UPPER HANOVER TWP., Pa. - Although third quarter 2017 sales and operating earnings were slightly less than third quarter 2016, Knoll Inc. of East Greenville believes its strategy for the future is starting to show positive results as its newer products’ sales climb and expenses related to their introduction stabilize.
“The third quarter was an important inflection point as sales stabilized and we returned to double digit levels of profitability,” said Andrew Cogan, Knoll President and CEO. “For the first time, sales of our newer workplace models and related products exceeded those of our legacy systems. Coupled with continued growth in our residential and Specialty businesses, the initiatives we have taken over the past year to increase our market penetration and office sales, position us well for a return to growth.”
Knoll, Inc. (NYSE: KNL) designs and produces furniture, textiles, leathers, accessories, and architectural and acoustical elements for the office, home and places of higher education.
Overall sales for Knoll in third quarter 2017 declined by 0.03 percent from third quarter 2016.
This was primarily due to a decline in the office segment caused by a decrease in government sales. Other business segments reported an increase in sales for third quarter 2017 led by a 4.2 percent increase in the studio segment, due primarily to increased sales at Holly Hunt and the incremental sales from Dates Weiser.
Those sales were partially offset by a decrease in contract shipments at Knoll Studios. The coverings segment increased net sales by 1.5 percent, driven primarily by higher volume in the Spinneybeck|FitzFelt and Edelman businesses, partially offset by volume declines in Knoll Textiles.
Reported profit data support managements claim of a turnaround.
Gross profit for third quarter 2017 continued the upward trend for the year, reaching $106.6 million, but down $6.2 million from third quarter 2016. Likewise, adjusted operating profit continued to show growth in 2017, increasing from $23 million in quarter one 2017, to $24.4 million in quarter two and $30.1 million in third quarter 2017.
Operating margins showed the same upward increase for the year.
Trends working against the company in third quarter 2017 and possibly into 2018 include accelerating commodity inflation, which can affect the price of steel and aluminum used in manufacturing, foreign exchange fluctuations, and an unfavorable mix related to the ramp-up of newer product platforms. These declines were partially offset by continuous improvement and LEAN initiatives.
Total operating expenses of $76.5 million in third quarter 2017 declined $1.3 million from third quarter 2016 due primarily to lower incentive compensation caused by decreased profitability in the comparable quarters. Adjusted diluted earnings per share in third quarter 2017 were 39 cents compared to 44 cents per share in third quarter 2016.
During the third quarter of 2017 Knoll paid a quarterly dividend of $7.3 million, or 15 cents per share, compared to a quarterly dividend of $7.2 million or 15 cents per share in the third quarter of 2016.
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