Integrating KII and Updating Estimates
With this note, we are updating our estimates for FY23 and FY24 to reflect the surprisingly strong margin performance in legacy HNI Workplace Furnishings, the integration of Kimball International (KII), and promised margin improvement in Residential Building Products (Hearth). One note on how we have modeled the next four quarters. Through 2QFY24, we are modeling KII revenues and operating income independent of the legacy WF. We expect to have visibility on KII and the legacy business for four quarters. We are modeling ~$343 million in KII revenue in the second half, just above the low end of management guidance, and assuming an operating margin, excluding any non-core charges, of 6.3%. Our GAAP 3Q estimate includes $8 million in revenue and $4 million in operating losses from Poppin, a business that will be divested. The non-GAAP results exclude Poppin...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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