HNI Corporation

operator today. At this time, I would like to welcome everyone to the HNI Corporation first quarter fiscal 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. It is now my pleasure to turn today's call over to Mr. Jack Herring. Please go ahead, sir. Good morning. My name is Jack Herring. I am Vice President, Corporate Finance and Treasurer for H&I Corporation. Thank you for joining us to discuss our first quarter fiscal 2022 results. With me today are Jeff Loringer, Chairman, President, and CEO, and Marshall Bridges, Senior Vice President and CFO. Copies of our financial news release and non-GAAP reconciliations are posted on our website. Statements made during this call that are not strictly historical facts are forward-looking statements, which are subject to known and unknown risk. Actual results could differ materially. The financial news release posted on our website includes additional factors that could affect actual results. The corporation assumes no obligation to update any forward-looking statements made during the call. I'm now pleased to turn the call over to Mr. Jeff Laringer.

Good morning, and thank you for joining us. Our members delivered solid results in the first quarter, despite record levels of inflation and a dynamic environment. Today, I will cover three key points around why we are optimistic about 2022 and beyond. First, our actions to drive profit improvement and address last year's headwinds are on track in delivering results. Second, top line growth and market demand in residential building products remains strong. And third, we are generating strong growth in workplace furnishings and the demand environment is improving. I will cover these points. Marshall will then go through our 2022 outlook, which is unchanged from what we presented in February. I will then conclude with some general comments. Finally, we will open up the call to your questions. Moving to our first key point. Our initiatives to improve long-term profitability are on track and delivering results. In February, on our fourth quarter call, we discussed two sources of pressure on our margins in 2021. First, price-cost negatively impacted profitability due to rapid input cost inflation. And second, constraints around labor availability and supply chain capacity shifted revenue out of 2021. We also discussed actions we were taking to address these issues, multiple pricing actions across our brands, the opening of a new seating facility in Mexico, moving multiple production lines to H&I facilities with better labor dynamics, and operational changes aimed at making our existing labor force more productive. These actions are all on track to deliver their expected benefits for 2022 and beyond. Specifically, price costs turned positive in the first quarter, driving sequential gross margin improvement from the fourth quarter. While inflationary pressures have recently intensified, we have quickly responded with additional pricing actions. We expect these actions to offset the additional inflation, keeping price costs on track to deliver significant profit improvement in 2022. Our actions to add labor capacity are also ramping up. Our new facility in Mexico is currently up in volume growth and long-term margin expansion.

I will now move on to my second key point. Top line growth and market demand in residential building products remains strong.