HNI 10-K & 10-Q changes, risk factors and insider trading

Workplace, health care, and hospitalityWorkplace furnishings industry sales are subject to risks resulting from a variety of macroeconomic factors including service-sector employment levels, corporate profits, business confidence, commercial construction, office vacancy rates, and new hospitality refurbishment rates. Industry factors, including corporate restructuring, technology changes, corporate relocations, health and safety concerns, including ergonomic considerations, and the globalization of companies also influence workplace furnishings industry revenues. In addition, adoption of hybrid working models has resulted in a significant decrease in worker attendance at their office locations. Despite office re-entry in many markets, office occupancy levels remain below historic levels. Lower office occupancy levels have had and could continue to have an adverse impact on the demand for workplace furnishings.

The workplace, health care, and hospitalityworkplace furnishings and residential building products industries are highly competitive. Many of the Corporation’s competitors in both industries offer similar products. Competitive factors include price, delivery and service, brand recognition, product design, product quality, strength of dealers and other distributors, and relationships with customers and key influencers, including architects, designers, home-builders, and facility managers. In both industries, most of the top competitors have an installed base of products that can be a source of significant future sales through repeat and expansion orders. The Corporation’s main competitors manufacture products with strong acceptance in the marketplace and are capable of developing products that have a competitive advantage, which could make it difficult for the Corporation to win new business.

The Corporation sells products through multiple distribution channels, which primarily include independent dealers, national dealers, wholesalers,and sales representatives, and eCommerce.representatives. These distribution channels have experienced significant consolidation, which may continue in future periods. The Corporation relies on distribution partners to provide a variety of important specification, installation, and after-market services to customers. Some distribution partners may terminate their relationship with the Corporation at any time and for any reason. Loss or termination of a significant number of reseller relationships could cause difficulties in marketing and distributing products, resulting in a decline in sales, which may adversely affect the Corporation’s business, operating results, or financial condition.

Fluctuations in the price and availability of commodities, raw materials, components, and finished goods could have an adverse effect on costs of sales, profitability, and ability to meet customers’ demand. The Corporation sources commodities, raw materials, components, and finished goods from domestic and international suppliers. From both domestic and international suppliers, the cost and availability of commodities, raw materials, components, and finished goods including steel have been significantly affected in recent years by, among other things, changes in global supply and demand, changes in laws and regulations (including tariffs and duties), changes in exchange rates and worldwide price levels, inflationary forces, natural disasters, labor disputes, military action, terrorism, and political unrest or instability. These factors could lead to price volatility or supply interruptions in the future. Profit margins could be adversely affected if commodity, raw material, component, and finished good costs increase and the Corporation is either unable to offset such costs through strategic sourcing initiatives and continuous improvement programs or, as a result of competitive market dynamics, unable to pass along a portion of the higher costs to customers.

Natural disasters, acts of God, global pandemics or epidemics, force majeure events, or other catastrophic events, including severe weather, military action, terrorist attacks, power interruptions, floods, and fires, could disrupt operations and the ability to produce or deliver products. Some of the Corporation’s production facilities, members, and key management are located within a small geographic area in eastern Iowa located near the Mississippi River, and a natural disaster or catastrophe in the area, such as flooding or severe storms, could have a significant adverse effect on the Corporation's results of operations and business conditions. Further, several of the Corporation’s production facilities are single-site manufacturers of certain products, and an adverse event affecting any of those facilities could significantly delay production of certain products and adversely affect operations and business conditions. Members are an integral part of the business and events such as those described above could negatively impact the availability of members reporting for work. In the event the Corporation experiences a temporary or permanent interruption in its ability to produce or deliver product,products, revenues could be reduced, and business could be materially adversely affected. In addition, any continuing disruption in the Corporation’s computerinformation systemtechnology systems could adversely affect the ability to receive and process customers’ orders, procure materials, manufacture products and ship products on a timely basis, which could adversely affect relations with customers and potentially reduce customer orders or result in the loss of customers.

The Corporation depends significantly on its executive officers and other key personnel. The Corporation’s success is also dependent on keeping pace with technological advancements and adapting services to provide manufacturing capabilities that meet customers’ changing needs. To domeet so,these goals, the Corporation must retain qualified engineering and technical personnel and successfully anticipate and respond to technological changes in a cost effective and timely manner. The Corporation focuses on continuous training, motivation, and development of its members, and it strives to attract and retain qualified personnel. Failure to retain the Corporation’s executive officers and retain and attract other key personnel could adversely affect the Corporation’s business.

As of January 3, 2026, goodwill and indefinite-lived intangible assets, net represented approximately 35% of the Corporation's total consolidated assets. Goodwill and other acquired intangible assets with indefinite lives are recorded at fair value at the time of acquisition and are not amortized, but reviewed for impairment annually or more frequently if an event occurs or circumstances change making it reasonably possible an impairment may exist. In evaluating the potential for impairment of goodwill and other intangible assets, the Corporation makes assumptions regarding future operating performance, business trends and market and economic performance, and the Corporation’s sales, operating margins, growth rates and discount rates. There are inherent uncertainties related to these factors. If the Corporation experiences disruptions in its business, unexpected significant declines in operating results, a divestiture of a significant component of its business, declines in the market value of equity, or other factors causing the Corporation’s goodwill or intangible assets to be impaired, the Corporation could be required to recognize additional non-cash impairment charges, which would adversely affect theits resultsfinancial of operations.results.

The Corporation provides health care benefits to the majority of its membersmember and Legacy HNI is self-insured. Health care costs have continued to rise significantly over time, which increases the annual spending on health care. Increased health care andcosts could adversely affect the Corporation’s business, operating results, and financial condition.

These risks may be elevated given the current uncertainties regarding the impact of the conflicts in Europe and the Middle East, ongoing disputes and increased tensions related to global trade, and complexities with foreign regulatory environments including the decreased ability of United States regulators to exercise oversight of subsidiaries of United States companies based in certain international jurisdictions.

Although the Corporation primarily sells products and reports the financial results in United States dollars, increasedIncreased business in countries outside the United States creates exposure to fluctuations in foreign currency exchange rates. Paying expenses in other currencies can result in a significant increase or decrease in the amount of those expenses in terms of United States dollars, which may affect profits. In the future, any foreign currency appreciation relative to the United States dollar would increase expenses that are denominated in that currency. Additionally, as the Corporation reports currency in the United States dollar, the financial position is affected by the strength of the currencies in countries where the Corporation has operations relative to the strength of the United States dollar.

The Corporation periodically reviews foreign currency exposure and evaluates whether it should enter into hedging transactions. As of the date of this report and for the period presented, the Corporation has not utilized any currency hedging instruments.

TheIn fiscal year 2025, the Corporation derivesderived a portion of its revenue from sales to various United States federal, state, and local government agencies and departments. The ability to compete successfully for and retain business with the United States government, as well as with state and local governments, is highly dependent on cost-effective performance. ThisBusiness pursuant to government businesscontracts is highly sensitive to changes in procurement laws, national, international, state, and local public priorities, and budgets at all levels of government, which frequently experience downward pressure and are subject to uncertainty, including the potential for a temporary shutdown of the United States federal government.

The Corporation’s contracts with government entities are subject to various statutes and regulations that apply to companies doing business with the government. The United States government, as well as state and local governments, can typically terminate or modify their contracts either for their convenience or if the Corporation fails to perform under the terms of the applicable contract. A termination arising out of default could expose the Corporation to liability and impede its ability to compete in the future for contracts and orders with agencies and departments at all levels of government. Moreover, the Corporation is subject to investigation and audit for compliance with the requirements governing government contracts, including requirements related to procurement integrity, export controls, employment practices, the accuracy of records, and reporting of costs. If the Corporation were found not to not be a responsible supplier or to have committed fraud or certain criminal offenses, it could be suspended or debarred from all further federal, state, or local government contracting.

The Corporation's information technology systems, processes, and sites may suffer interruptions, security incidents, or failures that may affect its ability to conduct its business andbusiness, cause significant damage to its reputation.reputation, and expose it to substantial legal liability.

Insider or employee cyber and security threats are also a significant concern for all companies, including the Corporation. Despite the Corporation’s substantial investment in physical and technological security measures, employee training and contractual precautions, the Corporation’s information technology networks and infrastructure (or those of the Corporation’s third-party vendors and other service providers) are potentially vulnerable to unauthorized access to data, loss of access to systems or breaches of confidential information due to criminal conduct, attacks by hackers, employee or insider malfeasance or human error.

Although theThe Corporation has put in place security measures to protect itself against cyber-based attacks and disaster recovery plans for its critical systems that are designed to protect its data and customer data and to prevent data loss and other security incidents,incidents. theseThese security measuresmeasures, however, cannot provide absolute security. In some cases, it is difficult to anticipate, detect or identify indicators of such incidents and assess the damage caused by the incidents. In addition, a failure to promptly disclose such material incidents as required by law may result in additional financial or regulatory consequences.

The third-party data management providers and other vendors upon which the Corporation relies may have or develop security problems or security vulnerabilities whichthat may also affect the Corporation’s systems or data. A data security or privacy breach of the Corporation’s systems or other form of cyber-based attack may occur in the future. In addition, the Corporation uses external vendors to perform security assessments on a periodic basis to review and assess its information security. The Corporation utilizes this information to audit itself, monitor the security of its technology infrastructure, and assess whether and how to prioritize the allocation of scarce resources to protect data and systems. These security assessments and audits may not identify or appropriately categorize relevant risks or result in the protection ofprotect its computer networks against security intrusions. Although the Corporation requires its third-party vendors contractually to maintain a level of security that is acceptable to it and work closely with key vendors to address potential and actual security concerns and attacks, all confidential, proprietary, or personal information may not be protected on their systems.

As of January 3, 2026, the Corporation had $1.3 billion of long-term indebtedness, including indebtedness it incurred in connection with its acquisition of Steelcase. The agreements governing thesuch indebtedness of the Corporation may, under certain circumstances, impose significant operating and financial restrictions on the Corporation. The debt agreements restrict the Corporation’s ability to incur additional indebtedness, create or incur certain liens with respect to any properties or assets, engage in lines of business substantially different than those currently conducted, sell, lease, license, or dispose of certain assets, enter into certain transactions with affiliates, make certain restricted payments or take certain restricted actions, and enter into certain sale-leaseback arrangements. These restrictions may affect the Corporation’s ability to operate its business and may limit the Corporation’s ability to take advantage of potential business opportunities as they arise.

Fluctuating interest rates including potential future rate increases may raise the interest cost on the Corporation’s debt and could materially adversely impact the Corporation’s ability to refinance existing debt and limit its acquisition and development activities going forward.

The U.S.United States Federal Reserve Board has raisedadjusted the benchmark interest rate multiple times in recent years, and may increase the rate or slow reductions in the rate in future periods. The agreements governing the indebtedness of the Corporation contain interest rates tied to various benchmark rates in effect at any given time, so as interest rates have increased, so has the Corporation’s interest costs for any new debt assumed in connection with the merger and in the normal course of our operations and any additional increases could further increase these costs. This increased cost could make the financing of any acquisition and development activity more costly, as well as lower future period earnings due to higher cost of borrowing.

The Corporation frequently provides public guidance on theits expected results of operations for future periods. This guidance comprisesconstitutes forward-looking statements subject to risks and uncertainties, including the risks and uncertainties described in this Annualannual Reportreport on Form 10-K and in other public filings and public statements, and is necessarily based necessarily on assumptions made at the time the Corporation provides such guidance. The guidance may not always be accurate. If, in the future, the results of operations for a particular period do not meet itsthe Corporation's guidance or the expectations of investment analystsanalysts, or if the Corporation reduces its guidance for future periods, the market price of its common stock could decline significantly.

The Corporation’s Articles of Incorporation give the Corporation’s Board of Directors ("Board") the authority to issue up to two million shares of preferred stock and to determine the rights and preferences of the preferred stock without obtaining shareholder approval. The existence of this preferred stock could make it more difficult or discourage an attempt to obtain control of the Corporation by means of a tender offer, merger, proxy contest, or otherwise. Furthermore, this preferred stock could be issued with other rights, including economic rights, senior to the rights of the common stock, thereby having a potentially adverse effect on the market price of the Corporation’s common stock.

The Board of Directors is divided into three classes. The Corporation’s classified Board,Board of Directors, along with other provisions of the Corporation’s Articles of Incorporation and Bylaws and Iowa corporate law, could make it more difficult for a third party to acquire the Corporation or remove the Corporation’s directors by means of a proxy contest, even if doing so would be beneficial to shareholders. Additionally, the Corporation may, in the future, adopt measures (such as a shareholder rights plan or "poison pill") that could have the effect of delaying, deferring, or preventing an unsolicited takeover, even if such a change in control were at a premium price or favored by a majority of unaffiliated shareholders. These measures may be adopted by the Board of Directors without any further vote or action by the shareholders.

The following discussion of the Corporation’s historical results of operations and of its liquidity and capital resources should be read in conjunction with the Consolidated Financial Statements of the Corporation and related notes. All dollar amounts presented are in millions, except per share data or where otherwise indicated. Amounts may not sum due to rounding. Statements that are not historical are forward-looking and involve risks and uncertainties. See "Item 1A. Risk Factors" and the Forward-Looking Statements section within "Item 1. Business" for further information.

The Corporation follows a 52/53-week fiscal year, which ends on the Saturday nearest December 31. Fiscal year 2025 ended on January 3, 2026, fiscal year 2024 ended on December 28, 2024, and fiscal year 2023 ended on December 30, 2023, and fiscal year 2022 ended on December 31, 2022.2023. The financial statements for fiscal yearsyear 2025 are on a 53-week basis and 2024, 2023, and 20222023 are on a 52-week basis. A 53-week year occurs approximately every sixth year.

To review management's discussion and analysis of the consolidated and segment-level results of operations for the fiscal year ended December 30,28, 20232024 compared with the fiscal year ended December 31,30, 2022,2023, refer to "Part II - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 30,28, 2023,2024, as filed with the Securities and Exchange Commission on February 27,25, 2024.2025.

Consolidated net sales for 20242025 were $2.526$2.8 billion, an increase of 3.812.4 percent compared to net sales of $2.434$2.5 billion in the prior year. The change was driven by 8.514.6 percent year-over-year sales growth in the workplaceWorkplace furnishingsFurnishings segment, partially offset byand an 8.05.7 percent decreaseincrease in net sales in the residentialResidential buildingBuilding productsProducts segment. TheSteelcase fullcontributed year$187.5 ofmillion Kimballin Internationalnet sales insince 2024the increasedacquisition year-over-year sales by $228.0 million.date. The divestiture of Poppin,HNI Inc. ("Poppin")India in 2023the second quarter of 2025 reduced year-over-year sales by $11.1$16.2 million. Poppin had been acquired in the prior year as part of the Kimball International transaction and was a component of the workplace furnishings segment. See "Note 4. Acquisitions and Divestitures" in the Notes to Consolidated Financial Statements for more details on the Kimball International acquisition and the Poppin divestiture. These transactions affect the comparability of results between years. The references below to "legacy" HNI businesses refer to the Corporation's businesses excluding the acquisition and impact of Kimball International.Steelcase.

Net income attributable to the Corporation in 20242025 was $139.5$54.2 million compared to net income of $49.2$139.5 million in 2023.2024. The priorcurrent year included $41.2$94.6 million of acquisition costscosts, associated with the Kimball International transaction and $31.0$9.5 million of goodwilladditional interest expense related to the Steelcase transaction, the $7.7 million impairment of intangible assets at a small Workplace Furnishings business, a loss of $6.5 million on the divestiture of HNI India, and intangible$4.6 assetmillion impairmentof chargespurchase ataccounting smalladjustments workplacerelated furnishingsto businessthe units.Steelcase acquisition. Excluding these items, net income increased in the current year driven by improvedhigher net productivity, favorable price-cost, and the full year benefit of the Kimball International acquisition, partially offset by lower sales volume in the legacy HNI businesses.businesses and improved net productivity, partially offset by higher core Selling and administrative expenses ("SG&A").

Consolidated net sales for 20242025 increased 3.812.4 percent compared to the prior year. The change was driven by $228.0$187.5 million of favorable impact from the fullacquisition of Steelcase in the current year ofalong Kimballwith Internationalvolume sales in 2024growth and price realization in both the residentialResidential buildingBuilding productsProducts and workplaceWorkplace furnishingsFurnishings segments. These factors were partially offset by lowera volume in the legacy HNI businesses due to soft market conditions and an $11.1$16.2 million decrease in net sales from the divestiture of PoppinHNI India in the thirdsecond quarter of 2023.2025.

Gross profit as a percentage of net sales increased 19050 basis points in 20242025 compared to 2023,2024, driven by improved net productivityproductivity. Gross profit contains $2.2 million of Steelcase purchase accounting adjustments for inventory step-up and favorableadditional price-cost,depreciation partially offset by lower volume infor the legacypreliminary HNIvaluation businesses.adjustment to property, plant and equipment.

Selling and administrative expenses as a percentage of net sales decreasedincreased 9050 basis points in 20242025 compared to 2023.2024. TheThis decreaseincrease was driven by $41.2wage millioninflation, the impacts from the acquisition of acquisition-related expenses incurred in the prior yearSteelcase, and acquisition-relatedhigher costcore synergies in 2024,SG&A, partially offset by lowerhigher net sales volume in the legacy HNI businesses. Selling and administrative expenses includes $2.4 million of Steelcase purchase accounting adjustments related to amortization of intangibles and additional depreciation for the preliminary valuation.

RestructuringRestructuring, Impairment, and Impairment ChargesDivestitures

Interest expense, net was $27.2$35.6 million and $25.5$27.2 million in 20242025 and 2023,2024, respectively. The increase was driven by higher average outstanding borrowings resulting from indebtedness incurred to fund the acquisition of Kimball International.Steelcase.

The income tax provision reflects a lowerhigher rate in 20242025 compared to the prior year, primarily due to the impact of non-deductible transactionacquisition costs incurredand inparachute 2023compensation inpayments connection with thefor acquisition of Kimball International.Steelcase. See "Note 8. Income Taxes" in the Notes to Consolidated Financial Statements for further information relating to income taxes.

Net sales in 20242025 for the workplaceWorkplace furnishingsFurnishings segment increased 8.514.6 percent compared to 2023.2024. The full yearacquisition of Kimball International sales in 2024Steelcase increased segment net sales by $228.0$187.5 million over the prior year, whilepartially offset by a $16.2 million decrease in net sales from the divestiture of PoppinHNI India in the thirdsecond quarter of 2023 decreased net sales by $11.1 million year-over-year.2025. Excluding the impact of thesethis transactions,transaction, segment net sales were downup 4.04.7 percent driven by lowerimproved demandvolume and price across most customer channels, partiallywith offsetthe byexception improvedof Hospitality which saw decreases in both volume in the hospitality sector and price realization.price.

Net sales in 20242025 for the residentialResidential buildingBuilding productsProducts segment decreasedincreased 8.05.7 percent compared to 2023.2024. Remodel/retrofit net sales volumeincreased decreasedyear-over-year, at a higher rate thanwhile new construction,construction withwas both channels adversely impacted by housing market weakness and broader macroeconomic volatility.flat.

Operating income as a percentage of net sales increased 60 basis points in 20242025 compared to 2023.2024. The increase was driven by improved net productivity, favorable price-cost, lower variable compensation, and favorable product mix, partially offset by lowerhigher salesvariable volume.compensation.

Cash, cash equivalents, and short-term investments totaled $215.7 million at the end of 2025, compared to $28.9 million at the end of 2024, compared to $34.5 million at the end of 2023.2024. These funds, coupled with cash flow from future operations, borrowing capacity expected to be available under the Corporation’s existing credit agreements, and the continued ability to access capital markets, are expected to be adequate to fund operations and satisfy the Corporation's cash flow needs for at least the next twelve months. As of DecemberJanuary 28,3, 2024,2026, the Corporation can access the full $425 million of borrowing capacity available under the revolving credit facility, which includes the $45.7$15.0 million of borrowings outstanding as of that date, and maintain compliance with applicablefinancial covenants.covenants under its debt agreements. As of the end of 2024,2025, an$54 immaterial amountmillion of cash was held overseasoutside andof consideredthe permanentlyUnited reinvested.States.

The Corporation places special emphasis on management and control of working capital, including accounts receivable and inventory. Management believes recorded trade receivable valuation allowances at the end of 20242025 are adequate to cover the risk of potential bad debts. Allowances for non-collectible trade receivables, as a percent of gross trade receivables, totaled 0.80.2 percent and 1.40.8 percent at the end of 20242025 and 2023,2024, respectively. The decrease in allowances for non-collectible trade receivables as a percent of gross trade receivables was driven by the addition of Steelcase's receivables as a result of the acquisition. The Corporation’s inventory turns were 7.68.7 and 7.97.6 for 20242025 and 2023,2024, respectively. Inventory turns in the current year have been normalized for the impact of half a month of Steelcase activity.

Capital Expenditures - Capital expenditures, including capitalized software, were $67.8 million in 2025 and $52.9 million in 20242024. andThe $79.1current-year million in 2023. In the prior year, the Corporation had highercapital expenditures related to a manufacturing facility expansion, which did not recur in the current year. The Corporation’s expenditures arewere primarily focusedapplied onto machinery, equipment, and tooling required to support newcontinuing products,operations, continuous improvements, and cost savings initiatives in the manufacturing processes. Additionally, in support of the Corporation’sCorporation's long-term strategy to create effortless winning experiences for customers, the Corporation continues to invest in technology.technology and digital capabilities. The Corporation expects capital expenditures for 20252026 to be in the range of $75$140 million to $85$150 million.

Acquisitions and Divestitures - Investing activities in 20232025 included expenditures of $369.7$390.3 million to acquire KimballSteelcase, International,net of cash acquired, including restricted cash classified as "Other Assets" in the Consolidated Balance Sheets, and $2.7$8.1 million received from the sale of PoppinHNI India (net of costs to sell). See "Note 4. Acquisitions and Divestitures" in the Notes to the Consolidated Financial Statements for further information.

Stock Repurchase - The Corporation’s capitallong-term strategy related to stock repurchaserepurchases is focused on offsetting the dilutive impact of issuances of common stock pursuant to equity awards granted for various compensation-related matters. The Corporation may elect to opportunistically purchase additional shares based on excess cash generation and/or share price considerations. In 2024,2025, the Corporation spent $65.8$83.6 million to repurchase 1.31.8 million shares of its common stock. As of DecemberJanuary 28,3, 2024,2026, $167.6$84.3 million was authorized and available for repurchase of shares by the Corporation. See "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" in the Notes to Consolidated Financial Statements for further information.

Sales of Stock - The Corporation records cash flows received from the sale of its common stock held in treasury, primarily in connection with stock option exercises and the HNI Corporation Members’ Stock Purchase Plan. The approximately $50 million increasedecrease in cash proceeds in the current year was due to a significant uptick in stock options exercised,exercised in the prior year, driven by growth in the market value per share of the Corporation's common stock. See "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" and "Note 11. Stock-Based Compensation" in the Notes to Consolidated Financial Statements for further information.

As of DecemberJanuary 28,3, 2024,2026, the Corporation has the following principal obligations and commitments to make future payments:

Debt - Debt principal obligations are approximately $50$16 million during 20252026 and $296$1,301 million thereafter. Interest obligations from debt are estimated to be approximately $18$71 million during 20252026 and $36$289 million thereafter. Refer toSee "Note 7. Debt" in the Notes to Consolidated Financial Statements for additional information.

DeferredEmployee CompensationBenefit Obligations - Deferred compensation cash obligations related to legacy HNI plans are expected to be approximately $0.3 million during 20252026 and $3.0$3.9 million thereafter. ReferFor legacy HNI post-retirement benefit plans, payments are expected to be approximately $1 million during 2026 and $10 million in aggregate from 2027 through 2035. For legacy Steelcase employee benefit plans, payments are expected to be approximately $65 million during 2026 and $82 million in aggregate from 2027 through 2035. See "Note 11.12. Stock-BasedEmployee CompensationBenefit Plan Obligations" in the Notes to Consolidated Financial Statements for additional information.information on legacy HNI and legacy Steelcase plan obligations. Obligations related to the Kimball International supplemental employee retirement plan are expected to be $4$5 million during 20252026 and $7 million thereafter. Refer toSee "Note 2. Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements for additional information.

Operating and Finance Leases - Operating and finance lease obligations are expected to be approximately $41$90 million during 20252026 and $152$273 million thereafter. There were no material commitments related to leases which had been signed but not commenced as of the end of 2024. Refer toSee "Note 14.13. Leases" in the Notes to Consolidated Financial Statements for additional information.

Other Obligations - Other long-term obligations of approximately $15$34 million are primarily comprised of statutory benefits for certain overseas workers, a put option, and uncertain tax liabilities, and dividends owed in connection with stock-based compensation awards.liabilities. Additionally, in 2022 the Corporation entered into a long-term commitment to purchase solar energy from a local utility to satisfy a portion of the Corporation’s electricity demand in the Muscatine, Iowa area. The Corporation’s future commitment to the project totals approximately $13 million. The commencement of the project was initially estimated to be in 2025, but has been delayed. For the Corporation’s estimated future obligations related to product warranties and self-insured liabilities, refer tosee "Note 2. Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements.

The Corporation continues to navigate near-term uncertainty driven by macroeconomic conditions, including the recent dynamics around housing, cost inflation, and interest rates. However, management remains optimistic about the long-term prospects in the workplace furnishings and residential building products markets. Management believes the KimballSteelcase InternationalInc. acquisition will continue to generate new opportunities for growth, and the Corporation continues to compete well in its legacy business markets.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the Consolidated Financial Statements, prepared in accordance with Generally Accepted Accounting Principles ("GAAP"). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection, and disclosure of these estimates with the Audit Committee of the Board.Board of Directors. Actual results may differ from these estimates under different assumptions or conditions.

The Corporation reviews goodwill at the reporting unit level, which refers to components for which discrete financial information is available and regularly reviewed by segment management. The accounting standards for goodwill permit entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. If the quantitative test is required, the Corporation estimates the fair value of its reporting units based on a weighted average of the income approach and the market approach. This estimated fair value is compared to the carrying value of the reporting unit and an impairment is recorded if the estimate is less than the carrying value. In the income approach, the estimate of fair value of each reporting unit is based on management’s projection of revenues, gross margin, operating costs, and cash flows considering historical and estimated future results, general economic and market conditions, as well asand the impact of planned business and operational strategies. The valuations employ present value techniques to measure fair value and consider market factors. In the market approach, the Corporation utilizes the guideline company method, which involves calculating valuation multiples based on operating data from guideline publicly-traded companies. These multiples are then applied to the operating data for the reporting units and adjusted for factors similar to those used in the discounted cash flow analysis. Management believes the assumptions used for the quantitative impairment test, if required, are consistent with those utilized by a market participant in performing similar valuations of its reporting units. Management bases its fair value estimates on assumptions theyit believebelieves to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates.

The key to recoverability of goodwill is the forecast of economic conditions and its impact on future revenues, operating profit, and cash flows. Management’s projection for the United States office furniture and domestic hearth markets and global economic conditions is inherently subject to a number of uncertain factors, such as global economic improvement, the U.S.United States housing market, credit availability, borrowing rates, and overall consumer confidence. In the near term, as management monitors the above factors, it is possible it may change the revenue and cash flow projections of certain reporting units, which may require the recording of additional goodwill impairment charges.

As described in "Note 4. Acquisitions and Divestitures" in the Notes to Consolidated Financial Statements, in 20232025 the Corporation acquired KimballSteelcase InternationalInc. in a transaction valued at $504$1.9 million,billion, resulting in the preliminary addition of $164$515.9 million of goodwill. Of this goodwill, $156all millionof which was assigned to the new Kimball Workplace &Furnishings Health reporting unit.segment. Recently acquired goodwill assigned to a new reporting unit generally has a higher inherent valuation risk, relative to goodwill assigned to reporting units that historically have had a large excess of fair value over carrying value. As discussed in "Note 6. Goodwill and Other Intangible Assets" in the Notes to Consolidated Financial Statements, management performed a quantitative goodwill impairment test in the fourth quarter of 2024. This testing resulted in no goodwill impairment charges recorded related to the Kimball Workplace & Health reporting unit, nor any of the remaining reporting units of the Corporation, in 2024.

In November 2024, the FASBFinancial Accounting Standards Board issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 aims to improve the disclosures about a public business entity’s expenses by requiring more detailed information about the types of costs and expenses, including purchases of inventory, employee compensation, selling expenses, depreciation, and intangible asset amortization within commonly presented captions on the face of the income statement. Disclosures are required to be made on an annual and interim basis in a tabular format in the footnotes to the financial statements. The ASU becomes effective for the Corporation for its fiscal year ending December 2027, and for interim periods beginning with the first fiscal quarter of 2028, and may be applied either prospectively or retrospectively. Early adoption is permitted. The Corporation is currently evaluating the impact of adopting this guidance to the consolidatedConsolidated financialFinancial statements.Statements.

HNI Corporation has been improving where people live, work, and gather for more than 80 years. HNI is a manufacturer of workplace furnishings and residential building products. The Corporation's two reportable segments consist of Workplace Furnishings and Residential Building Products. Within Workplace Furnishings, the Corporation is the thought leader in commercial furnishings and the preeminent global designer, innovator, and provider of workplace solutions going to market under unique brands serving multiple channels and customers from the largest multinational companies to small local businesses. Within Residential Building Products, the Corporation is the nation's leading manufacturer and marketer of hearth products. The Corporation utilizes a multi-faceted go-to-market model to deliver value to customers via various brands and selling models. HNI is focused on growing its existing businesses while seeking out and developing new opportunities for expansion. The Corporation's two reportable segments consist of Workplace Furnishings and Residential Building Products.

On December 10, 2025, the Corporation completed its acquisition of Steelcase, a global design and furniture manufacturing company, in a cash and stock transaction valued at approximately $1.9 billion. The acquisition of Steelcase unites two industry leaders to meet the dynamic marketplace and evolving needs of the workplace amid accelerating in-office work trends. This combination of two highly respected companies whose strong foundation, combined with expected synergies, will accelerate the Corporation's ability to invest in long-term operational enhancements, digital transformation, products to meet evolving customer needs, and customer-centered buying experiences. Steelcase is included in the Workplace Furnishings segment. See "Note 3. Acquisitions and Divestitures" in the Notes to Condensed Consolidated Financial Statements for more details on the Steelcase acquisition, which affects the comparability of results between the current and prior-year periods.

During the firstsecond quarter, the Corporation begancontinues its focus on managing costs across all businesses in response to soft volume to begin the year, driven by current geopolitical uncertainty. In Workplace Furnishings, the strategic focus remains margin expansion. The first quarter cost management actions taken in the first two quarters within the segment are in addition to previously announced synergies associated with the integration of Steelcase, the realization of which areis onconsistent track.with Current synergy projections are focused on the Americas business and do not include any revenue synergies.expectations. The Corporation also continues to expect additional savings from network optimization in the legacy Workplace Furnishing businesses over the next three years. The Residential Building Products segment remains focused on driving revenue growth over the long term. The business continues to navigate challenging housing market dynamics resulting from interest rate volatility and affordability issues. The combination of the Corporation's disciplined cost management, Steelcase synergies, and legacy network optimization projects continuecontinues to strengthen its earnings visibility story. The Corporation is also focused on streamlining priorities. As an example, Steelcase's multi-year ERP implementation project was terminated during the first quarter. This move is part of a broader corporation-wide effort to focus on profitable growth, while also avoiding disruption, eliminating substantial future ERP investment, and redeploying resources back into the business — toward customer-focused initiatives.

Consolidated net sales for the firstsecond quarter of 2026 were $1.3$1.5 billion, an increase of 125121 percent compared to net sales of $599.8$667.1 million in the prior-year quarter, with net sales in the Workplace Furnishings segment increasing 169157 percent, and Residential Building Products net sales increasingdecreasing 2.11.6 percent. Consolidated and Workplace Furnishings net sales include a $774.0$806.9 million year-over-year increase related to the acquisition of Steelcase in December 2025. See "Note 3. Acquisitions and Divestitures" in the Notes to Condensed Consolidated Financial Statements for further information about the acquisition.

Three Months Ended AprilJuly 4, 2026 and MarchJune 29,28, 2025

Consolidated net sales for the firstsecond quarter of 2026 increased 125121 percent compared to the same quarter last year. The increase was driven by the acquisition of Steelcase in theDecember priorof year,2025, which increased year-over-year net sales by $774.0$806.9 million. The divestiture of HNI India during the prior-year quarter decreased year-over-year net sales by $7.1 million.

SellingSelling, general and administrative expenses as a percentage of net sales increased 360390 basis points in the firstsecond quarter of 2026 compared to the same quarter last year. The increase was driven by impacts from the acquisition of Steelcase, including $27.8$21.9 million of incremental purchase accounting adjustments related to additionalthe amortization of intangibles and depreciationhigher forvariable the preliminary valuation to property, plant, and equipment, along with lower net sales in the legacy HNI business, and increased input costs.compensation.

Acquisition and Related Costs

In the current yearquarter the Corporation recorded costs of $3.5$4.2 million associated with the Steelcase acquisition. Acquisition and related costs consist primarily of retention compensation,compensation and other professional service fees, and change in control compensation expense adjustments.fees. See "Note 3. Acquisitions and Divestitures" in the Notes to the Condensed Consolidated Financial Statements for further information.

In the firstsecond quarter of 2026, the Corporation recorded charges of $18.0$17.9 million, primarily related to thestructural terminationcost of Steelcase's multi-year ERP implementation project, the Corporation's network optimization programactions and thean closureimpairment ofcharge therelated Wayland,to Newa Yorksmall facility.residential building products business. In the prior-year quarter, $6.4$2.5 million of charges were recorded, primarily related to the divestitureCorporation's ofnetwork theoptimization HNI India business.projects.

Operating Income (Loss)

In the firstsecond quarter of 2026, operating margin contracted 680390 basis points compared to the same quarter last year. This decrease was driven by impacts from the acquisition of Steelcase, including $64.2$21.9 million of incremental purchase accounting adjustments with respect to inventory step-up, and intangible amortization and depreciation related to the preliminary valuation of Steelcase, $20.5$23.8 million of restructuring and impairment charges,charges inclusive of restructuring amounts recorded to cost of sales, and lowerhigher netvariable sales incompensation, the legacy HNI business, the effecteffects of which were partially offset by 150 basis points of favorable net tariff impacts and improved net productivity and favorable price-cost.productivity.

Interest expense, net for the firstsecond quarter of 2026 increased to $20.7$23.7 million, from $5.5$6.1 million in the same quarter last year. The increase was driven by higher average outstanding borrowings incurred to fund the acquisition of Steelcase. See "Note 7. Debt" in the Notes to Condensed Consolidated Financial Statements for further information about such financing.

The Corporation’s income tax provisionexpense for the firstsecond quarter of 2026 was $16.8$20.1 million of benefit on lossincome before taxes of $55.6$71.2 million, or an effective tax rate of 30.328.2 percent. For the firstsecond quarter of 2025, the Corporation’s income tax provisionexpense was $5.0$13.8 million of expense on income before taxes of $18.9$62.0 million, or an effective tax rate of 26.322.2 percent. The increase in the effective tax rate was primarily due to favorablethe impact of non-deductible executive compensation, unfavorable equity-based compensation paymentsadjustments, drivingand athe highersettlement of certain foreign-related tax benefit on the loss for the quarter.positions.

Net Income (Loss) Attributable to HNI Corporation

Net lossincome attributable to the Corporation was $38.8$51.1 million, or $0.55$0.70 per diluted share, in the firstsecond quarter of 2026, compared to net income of $13.9$48.2 million, or $0.29$1.02 per diluted share, in the firstsecond quarter of 2025.

Three Months Ended AprilJuly 4, 2026 and MarchJune 29,28, 2025

FirstSecond quarter 2026 net sales for the Workplace Furnishings segment increased 169157 percent compared to the same quarter last year. The increase was driven by the acquisition of Steelcase in December of 2025, which increased net sales by $774.0$806.9 million, partially offset by the divestiture of HNI India in the second quarter of 2025, which decreased year-over-year sales by $7.1 million and lower legacy Workplace Furnishings sales volume partially offset by price.million.

Operating income (loss) as a percentage of net sales in the firstsecond quarter of 2026 decreased 770510 basis points compared to the same period in 2025. The decrease was driven by impacts from the acquisition of Steelcase, including $64.2$21.9 million of incremental purchase accounting adjustmentswith relatedrespect to inventory step-up, intangible amortization and depreciation related to the preliminary valuation of Steelcase, $20.5$16.6 million of restructuring and impairment costs, and $6.6$1.9 million of acquisition and related costs, as well as lower net sales in the legacy HNI business, partially offset by 170 basis points of favorable net tariff impacts and improved net productivity.

Three Months Ended AprilJuly 4, 2026 and MarchJune 29,28, 2025

FirstSecond quarter 2026 net sales for the Residential Building Products segment increaseddecreased 2.11.6 percent compared to the same quarter last year, with increased net sales in the remodel-retrofit market partially offset by decreased net sales in the new home market.market partially offset by increased remodel-retrofit sales.

Operating income as a percentage of net sales increasedwas 190 basis pointsunchanged in the firstsecond quarter of 2026 compared tofrom the same quarter last year, drivenwith byan increase from 420 basis points of favorable net tariff impacts, improved net productivityproductivity, and favorablelower price-cost,core partiallySG&A offset by an impairment charge and lower net sales volume.

Cash, cash equivalents, and short-term investments, coupled with cash flow from future operations, borrowing capacity expected to be available under the Corporation's existing revolving credit facility, and the Corporation's ability to access capital markets, are expected to be adequate to fund the Corporation's operations and satisfy its other cash requirements for at least the next twelve months. As of April 4, 2026, theThe Corporation can access the full $425 million of borrowing capacity available under its revolving credit facility, which includes the $169$103 million of borrowings outstanding as of thatJuly date,4, 2026, and to maintain compliance with specified financial covenants.

Operating cash flows were a use of $171.8$32.0 million of cash for the first threesix months of 2026 compared to a source of $12.6$43.7 million of cash for the first threesix months of 2025. The increase was driven by higherHigher working capital usage, includingdriven by the settlement of certain acquisition related expense accruals inwere the currentprimary driver of the difference versus the year-ago period.

Capital Expenditures - Capital expenditures, including capitalized software, for the first threesix months of 2026 were $35.7$64.7 million compared to $16.3$31.2 million for the same period last year. The current-period capital expenditures are primarily applied to machinery, equipment, and tooling required to support continuing operations, continuous improvements, and cost savings initiatives in the manufacturing processes. Additionally, in support of the Corporation's long-term strategy to create effortless winning experiences for customers, the Corporation continues to invest in technology and digital capabilities. For the full year 2026, capital expenditures are expected to be approximately $130 to $140 million.

Debt - TheAs discussed in "Note 7. Debt" in the Notes to Condensed Consolidated Financial Statements, the Corporation maintains a revolving credit facility as the primary source of committed funding from which the Corporation finances its planned capital expenditures, strategic initiatives, and seasonal working capital needs.needs and provides additional financial capacity for capital expenditures, repurchases of common stock, and strategic initiatives, such as acquisitions. Cash flows included in financing activities for the current and prior periods presented include periodic borrowings and repayments under the revolving credit facility.facility as part of normal operations.

As discussed in "Note 7. Debt" in the Notes to Condensed Consolidated Financial Statements, theThe Corporation also has borrowings outstanding under (i) a senior secured TLA Facility, and (ii) a senior secured TLB Facility, whichand were(iii) primarilyPublic usedNotes. to fundDuring the acquisitionsecond quarter of Steelcase2026, inthe DecemberCorporation 2025.refinanced borrowings under the TLB Facility, achieving a reduction of the borrowing rate on the TLB Facility. Cash flows included in financing activities in the current period include the refinancing of the borrowings under the TLB Facility and related debt issuance costs along with the scheduled principal amortization payments under the TLA and TLB Facilities.

DividendDividends - The Corporation is committed to maintaining or modestly increasing the quarterly dividend rate. Cash dividends declared and paid per common share were as follows:

During the firstsecond quarter of 2026, the Board of Directors declared the regular quarterly cash dividend at the rate of $0.34$0.35 per share on FebruaryMay 17,18, 2026. This represents a $0.01 per share or 3.02.9 percent increase from the prior quarterly dividend level. The dividend was paid on MarchJune 11,10, 2026, to shareholders of record as of MarchMay 2,29, 2026.

Stock Repurchase - The Corporation’s capital strategy related to stock repurchase is focused on offsetting the dilutive impact of issuances of common stock pursuant to equity awards granted for various compensation-related matters. The Corporation also may elect to opportunistically purchase additional shares based on excess cash generation and/or share price considerations. During the threesix months ended AprilJuly 4, 2026, the Corporation did not repurchase any of its outstanding common stock. As of AprilJuly 4, 2026, $84.3 million was available under the current authorization of the Board of Directors for repurchase of shares by the Corporation. See "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" in the Notes to Condensed Consolidated Financial Statements for further information.