Investor Presentation 4 th Quarter 2017
Forward Looking Statements This presentation contains "forward-looking" statements based on current expectations regarding future plans, events, outlook, objectives and financial performance, expectations for future sales growth and earnings per diluted share (GAAP and non-GAAP). Forward-looking statements can be identified by words including “expect,” “believe,” “anticipate,” “estimate,” “may,” “will,” “would,” “could,” “confident” or other similar words, phrases or expressions. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation's actual future results and performance to differ materially from expected results. These risks include but are not limited to: general economic conditions in the United States and internationally; unfavorable changes in the United States housing market; industry and competitive conditions; a decline in corporate spending on office furniture; changes in raw material, component or commodity pricing; future acquisitions, divestitures or investments; the cost of energy; changing legal, regulatory, environmental and healthcare conditions; the Corporation’s ability to successfully complete its business software system implementation; the Corporation’s ability to implement price increases; changes in the sales mix of products; the Corporation's ability to achieve the anticipated benefits from closures and structural alignment initiatives; and force majeure events outside the Corporation’s control. A description of these risks and additional risks can be found in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements.
Market Leader Office Furniture Hearth #2 #1 Market Position $2.2B 76% 24% Sales 3
Sales Channels Office Furniture 76% Hearth 24% Office Furniture Hearth New Supplies Construction Driven Contract & Retail Wood & Gas Products Other 4
Market Drivers Office Furniture Small Business Confidence CEO Confidence 80 110 70 105 60 50 100 15 yr. avg: 96 40 95 Line represents 30 90 overall positive vs 20 negative sentiment 85 10 80 0 Source: National Federation of Independent Business Source: The Conference Board Service Sector Employment Total Construction Spending: Office 100 86 90 84 80 82 70 Millions 80 Billions 60 78 50 76 40 74 30 72 20 Source: Bureau of Labor Statistics Source: U.S. Bureau of the Census CES Industries: Financial Activities, State and Local Government, Federal Government, Other Services, Professional Business 5 Services, Information, and Education and Health Services
Market Drivers Hearth Products Single Family Housing Starts Residential Remodeling Index 1,400 120 Seasonally Adj. Annual Rate (K) 1,200 110 1,000 100 800 90 600 80 400 70 200 60 - Source: Hanley Wood Source: U.S. Census Bureau US Temperatures Oil Prices Variance from Average $5 $150 8 $4 $120 6 Dollars per Gallon Dollars per Barrel $3 $90 4 Degree 2 $2 $60 0 Average $1 $30 -2 $0 $0 -4 Heating Oil Crude-Brent Source: U.S. NOAA Source: U.S. EIA 6
Breadth and Depth Brands Distribution Tuned and tailored Broadest coverage Products Price Points Solutions for every need High to low 7
Split and Focus House Of Brands Leverage Member Owner Culture with Lean 8
Market Coverage Office Furniture North America Contract Channel Supplies --Driven Channel Retail Commercial Contract Image Retail less than 1% HNI Brands Asian Imports Key Global Competitors Steelcase Haworth Herman Miller Knoll Core, sweet spot 9
Market Coverage Hearth Products New Construction Channel Remodel/Retrofit Channel Installing Distributors Specialty Dealer DIY HNI ` Brands ` ` ` Innovative Hearth Products (IHP) Napoleon Key Competitors Travis Niche Competitors Core, sweet spot 10
Financial Strength Operating Cash Flow $350 Solid financial position $300 $ in millions • Conservative leverage: Debt/EBITDA 1.4x $250 $200 $150 $100 Significant cash flow generation $50 $- • Economic profit focus/alignment Dividends Committed to strong dividend $0.28 • Sustainable and increasing $0.26 $0.24 $0.22 $0.20 $0.18 $0.16 11
Current Outlook FY17 FY18 Outlook Outlook Non-GAAP EPS HNI Non-GAAP EPS $1.88 to $1.95 $2.15 to $2.65 Earnings Per Share (PY $2.62) Up 1 to 4 percent, Office Furniture organically Up 1 to 4 percent Net Sales Down 2 to 5 percent Hearth Up 2 to 5 percent Up 3 to 6 percent Net Sales 12
2018 Guidance Bridge Price Amortization offsetting & inflation Comp reset Core Incremental productivity Profit Office 25% & Hearth 30% Structural cost 13
Long-Term Earnings Growth $ Growth opportunities Other Businesses $0.40 - $0.60 $ Structural cost savings Structural Cost Benefits +$0.20 $ Continued growth in Hearth single family housing New Construction $0.45 - $0.65 $ Core growth North America Office Furniture $0.60 - $0.80 14
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