HNI Raises Profit Outlook as Workplace Demand Strengthens
Second-quarter sales reached $1.472 billion as Steelcase contributed $806.9 million.
HNI Corporation (HNI), the workplace-furnishings and residential-building-products maker, reported higher second-quarter adjusted earnings as workplace demand strengthened and the Steelcase acquisition expanded its revenue base.
The quarter marked an improvement from first-quarter softness tied to geopolitical uncertainty. Organic Workplace Furnishings orders and quarter-end backlog each rose 5% from a year earlier, and order growth accelerated during the quarter.
Net sales rose 121% year over year and increased from about $1.3 billion in the first quarter, while organic sales edged up 0.1%. GAAP diluted earnings were $0.70 a share, down from $1.02 a year earlier but recovering from a first-quarter loss of $0.55. Adjusted earnings rose 14.4% to $1.27 a share from $1.11 and climbed from $0.34 sequentially.
Workplace Furnishings sales rose 157% to $1.324 billion with Steelcase included, while organic sales increased 0.6% after falling about 5% in the first quarter. The segment’s adjusted operating margin narrowed 240 basis points to 10.7%, reflecting Steelcase’s lower margin and acquisition effects. The legacy business moved in the other direction, with adjusted margin expanding 290 basis points to 16.0% on price-cost and productivity gains.
Residential Building Products sales fell 1.6% to $148.7 million after growing slightly more than 2% in the first quarter, as weakness in new construction outweighed remodel-and-retrofit growth. Adjusted operating margin widened 470 basis points to 20.4%, including about 420 basis points of benefit from tariffs.
Consolidated gross margin expanded 110 basis points to 44.0%, aided by tariff refunds, while adjusted operating margin contracted 140 basis points to 9.6% as Steelcase and higher expenses diluted profitability. HNI recorded $17.9 million of restructuring and impairment charges, $4.2 million of acquisition-related costs and $21.9 million of Steelcase purchase-accounting expense.
HNI now expects full-year adjusted EPS to grow 20% to 25%, a more specific outlook than its earlier projection for a fifth consecutive year of double-digit growth. The company continues to expect low-single-digit organic sales growth in both segments for 2026 and projects high-single-digit legacy Workplace Furnishings growth in the third quarter, alongside roughly flat Residential Building Products sales.
The company also raised its fully mature Steelcase operating-profit synergy target to at least $120 million and continues to expect the acquisition to be modestly accretive in 2026. HNI expects positive Workplace Furnishings volume growth in the third quarter and high-single-digit organic growth in the second half, supported by volume and pricing.