4Q Preview: Watching Order Trends in Office Furniture
HNI reports 4QFY23 ended December 31, 2023, on February 22 before the market opens, followed by a conference call at 11:00 am ET. We are expecting EPS of $0.84 on revenue of $681 million. Consensus EPS is $0.83, with a range of $0.80-0.84 among four analysts. Consensus revenue is $685 million. A year ago, HNI reported EPS of $0.63 on revenue of $569 million. We expect the adjusted operating margin to expand 250 bps to 8.8%, partially offset by higher interest expense due to the debt incurred for the KII acquisition. Drilling down to the segments, we expect Legacy HNI Office Furniture revenue to be roughly flat at ~$350 million, augmented by ~$150 million of acquired KII revenue. We are modeling continued top-line pressure in the Residential Building Products segment. We expect revenue of $180 million, down 17% Y/Y, which represents a sequential improvement from 3Q when RBP revenue fell 22% Y/Y. We will be watching order trends in the Office Furniture segment closely. 3Q showed stabilization in furniture orders. We are modeling continued stabilization and are cautiously optimistic about improvement.HNI provides office furniture and hearth products. The company's Office Furniture segment designs, manufactures, and markets a range of workplace furnishings. The company's portfolio includes panel-based and freestanding furniture systems and complementary products such as seating, storage, tables, and architectural products. The company provides office panel system products, benching, freestanding tables, storage, and social collaborative products. The company's Hearth Products segment manufactures and markets prefabricated fireplaces, hearth stoves, and related products. The company's line of hearth products includes a range of gas, wood, electric, and pellet fueled fireplaces, inserts, stoves, facings, and accessories.
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