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Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>Following a spate of earnings last week and major retailer earnings ahead, we pause here to reflect on where the furniture and furnishings sectors—residential and commercial/contract— are now and a peek at their likely tracks in the early 2024.</li><li>Where are we in broad strokes? Residential: Following demand surges fueled by a once-in-a-lifetime focus by consumers on their homes during the pandemic, residential furniture and furnishings demand slumped as the focus shifted to “experiences” from goods.</li><li>Commercial: New demand (orders) didn’t enjoy the surge (though backlog deliveries fueled reported sales).</li></ul>

Following a spate of earnings last week and major retailer earnings ahead, we pause here to reflect on where the furniture and furnishings sectors—residential and commercial/contract— are now and a peek at their likely tracks in the early 2024.Where are we in broad strokes? Residential: Following demand surges fueled by a once-in-a-lifetime focus by consumers on their homes during the pandemic, residential furniture and furnishings demand slumped as the focus shifted to “experiences” from goods.Commercial: New demand (orders) didn’t enjoy the surge (though backlog deliveries fueled reported sales).

Furniture/Furnishings Weekly - Looking Ahead: What We Expect in 2024

<ul><li>The commercial/contract (office) furniture stocks rallied last week following HNI’s strong 3Q23 earnings report.</li><li>The commercial/contract furniture issues rose more than 12.7%, outperforming the broad indexes, with HNI leading the group.</li><li>HNI’s 3Q report reinforced the sector story. Sales remain challenging. Improved pricing, a focus on costs, and eliminating unprofitable distractions restored margins.</li></ul>

The commercial/contract (office) furniture stocks rallied last week following HNI’s strong 3Q23 earnings report.The commercial/contract furniture issues rose more than 12.7%, outperforming the broad indexes, with HNI leading the group.HNI’s 3Q report reinforced the sector story. Sales remain challenging. Improved pricing, a focus on costs, and eliminating unprofitable distractions restored margins.

Furniture/Furnishings Weekly - Office Furniture Back in Focus After Strong HNI Quarter

Equity Bottom-Up

<ul><li>This note corrects the version that was published on November 2. Due to errors in our model, the full-year estimate for 2024 was not calculated properly.</li><li>The correct full-year 2024 EPS estimate is $2.65.</li><li>We are raising our non-GAAP (adjusted) EPS estimates for 4Q23 and 2024 following HNI’s strong 3Q23 earnings report on Tuesday, October 31, 2023.</li></ul>

This note corrects the version that was published on November 2. Due to errors in our model, the full-year estimate for 2024 was not calculated properly.The correct full-year 2024 EPS estimate is $2.65.We are raising our non-GAAP (adjusted) EPS estimates for 4Q23 and 2024 following HNI’s strong 3Q23 earnings report on Tuesday, October 31, 2023.

HNI Corporation - Raising Estimates Following Strong 3Q Earnings Report - Correction

<ul><li>We are raising our non-GAAP (adjusted) EPS estimates for 4Q23 and 2024 following HNI’s strong 3Q23 earnings report on Tuesday, October 31, 2023.</li><li>Our sales estimates have moderated. Following the 3Q23 report, margins should be sustainably stronger.</li><li>HNI reported 3Q23 adjusted EPS of $0.93, $0.30 better than consensus. Sales were roughly in line. </li></ul>

We are raising our non-GAAP (adjusted) EPS estimates for 4Q23 and 2024 following HNI’s strong 3Q23 earnings report on Tuesday, October 31, 2023.Our sales estimates have moderated. Following the 3Q23 report, margins should be sustainably stronger.HNI reported 3Q23 adjusted EPS of $0.93, $0.30 better than consensus. Sales were roughly in line. 

HNI Corporation - Raising Estimates Following Strong 3Q Earnings Report

<ul><li>Before market open today, HNI reported 3Q23 adjusted EPS of $0.94, substantially ahead of our estimate of $0.64 and consensus of $0.63.</li><li>Positive surprises on the gross margin line accounted for the beat. Sales were roughly in line with expectations at $711.7 million versus our $713 million estimate.</li><li>Our pre-report concerns were answered with strong performance.</li></ul>

Before market open today, HNI reported 3Q23 adjusted EPS of $0.94, substantially ahead of our estimate of $0.64 and consensus of $0.63.Positive surprises on the gross margin line accounted for the beat. Sales were roughly in line with expectations at $711.7 million versus our $713 million estimate.Our pre-report concerns were answered with strong performance.

HNI Corporation - 3Q23 Margins Beat Expectations

United States

HNI Corporation manufactures and markets office furniture as well as hearth products. The Company's products are sold primarily through dealers, wholesalers, and retail superstores. HNI has operations in the United States and Canada.

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HNI Corp (HNI US)

Furniture/Furnishings Weekly - Looking Ahead: What We Expect in 2024

Following a spate of earnings last week and major retailer earnings ahead, we pause here to reflect on where the furniture and furnishings...

Water Tower Research

Furniture/Furnishings Weekly - Office Furniture Back in Focus After Strong HNI Quarter

HNI’s 3Q report reinforced the sector story. Sales remain challenging. Improved pricing, a focus on costs, and eliminating unprofitable...

Water Tower Research

HNI Corporation - Raising Estimates Following Strong 3Q Earnings Report - Correction

This note corrects the version that was published on November 2. Due to errors in our model, the full-year estimate for 2024 was not calculated...

Water Tower Research

HNI Corporation - Raising Estimates Following Strong 3Q Earnings Report

We are raising our non-GAAP (adjusted) EPS estimates for 4Q23 and 2024 following HNI’s strong 3Q23 earnings report on Tuesday, October 31, 2023.

Water Tower Research

HNI Corporation - 3Q23 Margins Beat Expectations

Before market open today, HNI reported 3Q23 adjusted EPS of $0.94, substantially ahead of our estimate of $0.64 and consensus of $0.63.

Water Tower Research

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