Knoll Inc. (KNL), a maker of furnishings and accessories, textiles and fine leathers, on Tuesday reported a 61 percent surge in profit for the fourth quarter as a curtailment benefit related to modification of the company's pension and other post-retirement benefits more than offset a decline in sales and margins.
Knoll also said it has acquired FilzFelt, purveyors of German-milled wool design felt as well as felt floor coverings. Further, the company said it has agreed to acquire outdoor furniture maker Richard Schultz Design, Inc. However, the company's shares are down 10 percent in the regular session.
The East Greenville, Pennsylvania-based company's fourth-quarter net income rose to $17.4 million or $0.37 per share from $10.8 million or $0.23 per share in the prior-year period.
The recent quarter's result include a curtailment benefit of $5.4 million associated with the modification of the company's pension and other post-retirement benefits, while the prior-year results included restructuring charges of $1.7 million.
On average, 4 analysts polled by Thomson Reuters expected the company to report earnings of $0.37 per share. Analysts' estimates typically exclude special items.
Net sales declined 7 percent to $223.1 million from $239.8 million in the year-ago period. Analysts had a consensus estimate of $248.83 million.
The decline in sales during the quarter was the direct result of lower project activity in the company's Government business and significantly reduced purchases from a single commercial client.
Office segment revenues declined 7.6 percent to $157.3 million, and Studio segment revenues decreased 10.3 percent to $40.1 million. Net sales for the Coverings segment grew 3.6 percent to $25.7 million.
Gross margin declined to 31.7 percent from 32.2 percent last year, largely the result of lower absorption of the company's fixed costs in conjunction with lower sales volumes and materials and transportation inflation.
For fiscal year 2011, Knoll's net income doubled to $58.0 million or $1.24 per share from $28.0 million or $0.61 per share last year. Net sales rose 13.9 percent to $922.2 million from $809.5 million in the prior year. Analysts expected the company to earn $1.24 per share on revenues of $947.72 million.
Separately, Knoll said it has acquired FilzFelt, purveyors of German-milled 100% wool design felt as well as felt floor coverings and architectural applications for the residential, hospitality and contract office furniture markets. Financial terms of the deal were not disclosed.
Andrew Cogan, CEO of Knoll said, "The acquisition of FilzFelt reflects our strategy of building sales in our high design, high margin specialty businesses which appeal to both commercial buyers and consumers worldwide."
Kelly Smith and Traci Roloff, the founders of FilzFelt with over 20 years combined architecture and product design experience, will continue with executive roles at FilzFelt.
FilzFelt maintains a marketing and design studio in Boston, Massachusetts.
Knoll also said it has agreed to acquire Richard Schultz Design, Inc., a designer and manufacturer of outdoor furniture for the residential, hospitality and contract office furniture markets.
Financial terms of this deal too were not disclosed. The company expects the acquisition to close on or about March 1.
Richard Schultz Design maintains a flagship showroom in New York's D&D Building, sells the iconic 1966 Schultz Leisure Line and 1960 Petal Table Collection, originally designed for Knoll, as well as contemporary outdoor furniture designs. The company also maintains a marketing and design studio in Palm, Pennsylvania.
In Tuesday's regular session, KNL is trading at $15.11, down $1.76 or 10.43 percent on a volume of 57,794 shares.
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