, our quarterly results. Again, we delivered solid second quarter earnings with EPS in line with our expectations. Second, our back half outlook. Our revenue backdrop strengthened in the second quarter, providing increased confidence in the full year outlook. And third, our outlook beyond 2026. We have numerous sources of margin improvement and EPS visibility, and we project double-digit EPS growth again next year, and we have multiple years of elevated earnings growth visibility beyond 2027. Following my comments, VP will provide more details about the second quarter, our outlook, cash flow and balance sheet. I will close with some additional commentary before we open the call to your questions. I will start with some highlights from the second quarter. We continue to effectively manage the middle of the income statement, and we're able to deliver solid second quarter results. Non-GAAP EPS was $1.27, and was up 14% year-over-year. Versus the second quarter of 2025, the addition of Steelcase profit, price/cost, including the net impact of tariffs, legacy network optimization savings and productivity benefits combined to double operating profit on a year-over-year basis. Revenue was in line with our expectations in both segments with Workplace up slightly and Building Products down slightly. Encouragingly, and as we expected, second quarter orders strengthened. I will provide more color on the order patterns in a moment. In the legacy Workplace Furnishings businesses, second quarter net sales were up slightly year-over-year on an organic basis, consistent with commentary we provided last quarter. Growth was fueled by our businesses focused on small- and medium-sized customers. Moreover, a firming industry backdrop became more apparent during the quarter. In 2026, we expect stronger organic revenue growth in the back half and solid year-over-year margin expansion in legacy Workplace while we continue to invest to drive future growth. The integration of Steelcase is going well and synergy capture and accretion are progressing as expected. A new leadership team is largely in place, and we expect the President to be on board in the second half. We continue to expect modest accretion in 2026 and now expect total synergies will reach at least $120 million when fully mature. In Residential Building Products, revenue decreased 1.6% versus the prior year period. Again, this was consistent with our expectations communicated on the first quarter call. Revenue from the remodel retrofit business increased solidly, but was more than offset by continued market-driven weakness in the new construction channel. In both markets, our members continue to deliver strong relative performance. Second quarter segment operating margin expanded 470 basis points year-over-year, including net benefits of tariffs, reaching a strong 20.4%. Our unique operating model continues to deliver strong profit margins. Despite expectations of ongoing housing uncertainty, we remain encouraged about opportunities tied to the broader markets, and we continue to invest to grow our operating model and revenue streams. In summary, the strength of our strategies and our ability to manage daily uncertainty through varying macroeconomic conditions, all while remaining focused on investing for the future was evident in the second quarter results. That leads to my comments on our outlook for the second half of 2026. Again, our revenue backdrop strengthened in the second quarter, providing increased confidence for the remainder of the year. In addition to an improving organic revenue growth rate, the Steelcase acquisition and operational productivity gains are expected to continue driving strong results in the second half. From a segment perspective, beginning in our legacy Workplace businesses, we expect volume growth to return in the third quarter, driving mid- to high single-digit net sales growth in the second half. Our segment outlook is supported by external industry metrics and by internal pipeline data. Specifically, in addition to strengthening orders in the quarter, preorder metrics all remain highly active, including project funnel, bid quotes and design requests. For Steelcase, after a market soft patch to start the year, we saw pre-order activity and order momentum accelerate in late Q1 and continue in the second quarter. As we expect second half revenue -- and we expect second half revenue to increase solidly year-over-year. We project Steelcase will be modestly accretive in the second half and for the full year. In Residential Building Products, our structural changes to organize around the customer, along with our growth investments are expected to drive continued market outperformance. For 2026, we expect modest price-driven revenue growth in the second half despite expectations of ongoing housing market softness. From a profit perspective, we project both our legacy Workplace and our Building Products segments will solidly expand margins in 2026. Moving on to my third point, our outlook beyond 2026. We have multiple sources of margin improvement and EPS growth visibility, and we project double-digit EPS growth again next year, driven primarily by expected synergies from Steelcase and legacy network optimization projects. Beyond 2027, we have numerous years of elevated earnings visibility driven by multiple factors. During the quarter, we continue to smartly manage costs across all our businesses as we continue to navigate ongoing geopolitical and macro dynamics. Benefits associated with these cost management actions are in addition to the previously announced $30 million of legacy workplace network optimization savings and the synergies associated with the integration of Steelcase, which, as I stated earlier, are on track and now expected to be at least $120 million. The combination of our disciplined cost management, Steelcase synergies and ongoing legacy network optimization projects continue to support our earnings visibility story. Of note, additional items may provide incremental benefits. For context, our current synergy projections are focused on the Steelcase Americas business only, and we are assuming no benefits from revenue synergies. In addition, our outlook for double-digit EPS growth next year does not rely on improved volume from current levels. Now I will turn the call over to VP. VP? Vincent Berger: Thanks, Jeff. I'll start with some additional comments about the second quarter. GAAP diluted EPS for the second quarter was $0.70. On a non-GAAP basis, diluted EPS totaled $1.27, which was ahead of our internal expectations. The net tariff impact on operating margin in the quarter was about 150 basis points, and we expect approximately 40 basis points of benefit for the full year. From an EPS perspective, the net tariff benefit in the second quarter was approximately $0.25. Organic volume in the quarter was negatively impacted by geopolitical pressures to begin the year, especially in the Workplace Furnishings segment. However, the addition of Steelcase profit, price/cost benefits, including the net impact of tariffs, expense control and productivity savings offset the volume softness and continued investments in initiatives aiming to drive future growth. Total net sales in the quarter increased 121% overall. From an organic standpoint, net sales were up slightly on a year-over-year basis. Moving to Q2 orders and backlog. In the Workplace Furnishings segment, organic orders in the second quarter increased 5% compared to the prior year period. Legacy order growth rates from small- to medium-sized customers and from contract customers were comparable in the quarter. Legacy Workplace backlog also ended the quarter 5% higher than the year ago period. Steelcase order growth was slightly better than legacy Workplace Furnishing trends. Over the most recent 5-week period, the year-over-year segment order growth rate accelerated above the 5% average in the second quarter. Orders in the Residential Building Products segment were mostly unchanged compared to the second quarter of 2025. Solid remodel retrofit order growth essentially offset modest declines from the new construction channel. However, both segments continue to outperform the respective markets. Over the most recent 5-week period, segment orders grew at a low single-digit pace on a year-over-year basis. For the third quarter of 2026, we expect net sales in legacy Workplace to increase to a high single-digit rate year-over-year. Including Steelcase, total Workplace Furnishings net sales are expected to increase approximately 175% to 180% versus the prior year period. In Residential Building Products, third quarter 2026 net sales are expected to be roughly unchanged versus same period in 2025. Non-GAAP diluted earnings per share in the third quarter of 2026 are expected to increase at a rate in the mid- to high 20% range from the third quarter 2025 levels. Steelcase accretion, productivity savings, volume growth and price costs are expected to fuel the EPS increase. Our new outlook for 2026 full year earnings reflects expectations of 20% to 25% non-GAAP EPS growth from 2025 full year of $3.46, with accelerating double-digit earnings growth in the second half of the year. As we look at the second half, we now expect non-GAAP diluted earnings per share in the third quarter to be approximately 15% above the fourth quarter. This is primarily tied to the expected timing of revenue and investments. As Jeff mentioned, we expect double-digit diluted non-GAAP EPS growth again next year, and we have multiple years of elevated earnings growth visibility beyond 2027. The combination of Steelcase synergies, cost management actions and legacy workplace network optimization initiatives are expected to yield a total cumulative savings exceeding $70 million in 2027 and more than $150 million when fully mature. Next, a few additional items to assist you in your 2026 modeling. Combined depreciation and amortization are expected to be approximately $170 million to $180 million, excluding purchase accounting impact of approximately $100 million. Net interest expense is expected to total about $80 million, and our tax rate should be approximately 25% to 26%. And finally, from a cash flow and balance sheet perspective, our balance sheet is strong, and we remain committed to maintaining significant financial flexibility to fund ongoing business investments to drive growth and payment of our long-standing dividend. Free cash flow was used to reduce net debt levels by approximately $100 million during the quarter as we continue to decrease leverage following the Steelcase acquisition. Quarter ending debt leverage was at 2.4x, down from 2.5x last quarter. We continue to expect leverage to move back to pre-Steelcase acquisition levels within 18 to 24 months of the closing of the deal in December of 2025. Leverage is expected to trend lower as the year progresses. I will now turn the call back over to Jeff for some long-term thoughts and closing comments. Jeff? Jeffrey Lorenger: Thanks, VP. Our members continue to manage our businesses well, and we delivered another solid quarter. Order patterns showed noticeable improvement during the quarter as expected, especially in Workplace. As a result, as we look forward to the remainder of 2026, we expect year-over-year volume growth in Workplace Furnishings, while Building Products volume pressure is expected to moderate. More specifically, our updated outlook calls for accelerating revenue and operating profit growth in the Workplace Furnishings segment. This view is supported by both external macro and industry demand metrics, internal preorder, order and backlog data and multiple cost and expense initiatives. In Residential Building Products, we anticipate revenue to be flat year-over-year in the second half, and we expect both of our segments to solidly expand margins in 2026. While we remain focused, conservative and ready to adjust as required, our new outlook demonstrates our growing confidence in revenue growth, our ongoing visibility story and our proven ability to manage through dynamic economic conditions. From a demand indicator perspective, the workplace furnishing spec pattern we have discussed the last few quarters is unchanged, and we remain bullish about the segment's demand environment. Return to office continues to be a positive driver. Office leasing activity grew for the fourth straight quarter in Q2 with trailing 4-quarter leasing activity now up 27% year-over-year. Net absorption of office space, which has historically been a good leading indicator of future industry demand was positive for the fourth straight quarter with more than 11 million square feet absorbed in Q2. This brings the trailing 4-quarter total to nearly 31 million square feet absorbed, the highest level since 2019. And finally, sublease activity has returned to pre-COVID levels, another indication of the improving health of the office market. While supply of new office space will remain a headwind, we see multiple cyclical drivers of growth outside of new construction. As I mentioned earlier, these encouraging industry drivers are consistent with recent order patterns and internal preorder metrics in both workplace -- legacy Workplace and Steelcase. Our funnel continues to expand with second quarter bid quotes up solidly year-over-year, and the number of large dollar projects continues to increase. Customer visits, RFPs and design requests were all strong during the second quarter. We are competing well and win rates are improving as market momentum continues to accelerate. Moving on to housing. Headlines continue to point to ongoing softness, especially in the new build space. Interest rates remain relatively elevated, prices remain high and affordability concerns persist. As a result, we expect continued new construction weakness in 2026. However, new single-family permits surprised to the upside in June and were up 4% year-over-year with each region either flat or up. Our go-to-market initiatives and growth investments will allow us to continue to outperform the market. In remodel retrofit, we are assuming modest market growth in 2026. We also expect to continue to outperform the market in our R&R business. And importantly, we expect ongoing margin and cash flow consistency from the Residential Building Products segment. In conclusion, post the acquisition of Steelcase, we are a transformed and fundamentally stronger organization. The benefits of the Steelcase acquisition, the strength of our strategies and our financial discipline are expected to continue to drive strong free cash flow and allow us to maintain a strong balance sheet. This will enable us to continue to deliver exceptional value to our shareholders, customers, dealers, members and communities. I want to thank all HNI members for their continued focus and commitment. Thank you again for joining us. We will now open the call to your questions. Operator: And our first question comes from Reuben Garner of Benchmark. Reuben Garner: So the subtle tweak to the language on the Steelcase synergies, I think there was something similar several quarters after the Kimball acquisition. Can you just talk about why the tweak and what you're seeing there so far in the integration process? And then, I guess, any potential upside to that figure as we move forward? Vincent Berger: Sure, Reuben. I think there's 2 parts to it. We went in with a target of $120 million that we've said we've been confident in. That was pure analytics. That was before we even got in and start working with the teams, and that was based on KI's history as well as taking the Steelcase EBITDA business to the legacy targets. They were just over 8%, and we were driving over 13.5%. So our confidence was high. And what's happened in the last 7 months is we've put the integrated management office teams together. Their bottom-up project lists have started in SG&A, logistics, procurement, network optimization. And we now have a view of a list of projects that are larger than $120 million, which is very consistent to Kimball. So now what we'll do, which is why you heard Jeff say at least. Now what we'll do over the next 60 days is put project time lines on those and finalize our confidence levels. And with that, we'll come back to a new adjusted target. So I think we're kind of -- you called it well. It's similar to what we did with Kimball. And I'd say we're on track, and we're encouraged that the number is going to be higher than $120 million. Reuben Garner: And then a little help on the gross margin line. I think you guys -- your accounting maybe a little bit different than the way Steelcase accounted gross versus SG&A or cost of goods versus SG&A expenses. Can you just talk about on a like-to-like basis, what gross margins have been doing and what you expect for the balance of the year kind of embedded in your guide? Vincent Berger: Yes. The way you would have looked at the Steelcase margin would not mirror against the legacy workplace because of what's in there in freight and distribution. So to answer your question on what to expect on the workplace side, we still have high confidence of 150 basis point increase this year from 10.5% to 12% before the tariff refund that happened. So those projects, and Jeff talked about improving margins in both the businesses, those projects are in place, and we still have high confidence there. On the residential side on margins, we feel the same. There's a 90-basis point plan for incremental improvement this year, and that's before the tariff refund. And then if you look at actual Steelcase, you follow P&L throughout the year, you'll see that it's now aligning with the way we did with legacy, and you'll start to see the benefits of the synergies. We will have synergies hit in the third and fourth quarter that will start to improve those margins. And ultimately, analytically, the $120 million, that will incrementally improve margins for Steelcase and overall Workplace, each quarter for the next several years. Reuben Garner: And I'm going to sneak one more in. The mid-single-digit order growth, the 5-week comment about it accelerating. Just to clarify, I don't know if that was the last 5 weeks of the quarter or if that was essentially the month of July. But either way, what mid-single-digit kind of growth rate last quarter in orders, your outlook is for high single-digit revenue growth for the balance of the year in that segment. What gives you the confidence that, that acceleration is to come? Vincent Berger: There's 3 parts to that, Reuben. Yes, that -- it's a good catch. So there's 3 parts. First, backlog at 5% going into a quarter and order growth rates at 5% going into -- coming out of the quarter support it. The second thing is the order acceleration that happened after the quarter. You heard Jeff mention that orders accelerated. That was at a much higher percentage than 5%, specifically on the contract side of our business. That was a lot stronger. So that supports the high single digits. And then the third thing is a weighted funnel. So the mention of preorder metrics, we can see what's out in front of us that's actually going to come in, in the quarter. So we have a good feel because our customers order based on our lead times. So those 3 things give us confidence in the high single digits for the third quarter. Operator: And our next question comes from Greg Burns of Sidoti. We'll go to our next question. Our next question comes from Steven Ramsey of Thompson Research Group. Steven Ramsey: I wanted to continue the thoughts on workplace strength. And you talked about win rates improving. Maybe you can put into context the drivers of better win rates, dissect where it's coming from, if it's legacy and/or Steelcase and if the marketplace around you is being rational as we see the backdrop improve. Jeffrey Lorenger: Yes, good question. I think, Steven, it's kind of across the board, both legacy and Steelcase, teams are competing well. There's been -- it's a lot of project business, small, medium and large kind of across the board by business. And so there's not like a standout. It's kind of universal. I think it kind of goes to these macro drivers, I believe, that are happening with the leasing activity and the absorption and the dealer surveys are trending positive. And so that's the bottom line. And I don't really -- the marketplace seems to be rational at this point. I know we've all been through our periods as we've been in this space long enough. But right now, it seems everyone is -- there's nothing that pops as being unusual relative to how the market is behaving or how our customers and our sales teams are addressing those behaviors. Steven Ramsey: And then on the resi side of things, I want to make sure I understand this. The pricing-driven revenue growth in the second half, is there an implication that volumes are negative in the second half? And maybe you can talk to mix in that picture. Vincent Berger: Yes, Steven, the volume in the second half in the residential is low single digits negative. So there's a little bit of pressure. The price is going to offset that to make it relatively flattish for the second half or low single digits. So the point is even in a challenging housing market, we're going to hold revenue flat. Jeffrey Lorenger: Yes, Steven, I think I would add that I kind of made the comment, we believe we're outperforming the markets we're in, given kind of the macro and the cyclical and the headwinds that we are seeing. But I think we're pretty happy with that performance relative to our specific investments. We've done a lot with focusing on builders specifically, the service model that we continue to build out and work on our RDC and our service model and our lean process with the vertical integration. So all that is being ramped with some more new product development because like I said, we're bullish on this space long term. And so we're taking this time to make investments when the market does turn in the meantime, kind of outperform while the markets are flattish or slightly down. Operator: And our next question comes from Greg Burns of Sidoti. Gregory Burns: Can you hear me now? Operator: We can hear you now. Gregory Burns: All right. Great. So a lot of the focus on the Steelcase acquisition has been on the cost side of the equation. I just maybe wanted to get your thoughts on the longer term maybe revenue synergy opportunities. Any early indications of how the brands are working together across your dealer network? And maybe any plans on putting specific programs in place to maybe accelerate any of that activity that you might be seeing in the network? Jeffrey Lorenger: Yes, it's a great question, Greg. I mean I think that as you well know, none of that was programmed into our thinking going in. And so we're kind of watching that. I would tell you, some of that is occurring naturally in the ecosystem. And so that is -- there was a lot of excitement at Design Days this year, a lot of customers and dealers visiting all the spaces going to the Hans space, going to the Kimball space, what have you. So I think that's been really positive. I think the teams are excited about the opportunities. We have focused a lot. The sales force, we're going to continue to invest in selling. That's a critical element as we build this potential revenue synergy out. I will say we're not going to -- we haven't forced it at this point because this first year in these kind of transactions, we're very pleased with where we're at. And there's a lot of moving parts. So we kind of want to get through the transition year. But you are right, there will be -- there are opportunities that we have kind of studied relative to how we're seeing the natural ecosystem respond and where we could program in some benefits in order to help that to happen. And the other thing I've said in the past, too, is the whole price mixing and blending of the floor plate in a lot of these opportunities. That's the way the market is kind of developing over time. And we have -- this all goes to how we can configure the network in order to take advantage of not only our assets, but to meet the market where the market is headed anyway. Operator: And our next question comes from David MacGregor of Longbow Research. David S. MacGregor: Congratulations on the progress. Yes. I guess on your third quarter outlook, can you just talk in greater detail about what you're seeing in the presale indicators? Obviously, it's giving you a lot of confidence in the outlook. Vincent Berger: Yes. David, I think us sharing more about preorder activity and presale indicators, we're seeing all of them increase. We're seeing RFPs increase. A little bit about the question earlier about win rate. Some of the investments that we made over the last few years when volume wasn't helped in the front and more salespeople on the street allowed us to sophisticate some of these systems to see it. So you think of -- not just win rates, the amount of bids and size of bids, all of those are what's given us confidence to lean into the third quarter. And I think the last is the point on the weighted funnel. We can actually see in working with our clients that this preorder metric of won but not ordered is going to get ordered. So I think as this evolves, we'll just get more confidence to how that weighted funnel plays inside the quarter. That's obviously our internal. Certainly, Jeff mentioned a lot of the macro items, specifically absorption and leasing activity. All of those are green, and it's not accelerating as well. So market health plus our sales management systems give us confidence there. David S. MacGregor: And then the third quarter adjusted EPS guidance of up mid- to high 20s, how much of that is the improving demand fundamentals versus how much is acceleration in cost synergies, execution versus maybe how much is just push forward from the January, February pause in purchase orders? Vincent Berger: Yes. I mean a lot of it, when we just -- if I talk dollars just at the highest level, David, the Steelcase profit is going to drive a lot of it. Our productivity is increasing. And then everything we just talked about on volume, we're back to volume growth. We haven't talked about that in a few quarters. And that's obviously a significant driver. And actually, the one that we're probably most excited about because that's the better indication of what the market is doing and it's getting momentum. David S. MacGregor: And then you noted the double-digit EPS growth you expect in 2027. How much of that is kind of the strong pattern of growth you're seeing in new orders versus Steelcase cost synergies? Vincent Berger: Yes, minimal. We've been conservative on that approach. Our visibility story for '27 of the $70 million is Steelcase network and the network optimization. And those numbers have been consistent. Those projects are in place, and we're building them. So growth on top of that is not in the economics, and certainly, that would be upside. Jeffrey Lorenger: So I just want to be clear, VP, you've got synergies in there, obviously, you just mentioned that. You probably have some pricing in there as well, price cost, but you just don't have any volume. I just want to make sure I'm clear on that. Vincent Berger: Price cost is assumed neutral and there is no -- there's minimal volume in there, David. That would be upside. David S. MacGregor: So there's quite a bit of upside here if the strength you're seeing in the market right now should continue. Vincent Berger: Yes. David S. MacGregor: And then can you just talk about how the mix of business you're seeing is changing with the Steelcase acquisition? And given they typically play in a space where I guess the project sizes are typically larger than what the legacy HNI was used to seeing. And also, what are you learning from that in terms of how you reinvest back in the business going forward? Jeffrey Lorenger: Yes, it's a good question. We are -- this first year is a year of, I would say, transition. There's a lot of moving parts. But their exposure, obviously, is to larger opportunities than we typically have been operating kind of the standard deviation. It makes it a little lumpier, I would say. So we're kind of getting our arms around predictability. That's kind of why we're talking a lot about the funnel and the activities because that's kind of a precursor. But some of the pace of some of these from one to order and kind of in the funnel is -- we're working with the Steelcase team to make sure we have a -- we can predict that more accurately. But that's the beauty of this, though, it's exposure to pieces of the market we didn't have before and Steelcase does a great job. Their sales team does a great job, and they're really connected in with their customer base. So -- and this has gone well. I would say the team has responded well. We will probably look to reinvest more in the NPD. As you recall, last quarter, we talked about one of the surprises we had was this -- they had a BT project, and we kind of came in and made a fairly good deep assessment that we needed to stop that. We thought there was another way to do that was kind of holding back some other areas of business. And now the team has responded well. We're diverting those resources and some of this into actions in product development, supporting the sales force, all to kind of what I call win at the point of attack in the market. And so I think we get through that, and we've got that kind of retriggered going into the back half now, that's -- we really like where we're positioned as we look out into '27 with those moves. Vincent Berger: Yes. I mean you talked about the investment. One of the things that we picked up in our dealer checks this quarter was just a lot of dealers investing in their showrooms right now. I guess we should interpret that as an indication of confidence. Jeffrey Lorenger: Yes, I think so. I think the dealers are bullish, and we're spending a lot of time there. And they're investing, we're investing. That's the beauty. And I think that's what it's going to take to win the race long term. And that, again, goes to this -- goes to the transaction in general. And look, it's only 7 months in, but seeing -- couldn't be more pleased with how everyone's responded relative to that kind of the Steelcase ecosystem, super excited. People have been great, and we're hitting at the right time with some of the macro drivers. David S. MacGregor: And I guess just you were referencing earlier a little bit about NeoCon this year. Just what did you take away from the NeoCon experience in terms of the commercial synergy potential? Jeffrey Lorenger: I took away that there's a lot of opportunity. There is a lot of -- to get to know you, it's an exploration -- that's why some of this is -- will happen naturally. There's early adopters. There's other people that are comfortable with where they're at. So you kind of got -- you got to kind of look at the whole network. But the bottom-line takeaway is there's a lot of opportunity as our businesses cover the entire floor plate, like we've said, and the mixing and matching that's potentially available to some of our dealer partners is starting to be recognized. It's early days, but it's starting to be recognized. And all it takes is 1 or 2 experiences to win a job. But you also got to understand you don't snap your fingers. I mean we have sales forces. We have people getting to know each other. Some of this is just natural matriculation of the system. And at the right time, we can then -- I got the question earlier, you can then kind of program in some of that, but you want to make sure you do that when people are ready and understand the program. David S. MacGregor: And do you think you're making progress with the international Steelcase business and how you can better sort of leverage that asset? Jeffrey Lorenger: That -- international, it's early days there. I was -- I've gotten more visibility. I did a trip over there, and there's opportunities to uncover there, the fresh eyes. But look, I mean, the international piece is there's 2 segments for us. We've got the EMEA and the APAC -- and so those even operate a little differently. But yes, there clearly is opportunities there to configure that network to maybe even be more potent than it is, but they have nice coverage. EMEA, obviously, is -- they've got some headwinds with the local economics and the war that too shall pass. And we've got good teams over there and people that are eager to contribute. So that's all you can ask for in the early days. David S. MacGregor: Last question for me. I just -- you mentioned the Steelcase hiring of a President in the second half. I guess I'm just curious, how does that second half hire impact the synergies cadence? Do we see an acceleration shortly thereafter? Or how are you thinking about that? Jeffrey Lorenger: No, I don't think so, David. I think we've got, as VP mentioned and we mentioned, we got the IMO structure. We pretty much tipped that up and it's operating without a President. I mean, I think the President will spend more time in the market with dealers, with the sales force, winning business and getting to know the ecosystem well because we kind of have the IMO kind of locked down. It doesn't mean it won't -- they'll be involved, but we want to kind of focus on the front and focus on selling to start with. Operator: This concludes our question-and-answer session. I'd like to turn it back to Mr. Lorenger for closing remarks. Jeffrey Lorenger: Well, great. Thanks for taking the time today. I know it's always a busy time of the year. So I really appreciate everybody joining us for the summer call, so to speak. Thanks so much. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Before you buy stock in HNI, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and HNI wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 7, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. HNI (HNI) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed the 14% year-over-year EPS growth to the successful integration of Steelcase, effective price/cost management, and productivity gains that doubled operating profit. The Workplace Furnishings segment saw a return to organic growth fueled by small- and medium-sized customers, alongside a firming industry backdrop characterized by increased office leasing and positive net absorption. Residential Building Products maintained strong margins of 20.4% despite a 1.6% revenue decline, as growth in remodel/retrofit channels partially offset persistent weakness in new construction. The Steelcase integration is progressing as expected, with synergy capture and accretion on track., with management raising the total expected synergy target to at least $120 million based on bottom-up project lists in logistics and procurement. Strategic investments in the sales force and new product development are being prioritized to improve win rates and capitalize on the 'return to office' trend. Operational efficiency was bolstered by legacy network optimization projects, which contributed to a $30 million savings run-rate independent of the Steelcase acquisition. Management projects a fifth consecutive year of double-digit earnings growth in 2026, supported by high single-digit revenue growth in Workplace Furnishings for the second half. The 2027 outlook for double-digit EPS growth is primarily driven by $70 million in cumulative cost savings and does not rely on volume improvements from current levels. Guidance for the Residential segment assumes modest price-driven revenue growth in the second half, despite expectations of ongoing housing market softness and high interest rates. Steelcase is expected to be modestly accretive for the full year 2026, with synergy capture accelerating in the third and fourth quarters. Leverage is projected to return to pre-acquisition levels within 18 to 24 months of the December 2025 closing, funded by strong free cash flow. A net tariff benefit contributed approximately $0.25 to EPS in the second quarter, though management expects this benefit to moderate to 40 basis points for the full year. Management proactively halted a legacy Steelcase product development project to reallocate resources toward more potent market opportunities, impacting short-term R&D focus. Geopolitical pressures and macroeconomic uncertainty were cited as initial headwinds to organic volume at the start of the year, though momentum recovered by late Q1. The international Steelcase business, particularly in EMEA, faces ongoing headwinds from local economic conditions and regional conflict, though management sees long-term optimization potential. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained that the initial $120 million target was based on pure analytics, but seven months of 'bottom-up' project identification in SG&A and logistics suggest the final number will be higher. A new adjusted target will be finalized within 60 days as project timelines are established. Confidence is driven by a 5% increase in backlog, order acceleration in the most recent five-week period, and a 'weighted funnel' of won-but-not-yet-ordered projects. Preorder metrics, including bid quotes and design requests, are all trending positively. Management is not yet 'forcing' revenue synergies to avoid disruption during the transition year but observes natural cross-selling occurring in the dealer ecosystem. The combined portfolio allows dealers to mix and match products across the entire floor plate, which management believes meets evolving market demands. The upcoming hire of a Steelcase President is not expected to change the synergy timeline, as the Integration Management Office (IMO) is already fully operational. The new leader will focus primarily on market-facing activities, dealer relationships, and sales growth rather than internal cost-cutting.

Interested in HNI Corporation? Here are five stocks we like better. HNI’s second-quarter earnings improved significantly: Non-GAAP EPS rose 14% to $1.27, while sales more than doubled year over year due largely to the Steelcase acquisition. Pricing, productivity gains, cost savings and Steelcase profits offset earlier softer volumes. Workplace Furnishings demand is strengthening: Organic orders increased 5%, backlog grew 5%, and improving office-leasing and absorption trends support expectations for high-single-digit organic sales growth in legacy Workplace during the third quarter. HNI raised its full-year outlook: The company now expects 2026 non-GAAP EPS growth of 20% to 25% and anticipates third-quarter EPS growth of roughly 25% to 30%. Steelcase integration synergies are progressing, with at least $120 million in mature savings expected. Steelcase Makes the Case for the Taking Longs HNI (NYSE:HNI) reported second-quarter fiscal 2026 non-GAAP diluted earnings per share of $1.27, up 14% from a year earlier, as profit from the Steelcase acquisition, pricing and cost benefits, network optimization savings and productivity gains helped offset softer organic volumes earlier in the year. GAAP diluted EPS was $0.70. Total net sales increased 121% year over year, reflecting the addition of Steelcase, while organic net sales increased slightly. Chairman, President and CEO Jeff Lorenger said second-quarter results were in line with the company’s expectations and pointed to an improving demand environment, particularly in Workplace Furnishings. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now “Our revenue backdrop strengthened in the second quarter, providing increased confidence for the remainder of the year,” Lorenger said. HNI continues to expect low-single-digit revenue growth in both of its segments for the full year and a fifth consecutive year of double-digit earnings improvement. In HNI’s legacy Workplace Furnishings operations, second-quarter organic sales rose slightly from the prior year, supported by small and medium-sized customers. Organic Workplace orders increased 5% year over year, while legacy Workplace backlog ended the period 5% above year-ago levels. Steelcase order growth was slightly stronger than legacy Workplace trends, according to Executive Vice President and CFO VP Berger. → Microsoft Just Flipped the AI Spending Narrative Overnight Berger said the year-over-year order-growth rate accelerated above the quarter’s 5% average during the most recent five-week period, with particularly stronger activity in contract business. He said backlog, recent orders and the company’s weighted sales funnel support expectations for high-single-digit organic sales growth in legacy Workplace during the third quarter. For the full Workplace Furnishings segment, including Steelcase, HNI expects third-quarter sales to rise approximately 175% to 180% from the prior-year period. The company expects Steelcase revenue to increase solidly year over year in the second half and for the business to be modestly accretive both in the second half and for the full year. → Carrier Earnings Could Send the Stock to a New All-Time High Lorenger said external office-market indicators have also improved. He cited four consecutive quarters of growth in office leasing activity, with trailing four-quarter leasing activity up 27% year over year. Net office-space absorption was positive for a fourth consecutive quarter, reaching more than 11 million square feet in the second quarter and nearly 31 million square feet over the trailing four quarters, the highest level since 2019. The company also reported solid growth in bid quotes, more large-dollar projects, and strong customer visits, requests for proposals and design requests. Lorenger said win rates were improving across both legacy HNI and Steelcase, while describing the marketplace as rational. Residential Building Products revenue declined 1.6% year over year in the second quarter. Growth in remodel and retrofit revenue was offset by continued weakness in the new-construction channel. Segment operating margin nevertheless expanded 470 basis points from a year earlier to 20.4%, including the net benefit of tariffs. HNI said it expects modest price-driven revenue growth in the segment during the second half despite ongoing housing-market softness. Berger said second-half residential volumes are expected to decline at a low-single-digit rate, with pricing offsetting the pressure and leaving revenue roughly flat to up slightly. Lorenger said the company expects to continue outperforming its residential markets through customer-focused initiatives and investments in service, distribution, vertical integration and product development. While he cited continued affordability concerns and elevated interest rates as pressures on new home construction, he noted that June single-family permits rose 4% year over year. HNI expects third-quarter non-GAAP diluted EPS to increase at a mid-to-high-20% rate from the third quarter of 2025. Berger said Steelcase profit, productivity savings, returning volume growth and price-cost benefits are expected to drive the increase. The company expects third-quarter non-GAAP EPS to be about 15% higher than fourth-quarter EPS, primarily due to the anticipated timing of revenue and investments. For full-year 2026, HNI raised its earnings outlook to non-GAAP EPS growth of 20% to 25% from 2025’s $3.46. Both the legacy Workplace and Residential Building Products segments are expected to expand margins during the year. The company said the net tariff impact contributed about 150 basis points to second-quarter operating margin and approximately $0.25 to quarterly EPS. For the full year, HNI expects tariffs to provide roughly 40 basis points of operating-margin benefit. HNI said the Steelcase integration is progressing as planned, with an integrated management office working on projects across selling, general and administrative expenses, logistics, procurement and network optimization. The company now expects total Steelcase synergies of at least $120 million when fully mature, up from its prior expectation of $120 million, though Berger said HNI will further assess project timing and provide an updated target after completing that work. The company’s current synergy projection is focused on Steelcase’s Americas business and does not include revenue synergies. Lorenger said potential revenue opportunities are beginning to emerge naturally across the dealer network, but HNI has not yet formally programmed those benefits into its plans. HNI expects Steelcase synergies, cost-management actions and legacy Workplace network optimization initiatives to produce more than $70 million in cumulative savings in 2027 and more than $150 million when fully mature. The company also projected double-digit non-GAAP EPS growth in 2027, an outlook that Berger said assumes neutral price-cost and minimal volume growth. Free cash flow reduced net debt by about $100 million during the quarter. Debt leverage declined to 2.4 times at quarter-end from 2.5 times in the prior quarter. HNI expects leverage to return to pre-Steelcase acquisition levels within 18 to 24 months of the December 2025 transaction closing. HNI Corporation, founded in 1944 as the Heating & Novelty Company and headquartered in Muscatine, Iowa, is a leading manufacturer of office furniture and hearth products. Over its history, the company has evolved from producing gas heaters into two primary business segments: Office Furniture and Hearth & Home. HNI's Office Furniture division operates under well-known brands such as The HON Company, Allsteel, Gunlocke and Kimball, offering a comprehensive portfolio of workstations, seating, tables, storage solutions and acoustic products tailored for corporate, education, healthcare and government markets. In its Hearth & Home segment, HNI designs, manufactures and distributes fireplaces, stoves, fireplace inserts, logs and related accessories. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "HNI Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Non-GAAP EPS of $1.27 was up 14% year over year, in line with expectations. Workplace furnishings organic orders increased 5% in Q2, with order growth accelerating in the most recent 5-week period. Steelcase acquisition synergies are on track and now expected to reach at least $120 million when fully mature. Residential building products segment operating margin expanded 470 basis points year over year to 20.4%. Company projects double-digit EPS growth in 2027, driven by synergies and cost management, without relying on volume improvement. Residential building products revenue decreased 1.6% year over year due to weakness in new construction. Organic volume in the quarter was negatively impacted by geopolitical pressures, especially in workplace furnishings. Residential building products volumes are expected to be low single-digits negative in the second half of 2026. Ongoing housing market softness, elevated interest rates, and affordability concerns persist, pressuring new construction. Net tariff benefits are expected to be only about 40 basis points for the full year, down from 150 basis points in Q2. Warning! GuruFocus has detected 7 Warning Signs with HNI. Is HNI fairly valued? Test your thesis with our free DCF calculator. Q: The subtle tweak to the language on the steel case synergies. Why the tweak and what you're seeing there so far in the integration process, and then any potential upside to that figure as we move forward?A: (Jeff Loringer, Chairman, President and CEO) We went in with a target of $120 million based on analytics before working with the teams. In the last 7 months, the integrated management office teams have created bottom-up project lists in SG&A, logistics, procurement, and network optimization. We now have a view of a list of projects larger than $120 million. Over the next 60 days, we will put project timelines on those and finalize our confidence level, and we are encouraged that the number is going to be higher than $120 million. Q: The mid single-digit order growth, the 5-week comment about it accelerating. What gives you the confidence that the acceleration to high single-digit revenue growth for the balance of the year in that segment is real?A: (VP Berger, Executive Vice President and CFO) There are three parts. First, backlog at 5% going into the quarter and order growth rates at 5% coming out of the quarter support it. Second, the order acceleration after the quarter was at a much higher percentage than 5%, specifically on the contract side of our business. Third, the weighted funnel and pre-order metrics allow us to see what's out in front of us that will come in during the quarter. Q: On the resi side of things, is there an implication that volumes are negative in the second half?A: (VP Berger, Executive Vice President and CFO) Yes, the volume in the second half in the residential segment is low single-digits negative. Price is going to offset that to make it relatively flattish for the second half. The point is, even in a challenging housing market, we're going to hold revenue flat. Q: The third quarter adjusted EPS guidance of up mid to high 20s, how much of that is improving demand fundamentals versus acceleration of cost synergies versus just pushed forward from the January, February pause?A: (VP Berger, Executive Vice President and CFO) At the highest level, the Steelcase profit is going to drive a lot of it. Our productivity is increasing, and we are back to volume growth, which is a significant driver and the one we are most excited about as it indicates what the market is doing. Q: How much of the double-digit EPS growth you expect in 2027 is from the strong pattern of growth in new orders versus Steelcase cost synergies?A: (VP Berger, Executive Vice President and CFO) Minimal. Our visibility story for 2027 of the $70 million is from Steelcase network optimization and legacy network optimization. Those projects are in place. Volume growth on top of that is not in the economics and would be upside. Q: Can you talk about how the mix of business is changing with the Steelcase acquisition, given they typically play in a space with larger project sizes?A: (Jeff Loringer, Chairman, President and CEO) This first year is a year of transition. Their exposure to larger opportunities makes it a little lumpier, so we are getting our arms around predictability. The beauty is the exposure to pieces of the market we didn't have before. We will look to reinvest more in NPD, and we are diverting resources into product development and supporting the sales force to win at the point of attack. Q: What were your takeaways from the NeoCon experience in terms of the commercial synergy potential?A: (Jeff Loringer, Chairman, President and CEO) There is a lot of opportunity. It's a get-to-know-you exploration. The bottom line is there is a lot of opportunity as our businesses cover the entire floor plate. The mixing and matching available to our dealer partners is starting to be recognized. It's early days, but it's started. Q: Do you think you're making progress with the international Steelcase business and how you can better leverage that asset?A: (Jeff Loringer, Chairman, President and CEO) It's early days, but there are opportunities to uncover with fresh eyes. There are two segments, EMEA and APA, which operate a little differently. There are clearly opportunities to configure that network to be more potent. EMEA has some headwinds with local economics, but we have good teams over there eager to contribute. Q: How does the hiring of a Steelcase President in the second half impact the synergies cadence?A: (Jeff Loringer, Chairman, President and CEO) I don't think it will impact the cadence. We have the IMO structure up and operating without a President. The President will spend more time in the market with dealers and the sales force, winning business and getting to know the ecosystem. We want to focus on the front and focus on selling to start with. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

HNI (HNI) came out with quarterly earnings of $1.27 per share, beating the Zacks Consensus Estimate of $1.04 per share. This compares to earnings of $1.11 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +22.12%. A quarter ago, it was expected that this maker of office furniture and fireplaces would post earnings of $0.31 per share when it actually produced earnings of $0.34, delivering a surprise of +9.68%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. HNI, which belongs to the Zacks Business - Office Products industry, posted revenues of $1.47 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.72%. This compares to year-ago revenues of $667.1 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. HNI shares have added about 1.8% since the beginning of the year versus the S&P 500's gain of 6.9%. While HNI has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for HNI was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.31 on $1.62 billion in revenues for the coming quarter and $4.00 on $6.04 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Business - Office Products is currently in the top 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Deluxe (DLX), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This payments and data company is expected to post quarterly earnings of $0.81 per share in its upcoming report, which represents a year-over-year change of -8%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Deluxe's revenues are expected to be $486.3 million, down 6.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report HNI Corporation (HNI) : Free Stock Analysis Report Deluxe Corporation (DLX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Order Acceleration, Cost Actions, Net Tariff Impacts Support Improved 2026 Outlook GAAP diluted EPS for Q2 was $0.70 (-31% YoY). On a non-GAAP basis, diluted EPS was $1.27 (+14% YoY). Profit performance versus the prior year was driven by the Steelcase acquisition, net tariff impact, and operational productivity improvement. Revenue and non-GAAP diluted EPS (excluding net tariff impacts) for the second quarter of 2026 were in line with HNI's expectations. Accelerating demand trends — Workplace Furnishings Q2 orders and quarter-ending backlog each grew five percent year-over-year. Low-single digit organic net sales growth expectations remain for both segments in 2026. Non-GAAP EPS growth of 20-25 percent, including net tariff impacts, now expected in 2026 — the fifth straight year of double-digit non-GAAP EPS growth. Multiple years of elevated EPS growth visibility remain from sales growth, strategic initiatives, cost actions, and network optimization, plus at least $120 million of synergies expected from the Steelcase acquisition. MUSCATINE, Iowa, July 30, 2026--(BUSINESS WIRE)--HNI Corporation (NYSE: HNI) today announced net sales of $1.5 billion and net income of $51.1 million for the second quarter ended July 4, 2026. Non-GAAP net income was $92.6 million. Non-GAAP to GAAP reconciliations follow the financial statements in this release. Highlights Solid second quarter results. GAAP diluted EPS totaled $0.70 and diluted non-GAAP EPS of $1.27 was in line with internal expectations, excluding the net impact of tariffs. GAAP results include the impact of Steelcase purchase accounting, the details of which can be found later in the release. Revenue backdrop strengthened in the second quarter. Workplace Furnishings segment volume growth is expected to turn positive in the third quarter, with volume growth and price recognition driving high-single digit organic growth in the second half of 2026. In Residential Building Products, implemented structural changes organizing around the consumer and growth investments are expected to drive continued market outperformance, with modest price-driven net sales growth expected in the second half of 2026. Multiple sources of margin improvement and EPS visibility. The Corporation’s operating margin benefitted by 150 basis points in the second quarter from net tariff impacts, with 40-45 basis points of benefit expected for the full year 2026. In addition, efforts aimed at managing costs in the face of geopolitical and macro uncertainty, and at streamlining priorities across the organization to focus on profitable growth are ongoing and expected to support profitability in 2026 and in 2027. Further, the Corporation continues to expect network optimization savings in its legacy Workplace Furnishings businesses to total nearly $30 million (adding an expected $0.30 to non-GAAP diluted EPS) through 2028. In addition, synergies associated with the integration of Steelcase are progressing as planned and are now expected to add at least $120 million of operating profit when fully mature. "Our second quarter demonstrates the focus of our members, is indicative of an improving demand environment, and supports expectations of stronger 2026 earnings growth. Through focused cost management and the net benefits of price-cost and productivity, we were able to deliver second quarter results that were in line with our expectations. And, encouragingly, our internal leading indicators—pre-order activity, orders, and backlog—improved further in the quarter. The positive momentum of our strategies—both revenue- and cost-focused, the benefits of our diversified revenue streams, the merits of our customer-first business model, and the integration of Steelcase continue to deliver strong shareholder value. "In the legacy Workplace Furnishings businesses, which excludes Steelcase, second quarter net sales were up slightly year-over-year on an organic basis, consistent with commentary we provided last quarter. Growth was fueled by our businesses focused on small- and medium-sized workplace customers. Moreover, a firming industry backdrop became more apparent during the quarter. Overall, we saw solid profit improvement driven by favorable price cost and operational productivity gains and, when including Steelcase, non-GAAP operating income was nearly double the prior-year level. Looking ahead, we expect stronger organic revenue growth in the back half and solid year-over-year margin expansion in our legacy Workplace Furnishings businesses, while we continue to invest to drive growth. "In Residential Building Products, net sales decreased 1.6 percent versus the prior-year period. Again, this was consistent with expectations communicated on the first quarter call. Revenue from the remodel-retrofit business increased solidly but was more than offset by continued market-driven weakness in our new construction channel. Our members continue to deliver strong relative sales performance. Second quarter segment non-GAAP operating profit margin expanded 470 basis points year-over-year, reaching a strong 20.4 percent. Despite expectations of ongoing housing uncertainty, we remain encouraged about the opportunities tied to the broader markets and we continue to invest to grow our operating model and revenue streams, including go-to-market changes to organize around our customers. "The strength of our strategies and the ability to manage daily uncertainty through varying macroeconomic conditions, all while remaining focused on investing for the future, was evident in our second quarter results. We expect strong profit growth in the second half of 2026, driven by the Steelcase acquisition, operational productivity gains and improving organic revenue growth rates," stated Jeff Lorenger, Chairman, President, and Chief Executive Officer. HNI Corporation — Second Quarter Summary Comments Consolidated net sales increased 121 percent from the prior-year quarter to $1.5 billion, driven by the acquisition of Steelcase in December 2025. On an organic basis, net sales increased 0.1 percent year-over-year. The acquisition of Steelcase increased year-over-year sales by $806.9 million. A reconciliation of organic net sales, a non-GAAP measure, to net sales follows the financial statements in this release. Gross profit margin expanded 110 basis points compared to the prior-year quarter. The increase was driven by 240 basis points of tariff refunds along with improved net productivity, which were partially offset by impacts from the acquisition of Steelcase, and restructuring costs related to the Corporation's network optimization projects. Selling, general, and administrative expenses as a percentage of net sales increased 390 basis points compared to the prior-year quarter. The increase was driven by impacts from the acquisition of Steelcase and higher variable compensation. Acquisition and related costs of $4.2 million were recorded during the current period in connection with the acquisition of Steelcase. Acquisition costs consist of retention compensation and other professional service fees. Non-cash purchase accounting totaled $21.9 million for the current quarter related to the Steelcase acquisition, which were included in operating expenses and related to amortization of intangibles. Restructuring and impairment charges of $17.9 million were incurred in the current quarter, primarily related to structural cost actions and an impairment charge related to a small residential building products business. Income tax rate comparability versus the same quarter of 2025 was primarily impacted by matters associated with the acquisition of Steelcase. Net income per diluted share was $0.70 compared to $1.02 in the prior-year quarter. On a non-GAAP basis, net income per diluted share increased to $1.27 from $1.11 in the year-ago quarter. The change in non-GAAP EPS was driven by net tariff impacts and improved net productivity. Workplace Furnishings — Second Quarter Summary Comments Workplace Furnishings net sales increased 157 percent from the prior-year quarter to $1.3 billion. On an organic basis, net sales increased 0.6 percent year-over-year. The acquisition of Steelcase during the fourth quarter of 2025 increased year-over-year net sales by $806.9 million. Workplace Furnishings operating profit margin of 7.7 percent contracted by 510 basis points versus the prior-year quarter, driven by impacts from the acquisition of Steelcase, purchase accounting, increased restructuring costs, and acquisition costs, partially offset by net tariff impacts and improved net productivity. On a non-GAAP basis, segment operating profit margin of 10.7 percent contracted 240 basis points year-over-year. The net tariff impact on segment non-GAAP operating margin was approximately 170 basis points favorable when compared to the prior-year period. Residential Building Products — Second Quarter Summary Comments Residential Building Products net sales decreased 1.6 percent from the prior-year quarter to $148.7 million, as decreased net sales in the new home market were partially offset by increased net sales in remodel-retrofit. Residential Building Products operating profit margin of 15.7 percent was flat compared to the prior year, driven by the net tariff impact, improved net productivity, and lower core SG&A offset by an impairment charge and lower net sales volume. On a non-GAAP basis, segment operating profit margin of 20.4 percent expanded 470 basis points year-over-year. The net tariff impact on segment non-GAAP operating margin was approximately 420 basis points favorable when compared to the prior year period. Second Quarter Order Rates In the Workplace Furnishings segment, orders in the second quarter increased five percent compared to the prior-year period, organically. Order growth rates from small-to-medium-sized customers and from contract customers were comparable in the quarter. Steelcase order patterns were slightly better than legacy Workplace Furnishings trends. Over the most recent five-week period, the year-over-year segment order growth rate accelerated. In the Residential Building Products segment, orders were mostly unchanged compared to the second quarter of 2025. Solid remodel-retrofit order growth offset modest declines from the new construction channel. Over the most recent five-week period, segment orders grew at a low single-digit pace on a year-over-year basis. Outlook Third quarter net sales. The Corporation expects third quarter 2026 net sales in legacy Workplace Furnishings to increase at a high single-digit rate year-over-year. Including Steelcase, total Workplace Furnishings net sales are expected to increase approximately 175-180 percent versus the prior-year period. In Residential Building Products, third quarter 2026 net sales are expected to be roughly unchanged versus the same period in 2025. Third quarter non-GAAP diluted earnings per share. Non-GAAP diluted earnings per share for the third quarter of 2026 are expected to increase at a rate in the mid-to-high 20 percent range from third quarter 2025 levels. Steelcase accretion, productivity savings, volume growth, and price-cost, are expected to more than offset continued investments to drive future growth. Second half strength expected. The Corporation's updated outlook for 2026 full-year earnings reflects expectations for between 20-25 percent diluted non-GAAP EPS growth (including net tariff impacts), with accelerating earnings growth in the second half of the year. For the full year, productivity, cost management, network optimization initiatives, Steelcase accretion, and net price-cost benefits are expected to more than offset operating profit headwinds associated with first-half volume pressure and continued growth investment. Double-digit diluted non-GAAP EPS growth again next year, with multiple years of elevated earnings growth visibility beyond 2027. The combination of Steelcase accretion, cost management actions, and legacy workplace network optimization initiatives are expected to yield total cumulative savings exceeding $70 million in 2027 and more than $150 million when fully mature. Balance sheet. The Corporation held a strong balance sheet position as of quarter end and is committed to maintaining significant financial flexibility to fund ongoing business investments to drive growth and payment of its longstanding dividend. Net debt levels were reduced meaningfully during the quarter as the Corporation continues to decrease leverage following the Steelcase acquisition. Concluding Remarks "Our members continue to manage our businesses well, and we delivered another solid quarter with earnings that were in line with our expectations. In line with our previous outlook, our top line continued to demonstrate the residual effects of the slower start to the year in Workplace Furnishings and ongoing impact of a soft housing market. However, our order patterns showed noticeable improvement during the quarter. "As we look to the remainder of 2026, we expect year-over-year volume growth in Workplace Furnishings, while Residential Building Products volume pressure is expected to moderate. More specifically, our updated outlook calls for accelerating revenue and operating profit growth in our Workplace Furnishings segment. This view is supported by both external macro and industry demand metrics, our internal pre-order data, and multiple cost and expense initiatives. In Residential Building Products, we expect flattish revenue growth in the second half, despite expectations of ongoing housing market softness. From a profitability perspective, we anticipate both our legacy Workplace Furnishings and our Residential Building Products segments to expand margins in 2026. While we remain focused, conservative, and ready to adjust as required, our new outlook demonstrates our growing confidence in our revenue growth, our ongoing visibility story, and our proven ability to manage through changing economic conditions. "The integration of Steelcase is going well, synergy capture and accretion are progressing as expected. A new leadership team is largely in place, and we expect a president to be on board in the second half. We continue to expect modest accretion from Steelcase in 2026, with total synergies reaching at least $120 million when fully mature. The benefits of the Steelcase acquisition, the strength of our strategies, and our financial discipline are expected to continue to drive strong free cash flow. "Our HNI members remain focused on driving growth and expanding margins. And we will continue to invest for the future with confidence," concluded Mr. Lorenger. Conference Call As previously announced, HNI Corporation will host a conference call on Thursday, July 30, 2026 at 10:00 a.m. (Central) to discuss second quarter fiscal year 2026 results. A live webcast of the call will be available at: https://edge.media-server.com/mmc/p/tvgxb9k7. Following the conclusion of the call, a webcast replay will be available on HNI Corporation’s website at https://investors.hnicorp.com/events-presentations/events. About HNI Corporation HNI Corporation (NYSE: HNI) has been improving where people live, work, and gather for more than 80 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 within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, which involve risks and uncertainties. Any statements, plans, objectives, expectations, strategies, beliefs, or future performance or events to the extent they are not statements of historical fact are forward-looking statements. Words, phrases or expressions such as "anticipate," "believe," "could," "confident," "continue," "estimate," "expect," "forecast," "hope," "intend," "likely," "may," "might," "objective," "plan," "possible," "potential," "predict," "project", "target," "trend" and similar words, phrases or expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are based on information available and assumptions made at the time the statements are made. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Forward-looking statements in this release include statements regarding our expectations regarding third quarter 2026 segment net sales and consolidated non-GAAP diluted earnings per share, as well as non-GAAP diluted earnings per share growth for full year 2026 and subsequent periods. Forward-looking statements in this release about HNI's acquisition of Steelcase in December 2025 (the "Steelcase acquisition") include, but are not limited to, statements about the benefits of the transaction, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions, and other statements that are not historical facts. The following factors related to the Steelcase acquisition, among others, could cause actual results to differ materially from those expressed in or implied by forward-looking statements: the risk that the synergies and other benefits of the Steelcase acquisition may not be fully realized or may take longer to realize than expected, including as a result of changes in, or problems arising from, general economic and market conditions, interest and exchange rates, monetary policy, trade policy (including tariff levels), laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which HNI and Steelcase operate; any failure to promptly and effectively integrate the businesses of HNI and Steelcase; and potential adverse reactions to the transaction of HNI’s or Steelcase’s customers, employees or other business partners. Additional important factors relating to HNI that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, 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 HNI’s products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of HNI’s customers; HNI’s reliance on its network of independent dealers; changes in trade policy, including with respect to tariff levels; changes in raw material, component, or commodity pricing; market acceptance and demand for HNI’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 HNI’s financing activities; an inability to protect HNI’s intellectual property; cybersecurity threats, including those posed by potential ransomware attacks; impacts of tax legislation; and force majeure events outside HNI’s control, including those that may result from the effects of climate change. A description of these risks and uncertainties and additional risks and uncertainties can be found in HNI’s annual report on Form 10-K for the year ended January 3, 2026, and subsequent quarterly and current reports filed with the Securities and Exchange Commission on Forms 10-Q and 8-K. Forward-looking statements speak only as of the date they are made, and HNI does not undertake or assume any obligation to update publicly any of these statements to reflect actual results, new information or future events, changes in assumptions, or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. Non-GAAP Financial Measures This earnings release includes certain non-GAAP financial measures as defined by Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of historical non-GAAP financial measures to the most directly comparable historical GAAP measures are included below. This information gives investors additional insights into HNI’s financial performance and operations. While HNI’s management believes the non-GAAP financial measures are useful in evaluating HNI’s operations, this information should be considered supplemental and not in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these measures may be different from similarly titled non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, this earnings release contains the following non-GAAP financial measures on a consolidated basis or for our segments: organic net sales; non-GAAP gross profit; non-GAAP operating income; non-GAAP operating profit; non-GAAP interest expense; non-GAAP effective tax rate; non-GAAP net income; and non-GAAP net income per diluted share (EPS). These measures are adjusted from the comparable GAAP measures to exclude the impacts of the selected items as summarized in the tables below. Generally, non-GAAP EPS is calculated using HNI’s overall effective tax rate for the period, as this rate is reflective of the tax applicable to most non-GAAP adjustments. The effective tax rate used to calculate non-GAAP diluted EPS for the current-year quarter differs from the GAAP effective tax rate due to the impact of transaction costs associated with the acquisition of Steelcase, and non-GAAP diluted EPS for the prior-year quarter differs from the GAAP effective tax rate due to the impact of the impairment charge associated with HNI India. The transactions excluded for purposes of non-GAAP financial information included in this earnings release include: restructuring charges recorded related to network optimization which primarily consists of accelerated depreciation, asset disposals, and asset relocation; structural cost actions resulting in severance charges; an impairment charge related to a small residential building products business; purchase accounting costs associated with Steelcase; Steelcase acquisition costs; and impairment costs related to the abandonment of the Steelcase multi-year ERP implementation. This earnings release refers to our expectations regarding non-GAAP diluted EPS. The Corporation is unable to provide a reconciliation of this forward-looking non-GAAP measure to future EPS without unreasonable effort due to the uncertainty regarding, and to the potential variability of, many of the costs and expenses that could potentially impact diluted EPS calculated on a GAAP basis. These items include, but are not limited to, impairments, financial impacts from changes in legal, regulatory, and tax requirements, charges related to actions taken to improve future profitability, and the impact of acquisitions and divestitures, if any. These items necessary to reconcile forward-looking non-GAAP diluted EPS to diluted EPS could be material and have a significant impact on the Corporation’s results computed in accordance with GAAP. View source version on businesswire.com: https://www.businesswire.com/news/home/20260729934472/en/ Contacts For Information Contact: Vincent P. Berger, Executive Vice President and Chief Financial Officer (563) 272-7400Matthew S. McCall, Vice President, Investor Relations and Corporate Development (563) 275-8898

Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at HNI (NYSE:HNI) and its peers. This is a sector that encompasses many types of business, and so it follows that a number of trends will impact the space. For industrial and environmental services companies, for example, trends around environmental compliance and increasing corporate ESG commitments matter while for safety and security services companies, the intersection of physical security, cybersecurity, and workplace safety regulations are the topics du jour. Broadly, AI and automation could be tailwinds for companies in the space that invest wisely. On the other hand, shifting regulatory frameworks could force continual changes in go-to-market and costly investments. The 19 business services & supplies stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 2.5% while next quarter’s revenue guidance was in line. Thankfully, share prices of the companies have been resilient as they are up 8% on average since the latest earnings results. With roots dating back to 1944 and a significant acquisition of Kimball International in 2023, HNI (NYSE:HNI) manufactures and sells office furniture systems, seating, and storage solutions, as well as residential fireplaces and heating products. HNI reported revenues of $1.35 billion, up 125% year on year. This print fell short of analysts’ expectations by 2%, but it was still a satisfactory quarter for the company with a beat of analysts’ EPS estimates but a miss of analysts’ revenue estimates. HNI pulled off the fastest revenue growth but had the weakest performance against analyst estimates of the whole group. Even though it had a relatively good quarter, the market seems discontent with the results. The stock is down 9.8% since reporting and currently trades at $32.68. Is now the time to buy HNI? Access our full analysis of the earnings results here, it’s free. Founded in 1914 and evolving through more than a century of industrial innovation, Brady (NYSE:BRC) manufactures and supplies identification solutions and workplace safety products that help companies identify and protect their premises, products, and people. Brady reported revenues of $435.2 million, up 13.8% year on year, outperforming analysts’ expectations by 7.2%. The business had a stunning quarter with a solid beat of analysts’ revenue estimates and an impressive beat of analysts’ full-year EPS guidance estimates. The market seems happy with the results as the stock is up 8.2% since reporting. It currently trades at $76.75. Is now the time to buy Brady? Access our full analysis of the earnings results here, it’s free. Created through the 2021 merger of industry icons Herman Miller and Knoll, MillerKnoll (NASDAQ:MLKN) designs, manufactures, and distributes interior furnishings for offices, healthcare facilities, educational settings, and homes worldwide. MillerKnoll reported revenues of $926.6 million, up 5.8% year on year, falling short of analysts’ expectations by 1.6%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS guidance for next quarter estimates and a significant miss of analysts’ EPS estimates. As expected, the stock is down 22.4% since the results and currently trades at $15.02. Read our full analysis of MillerKnoll’s results here. Born from the 1958 founding of Ritchie Bros. Auctioneers and rebranded in 2023, RB Global (NYSE:RBA) operates global marketplaces that connect buyers and sellers of commercial assets, vehicles, and equipment across multiple industries. RB Global reported revenues of $1.23 billion, up 11.4% year on year. This number surpassed analysts’ expectations by 6.9%. Overall, it was a very strong quarter as it also recorded a solid beat of analysts’ revenue and EPS estimates. The stock is up 1.1% since reporting and currently trades at $106.12. Read our full, actionable report on RB Global here, it’s free. Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE:VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada. Vestis reported revenues of $659.4 million, flat year on year. This print beat analysts’ expectations by 0.7%. Taking a step back, it was a slower quarter as it produced EPS in line with analysts’ estimates. The stock is up 38.5% since reporting and currently trades at $12.88. Read our full, actionable report on Vestis here, it’s free. Late in 2025 into early 2026, there was hand-wringing around artificial intelligence. For software companies, the fear was that AI would erode pricing power and compress margins as new tools made it easier to replicate what once required expensive enterprise platforms. Crypto investors had their own version of the same anxiety: if AI agents could trade, allocate capital, and manage wallets autonomously, what exactly was the long-term value of today’s crypto infrastructure? These concerns triggered a noticeable rotation away from these sectors and into safer havens. But markets rarely dwell on one narrative for long. Spring 2026 came, and the focus shifted abruptly from technological disruption to geopolitical risk. The US’ conflict with Iran became the dominant driver of market psychology, and when geopolitics takes center stage, the script changes quickly. Investors stop debating growth rates and start worrying about oil supply, inflation, and global stability. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate. StockStory’s analyst team — all seasoned professional investors — uses quantitative analysis and automation to deliver market-beating insights faster and with higher quality.