HNI (HNI) Q1 2025 earnings summary

Executive summary

• Net sales increased 2% year-over-year to $599.8 million in Q1 2025, with non-GAAP EPS up 19% to $0.44 and GAAP EPS at $0.29, impacted by $6.4 million in restructuring and impairment charges mainly from HNI India.

• Both workplace furnishings and residential building products segments achieved year-over-year net sales growth and remained profitable despite macroeconomic headwinds.

• Profitability improved, with consolidated non-GAAP gross and operating margins expanding to 39.7% and 5.3%, respectively, the highest Q1 margin since 2007.

• Contract customer revenue increased 4% year-over-year; SMB shipments declined 5%.

• Remodel retrofit business in residential building products grew 13% year-over-year, with segment EBIT margin expanding 130 basis points to 15.7%.

Financial highlights

• Q1 non-GAAP EPS was $0.44, up 19% year-over-year; GAAP EPS was $0.29, down 22% year-over-year.

• Gross profit margin expanded 10 bps year-over-year to 39.7%.

• Operating income was $24.4 million, down 17.7% from Q1 2024; non-GAAP operating margin reached 5.3%.

• Interest expense, net, decreased to $5.5 million from $7.6 million.

• Operating cash flow was $12.6 million, up from a use of $4.3 million in the prior year period.

Outlook and guidance

• 2025 earnings outlook remains unchanged, with expectations for a fourth consecutive year of double-digit non-GAAP EPS growth.

• Q2 2025 net sales in Workplace Furnishings expected to grow mid-single digits year-over-year; Residential Building Products to grow low-single digits.

• Tariff-related margin pressure of $3M-$5M expected in Q2, with most offset in the second half.

• Full-year guidance includes mid-single-digit revenue growth in workplace furnishings and low to mid-single digits in residential building products.

• KII synergies and Mexico facility ramp-up expected to add $0.70–$0.80 EPS through 2026.