Knoll Inc.

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Press Release $KNL Knoll Inc.

0 COMMENTs 16 Oct
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Knoll Reports Third Quarter 2013 Results


EAST GREENVILLE, PA, October 16, 2013 -- Knoll, Inc. (NYSE: KNL) today announced
results for the third quarter ended September 30, 2013. Net sales were $216.9
million for the quarter, a decrease of 1.3% from the third quarter 2012.
Operating profit was $17.1 million a decrease of 27.2% from the third quarter
2012. The decrease in operating profit during the third quarter of 2013 was
mainly the result of  the increased spending associated with our announced
programs of strategic investments and initiatives to achieve our longer-term
revenue and margin objectives.  Net income was $8.6 million during the third
quarter of 2013 compared to $12.2 million during the third quarter 2012. Diluted
earnings per share for the third quarter of 2013 was $0.18 compared to $0.26 in
the prior year.  During the third quarter of 2013 non-cash charges relating to
foreign exchange losses decreased earnings approximately $0.03 per share.


"We continued to execute against our multi-year strategic plan designed to drive
revenue growth and margin improvement  across our varied segments," commented
Andrew Cogan, CEO.

"While our Office segment remains pressured by significant declines in our
Federal government business, our results in the quarter do demonstrate the
traction we are gaining in our Studio and Coverings segments," he added.
Third Quarter Results

Third quarter 2013 financial results highlights follow:


+-----------------------------------------+ +---------------------+ +--------+
|Dollars in Millions Except Per Share Data| | Three Months Ended  | |Percent |
+-----------------------------------------+ +-----------+---------+ +--------+
|                                         | |9/30/2013  |9/30/2012| | Change |
+-----------------------------------------+ +---------+ +---------+ +--------+
|Net Sales                                | |$ 216.9  | |$ 219.8  | | (1.3 )%|
+-----------------------------------------+ +---------+ +---------+ +--------+
|Gross Profit                             | |   72.3  | |   74.2  | | (2.6 )%|
+-----------------------------------------+ +---------+ +---------+ +--------+
|Gross Profit %                           | |   33.4 %| |   33.8 %| | (1.2 )%|
+-----------------------------------------+ +---------+ +---------+ +--------+
|Operating Expenses                       | |   55.3  | |   50.7  | |  9.1 % |
+-----------------------------------------+ +---------+ +---------+ +--------+
|Operating Profit                         | |   17.1  | |   23.5  | |(27.2 )%|
+-----------------------------------------+ +---------+ +---------+ +--------+
|Operating Profit %                       | |    7.9 %| |   10.7 %| |(26.2 )%|
+-----------------------------------------+ +---------+ +---------+ +--------+
|Net Income                               | |    8.6  | |   12.2  | |(29.5 )%|
+-----------------------------------------+ +---------+ +---------+ +--------+
|Earnings Per Share                       | |   0.18  | |   0.26  | |(30.8 )%|
+-----------------------------------------+ +---------+ +---------+ +--------+



Net sales for the quarter were $216.9 million, a decrease of $2.9 million, or
1.3%, over the third quarter of 2012. Sequentially sales increased by $2.6
million when compared with second quarter of 2013.  Net sales for the Office
segment were $150.5 million during the third quarter of 2013, a decrease of $9.5
million, or 5.9%, when compared with the third quarter of 2012. Sales to
governmental agencies continued to decline on a year-over-year basis which drove
the overall decline in sales in the Office segment. Net sales for the Studio
segment were $37.7 million, an increase of $4.7 million, or 14.2%, when compared
with the third quarter of 2012. During the third quarter of 2013 the Studio
segment experienced double digit growth in Europe and single digit growth in
North America. Net sales for the Coverings segment were $28.7 million, a
increase of $2.0 million, or 7.5%, when compared with the third quarter of
2012. Both our textiles and leather subsidiaries experienced growth during the
quarter.

Gross profit for the third quarter of 2013 was $72.3 million, a decrease of $1.9
million, or 2.6%, over the same period in 2012. Gross profit as a percentage of
net sales decreased 40 basis points to 33.4% in the third quarter of 2013 from
33.8% in the same quarter of 2012. This decrease in gross profit as a percentage
of sales  largely resulted from lower absorption of our fixed costs as a result
of the lower sales and pricing pressures in the Office segment.  Continuous
improvement projects in our factories helped to offset some of this decline.
Sequentially gross profit as a percentage of net sales increased 80 basis points
when compared with the second quarter of 2013.

Operating expenses for the quarter were $55.3 million, or 25.5% of net sales,
compared to $50.7 million, or 23.1% of net sales, for the third quarter of
2012. The increase in operating expenses during the third quarter of 2013 was
primarily due to our previously announced strategic initiatives partially offset
by lowered levels of incentive accruals.

Operating profit for the third quarter of 2013 was $17.1 million, a decrease of
$6.4 million, or 27.2%, when compared to the same period in 2012.  Sequentially
operating profit increased by $4.7 million and operating margins expanded 210
basis points when compared with the second quarter of 2013.  Operating profit
for the Office segment was $5.7 million in the third quarter of 2013, a decrease
of $7.3 million, or 56.2%, when compared with the third quarter of 2012.  This
decrease in operating profit  was mainly the result of increased operating
expenses associated with our strategic investments and initiatives and our lower
sales. Operating profit for the Studio segment was $5.3 million, an increase of
$0.1 million, or 1.9%, when compared with the third quarter of 2012. Operating
profit for the Coverings segment was $6.1 million, a increase of $0.8 million,
or 15.1%, when compared to the third quarter of 2012.

Interest expense decreased $0.2 million when compared with the third quarter
2012 as a result of our lower outstanding debt.  Other expense (income), net for
the third quarter of 2013 consisted of expense of $2.2 million primarily related
to foreign exchange losses. Other expense (income), net for the third quarter
2012 consisted of expense of $2.9 million primarily related to foreign exchange
losses offset by $0.1 million of miscellaneous income.

The effective tax rate was 35.9% for the quarter, as compared to 36.1% for the
same period last year. The decrease 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 2013 was $8.6
million, or $0.18 diluted earnings per share, as compared to $12.2 million, or
$0.26 diluted earnings per share, for the same quarter in 2012.







Cash generated from operations during the third quarter 2013 was $15.3 million,
compared to $22.6 million in the same period of 2012. Capital expenditures for
the third quarter 2013 totaled $3.3 million compared to $3.6 million for 2012.
We repaid $5.0 million of debt during the third quarter of 2013, compared to
$15.0 million during the third quarter of 2012. We also paid a quarterly
dividend of $5.6 million, or $0.12 per share, in the third quarter of 2013 and
2012.






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 FilzFelt(TM). These businesses serve a wide
range of customers offering high quality textiles and leather.



+-----------------------+ +-----------------------------+
|                       | |   Three Months Ended        |
|                       | |      September 30,          |
+-----------------------+ +---------+-+-+-+---------+---+
|Net Sales (in millions)| |  2013   | | | |  2012   |   |
+-----------------------+ +---------+ +-+ +---------+---+
|Office                 | |$ 150.5  | | | |$ 160.0  |   |
+-----------------------+ +---------+ +-+ +---------+---+
|Studio                 | |   37.7  | | | |   33.0  |   |
+-----------------------+ +---------+ +-+ +---------+---+
|Coverings              | |   28.7  | | | |   26.7  |   |
+-----------------------+ +---------+ +-+ +---------+---+
|Total Net Sales        | |$ 216.9  | | | |$ 219.8  |(1)|
+-----------------------+ +---------+ +-+ +---------+---+




+------------------------------+ +-----------------------+-+
|                              | |  Three Months Ended   | |
|                              | |     September 30,     | |
+------------------------------+ +--------+-+-+-+--------+-+
|Operating Profit (in millions)| |  2013  | | | |  2012  | |
+------------------------------+ +--------+ +-+ +--------+-+
|Office                        | |$  5.7  | | | |$ 13.0  | |
+------------------------------+ +--------+ +-+ +--------+-+
|Studio                        | |   5.3  | | | |   5.2  | |
+------------------------------+ +--------+ +-+ +--------+-+
|Coverings                     | |   6.1  | | | |   5.3  | |
+------------------------------+ +--------+ +-+ +--------+-+
|Total Operating Profit        | |$ 17.1  | | | |$ 23.5  | |
+------------------------------+ +--------+ +-+ +--------+-+


 (1) - Results do not add due to rounding





Conference Call Information

Knoll will host a conference call on Wednesday, October 16, 2013 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            800 295-4740

International    617 614-3925

Passcode          52746240

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 23, 2013 by dialing 888 286-8010. International replay: 617 801-6888
(Passcode: 90277810).

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 and our publicly announced plans for increased capital
and investment spending to achieve our long-term revenue and profitability
growth goals.  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 furniture solutions, changes in the competitive marketplace, changes in
the trends in the market for 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:

Craig B. Spray

Senior Vice President and Chief Financial Officer

Tel 215 679-1752

cspray@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     | |    Nine Months Ended      |
|                  | |       September 30,       | |       September 30,       |
+------------------+ +------------+-+------------+ +------------+ +------------+
|                  | |    2013    | |    2012    | |    2013    | |    2012    |
+------------------+ +------------+ +------------+ +------------+ +------------+
|                  | |(Unaudited)   |(Unaudited)   |(Unaudited) | |(Unaudited) |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Net Sales         | |$  216,898  | |$  219,794  | |$  631,796  | |$  637,473  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Cost of sales     | |   144,559  | |   145,578  | |   425,949  | |   425,798  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Gross profit      | |    72,339  | |    74,216  | |   205,847  | |   211,675  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Selling, general, | |            | |            | |            | |            |
|and administrative| |            | |            | |            | |            |
|expenses          | |    55,288  | |    50,694  | |   166,094  | |   151,899  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Operating income  | |    17,051  | |    23,522  | |    39,753  | |    59,776  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Interest expense  | |     1,484  | |     1,635  | |     4,496  | |     4,778  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Other expense     | |            | |            | |            | |            |
|(income), net     | |     2,224  | |     2,786  | |    (1,273 )| |     3,723  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Income before     | |            | |            | |            | |            |
|income tax expense| |    13,343  | |    19,101  | |    36,530  | |    51,275  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Income tax expense| |     4,793  | |     6,904  | |    14,018  | |    18,766  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Net income        | |$    8,550  | |$   12,197  | |$   22,512  | |$   32,509  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Earnings per      | |            | |            | |            | |            |
|share:            | |            | |            | |            | |            |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Basic             | |$     0.18  | |$     0.26  | |$     0.48  | |$     0.70  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Diluted           | |$     0.18  | |$     0.26  | |$     0.47  | |$     0.69  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Weighted-average  | |            | |            | |            | |            |
|shares            | |            | |            | |            | |            |
|outstanding:      | |            | |            | |            | |            |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Basic             | |46,915,660  | |46,667,359  | |46,882,362  | |46,595,066  |
+------------------+ +------------+ +------------+ +------------+ +------------+
|Diluted           | |47,679,422  | |47,038,785  | |47,615,305  | |47,051,004  |
+------------------+ +------------+ +------------+ +------------+ +------------+




                                  KNOLL, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                             (Dollars in thousands)





+------------------------------------------+ +--------------+ +-------------+
|                                          | |September 30, | |December 31, |
|                                          | |     2013     | |    2012     |
+------------------------------------------+ +--------------+ +-------------+
|ASSETS                                    | |              | |             |
+------------------------------------------+ +--------------+ +-------------+
|Current assets:                           | |              | |             |
+------------------------------------------+ +--------------+ +-------------+
|Cash and cash equivalents                 | |$  13,513     | |$  29,956    |
+------------------------------------------+ +--------------+ +-------------+
|Customer receivables, net                 | |   90,511     | |  105,877    |
+------------------------------------------+ +--------------+ +-------------+
|Inventories                               | |   94,102     | |   98,195    |
+------------------------------------------+ +--------------+ +-------------+
|Prepaid and other current assets          | |   30,415     | |   24,494    |
+------------------------------------------+ +--------------+ +-------------+
|Total current assets                      | |  228,541     | |  258,522    |
+------------------------------------------+ +--------------+ +-------------+
|Property, plant, and equipment, net       | |  133,281     | |  124,838    |
+------------------------------------------+ +--------------+ +-------------+
|Intangible assets, net                    | |  302,453     | |  302,830    |
+------------------------------------------+ +--------------+ +-------------+
|Other noncurrent assets                   | |    9,095     | |    8,863    |
+------------------------------------------+ +--------------+ +-------------+
|Total Assets                              | |$ 673,370     | |$ 695,053    |
+------------------------------------------+ +--------------+ +-------------+
|LIABILITIES AND STOCKHOLDERS' EQUITY      | |              | |             |
+------------------------------------------+ +--------------+ +-------------+
|Current liabilities:                      | |              | |             |
+------------------------------------------+ +--------------+ +-------------+
|Accounts payable                          | |   75,840     | |   83,600    |
+------------------------------------------+ +--------------+ +-------------+
|Other current liabilities                 | |   69,598     | |   92,345    |
+------------------------------------------+ +--------------+ +-------------+
|Total current liabilities                 | |  145,438     | |  175,945    |
+------------------------------------------+ +--------------+ +-------------+
|Long-term debt                            | |  183,000     | |  193,000    |
+------------------------------------------+ +--------------+ +-------------+
|Other noncurrent liabilities              | |  144,275     | |  138,008    |
+------------------------------------------+ +--------------+ +-------------+
|Total liabilities                         | |  472,713     | |  506,953    |
+------------------------------------------+ +--------------+ +-------------+
|Stockholders' equity                      | |  200,657     | |  188,100    |
+------------------------------------------+ +--------------+ +-------------+
|Total Liabilities and Stockholders' Equity| |$ 673,370     | |$ 695,053    |
+------------------------------------------+ +--------------+ +-------------+




                                  KNOLL, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (Dollars in thousands)





+--------------------------------------------------+ +--------------------------
|                                                  | | Nine Months Ended
|                                                  | |    September 30,
+--------------------------------------------------+ +-----------+ +-----------+
|                                                  | |   2013    | |   2012    |
+--------------------------------------------------+ +-----------+ +-----------+
|                                                  | |(Unaudited)| |(Unaudited)|
+--------------------------------------------------+ +-----------+ +-----------+
|Net income                                        | | 22,512    | | 32,509    |
+--------------------------------------------------+ +-----------+ +-----------+
|Cash Flows provided by Operating Activities       | | 31,349    | | 29,055    |
+--------------------------------------------------+ +-----------+ +-----------+
|Cash Flows used in Investing Activities           | |(20,761 )  | |(16,544 )  |
+--------------------------------------------------+ +-----------+ +-----------+
|Cash Flows used in Financing Activities           | |(27,150 )  | |(29,224 )  |
+--------------------------------------------------+ +-----------+ +-----------+
|Effect of exchange rate changes on cash and cash  | |           | |           |
|equivalents                                       | |    119    | |   (860 )  |
+--------------------------------------------------+ +-----------+ +-----------+
|(Decrease) increase in cash and cash equivalents  | |(16,443 )  | |(17,573 )  |
+--------------------------------------------------+ +-----------+ +-----------+
|Cash and cash equivalents at beginning of period  | | 29,956    | | 28,263    |
+--------------------------------------------------+ +-----------+ +-----------+
|Cash and cash equivalents at end of period        | | 13,513    | | 10,690    |
+--------------------------------------------------+ +-----------+ +-----------+




This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
    other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
     originality of the information contained therein.

Source: Knoll, Inc. via Thomson Reuters ONE
[HUG#1736079]



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