Order Acceleration, Cost Actions, Net Tariff Impacts Support Improved 2026 Outlook

• GAAP diluted EPS for Q2 was $0.70 (-31% YoY). On a non-GAAP basis, diluted EPS was $1.27 (+14% YoY).
• Profit performance versus the prior year was driven by the Steelcase acquisition, net tariff impact, and operational productivity improvement.
• Revenue and non-GAAP diluted EPS (excluding net tariff impacts) for the second quarter of 2026 were in line with HNI's expectations.
• Accelerating demand trends — Workplace Furnishings Q2 orders and quarter-ending backlog each grew five percent year-over-year.
• Low-single digit organic net sales growth expectations remain for both segments in 2026.
• Non-GAAP EPS growth of 20-25 percent, including net tariff impacts, now expected in 2026 — the fifth straight year of double-digit non-GAAP EPS growth.
• Multiple years of elevated EPS growth visibility remain from sales growth, strategic initiatives, cost actions, and network optimization, plus at least $120 million of synergies expected from the Steelcase acquisition.

Company Website: https://www.hnicorp.com
MUSCATINE, Iowa -- (Business Wire)

HNI Corporation (NYSE: HNI) today announced net sales of $1.5 billion and net income of $51.1 million for the second quarter ended July 4, 2026. Non-GAAP net income was $92.6 million. Non-GAAP to GAAP reconciliations follow the financial statements in this release.

Highlights

• Solid second quarter results. GAAP diluted EPS totaled $0.70 and diluted non-GAAP EPS of $1.27 was in line with internal expectations, excluding the net impact of tariffs. GAAP results include the impact of Steelcase purchase accounting, the details of which can be found later in the release.
• Revenue backdrop strengthened in the second quarter. Workplace Furnishings segment volume growth is expected to turn positive in the third quarter, with volume growth and price recognition driving high-single digit organic growth in the second half of 2026. In Residential Building Products, implemented structural changes organizing around the consumer and growth investments are expected to drive continued market outperformance, with modest price-driven net sales growth expected in the second half of 2026.
• Multiple sources of margin improvement and EPS visibility. The Corporation’s operating margin benefitted by 150 basis points in the second quarter from net tariff impacts, with 40-45 basis points of benefit expected for the full year 2026. In addition, efforts aimed at managing costs in the face of geopolitical and macro uncertainty, and at streamlining priorities across the organization to focus on profitable growth are ongoing and expected to support profitability in 2026 and in 2027. Further, the Corporation continues to expect network optimization savings in its legacy Workplace Furnishings businesses to total nearly $30 million (adding an expected $0.30 to non-GAAP diluted EPS) through 2028. In addition, synergies associated with the integration of Steelcase are progressing as planned and are now expected to add at least $120 million of operating profit when fully mature.

“Our second quarter demonstrates the focus of our members, is indicative of an improving demand environment, and supports expectations of stronger 2026 earnings growth. Through focused cost management and the net benefits of price-cost and productivity, we were able to deliver second quarter results that were in line with our expectations. And, encouragingly, our internal leading indicators—pre-order activity, orders, and backlog—improved further in the quarter. The positive momentum of our strategies—both revenue- and cost-focused, the benefits of our diversified revenue streams, the merits of our customer-first business model, and the integration of Steelcase continue to deliver strong shareholder value.

“In the legacy Workplace Furnishings businesses, which excludes Steelcase, second quarter net sales were up slightly year-over-year on an organic basis, consistent with commentary we provided last quarter. Growth was fueled by our businesses focused on small- and medium-sized workplace customers. Moreover, a firming industry backdrop became more apparent during the quarter. Overall, we saw solid profit improvement driven by favorable price cost and operational productivity gains and, when including Steelcase, non-GAAP operating income was nearly double the prior-year level. Looking ahead, we expect stronger organic revenue growth in the back half and solid year-over-year margin expansion in our legacy Workplace Furnishings businesses, while we continue to invest to drive growth.

“In Residential Building Products, net sales decreased 1.6 percent versus the prior-year period. Again, this was consistent with expectations communicated on the first quarter call. Revenue from the remodel-retrofit business increased solidly but was more than offset by continued market-driven weakness in our new construction channel. Our members continue to deliver strong relative sales performance. Second quarter segment non-GAAP operating profit margin expanded 470 basis points year-over-year, reaching a strong 20.4 percent. Despite expectations of ongoing housing uncertainty, we remain encouraged about the opportunities tied to the broader markets and we continue to invest to grow our operating model and revenue streams, including go-to-market changes to organize around our customers.

“The strength of our strategies and the ability to manage daily uncertainty through varying macroeconomic conditions, all while remaining focused on investing for the future, was evident in our second quarter results. We expect strong profit growth in the second half of 2026, driven by the Steelcase acquisition, operational productivity gains and improving organic revenue growth rates,” stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.

HNI Corporation — Second Quarter Summary Comments

• Consolidated net sales increased 121 percent from the prior-year quarter to $1.5 billion, driven by the acquisition of Steelcase in December 2025. On an organic basis, net sales increased 0.1 percent year-over-year. The acquisition of Steelcase increased year-over-year sales by $806.9 million. A reconciliation of organic net sales, a non-GAAP measure, to net sales follows the financial statements in this release.
• Gross profit margin expanded 110 basis points compared to the prior-year quarter. The increase was driven by 240 basis points of tariff refunds along with improved net productivity, which were partially offset by impacts from the acquisition of Steelcase, and restructuring costs related to the Corporation's network optimization projects.
• Selling, general, and administrative expenses as a percentage of net sales increased 390 basis points compared to the prior-year quarter. The increase was driven by impacts from the acquisition of Steelcase and higher variable compensation.
• Acquisition and related costs of $4.2 million were recorded during the current period in connection with the acquisition of Steelcase. Acquisition costs consist of retention compensation and other professional service fees.
• Non-cash purchase accounting totaled $21.9 million for the current quarter related to the Steelcase acquisition, which were included in operating expenses and related to amortization of intangibles.
• Restructuring and impairment charges of $17.9 million were incurred in the current quarter, primarily related to structural cost actions and an impairment charge related to a small residential building products business.
• Income tax rate comparability versus the same quarter of 2025 was primarily impacted by matters associated with the acquisition of Steelcase.
• Net income per diluted share was $0.70 compared to $1.02 in the prior-year quarter. On a non-GAAP basis, net income per diluted share increased to $1.27 from $1.11 in the year-ago quarter. The change in non-GAAP EPS was driven by net tariff impacts and improved net productivity.

Workplace Furnishings — Second Quarter Summary Comments

• Workplace Furnishings net sales increased 157 percent from the prior-year quarter to $1.3 billion. On an organic basis, net sales increased 0.6 percent year-over-year. The acquisition of Steelcase during the fourth quarter of 2025 increased year-over-year net sales by $806.9 million.

• Workplace Furnishings operating profit margin of 7.7 percent contracted by 510 basis points versus the prior-year quarter, driven by impacts from the acquisition of Steelcase, purchase accounting, increased restructuring costs, and acquisition costs, partially offset by net tariff impacts and improved net productivity. On a non-GAAP basis, segment operating profit margin of 10.7 percent contracted 240 basis points year-over-year. The net tariff impact on segment non-GAAP operating margin was approximately 170 basis points favorable when compared to the prior-year period.

Residential Building Products — Second Quarter Summary Comments

• Residential Building Products net sales decreased 1.6 percent from the prior-year quarter to $148.7 million, as decreased net sales in the new home market were partially offset by increased net sales in remodel-retrofit.
• Residential Building Products operating profit margin of 15.7 percent was flat compared to the prior year, driven by the net tariff impact, improved net productivity, and lower core SG&A offset by an impairment charge and lower net sales volume. On a non-GAAP basis, segment operating profit margin of 20.4 percent expanded 470 basis points year-over-year. The net tariff impact on segment non-GAAP operating margin was approximately 420 basis points favorable when compared to the prior year period.

Second Quarter Order Rates

• In the Workplace Furnishings segment, orders in the second quarter increased five percent compared to the prior-year period, organically. Order growth rates from small-to-medium-sized customers and from contract customers were comparable in the quarter. Steelcase order patterns were slightly better than legacy Workplace Furnishings trends. Over the most recent five-week period, the year-over-year segment order growth rate accelerated.
• In the Residential Building Products segment, orderswere mostly unchanged compared to the second quarter of 2025. Solid remodel-retrofit order growth offset modest declines from the new construction channel. Over the most recent five-week period, segment orders grew at a low single-digit pace on a year-over-year basis.

Outlook

• Third quarter net sales. The Corporation expects third quarter 2026 net sales in legacy Workplace Furnishings to increase at a high single-digit rate year-over-year. Including Steelcase, total Workplace Furnishings net sales are expected to increase approximately 175-180 percent versus the prior-year period. In Residential Building Products, third quarter 2026 net sales are expected to be roughly unchanged versus the same period in 2025.
• Third quarter non-GAAP diluted earnings per share. Non-GAAP diluted earnings per share for the third quarter of 2026 are expected to increase at a rate in the mid-to-high 20 percent range from third quarter 2025 levels. Steelcase accretion, productivity savings, volume growth, and price-cost, are expected to more than offset continued investments to drive future growth.
• Second half strength expected. The Corporation's updated outlook for 2026 full-year earnings reflects expectations for between 20-25 percent diluted non-GAAP EPS growth (including net tariff impacts), with accelerating earnings growth in the second half of the year. For the full year, productivity, cost management, network optimization initiatives, Steelcase accretion, and net price-cost benefits are expected to more than offset operating profit headwinds associated with first-half volume pressure and continued growth investment.
• Double-digit diluted non-GAAP EPS growth again next year, with multiple years of elevated earnings growth visibility beyond 2027. The combination of Steelcase accretion, cost management actions, and legacy workplace network optimization initiatives are expected to yield total cumulative savings exceeding $70 million in 2027 and more than $150 million when fully mature.
• Balance sheet. The Corporation held a strong balance sheet position as of quarter end and is committed to maintaining significant financial flexibility to fund ongoing business investments to drive growth and payment of its longstanding dividend. Net debt levels were reduced meaningfully during the quarter as the Corporation continues to decrease leverage following the Steelcase acquisition.

Concluding Remarks

“Our members continue to manage our businesses well, and we delivered another solid quarter with earnings that were in line with our expectations. In line with our previous outlook, our top line continued to demonstrate the residual effects of the slower start to the year in Workplace Furnishings and ongoing impact of a soft housing market. However, our order patterns showed noticeable improvement during the quarter.

"As we look to the remainder of 2026, we expect year-over-year volume growth in Workplace Furnishings, while Residential Building Products volume pressure is expected to moderate. More specifically, our updated outlook calls for accelerating revenue and operating profit growth in our Workplace Furnishings segment. This view is supported by both external macro and industry demand metrics, our internal pre-order data, and multiple cost and expense initiatives. In Residential Building Products, we expect flattish revenue growth in the second half, despite expectations of ongoing housing market softness. From a profitability perspective, we anticipate both our legacy Workplace Furnishings and our Residential Building Products segments to expand margins in 2026. While we remain focused, conservative, and ready to adjust as required, our new outlook demonstrates our growing confidence in our revenue growth, our ongoing visibility story, and our proven ability to manage through changing economic conditions.

“The integration of Steelcase is going well, synergy capture and accretion are progressing as expected. A new leadership team is largely in place, and we expect a president to be on board in the second half. We continue to expect modest accretion from Steelcase in 2026, with total synergies reaching at least $120 million when fully mature. The benefits of the Steelcase acquisition, the strength of our strategies, and our financial discipline are expected to continue to drive strong free cash flow.

“Our HNI members remain focused on driving growth and expanding margins. And we will continue to invest for the future with confidence,” concluded Mr. Lorenger.

Conference Call

As previously announced, HNI Corporation will host a conference call on Thursday, July 30, 2026 at 10:00 a.m. (Central) to discuss second quarter fiscal year 2026 results. A live webcast of the call will be available at: https://edge.media-server.com/mmc/p/tvgxb9k7. Following the conclusion of the call, a webcast replay will be available on HNI Corporation’s website at https://investors.hnicorp.com/events-presentations/events.

About HNI Corporation

HNI Corporation (NYSE: HNI) has been improving where people live, work, and gather for more than 80 years. HNI is a manufacturer of workplace furnishings and residential building products, operating under two segments. The Workplace Furnishings segment is a leading global designer and provider of commercial furnishings, going to market under multiple unique brands. The Residential Building Products segment is the nation’s leading manufacturer and marketer of hearth products, which include a full array of gas, electric, wood, and pellet-burning fireplaces, inserts, stoves, facings, and accessories. More information can be found on the Corporation’s website at www.hnicorp.com.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, which involve risks and uncertainties. Any statements, plans, objectives, expectations, strategies, beliefs, or future performance or events to the extent they are not statements of historical fact are forward-looking statements. Words, phrases or expressions such as “anticipate,” “believe,” “could,” “confident,” “continue,” “estimate,” “expect,” “forecast,” “hope,” “intend,” “likely,” “may,” “might,” “objective,” “plan,” “possible,” “potential,” “predict,” “project”, “target,” “trend” and similar words, phrases or expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are based on information available and assumptions made at the time the statements are made. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Forward-looking statements in this release include statements regarding our expectations regarding third quarter 2026 segment net sales and consolidated non-GAAP diluted earnings per share, as well as non-GAAP diluted earnings per share growth for full year 2026 and subsequent periods. Forward-looking statements in this release about HNI's acquisition of Steelcase in December 2025 (the "Steelcase acquisition") include, but are not limited to, statements about the benefits of the transaction, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions, and other statements that are not historical facts.

The following factors related to the Steelcase acquisition, among others, could cause actual results to differ materially from those expressed in or implied by forward-looking statements: the risk that the synergies and other benefits of the Steelcase acquisition may not be fully realized or may take longer to realize than expected, including as a result of changes in, or problems arising from, general economic and market conditions, interest and exchange rates, monetary policy, trade policy (including tariff levels), laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which HNI and Steelcase operate; any failure to promptly and effectively integrate the businesses of HNI and Steelcase; and potential adverse reactions to the transaction of HNI’s or Steelcase’s customers, employees or other business partners.

Additional important factors relating to HNI that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, disruptions in the global supply chain; the effects of prolonged periods of inflation and rising interest rates; labor shortages; the levels of office furniture needs and housing starts; overall demand for HNI’s products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of HNI’s customers; HNI’s reliance on its network of independent dealers; changes in trade policy, including with respect to tariff levels; changes in raw material, component, or commodity pricing; market acceptance and demand for HNI’s new products; changing legal, regulatory, environmental, and healthcare conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on HNI’s financing activities; an inability to protect HNI’s intellectual property; cybersecurity threats, including those posed by potential ransomware attacks; impacts of tax legislation; and force majeure events outside HNI’s control, including those that may result from the effects of climate change. A description of these risks and uncertainties and additional risks and uncertainties can be found in HNI’s annual report on Form 10-K for the year ended January 3, 2026, and subsequent quarterly and current reports filed with the Securities and Exchange Commission on Forms 10-Q and 8-K.

Forward-looking statements speak only as of the date they are made, and HNI does not undertake or assume any obligation to update publicly any of these statements to reflect actual results, new information or future events, changes in assumptions, or changes in other factors affecting forward-looking statements, except to the extent required by applicable law.

Non-GAAP Financial Measures

This earnings release includes certain non-GAAP financial measures as defined by Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of historical non-GAAP financial measures to the most directly comparable historical GAAP measures are included below. This information gives investors additional insights into HNI’s financial performance and operations. While HNI’s management believes the non-GAAP financial measures are useful in evaluating HNI’s operations, this information should be considered supplemental and not in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these measures may be different from similarly titled non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, this earnings release contains the following non-GAAP financial measures on a consolidated basis or for our segments: organic net sales; non-GAAP gross profit; non-GAAP operating income; non-GAAP operating profit; non-GAAP interest expense; non-GAAP effective tax rate; non-GAAP net income; and non-GAAP net income per diluted share (EPS). These measures are adjusted from the comparable GAAP measures to exclude the impacts of the selected items as summarized in the tables below. Generally, non-GAAP EPS is calculated using HNI’s overall effective tax rate for the period, as this rate is reflective of the tax applicable to most non-GAAP adjustments. The effective tax rate used to calculate non-GAAP diluted EPS for the current-year quarter differs from the GAAP effective tax rate due to the impact of transaction costs associated with the acquisition of Steelcase, and non-GAAP diluted EPS for the prior-year quarter differs from the GAAP effective tax rate due to the impact of the impairment charge associated with HNI India.

The transactions excluded for purposes of non-GAAP financial information included in this earnings release include: restructuring charges recorded related to network optimization which primarily consists of accelerated depreciation, asset disposals, and asset relocation; structural cost actions resulting in severance charges; an impairment charge related to a small residential building products business; purchase accounting costs associated with Steelcase; Steelcase acquisition costs; and impairment costs related to the abandonment of the Steelcase multi-year ERP implementation.

This earnings release refers to our expectations regarding non-GAAP diluted EPS. The Corporation is unable to provide a reconciliation of this forward-looking non-GAAP measure to future EPS without unreasonable effort due to the uncertainty regarding, and to the potential variability of, many of the costs and expenses that could potentially impact diluted EPS calculated on a GAAP basis. These items include, but are not limited to, impairments, financial impacts from changes in legal, regulatory, and tax requirements, charges related to actions taken to improve future profitability, and the impact of acquisitions and divestitures, if any. These items necessary to reconcile forward-looking non-GAAP diluted EPS to diluted EPS could be material and have a significant impact on the Corporation’s results computed in accordance with GAAP.