EAST GREENVILLE, Pa., April 25 /PRNewswire-FirstCall/ -- Knoll, Inc.
(NYSE: KNL) today announced results for the first quarter ended March 31,
2006. Net sales were $218.1 million for the quarter, an increase of 21.8%
from first quarter 2005. Operating income was $21.9 million, an increase of
28.8% from the first quarter 2005, net income was $10.2 million, an
increase of 47.8% over the first quarter 2005, and adjusted earnings per
share was $0.20 compared to earnings per share of $0.13 in the prior year.
Quarter ending backlog was $174.1 million, an increase of 48.6% over first
quarter 2005.
Andrew Cogan, Chief Executive Officer, stated, "We delivered strong
double digit growth in sales, operating profit, net income and adjusted
earnings per share for our shareholders in the first quarter of 2006.
Clearly, our year end momentum has carried over into 2006."
"We are encouraged by the ongoing activity in the business and the
favorable macro-economic drivers on the revenue side. As a result of our
growth initiatives we are progressively capturing greater market share
particularly as we garner more of our clients' furniture spend in areas
like seating and storage. I want to congratulate and thank our associates
and dealers on this strong start to 2006."
2006 Financial Results
First quarter 2006 financial results highlights follow:
Dollars in Millions
Except Per Share Data Three Months Ended Percent
3/31/06 3/31/05 Change
Sales $218.1 $179.1 21.8 %
Gross Profit 69.8 58.1 20.1 %
Operating Expenses 47.8 41.1 16.3 %
Operating Income 21.9 17.0 28.8 %
Net Income 10.2 6.9 47.8 %
Earnings Per Share - Diluted .19 .13 46.2 %
Adjusted Earnings
Per Share - Diluted .20 .13 53.8 %
Backlog 174.1 117.2 48.6 %
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 Earnings Per Share to
Adjusted Earnings Per Share, see "Reconciliation of Non-GAAP Financial
Measures" below.
Net sales for the quarter were $218.1 million, an increase of $39.0
million or 21.8% over first quarter 2005 representing increased volume
across all product categories.
Gross profit for the first quarter was $69.8 million, an increase of
$11.7 million or 20.1%, over the same period in 2005. As a percentage of
sales, gross profit declined slightly to 32.0% from 32.4% in the same
quarter of 2005. Higher volumes allowed for increased absorption of
overhead costs; however this was more than offset by increased material and
transportation costs as well as by the strengthening Canadian dollar. These
inflationary costs were partially offset by continuous improvement efforts
and increased global sourcing initiatives.
Operating expenses for the quarter were $47.8 million, or 21.9% of
sales, compared to $41.1 million, or 22.9% of sales for first quarter of
2005. 2006 operating expenses included additional costs related to our
stock-based compensation as a result of the implementation of FASB 123R.
First quarter 2006 operating expenses included $1.2 million of stock-based
compensation compared to $1.0 million in the first quarter 2005. Operating
expenses for the quarter also include higher sales compensation due to
strong bookings in the first quarter, approximately $393,000 of costs
related to our secondary public offering completed in February 2006, higher
employee benefit-related costs, and costs associated with the initial
completion and on-going Sarbanes- Oxley compliance.
In spite of the inflationary pressures on gross margins, operating
income excluding the $393,000 of public offering expenses increased, as a
percentage of sales, to 10.2% from 9.5% in the same period in the prior
year.
Net income for first quarter 2006 was $10.2 million, or $0.20 adjusted
earnings per share as compared to $6.9 million or $0.13 earnings per share
for the same quarter in 2005. Interest expense in the first quarter 2006
decreased from first quarter 2005 largely due to the reduction of debt. The
effective tax rate was 39.1% for the quarter, as compared to 40.1% for the
same period last year.
Cash used in operations in the first quarter of 2006 was $15.2 million
compared to $13.3 million generated from operations during the same period
the year before. Capital expenditures totaled $1.2 million compared to $2.1
million for 2005. From approximately $16.3 million of proceeds received
from exercised stock options, the Company repurchased approximately 824,000
shares of its stock. The Company also paid a quarterly dividend of $5.2
million or $0.10 per share in the first quarter of 2006 compared to $2.5
million or $0.05 per share in the first quarter of 2005.
Barry McCabe, Chief Financial Officer, added, "In the first quarter of
2006 we had net borrowings of approximately $16.4 million, primarily to
fund increased working capital associated with the higher sales, but were
still able to maintain a leverage ratio of 2.8 to 1. As previously
announced on February 3, 2006, our board approved a $50,000,000 stock
repurchase program which we intend to start implementing during the second
quarter of 2006."
Second Quarter 2006 Outlook
The Company stated that it expects second quarter 2006 revenue to be in
the $227-232 million range, an increase of 15%-17% from the second quarter
of 2005. Earnings per share estimates are between $0.25 and $0.27.
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 offering. 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. We are no longer adjusting
earnings per share for non- cash based compensation as this item is
recurring in both 2005 and 2006.
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.
Three Months Ended
March 31,
2006 2005
Earnings per Share - Diluted $0.19 $0.13
Add back:
Public offering expense 0.01 -
Adjusted Earnings per Share - Diluted $0.20 $0.13
Conference Call Information
Knoll will host a conference call on Wednesday, April 26, 2006 at 10:00
A.M. EDT to discuss its financial results, quarterly highlights and
business outlook.
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 866 362-4666
International 617 597-5313
Passcode 95562584
Headquartered in East Greenville, Pennsylvania, Knoll, a leading
designer and manufacturer of branded office furniture products and
textiles, serves clients worldwide. Our commitment to innovation and modern
design has yielded a comprehensive portfolio of products designed to
provide enduring value and help clients shape their workplaces with
imagination and vision. The Knoll commitment to high environmental
standards is mandated by a comprehensive Environmental, Health & Safety
Management Plan.
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," "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, 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 Registration Statement on Form S-3, its
annual report on Form 10-K for 2005, 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
March 31,
2006 2005
(Unaudited) (Unaudited)
Sales $218,100 $179,129
Cost of sales 148,327 121,040
Gross profit 69,773 58,089
Selling, general, and administrative expenses 47,836 41,070
Operating income 21,937 17,019
Interest expense 5,347 6,087
Other income, net 237 514
Income before income tax expense 16,827 11,446
Income tax expense 6,574 4,595
Net income $10,253 $6,851
Earnings per share:
Basic $.19 $.14
Diluted $.19 $.13
Weighted-average shares outstanding:
Basic 52,778,094 49,888,640
Diluted 54,152,760 51,904,940
KNOLL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
March 31, December 31,
2006 2005
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $11,838 $10,695
Customer receivables, net 123,037 113,531
Inventories 65,878 56,500
Prepaid and other current assets 19,555 17,023
Total current assets 220,308 197,749
Property, plant, and equipment, net 138,643 142,166
Intangible assets, net 236,094 236,399
Other noncurrent assets 5,992 6,232
Total Assets $601,037 $582,546
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $2,600 $2,599
Accounts payable 61,092 56,559
Other current liabilities 58,227 74,598
Total current liabilities 121,919 133,756
Long-term debt 329,819 313,439
Other noncurrent liabilities 99,281 97,635
Total liabilities 551,019 544,830
Stockholders' equity 50,018 37,716
Total Liabilities and Stockholders' Equity $601,037 $582,546
KNOLL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended March 31,
2006 2005
(Unaudited)
Net income $10,253 $6,851
Cash Flows (used in) provided by
Operating Activities (15,230) 13,314
Cash Flows used in Investing Activities (1,186) (2,118)
Cash Flows provided by (used in)
Financing Activities 17,515 (9,691)
Effect of exchange rate changes on
cash and cash equivalents 44 (164)
Increase in cash and cash equivalents 1,143 1,341
Cash and cash equivalents at
beginning of period 10,695 9,052
Cash and cash equivalents at end of period $11,838 $10,393
SOURCE Knoll, Inc.
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Related links:
http://www.knoll.com
CONTACT:
Investors, Barry L. McCabe, Senior Vice
President and Chief Financial Officer, +1-215-679-1301,
bmccabe@knoll.com, or Media, David E. Bright, Vice President,
Communications, +1-212-343-4135, dbright@knoll.com, both of
Knoll, Inc.
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