EAST GREENVILLE, PA, February 11, 2016 -- Knoll, Inc. (KNL) today announced results for the fourth quarter and year ended December 31, 2015. Net sales were $305.7 million for the fourth quarter, an increase of 6.7%, or 8.4% on a constant currency basis, from the fourth quarter of 2014. Operating profit for the quarter increased to $21.8 million, or 9.2%, when compared to operating profit of $20.0 million for the fourth quarter of 2014. Adjusted operating profit for the quarter was $33.9 million, an increase of $6.2 million, or 22.4%, from the fourth quarter of 2014. Net earnings for the fourth quarter of 2015 were $13.4 million, an increase of 8.9% when compared to the fourth quarter of 2014. Diluted earnings per share was $0.28 for the quarter compared to $0.26 in the fourth quarter of 2014. Adjusted diluted earnings per share was $0.43 for the quarter compared to $0.35 in the fourth quarter of 2014.

Net sales were $1,104.4 million for the year ended December 31, 2015, an increase of 5.2%, or 6.9% on a constant currency basis, from 2014. Operating profit for the year increased to $101.0 million, or 9.1% of net sales, an increase of 31.5% when compared to 2014. Adjusted operating profit was $113.5 million, or 10.3% of net sales, an increase of 32.0% when compared to 2014. Net income was $66.0 million for 2015, an increase of 41.6% when compared to 2014. Diluted earnings per share was $1.36 for the year compared to $0.97 in 2014. Adjusted diluted earnings per share was $1.52 for 2015 compared to $1.09 in 2014.

"We are so pleased to be reporting strong fourth quarter growth and margin expansion as we complete a year of terrific progress in our journey to create a singular and highly profitable design-driven business," commented Andrew Cogan, CEO. "We are playing a different game than others to whom we are often compared and executing that strategy well," he added. "Looking ahead to 2016, our strong year-end backlog positions us well for another year of better-than-industry growth and continued operating margin expansion."

Fourth Quarter Results

For the fourth quarter, net sales totaled $305.7 million, an increase of 6.7%, or 8.4% on a constant currency basis, when compared to the fourth quarter of 2014. Net sales for the Office segment were $197.5 million during the fourth quarter of 2015, an increase of 7.2%, or 8.4% on a constant currency basis, when compared with the fourth quarter of 2014. The increase in the Office segment was led by recent introductions in complementary and ergonomic product categories. Net sales for the Studio segment were $80.8 million during the fourth quarter of 2015, an increase of 8.5%, or 11.7% on a constant currency basis, when compared with the fourth quarter of 2014. All of our Studio segment businesses, including HOLLY HUNT, KnollEurope and KnollStudio, continued to grow. Growth in these businesses spanned both commercial and residential clients. Net sales for the Coverings segment were $27.4 million during the fourth quarter of 2015, a decrease of 1.3%, or 0.7% on a constant currency basis, when compared with the fourth quarter of 2014. Continued year-over-year growth in Spinneybeck | FilzFelt sales was offset by weakness at KnollTextiles and in the private aviation market of our Edelman leather business.

Gross profit for the fourth quarter of 2015 was $114.4 million, an increase of $11.5 million, or 11.2%, when compared with the fourth quarter of 2014. During the fourth quarter 2015, gross margin increased to 37.4% from 35.9% in the fourth quarter of 2014. Gross profit in the fourth quarter of 2015 includes a one-time charge of $0.9 million due to the discontinuation of one of our seating products. Adjusted gross profit for the fourth quarter of 2015 was $115.3 million, an increase of $12.4 million, or 12.1%, when compared with the fourth quarter of 2014. During the fourth quarter 2015, adjusted gross margin improved 180 basis points from 35.9% to 37.7%. This improvement was driven mainly by the Office segment, where business mix, foreign exchange rates, net price realization, operating efficiencies and improved fixed-cost absorption from higher volumes were all favorable.

Total operating expenses were $92.6 million, or 30.3% of net sales, compared to $82.9 million, or 28.9% of net sales, for the fourth quarter of 2014. Operating expenses in the fourth quarter of 2015 include $11.2 million of infrequent items. These items include a non-cash Edelman tradename impairment of $10.7 million, as well as restructuring charges of $0.5 million that are intended to streamline our corporate structure and improve future profitability. Operating expenses in the fourth quarter of 2014 included a pension settlement and other postretirement benefit curtailment of $6.5 million, restructuring charge of $0.7 million, and a $0.5 million charge for the remeasurement of the FilzFelt earn-out liability. Excluding these items, adjusted operating expenses were $81.5 million for the fourth quarter of 2015, compared to $75.2 million for the fourth quarter of 2014. The increase in adjusted operating expenses was related to higher commissions from increased sales volume as well as higher incentive compensation and profit sharing resulting from increased profitability.

Operating profit for the fourth quarter of 2015 was $21.8 million, or 7.1% of net sales, an increase of $1.8 million, or 9.2%, when compared to the fourth quarter of 2014. Adjusted operating profit for the fourth quarter of 2015 was $33.9 million, or 11.1% of net sales, an increase of $6.2 million, or 22.4%, when compared to the fourth quarter of 2014. Operating profit for the Office segment was $15.7 million, or 7.9% of net sales, in the fourth quarter of 2015, an increase of $8.9 million, or 130.9%, when compared with the fourth quarter of 2014. Adjusted operating profit for the Office segment was $17.1 million, or 8.7% of net sales, an increase of $3.7 million, or 27.6%, when compared to the fourth quarter of 2014. Operating profit for the Studio segment was $10.9 million, or 13.5% of net sales, an increase of $1.4 million, or 14.7%, when compared with the fourth quarter of 2014. Adjusted operating profit for the Studio segment was $10.9 million, or 13.5% of net sales, an increase of $1.5 million, or 16.0%, when compared to the fourth quarter of 2014. Operating loss for the Coverings segment was $4.8 million, a decrease of $8.5 million when compared to the fourth quarter of 2014. Operating loss for the Coverings segment included a $10.7 million impairment charge related to the write-down of the Edelman tradename. This write-down was primarily the result of weakness in the private aviation market. There are no cash implications to the aforementioned charge and Edelman Leather remains solidly profitable and accretive to our earnings. Excluding this charge, adjusted operating profit for the Coverings segment was $5.9 million, or 21.5% of net sales, an increase of $1.0 million, or 20.4%, when compared to the fourth quarter of 2014. For a reconciliation of adjusted operating profit to operating profit, see "Reconciliation of Non-GAAP Financial Measures" below.

During the fourth quarter of 2015, other income was $0.5 million, which primarily related to foreign exchange gains. During the fourth quarter of 2014, other income was $3.2 million. Other income for the fourth quarter of 2014 primarily related to foreign exchange gains, which increased diluted earnings $0.03 per share. Other income for the fourth quarter of 2014 also included the gain on the sale of our Equity product line for $0.6 million.

Net income for the fourth quarter 2015 was $13.4 million, or $0.28 diluted earnings per share, compared to $12.3 million, or $0.26 diluted earnings per share, for the fourth quarter of 2014. Adjusted diluted earnings per share was $0.43 and $0.35 for the fourth quarter of 2015 and 2014, respectively.

Capital expenditures for the fourth quarter of 2015 totaled $9.8 million compared to $9.6 million in the fourth quarter of 2014. During the fourth quarter of 2015, the Company paid a quarterly dividend of $7.2 million, or $0.15 per share, compared to a quarterly dividend of $5.7 million, or $0.12 per share, in the fourth quarter of 2014.

Full Year Results

For the year, net sales totaled $1,104.4 million, an increase of 5.2%, or 6.9% on a constant currency basis, from 2014. Net sales for the Office segment were $686.9 million for 2015, an increase of 4.7%, or 5.5% on a constant currency basis, when compared with 2014. The increase in net sales in the Office segment was attributable to growth across all of our product categories, but the most predominant growth was experienced in complimentary products where we have been aggressively investing. Net sales for the Studio segment were $303.8 million for 2015, an increase of 8.8%, or 13.2% on a constant currency basis, when compared with 2014. This increase in sales was driven by strong growth in HOLLY HUNT, KnollEurope, as well as our North American Studio business. Net sales for the Coverings segment were $113.7 million, a decrease of 1.0%, or 0.3% on a constant currency basis, when compared with 2014. For the full year 2015, Spinneybeck | FilzFelt and KnollTextiles all grew, while Edelman was negatively impacted by weakness in the private aviation market.

Gross profit for 2015 was $412.1 million, an increase of $40.4 million, or 10.9%, when compared with 2014. During 2015, gross margin increased to 37.3% from 35.4% in 2014. Gross profit for 2015 includes a one-time charge of $0.9 million due to the discontinuation of one of our seating products. Adjusted gross profit for 2015 was $413.0 million, an increase of $41.3 million, or 11.1%, when compared with 2014. During 2015, adjusted gross margin improved 200 basis points from 35.4% to 37.4%. Gross profit improved across all three of our operating segments as a result of favorable foreign exchange rates, net price realization, operating efficiencies and improved fixed-cost absorption from higher volumes.

Total operating expenses for 2015 were $311.1 million, or 28.2% of net sales, compared to $294.8 million, or 28.1% of net sales, for 2014. Operating expenses for 2015 include $11.5 million of infrequent items. These items include a non-cash Edelman tradename impairment of $10.7 million as well as restructuring charges of $0.9 million that are intended to streamline our corporate structure and improve future profitability. There are no cash implications to the aforementioned charge and Edelman Leather remains solidly profitable and accretive to our earnings. Operating expenses for 2014 include the pension settlement and other postretirement benefit curtailment of $6.5 million, acquisition expenses of $0.7 million, restructuring charges of $1.5 million and a charge of $0.5 million associated with the remeasurement of the FilzFelt earn-out liability. Excluding these items, adjusted operating expenses were $299.5 million for 2015 compared to $285.6 million for 2014. The increase in adjusted operating expenses was related to higher commissions from increased sales volume as well as higher incentive compensation and profit sharing resulting from increased profitability.

Operating profit for 2015 was $101.0 million, an increase of $24.2 million, or 31.5%, when compared to 2014. Operating profit as a percent of net sales was 9.1% for 2015 compared to 7.3% in 2014. Adjusted operating profit for 2015 was $113.5 million, or 10.3% of net sales, an increase of $27.5 million, or 32.0%, when compared to 2014. Operating profit for the Office segment was $43.1 million for 2015, compared to $22.0 million in 2014. Adjusted operating profit for the Office segment was $44.5 million, or 6.5% of net sales, in 2015, an increase of $15.1 million, or 51.4%, when compared with 2014. Operating profit for the Studio segment was $43.3 million for 2015, compared to $33.6 million in 2014. Adjusted operating profit for the Studio segment was $43.7 million, or 14.4% of net sales, for 2015, an increase of $9.5 million, or 27.8%, when compared with 2014. Operating profit for the Coverings segment was $14.6 million for 2015, compared to $21.2 million in 2014. Adjusted operating profit for the Coverings segment was $25.3 million, or 22.3% of net sales, for 2015, an increase of $2.9 million, or 12.9%, when compared to 2014. For a reconciliation of adjusted operating profit to operating profit, see "Reconciliation of Non-GAAP Financial Measures" below.

Interest expense for 2015 decreased $0.5 million compared to 2014. The decrease in interest expense was due primarily to a reduction in outstanding debt. Other income in 2015 and 2014 was $9.2 million and $6.3 million, respectively, which primarily consisted of foreign exchange gains.

The effective tax rate was 36.2% for 2015, as compared to 38.5% for 2014. Our effective tax rate is dependent upon the mix of pretax income in the countries in which we operate.

In 2015, we generated net income of $66.0 million, or $1.36 diluted earnings per share, compared to $46.6 million, or $0.97 diluted earnings per share, in 2014. Adjusted diluted earnings per share was $1.52 and $1.09 for 2015 and 2014, respectively.

Capital expenditures in 2015 totaled $29.3 million compared to $41.6 million for 2014. During 2015, we reduced our long-term debt by $36.0 million. In addition, we paid dividends of $24.4 million in 2015 compared with $22.7 million in 2014.

"2015 was a productive year, we have grown adjusted EBITDA by 25% and paid down $36.0 million of debt, resulting in a reduction in our debt leverage from 2.41 to 1.67 times EBITDA all while increasing dividends by 25%. We enter 2016 with a strong and flexible balance sheet," commented Craig B. Spray, SVP & CFO.

Business Segment Results

The following information categorizes the Company`s results into its reporting segments.

The Office segment serves corporate, government, healthcare, retail and other customers in the United States and Canada providing a portfolio of office furnishing solutions including office systems, seating, storage, tables, desks and KnollExtra® ergonomic accessories. The Office segment also includes international sales of our North American office products. The Studio segment includes KnollStudio®, Knoll Europe which sells primarily KnollStudio products, Richard Schultz®Design, and HOLLY HUNT®. The Coverings segment includes, KnollTextiles®,Spinneybeck®, Edelman®Leather, and FilzFelt(TM). These businesses serve a wide range of customers offering high quality textiles and leather.