Sales, Gross Profit, Operating Profit, Net Income, EPS and Backlog
All Grow By Double Digits. EPS Grows 40.5%. EAST GREENVILLE, Pa.,
Oct. 16 /PRNewswire-FirstCall/ -- Knoll, Inc. (NYSE: KNL) today
announced results for the third quarter ended September 30, 2008.
Net sales were $283.5 million for the quarter, an increase of 11.6%
from third quarter 2007. Operating income was $41.1 million, or
14.5% of net sales, an increase of 19.8% from the third quarter
2007, and net income was $24.1 million, an increase of 31.0% over
the third quarter 2007. Diluted earnings per share was $0.52
compared to $0.37 diluted earnings per share in the prior year, an
increase of 40.5%. "We had a very strong quarter," commented Andrew
Cogan, CEO. "Our focus on high design content businesses together
with a rigorous, proactive and environmentally responsible business
philosophy continued to produce industry leading levels of
profitability." "We realize that we could be in for a bumpy ride
ahead but are confident that with our strong balance sheet,
talented associates and committed dealers that we will be able to
handle whatever comes at us." Third Quarter Results Third quarter
2008 financial results highlights follow: Dollars in Millions
Except Per Share Data Three Months Ended Percent 9/30/08 9/30/07
Change Net Sales $ 283.5 $ 254.0 11.6 % Gross Profit 104.2 88.2
18.1 % Operating Expenses 63.1 54.0 16.9 % Operating Income 41.1
34.3 19.8 % Net Income 24.1 18.4 31.0 % Earnings Per Share -
Diluted .52 .37 40.5 % Backlog 203.1 169.8 19.6 % Net sales for the
quarter were $283.5 million, an increase of $29.5 million, or
11.6%, over the third quarter of 2007. Once again our International
businesses and Specialty products experienced the strongest growth
in the quarter followed by our Complimentary products. During the
third quarter of 2008, net sales also benefited from a price
increase implemented in February of 2008. Backlog of unfilled
orders at September 30, 2008 was $203.1 million as compared to
$169.8 million at September 30, 2007. Gross profit for the third
quarter of 2008 was $104.2 million, an increase of $16.0 million,
or 18.1%, over the same period in 2007. Gross margin increased to
36.8% from 34.7% in the same quarter of 2007 and sequentially
increased from 34.6% in the second quarter of 2008. The increase
from the third quarter of 2007 largely resulted from improved price
realization and favorable product mix. Increased volumes also
allowed for better absorption of our fixed costs. Operating
expenses for the quarter were $63.1 million, or 22.3% of sales,
compared to $54.0 million, or 21.3% of sales, for the third quarter
of 2007. The increase in operating expense dollars during the third
quarter of 2008 was in large part due to the inclusion of Edelman
Leather, which was acquired during the fourth quarter of 2007.
Increased commissions on our higher sales also contributed to the
increase. Our operating income as a percentage of sales for the
third quarter of 2008 increased by 100 basis points to 14.5% of
sales from 13.5% of sales in the same period in the prior year.
Interest expense in the third quarter of 2008 decreased $1.9
million over the third quarter 2007 due to lower average interest
rates on our revolving credit facility. Other income for the third
quarter 2008 was $2.1 million. Other income includes $2.0 million
of gains from foreign currency transactions. Other expense for the
third quarter 2007 was approximately $0.8 million and consisted of
$1.0 million of losses from foreign currency transactions offset by
other income. Our effective tax rate was 39.0% for the quarter, as
compared to 33.9 % for the same period last year. The increase in
the effective tax rate is largely due to the mix of pretax income
in the countries in which we operate. The third quarter of 2007
also included a reduction in our contingent tax reserve which
resulted in a lower effective tax rate. Net income for the third
quarter 2008 was $24.1 million, or $0.52 diluted earnings per
share, as compared to $18.4 million, or $0.37 diluted earnings per
share, for the same quarter in 2007. Cash generated from operations
during the third quarter 2008 was $50.3 million, compared to $27.4
million in the same period of 2007. Capital expenditures for the
third quarter 2008 totaled $3.2 million compared to $3.8 million
for 2007. We repaid $21.0 million of debt during the third quarter
of 2008 compared to $20.0 million during 2007. We repurchased
approximately $14.4 million of stock during the third quarter of
2008 compared to a minimal amount during the third quarter of 2007.
We also paid a quarterly dividend of $5.6 million, or $0.12 per
share, in the third quarter of 2008 compared to $5.3 million, or
$0.11 per share, in the third quarter of 2007. "We believe our
strong operating performance, strong balance sheet with ample
liquidity, and track record of managing the business in both good
and bad economic environments, will allow us to navigate through
today's uncertain economic times," commented Barry McCabe, CFO.
Fourth Quarter 2008 Outlook The Company stated that it expects
fourth quarter 2008 revenue to be in the range of $278 to $283
million. Earnings per share estimates are between $0.44 and $0.47.
Conference Call Information Knoll will host a conference call on
Thursday, October 16, 2008 at 10:00 A.M. EST 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 800 295-4740
International 617 614-3925 Passcode 71893699 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, 2008 by
dialing 888 286-8010. International replay: 617 801-6888 (Passcode:
31595761). 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
Chicago Climate Exchange (CCX(R)) 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, 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 Nine Months Ended Ended September 30,
September 30, 2008 2007 2008 2007 (Unaudited) (Unaudited)
(Unaudited) (Unaudited) Sales $283,517 $253,962 $843,861 $773,998
Cost of sales 179,319 165,713 548,253 507,832 Gross profit 104,198
88,249 295,608 266,166 Selling, general, and administrative
expenses 63,109 53,967 187,519 163,469 Operating income 41,089
34,282 108,089 102,697 Interest expense 3,766 5,629 12,663 18,584
Other income (expense), net 2,137 (794) 1,878 (3,907) Income before
income tax expense 39,460 27,859 97,304 80,206 Income tax expense
15,398 9,446 35,046 29,451 Net income $24,062 $18,413 $62,258
$50,755 Earnings per share: Basic $.52 $.38 $1.32 $1.05 Diluted
$.52 $.37 $1.32 $1.03 Weighted-average shares outstanding: Basic
46,291,785 48,568,698 47,014,263 48,250,009 Diluted 46,522,590
49,327,042 47,178,379 49,335,647 KNOLL, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (Dollars in thousands, except per share data)
September 30, December 31, 2008 2007 (Unaudited) ASSETS Current
assets: Cash and cash equivalents $28,648 $17,975 Customer
receivables, net 131,825 137,001 Inventories 103,538 92,087 Prepaid
and other current assets 14,322 16,381 Total current assets 278,333
263,444 Property, plant, and equipment, net 135,260 143,643
Intangible assets, net 299,057 302,367 Other noncurrent assets
6,661 7,988 Total Assets $719,311 $717,442 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Current maturities of
long-term debt $140 $136 Accounts payable 82,062 83,107 Other
current liabilities 118,167 93,748 Total current liabilities
200,369 176,991 Long-term debt 342,299 368,440 Other noncurrent
liabilities 92,897 97,290 Total liabilities 635,565 642,721
Stockholders' equity 83,746 74,721 Total Liabilities and
Stockholders' Equity $719,311 $717,442 KNOLL, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Nine
Months Ended September 30, 2008 2007 (Unaudited) (Unaudited) Net
income $62,258 $50,755 Cash Flows provided by Operating Activities
97,537 64,469 Cash Flows used in Investing Activities (9,803)
(10,705) Cash Flows used in Financing Activities (75,471) (53,262)
Effect of exchange rate changes on cash and cash equivalents
(1,590) 2,191 Increase in cash and cash equivalents 10,673 2,693
Cash and cash equivalents at beginning of period 17,975 16,038 Cash
and cash equivalents at end of period $28,648 $18,731 DATASOURCE:
Knoll, Inc. CONTACT: Investors: Barry L. McCabe, Executive Vice
President and Chief Financial Officer, +1-215-679-1301, ; Media:
David E. Bright, Senior Vice President, Communications,
+1-212-343-4135, Web Site: http://www.knoll.com/
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