HNI (NYSE:HNI) executives highlighted what they called a “seminal year” in fiscal 2025, pointing to a fourth consecutive year of double-digit non-GAAP earnings growth and the company’s late-year acquisition of Steelcase as major milestones. Management said results were delivered despite “persistent, soft, and uncertain macro conditions,” and emphasized that margin expansion initiatives, portfolio actions, and a diversified revenue base helped support performance.
Fiscal 2025 results and margin progress
On the call, Executive Vice President and CFO VP Berger said fiscal 2025 non-GAAP diluted EPS for HNI’s legacy business was $3.74, up 22% from 2024. Total net sales increased 12% for the year and 6% on an organic basis. Excluding Steelcase impacts, the company’s full-year adjusted operating margin expanded 80 basis points to 9.4%, driven by “volume growth, productivity gains, Kimball International synergy capture, and price cost benefits,” according to Berger.
Segment performance: Workplace Furnishings and Building Products
In legacy Workplace Furnishings, Berger said full-year organic net sales rose 6% year-over-year, supported by strength in contract brands and an extra week in fiscal 2025. Full-year non-GAAP operating profit margin expanded 100 basis points to 10.5%, achieving management’s stated goal of reaching double-digit operating margin. Berger noted non-GAAP operating margin in the segment has expanded nearly 900 basis points over the past three years.
In Residential Building Products, Berger said fourth quarter revenue grew “more than 10%” versus the prior-year period, driven by remodel-retrofit strength and the extra week. Full-year revenue increased nearly 6%, with new construction revenue flat and remodel-retrofit up at a double-digit pace. Segment non-GAAP operating profit margin expanded 60 basis points to 18.1%. Lorenger said the company expects continued margin and cash flow consistency in the segment even as it assumes continued weakness in new construction during 2026.
Steelcase acquisition: early integration and synergy targets
Management said the Steelcase acquisition, completed on December 10, is intended to “transform” HNI and the Workplace Furnishings industry. Lorenger stated that integration efforts are underway and that the company remains confident in targeted synergies of $120 million and long-term accretion of $1.20. He emphasized that current synergy projections focus on the Americas and do not include revenue synergies. He also said HNI has “no plans to change dealer partnerships, sales forces, or brand distribution,” describing continuity as a positive for customers and dealers.
Berger explained that Steelcase’s results were consolidated for only the final three weeks of December, a seasonally lower shipment period. HNI excluded the stub period from adjusted results, saying it did not provide “fundamental insight” into performance. Berger added that for the fourth calendar quarter, Steelcase revenue grew about 5% year-over-year and earnings increased around 9%, absent purchase accounting, restructuring, and acquisition-related costs.
In Q&A, Berger said the company’s double-digit EPS growth target for 2026 should be compared against $3.53 non-GAAP EPS, which he described as excluding purchase accounting but including the stub period, noting purchase accounting created roughly a $4.6 million headwind. He also said Steelcase is now expected to be “modestly accretive in year one,” versus prior expectations of neutrality, due to lower-than-anticipated transition offsets—while keeping the overall synergy target unchanged.
2026 outlook: growth, near-term pressure, and financial framework
For 2026, Berger said HNI expects a fifth year of double-digit non-GAAP EPS growth, with revenue growth continuing alongside bottom-line improvement. However, he guided to a softer first quarter: total net sales are expected to rise “more than 130%” year-over-year (reflecting the inclusion of Steelcase), while non-GAAP EPS is expected to decrease slightly compared with the prior year.
Management attributed first-quarter earnings pressure to revenue and expense timing and increased investment. Berger said modest year-over-year revenue pressure in Workplace Furnishings is expected to be limited to the first quarter, with mid-single-digit growth expected for the full year. Building Products revenue is expected to be up low single digits in the first quarter and for the full year. Berger said earnings are expected to improve in the second quarter and “accelerate as the year progresses.”
Berger also provided several modeling items for investors:
- Depreciation and amortization: approximately $175 million to $180 million
- Interest expense: approximately $75 million to $80 million
- Tax rate: approximately 25%
He added that network optimization initiatives—citing Kimball International synergies, Mexico ramp-up, the Hickory closure, and the planned Wayland closure—are expected to contribute an incremental $0.25 to $0.30 of EPS over the next three years, with about $0.10 recognized in 2026.
Market conditions: office demand signals and housing challenges
Lorenger said the company is increasingly bullish on Workplace Furnishings demand dynamics, citing “return to office” trends, expectations that remote work will continue to decline in 2026, and improving office market indicators. He said office leasing activity reached a new post-pandemic high in the fourth quarter, with full-year 2025 leasing activity up more than 5%. He also noted that net absorption of office space was “meaningfully positive” in the second half of 2025, adding that JLL believes a new expansionary cycle has begun.
On housing, Lorenger said the company expects continued weakness in new construction in 2026 due to elevated interest rates, high prices, and low affordability, while assuming modest growth in remodel-retrofit consistent with LIRA projections. During Q&A, management said Building Products initiatives are focused on “customer intimate” execution and market-by-market share gains, including more engagement with builders and designers, along with product and go-to-market investments such as in wood stoves and DIY and an “electric” product pipeline.
Finally, Berger said leverage ended fiscal 2025 at about 2.0x net debt to EBITDA following the Steelcase acquisition. He said the company expects leverage to return to the 1.0x to 1.5x range in the next 18 to 24 months, while remaining committed to its dividend and continued investment for growth.
About HNI (NYSE:HNI)
HNI Corporation, founded in 1944 as the Heating & Novelty Company and headquartered in Muscatine, Iowa, is a leading manufacturer of office furniture and hearth products. Over its history, the company has evolved from producing gas heaters into two primary business segments: Office Furniture and Hearth & Home. HNI’s Office Furniture division operates under well-known brands such as The HON Company, Allsteel, Gunlocke and Kimball, offering a comprehensive portfolio of workstations, seating, tables, storage solutions and acoustic products tailored for corporate, education, healthcare and government markets.
In its Hearth & Home segment, HNI designs, manufactures and distributes fireplaces, stoves, fireplace inserts, logs and related accessories.
