KNOLL INC - FORM 8-K - EX-99 - PRESS RELEASE - October 17, 2012

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Knoll 1235 Water Street

East Greenville, PA 18041

Tel 215 679-7991

Press Release

 

 

Knoll Reports Third Quarter 2012 Results;

In the quarter company announced an increase in the quarterly dividend to $0.12

EAST GREENVILLE, PA, October 17, 2012 -- Knoll, Inc. (NYSE: KNL) today announced results for the third quarter ended September 30, 2012. Net sales were $219.8 million for the quarter, a decrease of 8.2% from the third quarter 2011. Operating profit was $23.5 million a decrease of 6.0% from the third quarter 2011, but operating profit as a percent of sales was 10.7%, an increase of 30 basis points from the third quarter of 2011. Net income was $12.2 million during the third quarter of 2012 compared to $18.4 million during the third quarter 2011. Diluted earnings per share for the third quarter of 2012 was $0.26 compared to $0.39 in the prior year. During the third quarter of 2012 foreign exchange losses, negatively impacted earnings per share by approximately $0.04 while foreign exchange gains positively impacted earnings per share by approximately $0.06 in the prior year.

"We are pleased with the strong gross and operating margins we reported in the quarter," commented Andrew Cogan CEO. "In spite of recent softening in industry demand, we expect to be back on a path of growth as we end 2012," he added.

Third Quarter Results

Third quarter 2012 financial results highlights follow:

Dollars in Millions Except Per Share Data

  

Three Months Ended

  

Percent

  
   

9/30/12

  

9/30/11

  

Change

  
                   

Net Sales

  

$

219.8

  

$

239.5

  

(8.2)

%

Gross Profit

    

74.2

    

78.9

  

(6.0)

%

Gross Profit %

    

33.8

%

  

32.9

%

N/A

  

Operating Expenses

    

50.7

    

53.9

  

(5.9)

%

Operating Profit

    

23.5

    

25.0

  

(6.0)

%

Operating Profit %

    

10.7

%

  

10.4

%

N/A

  

Net Income

    

12.2

    

18.4

  

(33.7)

%

Earnings Per Share

   

.26

    

.39

  

(33.3)

%
                   

 

 

 

 

 

 

 

 

 

Net sales for the quarter were $219.8 million, a decrease of $19.7 million, or 8.2%, over the third quarter of 2011. Net sales for the Office segment were $160.0 million during the third quarter of 2012, a decrease of $13.6 million, or 7.8%, when compared with the third quarter of 2011. This decrease was primarily the result of softening industry demand and lower sales to government and financial services clients. Net sales for the Studio segment were $33.0 million, a decrease of $4.3 million, or 11.5%, when compared with the third quarter of 2011. Lower sales resulting primarily from the poor economic conditions in Europe more than offset the growth of Studio sales in North America. Net sales for the Coverings segment were $26.7 million, a decrease of $1.9 million, or 6.6%, when compared with the third quarter of 2011. The decrease in sales in the Coverings segment during the third quarter of 2012 was the result of lower demand in certain markets such as hospitality and transportation.

Gross profit for the third quarter of 2012 was $74.2 million, a decrease of $4.7 million, or 6.0%, over the same period in 2011. Gross profit as a percentage of net sales increased 90 basis points to 33.8% in the third quarter of 2012 from 32.9% in the same quarter of 2011. The increase in gross profit as a percentage of sales from the third quarter of 2011 largely resulted from a more profitable mix in our business as we saw government shipments, which are generally at higher discount rates, make up a smaller portion of our overall sales. Continuous improvement projects in our factories also positively impacted our gross margin.

Operating expenses for the quarter were $50.7 million, or 23.1% of net sales, compared to $53.9 million, or 22.5% of net sales, for the third quarter of 2011. The decrease in operating expenses during the third quarter of 2012 was primarily due to lower variable compensation spending due to our lower sales but was partially offset with continued spending on new product and growth initiatives.

Operating profit for the third quarter of 2012 was $23.5 million, a decrease of $1.5 million, or 6.0%, when compared to the same period in 2011. Operating profit for the Office segment was $13.0 million in the third quarter of 2012, an increase of $0.2 million, or 1.6%, when compared with the third quarter of 2011. Operating profit for the Studio segment was $5.2 million, a decrease of $0.5 million, or 8.8%, when compared with the third quarter of 2011. Operating profit for the Coverings segment was $5.3 million, a decrease of $1.3 million, or 19.7%, when compared to the third quarter of 2011. The decrease in operating profit in the Coverings segment during the third quarter of 2012 is the result of lower sales to hospitality and transportation clients and increased costs associated with growth initiatives.

Interest expense increased $0.4 million when compared with the third quarter 2011. Other (income) expense for the third quarter of 2012 consisted of expense of $2.8 million primarily related to foreign exchange losses. Other (income) expense for the third quarter 2011 consisted of income of $4.1 million primarily related to foreign exchange gains.

The effective tax rate was 36.1% for the quarter, as compared to 34.0% 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 third quarter 2012 was $12.2 million, or $0.26 diluted earnings per share, as compared to $18.4 million, or $0.39 diluted earnings per share, for the same quarter in 2011.

 

 

 

 

 

Cash generated from operations during the third quarter 2012 was $23.9 million, compared to $18.4 million in the same period of 2011. Capital expenditures for the third quarter 2012 totaled $4.0 million compared to $2.5 million for 2011. We repaid $15.0 million of debt during the third quarter of 2012, compared to $13.1 million during the third quarter of 2011. We also paid a quarterly dividend of $5.6 million, or $0.12 per share, in the third quarter of 2012 compared to $4.6 million, or $0.10 per share, in the third quarter of 2011.

"We continue to reduce our bank debt and improve our balance sheet which provides us with the financial flexibility to continue to invest opportunistically in both our growth and infrastructure improvement initiatives," stated 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 office 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

September 30,

Net Sales (in millions)

    

2012

    

2011

  
                 
         

  

    

 

Office

  

$

160.0

      

$ 173.6

  

Studio

    

33.0

      

37.3

  

Coverings

    

26.7

      

28.6

  
         

  

      

Total Net Sales

$

219.8

(1)

$ 239.5

 

   

 

Three Months Ended

September 30,

  

Operating Profit (in millions)

    

2012

    

2011

 		   
                   

Office

  

$

13.0

  

  

$

12.8

  

 

Studio

    

5.2

      

5.7

    

Coverings

5.3

6.6

Total Operating Profit

$

23.5

$

25.0

(0 (1)

 

    1. Results do not add due to rounding.

 

 

 

 

 

 

 

 

Conference Call Information

Knoll will host a conference call on Wednesday, October 17, 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 866 700-6067

International 617 213-8834

Passcode 12564921

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 October 24, 2012 by dialing 888 286-8010. International replay: 617 801-6888 (Passcode: 13584047).

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 and profit 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 or coverings, 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

September 30,

 

Nine Months Ended

September 30,
     

2012

    

2011

    

2012

  

2011

  
   

(Unaudited)

    

(Unaudited)

    

(Unaudited)

    

(Unaudited)

  
                               

Net Sales

  

$

219,794

  

  

$

239,543

 

 

$

637,473

  

$

699,052

  

Cost of sales

  

 

145,578

  

  

 

160,692

 

 

 

425,798

  

 

475,306

  
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

  

 

74,216

  

  

 

78,851

 

 

 

211,675

  

 

223,746

  

Selling, general, and administrative expenses

  

 

50,694

  

  

 

53,854

 

 

 

151,899

  

 

153,795

  

Restructuring and other charges

    

-

     

(18)

     

-

 

 

  

696

 

 
   

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

Operating income

  

 

23,522

  

  

 

25,015

 

 

 

59,776

  

 

69,255

  

Interest expense

  

 

1,635

  

  

 

1,226

 

 

 

4,778

  

 

8,615

  

Other expense (income), net

  

 

2,786

  

  

 

(4,077

)

 

 

3,723

  

 

(1,473

)
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

  

 

19,101

  

  

 

27,866

 

 

 

51,275

  

 

62,113

  

Income tax expense

  

 

6,904

  

  

 

9,477

 

 

 

18,766

  

 

21,547

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

  

$

12,197

  

  

$

18,389

 

 

$

32,509

  

$

40,566

  
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

  

 

 

  

  

 

 

 

 

 

 

  

 

 

  

Basic

  

$

.26

  

  

$

.40

 

 

$

.70

  

$

.88

  

Diluted

  

$

.26

  

  

$

.39

 

 

$

.69

  

$

.87

  

Weighted-average shares outstanding:

  

 

 

  

  

 

 

 

 

 

 

  

 

 

  

Basic

  

 

46,667,359

  

  

 

46,250,362

 

 

 

46,595,066

  

 

46,219,291

  

Diluted

  

 

47,038,785

  

  

 

46,792,225

 

 

 

47,051,004

  

 

46,858,766

  

 

KNOLL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

  

September 30,

2012

    

December 31, 2011

 
   

       

ASSETS

  

 

 

 

 

 

 

 

Current assets:

  

 

 

 

 

 

 

 

Cash and cash equivalents

  

$

10,690

 

 

$

28,263

 

Customer receivables, net

  

 

99,631

 

 

 

126,078

 

Inventories

  

 

101,941

 

 

 

89,244

 

Prepaid and other current assets

  

 

25,414

 

 

 

21,308

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total current assets

  

 

237,676

 

 

 

264,893

 

Property, plant, and equipment, net

  

 

121,715

 

 

 

121,792

 

Intangible assets, net

  

 

303,376

 

 

 

297,250

 

Other noncurrent assets

  

 

6,017

 

 

 

4,156

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total Assets

  

$

668,784

 

 

$

688,091

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

  

 

 

 

 

 

 

 

Accounts payable

  

 

73,570

 

 

 

83,824

 

Other current liabilities

  

 

74,589

 

 

 

99,304

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total current liabilities

  

 

148,159

 

 

 

183,128

 

Long-term debt

  

 

203,000

 

 

 

212,000

 

Other noncurrent liabilities

  

 

128,553

 

 

 

127,540

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total liabilities

  

 

479,712

 

 

 

522,668

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Stockholders' equity

  

 

189,072

  

 

 

165,423

  
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

Total Liabilities and Stockholders' Equity

  

$

668,784

 

 

$

688,091

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

  

 

 

 

 

KNOLL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

 

 

 

Nine Months Ended September 30,

 
   

2012

    

2011

    
   

(Unaudited)

    

(Unaudited)

    
                   

Net income

  

$

32,509

 

 

$

40,566

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows provided by Operating Activities

  

 

30,395

 

 

 

31,124

 

 
                   

Cash Flows used in Investing Activities

  

 

(16,890)

  

 

 

(9,733

)

 
                   

Cash Flows used in Financing Activities

  

 

(30,218)

  

 

 

(39,696

)

 
                   

Effect of exchange rate changes on cash and cash equivalents

  

 

(860)

 

 

 

2,108

 

 
   

 

 

 

 

    

 

 

 

 

 

 

 

 

    

(Decrease) increase in cash and cash equivalents

  

 

(17,573)

  

 

 

(16,197

)

 

 

 

 

Cash and cash equivalents at beginning of period

  

 

28,263

 

 

 

26,935

 

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

Cash and cash equivalents at end of period

  

$

10,690

 

 

$

10,738

 

 
   

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

    

 

 

 

 

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