KNOLL INC - FORM 8-K - EX-99 - PRESS RELEASE - July 19, 2012

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KNOLL

1235 Water Street

East Greenville, PA 18041

Tel 215 679-7991

Press Release

 

 

Knoll Reports Second Quarter Results;

Company Celebrates Integrated Interior Capability at NeoCon Tradeshow

EAST GREENVILLE, PA, July 19, 2012 -- Knoll, Inc. (NYSE: KNL) today announced results for the second quarter ended June 30, 2012. Net sales were $221.0 million for the quarter, a decrease of 7.4% from the second quarter 2011. Operating profit was $20.8 million, or 9.4% of net sales, a decrease of 10.7% from the second quarter 2011. Net income was $13.1 million during the second quarter of 2012 compared to $13.0 million during the second quarter 2011. Diluted earnings per share for the second quarter of 2012 and 2011 was $0.28.

"The second quarter played out very much as we had expected," commented Andrew Cogan, CEO. "While sales grew sequentially, lowered levels of government shipments combined with significantly reduced purchases by a single financial services client drove our year-over-year top line decline. Outside of these two areas, commercial sales grew mid-single digits as compared to the prior year quarter. In spite of these declines, we were pleased to deliver strong year-over-year and sequential improvement in our gross margins."

"At our June NeoCon tradeshow clients saw a powerful demonstration of our ability to bring together all the elements necessary to create a modern workplace that when combined together create and inspire solutions far greater than the sum of our different segments. From novel approaches to managing power, to the use of materials and color in a fresh way, we were very pleased with the response to our space and the impact that our recent acquisitions are having on our overall business. Our Studio and Coverings segments not only differentiate Knoll and have strong stand alone prospects, but they enrich our workplace capabilities."

Second Quarter Results

Second quarter 2012 financial results highlights follow:

Dollars in Millions Except Per Share Data

  

Three Months Ended

  

Percent

  
   

6/30/12

  

6/30/11

  

Change

  
                   

Net Sales

  

$

221.0

  

$

238.7

  

(7.4)

%

Gross Profit

    

74.4

    

76.5

  

(2.7)

%

Operating Expenses

    

53.6

    

52.9

  

1.3

%

Operating Profit

    

20.8

    

23.3

  

(10.7)

%

Net Income

    

13.1

    

13.0

  

0.8

%

Earnings Per Share

   

.28

    

.28

  

-

%
                   

 

 

 

 

Net sales for the quarter were $221.0 million, a decrease of $17.7 million, or 7.4%, over the second quarter of 2011. Net sales for the Office segment were $153.9 million during the second quarter of 2012, a decrease of $17.6 million, or 10.3% when compared with the second quarter of 2011. Lower government shipments and purchases by a single financial services client impacted the Office segment during the second quarter of 2012. Net sales for the Studio segment were $39.2 million, a decrease of $0.5 million, or 1.3%, when compared with the second quarter of 2011. Net sales for the Coverings segment were $27.9 million, an increase of $0.4 million, or 1.5%, when compared with the second quarter of 2011.

Gross profit for the second quarter of 2012 was $74.4 million, a decrease of $2.1 million, or 2.7%, over the same period in 2011. Gross profit as a percentage of net sales increased 160 basis points to 33.7% in the second quarter of 2012 from 32.1% in the same quarter of 2011; this was our best gross profit percentage in the past 10 quarters. The increase in gross margin from the second quarter of 2011 largely resulted from previously implemented price increases, favorable movements in foreign exchange rates, continuous improvement projects in our factories, and lower transportation costs.

Operating expenses for the quarter were $53.6 million, or 24.3% of net sales, compared to $52.9 million, or 22.2% of net sales, for the second quarter of 2011. The increase in operating expenses during the second quarter of 2012 was in large part due to costs associated with growth initiative programs and technology infrastructure upgrades as well as increased incentive compensation.

We generated operating profit for the second quarter of 2012 of $20.8 million, a decrease of $2.5 million, or 10.7%, when compared to the same period in 2011. Operating profit for the Office segment was $8.7 million in the second quarter of 2012, a decrease of $3.1 million, or 26.3% when compared with the second quarter of 2011. Taking into account the restructuring charges of $0.2 million incurred during the second quarter of 2011 operating profit for the Office segment decreased $2.9 million during the second quarter of 2012 when compared with the prior year. Operating profit for the Studio segment was $6.4 million, an increase of $0.5 million, or 8.5% when compared with the second quarter of 2011. Operating profit for the Coverings segment was $5.7 million, a decrease of $0.2 million, or 3.4% when compared to the second quarter of 2011.

Interest expense decreased $1.8 million when compared with the second quarter 2011. The decrease in interest expense is due to the expiration of two interest rate swap agreements during June of 2011 and our lower outstanding debt when compared with the second quarter of 2011. Other (income) expense for the second quarter of 2012 consisted of income of $1.3 million related to foreign exchange gains. Other (income) expense for the second quarter 2011 consisted of expense of $0.3 million related to foreign exchange losses.

The effective tax rate was 36.1% for the quarter, as compared to 34.1% for the same period last year. The increase in our effective tax rate was due in large part to the mix of pretax income and the varying effective tax rates in the countries in which we operate. Net income for the second quarter 2012 was $13.1 million, or $0.28 diluted earnings per share, as compared to $13.0 million, or $0.28 diluted earnings per share, for the same quarter in 2011.

 

 

 

 

 

Cash generated from operations during the second quarter 2012 was $20.0 million, compared to $29.6 million in the same period of 2011. Capital expenditures for the second quarter 2012 totaled $3.4 million compared to $5.2 million for 2011. We repaid $10.0 million of debt during the second quarter of 2012 compared to $12.0 million during the second quarter of 2011. We also paid a quarterly dividend of $4.7 million, or $0.10 per share, in the second quarter of 2012 compared to $4.6 million, or $0.10 per share, in the second quarter of 2011.

"Our balance sheet is strong and together with improving gross margins provides the resources to continue to fund our investments in longer term growth initiatives", commented Barry L. McCabe, EVP & CFO.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Segment Results

The following information categorizes the Company's results into its defined reporting segments.

The Office segment serves corporate, government, healthcare, retail and other customers in the United States and Canada providing a portfolio of office furnishing solutions including systems, seating, storage, tables, desks and KnollExtra ® ergonomic accessories. The Office segment also includes international sales of our North American office products. The Studio segment includes KnollStudio®, Knoll Europe which sells primarily Knoll Studio products, and Richard Schultz® Design. The KnollStudio® portfolio includes a range of lounge seating; side, café and dining chairs; barstools; and conference, dining and occasional tables. The Coverings segment includes, KnollTextiles®, Spinneybeck®, Edelman® Leather, and FilzfeltTM. These businesses serve a wide range of customers offering high quality textiles and leather.

   

 

Three Months Ended

June 30,

Net Sales (in millions)

    

2012

    

2011

  
                 
         

  

    

 

Office

    

$ 153.9

      

$ 171.5

  

Studio

    

39.2

      

39.7

  

Coverings

    

27.9

      

27.5

  
         

  

      

Total Net Sales

$

221.0

$ 238.7

 

   

 

Three Months Ended

June 30,

Operating Profit (in millions)

    

2012

    

2011

 		 
                 
         

  

    

 

Office

    

$ 8.7

      

$ 11.8

  

Studio

    

6.4

      

5.9

  

Coverings

    

5.7

      

5.9

  
         

  

      

Total

   

20.8

      

23.6

  
                 

Restructuring Charges primarily Office

    

-

      

(0.2)

  

Total Operating Profit

$

20.8

$

23.3(1)

 

    1. Results do not add due to rounding.

 

 

 

 

Conference Call Information

Knoll will host a conference call on Thursday, July 19, 2012 at 10:00 A.M. EST to discuss its financial results.

The call will include slides; participants are encouraged to listen to and view the presentation via webcast at http://www.knoll.com; go to "About Knoll" and click on "Investor Relations".

The conference call may also be accessed by dialing:

North America 866 203-2528

International 617 213-8847

Passcode 60616318

A replay of the webcast can be viewed by visiting the Investor Relations section of the Knoll corporate website.

In addition, an audio replay of the conference call will be available through July 26, 2012 by dialing 888 286-8010. International replay: 617 801-6888 (Passcode: 28670451).

About Knoll

Knoll is the recipient of the 2011 National Design Award for Corporate and Institutional Achievement from the Smithsonian's Copper-Hewitt, National Design Museum. Since 1938, Knoll has been recognized internationally for creating workplace and residential furnishings that inspire, evolve and endure. Today, our commitment to modern design, our understanding of the workplace and our dedication to sustainable design has yielded a unique portfolio of products that respond and adapt to changing needs. Knoll is aligned with the U.S. Green Building Council and the Canadian Green Building Council and can help companies achieve Leadership in Energy and Environmental Design LEED workplace certification. Knoll is the founding sponsor of the World Monuments Fund Modernism at Risk program.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cautionary Statement Regarding Forward-Looking Information

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding Knoll, Inc.'s expected future financial position, results of operations, revenue levels, cash flows, business strategy, budgets, projected costs, capital expenditures, products, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as "anticipate," "if," "believe," "plan," "goals, " "estimate," "expect," "intend," "may," "could," "should," "will," and other similar expressions are forward- looking statements. This includes, without limitation, our statements and expectations regarding any current or future recovery in our industry. Such forward-looking statements are inherently uncertain, and readers must recognize that actual results may differ materially from the expectations of Knoll management. Knoll does not undertake a duty to update such forward-looking statements. Factors that may cause actual results to differ materially from those in the forward-looking statements include corporate spending and service-sector employment, price competition, acceptance of Knoll's new products, the pricing and availability of raw materials and components, foreign currency exchange, transportation costs, demand for high quality, well designed office furniture solutions, changes in the competitive marketplace, changes in the trends in the market for office furniture, the financial strength and stability of our suppliers, customers and dealers, access to capital, and other risks identified in Knoll's annual report on Form 10-K, and other filings with the Securities and Exchange Commission. Many of these factors are outside of Knoll's control.

Contacts

Investors: Barry L. McCabe

Executive Vice President and Chief Financial Officer

Tel 215 679-1301

bmccabe@knoll.com

Media: David E. Bright

Senior Vice President, Communications

Tel 212 343-4135

dbright@knoll.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KNOLL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

 

 

  

Three Months Ended

June 30,

 

Six Months Ended

June 30,
     

2012

    

2011

    

2012

  

2011

  
   

(Unaudited)

    

(Unaudited)

    

(Unaudited)

    

(Unaudited)

  
                               

Net Sales

  

$

221,018

  

  

$

238,650

 

 

$

417,679

  

$

459,509

  

Cost of sales

  

 

146,611

  

  

 

162,157

 

 

 

280,220

  

 

314,614

  
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

  

 

74,407

  

  

 

76,493

 

 

 

137,459

  

 

144,895

  

Selling, general, and administrative expenses

  

 

53,604

  

  

 

52,925

 

 

 

101,205

  

 

99,941

  

Restructuring and other charges

    

-

     

243

     

-

 

 

  

714

 

 
   

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

Operating income

  

 

20,803

  

  

 

23,325

 

 

 

36,254

  

 

44,240

  

Interest expense

  

 

1,637

  

  

 

3,372

 

 

 

3,143

  

 

7,389

  

Other (income) expense, net

  

 

(1,262

)

  

 

275

  

 

 

937

  

 

2,604

  
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

  

 

20,428

  

  

 

19,678

 

 

 

32,174

  

 

34,247

  

Income tax expense

  

 

7,373

  

  

 

6,703

 

 

 

11,862

  

 

12,070

  
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

  

$

13,055

  

  

$

12,975

 

 

$

20,312

  

$

22,177

  
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

  

 

 

  

  

 

 

 

 

 

 

  

 

 

  

Basic

  

$

.28

  

  

$

.28

 

 

$

.44

  

$

.48

  

Diluted

  

$

.28

  

  

$

.28

 

 

$

.43

  

$

.47

  

Weighted-average shares outstanding:

  

 

 

  

  

 

 

 

 

 

 

  

 

 

  

Basic

  

 

46,620,897

  

  

 

46,245,776

 

 

 

46,558,520

  

 

46,203,498

  

Diluted

  

 

47,017,440

  

  

 

46,904,015

 

 

 

47,056,715

  

 

46,889,703

  

 

KNOLL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

  

June 30,

2012

    

December 31, 2011

 
   

       

ASSETS

  

 

 

 

 

 

 

 

Current assets:

  

 

 

 

 

 

 

 

Cash and cash equivalents

  

$

11,473

 

 

$

28,263

 

Customer receivables, net

  

 

103,414

 

 

 

126,078

 

Inventories

  

 

96,757

 

 

 

89,244

 

Prepaid and other current assets

  

 

23,415

 

 

 

21,308

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total current assets

  

 

235,059

 

 

 

264,893

 

Property, plant, and equipment, net

  

 

120,330

 

 

 

121,792

 

Intangible assets, net

  

 

303,014

 

 

 

297,250

 

Other noncurrent assets

  

 

6,409

 

 

 

4,156

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total Assets

  

$

664,812

 

 

$

688,091

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

  

 

 

 

 

 

 

 

Accounts payable

  

 

65,845

 

 

 

83,824

 

Other current liabilities

  

 

76,616

 

 

 

99,304

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total current liabilities

  

 

142,461

 

 

 

183,128

 

Long-term debt

  

 

218,000

 

 

 

212,000

 

Other noncurrent liabilities

  

 

128,269

 

 

 

127,540

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total liabilities

  

 

488,730

 

 

 

522,668

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Stockholders' equity

  

 

176,082

  

 

 

165,423

  
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total Liabilities and Stockholders' Equity

  

$

664,812

 

 

$

688,091

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

KNOLL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

 

 

 

Six Months Ended June 30,

 
   

2012

    

2011

    
   

(Unaudited)

    

(Unaudited)

    
                   

Net income

  

$

20,312

 

 

$

22,177

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows provided by Operating Activities

  

 

6,482

 

 

 

12,774

 

 
                   

Cash Flows used in Investing Activities

  

 

(12,616

)

 

 

(7,120

)

 
                   

Cash Flows used in Financing Activities

  

 

(9,064

)

 

 

(21,761

)

 
                   

Effect of exchange rate changes on cash and cash equivalents

  

 

(1,592

) 

 

 

2,653

 

 
   

 

 

 

 

    

 

 

 

 

 

 

 

 

    

(Decrease) increase in cash and cash equivalents

  

 

(16,790

)

 

 

(13,454

)

 

 

 

 

Cash and cash equivalents at beginning of period

  

 

28,263

 

 

 

26,935

 

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

Cash and cash equivalents at end of period

  

$

11,473

 

 

$

13,481

 

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

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