First Sequential Increase in Backlog in 6 Quarters as New Products
Begin to Impact Top Line Results EAST GREENVILLE, Pa., Feb. 4
/PRNewswire-FirstCall/ -- Knoll, Inc. (NYSE: KNL) today announced
results for the fourth quarter and year ended December 31, 2009.
Net sales were $183.9 million for the quarter, a decrease of 33.4%
from fourth quarter 2008. Operating profit was $11.4 million, or
6.2% of net sales, a decrease of 69.4% from the fourth quarter
2008. Excluding restructuring charges of $3.5 million, adjusted
operating profit was $14.9 million during the fourth quarter of
2009, or 8.1% of net sales, a decrease of 61.3% when compared to
adjusted operating profit from the fourth quarter of 2008. Net
income was $4.0 million, a decrease of 82.4% when compared with the
fourth quarter of 2008. Earnings per share was $0.09 for the
quarter compared to $0.50 per share in the prior year. Adjusted
earnings per share was $0.14 for the quarter compared to $0.52 per
share in the prior year. For the full year, net sales were $780.0
million, a decrease of 30.4% when compared to 2008. Operating
profit was $63.5 million, or 8.1% of net sales, a decrease of 56.3%
when compared to 2008. Operating profit for the full year of 2009
includes restructuring charges of $12.0 million. Excluding these
charges adjusted operating profit was $75.5 million, or 9.7% of net
sales, a decrease of 49.7% when compared to the full year 2008
adjusted operating profit. Net income was $27.4 million, a decrease
of 67.7% when compared to 2008. Earnings per share was $0.60 for
the year compared to $1.82 per share in the prior year. Adjusted
earnings per share was $0.77 compared to $1.88 per share in the
prior year. "We ended a difficult year for our industry on a
positive note," commented Andrew Cogan, CEO. "Our new product
introductions including our award winning Generation by Knoll®
chair combined with some stabilization in overall demand helped
lead to a double digit sequential increase in backlog as we wrapped
up 2009. In the face of a daunting decline in demand this past year
we actively scaled our cost structure and continued to generate
industry leading levels of operating profitability while making the
investments in impactful new designs which we believe positions us
well for the decade ahead." "We were honored to be cited by
respondents in Contract magazine's 2009 brand report as the number
one brand in the commercial design space that perpetually inspires
them. After all, that is the best compliment we could hope for and
is what all of us at Knoll aspire to do every day. I want to thank
and congratulate all our associates and dealer partners around the
world on this special recognition," he added. Fourth Quarter
Results Fourth quarter 2009 financial results highlights follow:
Dollars in Millions Except Per Share Data Three Months Ended
---------------------------- Percent 12/31/09 12/31/08 Change
-------- -------- ------ Net Sales $183.9 $276.3 (33.4)% Gross
Profit 62.7 99.5 (37.0)% Operating Expenses 47.7 60.9 (21.7)%
Restructuring and Other Charges 3.5 1.2 Operating Profit 11.4 37.3
(69.4)% Adjusted Operating Profit 14.9 38.5 (61.3)% Net Income 4.0
22.7 (82.4)% Earnings Per Share - Diluted .09 .50 (82.0)% Adjusted
Earnings Per Share - Diluted .14 .52 (73.1)% Backlog 153.0 201.7
(24.1)% Adjusted earnings per share and adjusted operating profit
are calculated by excluding from earnings per share and operating
profit items we believe to be infrequent or not indicative of our
operating performance. For a reconciliation of adjusted earnings
per share and adjusted operating profit to GAAP earnings per share
and GAAP operating profit, respectively, see "Reconciliation of
Non-GAAP Financial Measures" below. Net sales for the quarter were
$183.9 million, a decrease of $92.4 million, or 33.4%, when
compared with the fourth quarter of 2008, representing decreased
volume across all product categories and geographies with the
largest declines occurring in office systems and in North America.
Backlog of unfilled orders at December 31, 2009 was $153.0 million,
a decrease of $48.7 million, or 24.1%, versus the prior year.
Backlog of unfilled orders at December 31, 2009 increased $31.3
million, or 25.7%, when compared to September 30, 2009 backlog of
unfilled orders of $121.7 million. Gross profit for the fourth
quarter of 2009 was $62.7 million, a decrease of $36.8 million, or
37.0%, from the same period in 2008. Gross margin decreased from
36.0% in the fourth quarter of 2008 to 34.1%. The decrease from the
fourth quarter of 2008 largely resulted from price deterioration
and the lower absorption of our fixed costs because of our lower
sales volumes. The increase in the Canadian dollar also negatively
affected our gross margin. Operating expenses for the quarter were
$47.7 million, or 25.9% of net sales, compared to $60.9 million, or
22.0% of net sales, for fourth quarter of 2008. The decrease in
operating expenses during the fourth quarter of 2009 was in large
part due to decreased spending in conjunction with our lower sales
volumes. Lower sales and incentive compensation accounted for $5.5
million of the decrease. In addition, during the fourth quarter of
2008 we incurred a charge of $4.8 million to bad debt expense.
During the fourth quarter of 2009 bad debt expense was $1.0
million. Our operating profit for the fourth quarter of 2009 was
$11.4 million, a decrease of $25.9 million, or 69.4%, when compared
to the same period in 2008. Operating profit as a percentage of net
sales was 6.2%. Operating profit for the fourth quarter of 2009
includes restructuring charges of $3.5 million. Excluding those
restructuring charges, operating profit would have been $14.9
million, or 8.1% as a percent of net sales. For a reconciliation of
adjusted operating profit to GAAP operating profit, see
"Reconciliation of Non-GAAP Financial Measures" below. Net income
for the fourth quarter 2009 was $4.0 million, or $0.09 earnings per
share, as compared to $22.7 million, or $0.50 earnings per share,
for the same quarter in 2008. Full Year Results 2009 financial
results highlights follow: Dollars in Millions Except Per Share
Data Twelve Months Ended -------------------------- Percent
12/31/09 12/31/08 Change -------- -------- ------ Net Sales $780.0
$1,120.1 (30.4)% Gross Profit 269.4 395.1 (31.8)% Operating
Expenses 194.0 245.0 (20.8)% Restructuring and Other Charges 12.0
4.6 Operating Profit 63.5 145.4 (56.3)% Adjusted Operating Profit
75.5 150.0 (49.7)% Net Income 27.4 84.9 (67.7)% Earnings Per Share
- Diluted 0.60 1.82 (67.0)% Adjusted Earnings Per Share - Diluted
0.77 1.88 (59.0)% Backlog 153.0 201.7 (24.1)% For the year, net
sales totaled $780.0 million a decrease of $340.1 million, or
30.4%, from 2008 net sales of $1.12 billion. The decrease in sales
for the year was experienced across all product categories and
geographies. The largest declines for the year occurred in office
systems and in Europe. During the full year 2009, gross margin
decreased from 35.3% in 2008 to 34.5% in 2009. The largest
contributors to this decrease were price deterioration and lower
absorption of our fixed costs as a result of our lower sales
volumes. Gross profit dollars decreased 31.8% from $395.1 million
in 2008 to $269.4 million in 2009. Operating expenses for 2009 were
$194.0 million, or 24.9% of net sales, compared to $245.0 million,
or 21.9% of net sales, for 2008. The decrease in operating expenses
during 2009 was in large part due to decreased spending in
conjunction with our lower sales volumes. Decreased sales and
incentive compensation accounted for $23.5 million of the
reduction. In addition, decreased bad debt expense and previously
implemented cost reduction measures added to the decrease. Our
operating profit for 2009 was $63.5 million, a decrease of $81.9
million, or 56.3%, when compared with the same period in 2008.
Operating profit as a percent of net sales was 8.1%. Operating
profit for 2009 includes restructuring charges of $12.0 million.
Excluding that restructuring charge, operating profit would have
been $75.5 million, or 9.7% as a percent of net sales. For a
reconciliation of adjusted operating profit to GAAP operating
profit, see "Reconciliation of Non-GAAP Financial Measures" below.
Other income/expense in 2009 included an approximate $6.6 million
loss due to foreign currency translation and $0.8 million gain on
miscellaneous income. Other income/expense in 2008 included an
approximate $2.9 million gain due to foreign currency translation
and $0.7 million gain on miscellaneous income. We generated 2009
net income of $27.4 million, or $0.60 earnings per share, compared
to $84.9 million, or $1.82 earnings per share, in 2008. Annual cash
generated from operations in 2009 was $52.9 million, compared to
$112.2 million the year before. Capital expenditures in 2009
totaled $13.7 million compared to $18.5 million for 2008. During
2009 the Company repaid $42.0 million of debt. The Company also
paid dividends of $8.2 million, $0.12 per share for the first
quarter of 2009 and $0.02 per share for the second, third, and
fourth quarters of 2009. "In a year where we experienced over a 30%
decline in our revenues we were able to flex our costs and
restructure our operations to protect our profitability while
concurrently taking actions to reduce our debt below $300 million
and preserve our liquidity and capital structure flexibility,"
stated Barry McCabe, EVP & CFO. The Company added that on
February 3, 2010, its Board of Directors declared a quarterly cash
dividend of $0.02 per share payable on March 31, 2010, to
stockholders of record on March 15, 2010. Reconciliation of
Non-GAAP Financial Measures This release contains adjusted earnings
per share and adjusted operating profit measures, which are both
non-GAAP financial measures. Adjusted earnings per share and
adjusted operating profit are calculated by excluding from earnings
per share and operating profit items that we believe to be
infrequent or not indicative of our operating performance. For the
periods covered by this release such items consist of expenses
associated with restructuring and other charges. We present
adjusted earnings per share and adjusted operating profit because
we consider them to be important supplemental measures of our
performance and believe them to be useful to show ongoing results
from operations distinct from items that are infrequent or not
indicative of our operating performance. Adjusted earnings per
share and adjusted operating profit are not measurements of our
financial performance under GAAP and should not be considered as an
alternative to earnings per share or operating profit under GAAP.
Adjusted earnings per share and adjusted operating profit have
limitations as analytical tools, and you should not consider them
in isolation or as a substitute for analysis of our results as
reported under GAAP. In addition, in evaluating adjusted earnings
per share and adjusted operating profit, you should be aware that
in the future we may incur expenses similar to the adjustments in
this presentation. Our presentation of adjusted earnings per share
and adjusted operating profit should not be construed as an
inference that our future results will be unaffected by unusual or
infrequent items. We compensate for these limitations by providing
equal prominence of our GAAP results and using adjusted earnings
per share and adjusted operating profit only supplementally. The
following table reconciles adjusted earnings per share to GAAP
earnings per share for the periods indicated. Three Months Ended
December 31, ---------------------- 2009 2008 ---- ---- Earnings
per Share - Diluted $0.09 $0.50 Add back: Restructuring and other
charges 0.05 0.02 ---- ---- Adjusted Earnings per Share - Diluted
$0.14 $0.52 ===== ===== Twelve Months Ended December 31,
----------------------- 2009 2008 ---- ---- Earnings per Share -
Diluted $0.60 $1.82 Add back: Restructuring and other charges 0.17
0.06 ---- ---- Adjusted Earnings per Share - Diluted $0.77 $1.88
===== ===== The following table reconciles adjusted operating
profit to GAAP operating profit for the periods indicated. Three
Months Ended December 31, ----------------------- 2009 2008 ----
---- Operating Profit ($mm) $11.4 $37.3 Add back: Restructuring and
other charges 3.5 1.2 --- --- Adjusted Operating Profit $14.9 $38.5
===== ===== Twelve Months Ended December 31,
----------------------- 2009 2008 ---- ---- Operating Profit ($mm)
$63.5 $145.4 Add back: Restructuring and other charges 12.0 4.6
---- --- Adjusted Operating Profit $75.5 $150.0 ===== ======
Conference Call Information Knoll will host a conference call on
Thursday, February 4, 2010 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 866 543-6407 International 617 213-8898 Passcode
13680317 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 February 11, 2010 by dialing 888 286-8010. International
replay: 617 801-6888 (Passcode: 21893125). About Knoll 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 can help
companies, healthcare organizations and educational institutions
achieve Leadership in Energy and Environmental Design (LEED®)
workplace certification. Knoll is the contract furniture industry's
first member of the Chicago Climate Exchange (CCX®) and 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. 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. KNOLL, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
data) Three Months Ended Twelve Months Ended December 31, December
31, ---------------- ---------------- 2009 2008 2009 2008 ---- ----
---- ---- Sales $183,945 $276,286 $780,033 $1,120,147 Cost of sales
121,271 176,825 510,590 725,078 ------- ------- ------- -------
Gross profit 62,674 99,461 269,443 395,069 Selling, general, and
administrative expenses 47,724 60,945 193,995 245,032 Restructuring
and other charges 3,537 1,193 11,959 4,625 ----- ----- ------ -----
Operating income 11,413 37,323 63,489 145,412 Interest expense
4,181 3,626 13,862 16,289 Other (expense) income, net (1,297) 1,801
(5,832) 3,679 ------ ----- ------ ----- Income before income tax
expense 5,935 35,498 43,795 132,802 Income tax expense 1,907 12,844
16,442 47,890 ----- ------ ------ ------ Net income $4,028 $22,654
$27,353 $84,912 ------ ------- ------- ------- Earnings per share:
Basic $.09 $.50 $0.60 $1.82 Diluted $.09 $.50 $0.60 $1.82
Weighted-average shares outstanding: Basic 45,514,140 45,247,951
45,403,401 46,570,272 Diluted 45,543,831 45,251,875 45,413,770
46,694,340 KNOLL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data) December December 31,
2009 31, 2008 -------- -------- ASSETS Current assets: Cash and
cash equivalents $5,961 $14,903 Customer receivables, net 113,652
126,051 Inventories 79,964 100,225 Prepaid and other current assets
14,300 19,069 ------ ------ Total current assets 213,877 260,248
Property, plant, and equipment, net 135,045 132,168 Intangible
assets, net 299,162 299,120 Other noncurrent assets 8,836 6,124
----- ----- Total Assets $656,920 $697,660 -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current
maturities of long-term debt $149 $121 Accounts payable 74,687
78,442 Other current liabilities 78,428 116,457 ------ -------
Total current liabilities 153,264 195,020 Long-term debt 295,156
337,258 Other noncurrent liabilities 118,938 120,763 -------
------- Total liabilities 567,358 653,041 ------- -------
Stockholders' equity 89,562 44,619 ------ ------ Total Liabilities
and Stockholders' Equity $656,920 $697,660 -------- -------- KNOLL,
INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in
thousands) Year Ended December 31, ----------------------- 2009
2008 ---- ---- Net income $27,353 $84,912 ------- ------- Cash
Flows provided by Operating Activities 52,853 112,224 Cash Flows
used in Investing Activities (14,519) (18,530) Cash Flows used in
Financing Activities (51,778) (92,381) Effect of exchange rate
changes on cash and cash equivalents 4,502 (4,385) ----- ------
Increase in cash and cash equivalents (8,942) (3,072) Cash and cash
equivalents at beginning of period 14,903 17,975 ------ ------ Cash
and cash equivalents at end of period $5,961 $14,903 ------ -------
DATASOURCE: Knoll, Inc. CONTACT: Investors: Barry L. McCabe,
Executive Vice President and Chief Financial Officer,
+1-215-679-1301, ; or Media: David E. Bright, Senior Vice
President, Communications, +1-212-343-4135, Web Site:
http://www.knoll.com/
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