HNI Corporation

Good day and thank you for standing by. Welcome to the HNI Corporation second quarter fiscal year 2026 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Matt McCall. Please go ahead.

Good morning. My name is Matt McCall. I'm Vice President, Investor Relations and Corporate Development for H&I Corporation. Thank you for joining us to discuss our second quarter 2026 results. With me today are Jeff Lorenger, Chairman, President, and CEO, and VP Berger, Executive 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 to turn the call over to Jeff Lorenger. Jeff?

Good morning. Thank you for joining us. Second quarter demonstrates the focus of our members, indicates an improving demand environment, and supports expectations of stronger 2026 earnings growth. Through focused cost management and the net benefits of price, cost, and productivity, we were able to deliver second quarter results that were in line with our expectations. and encouragingly, our internal leading indicators improved further in the quarter. The positive momentum of our strategies, both revenue and cost focused, the benefits of our diversified revenue streams, the merits of our customer first business model and the integration of Steelcase are delivering significant shareholder value. And we continue to expect a strong year in 2026 with a fifth straight year of double digit earnings improvement. and revenue growth in the low single digits in both segments. On today's call, I'll break my comments into three sections. First, our quarterly results. Again, we delivered solid second quarter earnings with EPS in line with our expectations. Second, our back half outlook. Our revenue backdrop strengthened in the second quarter, providing increased confidence in the full year outlook. And third, our outlook beyond 2026. We have numerous sources of margin improvement and EPS visibility, and we project double-digit EPS growth again next year. And we have multiple years of elevated earnings growth visibility beyond 2027. Following my comments, VP will provide more details about the second quarter, our outlook, cash flow, and balance sheet. I will close with some additional commentary before we open the call to your questions. I will start with some highlights from the second quarter. We continued to effectively manage the middle of the income statement and were able to deliver solid second quarter results. Non-GAAP EPS was $1.27 and was up 14% year-over-year versus the second quarter of 2025, the addition of Steelcase profit, price cost, including the net impact of tariffs, legacy network optimization savings, and productivity benefits combined to double operating profit on a year-over-year basis. Revenue was in line with our expectations in both segments, with workplace up slightly and building products down slightly. Encouragingly, and as we expected, second quarter orders strengthened. I will provide more color on the order patterns in a moment. In the legacy workplace furnishings businesses, second quarter net sales were up slightly year over year on an organic basis, consistent with commentary we provided last quarter. Growth was fueled by our businesses focused on small and medium-sized customers. Moreover, affirming industry backdrop became more apparent during the quarter. In 2026, we expect stronger organic revenue growth in the back half and solid year-over-year margin expansion in legacy workplace while we continue to invest to drive future growth. The integration of steel cases going well and synergy at capture and accretion are progressing as expected. A new leadership team is largely in place, and we expect the president to be on board in the second half. We continue to expect modest accretion in 2026, and now expect total synergies will reach at least $120 million when fully mature. In residence and building products, revenue decreased 1.6% versus the prior year period. Again, this was consistent with our expectations communicated on the first quarter call. Revenue from the remodel retrofit business increased solidly, but was more than offset by continued market-driven weakness in the new construction channel. In both markets, our members continue to deliver strong relative performance. Second quarter segment operating margin expanded 470 basis points year over year, including net benefits of tariffs, reaching a strong 20.4%. Our unique operating model continues to deliver strong profit margins. Despite expectations of ongoing housing uncertainty, we remain encouraged about opportunities tied to the broader markets, and we continue to invest to grow our operating model and revenue streams. In summary, the strength of our strategies and our ability to manage daily uncertainty through varying macroeconomic conditions, all while remaining focused on investing for the future, was evident in the second quarter results. That leads to my comments on our outlook for the second half of 2026. Again, our revenue backdrop strengthened in the second quarter, providing increased confidence for the remainder of the year. In addition to an improving organic revenue growth rate, the Steelcase acquisition and operational productivity gains are expected to continue driving strong results in the second half. From a segment perspective, beginning in our legacy workplace businesses, we expect volume growth to return in the third quarter, driving mid to high single-digit net sales growth in the second half. Our segment outlook is supported by external industry metrics and by internal pipeline data. Specifically, in addition to strengthening orders in the quarter, preorder metrics all remain highly active, including project funnel, bid quotes, and design requests. For Steelcase, after a market soft patch to start the year, we saw preorder activity and order momentum accelerate in late Q1 and continue in the second quarter. As we expected, Second half revenue and we expect second half revenue to increase solidly year over year. We project Steelcase will be modestly accretive in the second half and for the full year. In residential building products, our structural changes to organize around the customer, along with our growth investments, are expected to drive continued market outperformance. For 2026, we expect modest price-driven revenue growth in the second half, despite expectations of ongoing housing market softness. From a profit perspective, we project both our legacy workplace and our building product segments will solidly expand margins in 2026. Moving on to my third point, our outlook beyond 2026. We have multiple sources of margin improvement and EPS growth visibility. And we project double digit EPS growth again next year, driven primarily by expected synergies from Steelcase and legacy network optimization projects. Beyond 2027, we have numerous years of elevated earnings visibility driven by multiple factors. During the quarter, we continue to smartly manage costs across all our businesses as we continue to navigate ongoing geopolitical and macro dynamics. Benefits associated with these cost management actions are in addition to the previously announced $30 million of legacy workplace network optimization savings and the synergies associated with the integration of Steelcase. which, as I stated earlier, are on track and now expected to be at least $120 million. The combination of our disciplined cost management, Steelcase synergies, and ongoing legacy network optimization projects continue to support our earnings visibility story. Of note, additional items may provide incremental benefits. For context, our current synergy projections are focused on the Steelcase Americas business only, and we are assuming no benefits from revenue synergies. In addition, our outlook for double-digit EPS growth next year does not rely on improved volume from current levels. Now I will turn the call over to BP. BP?