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Knoll, Inc. News
Knoll, Inc. Reports Highest Quarterly Earnings, Sales and Operating Margins Since 2004 IPO
EAST GREENVILLE, Pa.,
For the full year, net sales were
"For the 3rd year in a row now Knoll has continued to expand our industry leading operating margins, generate better than industry top-line growth and deliver more than 20% EPS growth for our shareholders," said
"While we are aware that our industry faces headwinds as we head into 2008, we are confident that the strength and diversity of our growth initiatives, the fullness of our new product pipeline and our cost discipline will allow us to continue to generate better than industry top-line performance as we work to achieve our mid-term 15% operating margin goals."
"I want to congratulate and thank our Associates and Dealers on generating another year of industry leading performance. They have once again demonstrated that in the words of our founder
Fourth Quarter Results Fourth quarter 2007 financial results highlights follow: Dollars in Millions Three Months Ended Percent Except Per Share Data 12/31/07 12/31/06 Change Net Sales $ 281.8 $ 273.0 3.2 % Gross Profit 99.0 89.1 11.1 % Operating Expenses 59.5 53.5 11.2 % Operating Income 39.5 35.6 11.0 % Net Income 20.7 18.0 15.0 % Earnings Per Share - Diluted .42 .37 13.5 % Backlog 190.7 167.7 13.7 %
Net sales for the quarter were
Backlog of unfilled orders at
Gross profit for the fourth quarter 2007 was
Operating expenses for the quarter were
Operating income increased, as a percentage of sales, to 14.0% from 13.0% in the same period in the prior year. Gross margin improvements from a year ago contributed to this increase.
Net income for the fourth quarter 2007 was
Full Year Results 2007 financial results highlights follow: Dollars in Millions Twelve Months Ended Percent Except Per Share Data 12/31/07 12/31/06 Change Net Sales $ 1,055.8 $ 982.2 7.5 % Gross Profit 365.1 319.0 14.5 % Operating Expenses 222.9 202.1 10.3 % Operating Income 142.2 116.9 21.6 % Net Income 71.4 58.6 21.8 % Earnings Per Share - Diluted 1.45 1.14 27.2 % Adjusted Earnings Per Share - Diluted 1.47 1.17 25.6 % Backlog 190.7 167.7 13.7 %
Adjusted Earnings Per Share is calculated by excluding from Earnings Per Share items we believe to be infrequent or not indicative of our operating performance. For a reconciliation of Adjusted Earnings Per Share to Earnings Per Share, see "Reconciliation of Non-GAAP Financial Measures" below.
For the year, net sales totaled
Gross margins increased to 34.6% in 2007 compared to 32.5% in 2006. Additional volume, better pricing, and moderating inflation led to the increase. Improved factory performance and global sourcing initiatives also contributed to the increase. The increase in gross margin came in spite of the further appreciation in the Canadian Dollar.
Operating expenses for 2007 were
We generated 2007 net income of
Other income/expense in 2007 included an approximate
Annual cash generated from operations in 2007 was
Barry L. McCabe, Chief Financial Officer said, "During the quarter we were able to close the acquisition of Edelman Leather, increase our quarterly dividend and take advantage of our current stock price by repurchasing 1.1 million shares for a total repurchase of 2.261 million shares for the year. With our expanded bank facility, lowered leverage ratio and reduced borrowing costs, Knoll enters 2008 in the strongest financial position since our 2004 IPO and we are well positioned to take advantage of opportunities to continue to reduce our shares outstanding. Accordingly, we are pleased to announce the expansion of our share repurchase program by
Expanded
On
First Quarter 2008 Outlook
The Company stated that it expects first quarter 2008 revenue to be in the $258-265 million range, an increase of 4.1%-6.9% from the first quarter of 2007. Earnings per share estimates are between
The Company added that on
Reconciliation of Non-GAAP Financial Measures
Adjusted Earnings Per Share is calculated by excluding from Earnings Per Share items that we believe to be infrequent or not indicative of our operating performance. For the periods in this release such items consist of expenses associated with our secondary public offerings and the write-off of deferred financing fees. We present Adjusted Earnings Per Share because we consider it an important supplemental measure of our performance and believe it is useful to show ongoing results from operations distinct from items that are infrequent or not indicative of our operating performance.
Adjusted Earnings Per Share is not a measurement of our financial performance under GAAP and should not be considered as an alternative to Earnings Per Share. Adjusted Earnings Per Share has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. In addition, in evaluating Adjusted Earnings Per Share, 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 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 only supplementally.
The following table reconciles Adjusted Earnings Per Share to Earnings Per Share for the periods indicated.
Twelve Months Ended December 31, 2007 2006 Earnings per Share - Diluted $ 1.45 $ 1.14 Add back: Public offering expenses - 0.03 Write-off of deferred financing fees 0.02 Total Adjustments 0.02 0.03 Adjusted Earnings per Share - Diluted $ 1.47 $ 1.17
Conference Call Information
Knoll will host a conference call on
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 800 591-6945 International 617 614-4911 Passcode 99910740
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
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(R)) workplace certification. Knoll is the contract furniture industry's first member of the
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, 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, 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, 2007 2006 2007 2006 (Unaudited) (Unaudited) (Unaudited) Sales $281,816 $272,967 $1,055,814 $982,152 Cost of sales 182,857 183,888 690,689 663,115 Gross profit 98,959 89,079 365,125 319,037 Selling, general, and administrative expenses 59,468 53,470 222,937 202,097 Operating income 39,491 35,609 142,188 116,940 Interest expense 6,014 6,938 24,598 23,717 Other (expense) income, net (744) 288 (4,651) 741 Income before income tax expense 32,733 28,959 112,939 93,964 Income tax expense 12,045 10,970 41,496 35,331 Net income $20,688 $17,989 $71,443 $58,633 Earnings per share: Basic $.43 $.38 $1.48 $1.18 Diluted $.42 $.37 $1.45 $1.14 Weighted-average shares outstanding: Basic 48,207,075 47,224,728 48,239,189 49,606,677 Diluted 48,775,509 48,848,124 49,248,902 51,238,088 KNOLL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) December 31, December 31, 2007 2006 (Unaudited) ASSETS Current assets: Cash and cash equivalents $17,975 $16,038 Customer receivables, net 137,001 132,970 Inventories 92,087 75,930 Prepaid and other current assets 16,382 23,446 Total current assets 263,445 248,384 Property, plant, and equipment, net 143,643 137,729 Intangible assets, net 302,367 238,291 Other noncurrent assets 7,987 7,733 Total Assets $717,442 $632,137 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $136 $2,996 Accounts payable 83,107 72,567 Other current liabilities 93,748 95,651 Total current liabilities 176,991 171,214 Long-term debt 368,440 347,320 Other noncurrent liabilities 97,290 109,219 Total liabilities 642,721 627,753 Stockholders' equity 74,721 4,384 Total Liabilities and Stockholders' Equity $717,442 $632,137 KNOLL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended December 31, 2007 2006 (Unaudited) Net income $71,443 $58,633 Cash Flows provided by Operating Activities 102,155 77,528 Cash Flows used in Investing Activities (86,910) (16,578) Cash Flows used in Financing Activities (16,675) (56,414) Effect of exchange rate changes on cash and cash equivalents 3,367 807 Increase in cash and cash equivalents 1,937 5,343 Cash and cash equivalents at beginning of period 16,038 10,695 Cash and cash equivalents at end of period $17,975 $16,038
SOURCE Knoll, Inc.
