EAST GREENVILLE, PA, April 21, 2016 -- Knoll, Inc. (KNL), a leading designer and manufacturer of furnishings, textiles and fine leathers for the workplace and home, today announced results for the first quarter ended March 31, 2016. Net sales were $284.6 million for the first quarter, an increase of 6.8%, from the first quarter of 2015. Operating profit for the quarter increased to $31.8 million, or 42.8%, compared to operating profit of $22.3 million for the first quarter of 2015. Net earnings for the first quarter of 2016 were $17.3 million, a decrease of 0.6% when compared to the first quarter of 2015. Diluted earnings per share were $0.36 for both the first quarter of 2016 and 2015, respectively. However, 2015 included a foreign exchange gain of $0.09 per share related to the settlement of an intercompany receivable, and 2016 included a foreign exchange loss of $0.03 per share.

"We are pleased to be reporting a strong start to 2016 with better than industry growth, and significant margin and operating profit expansion," 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. "We are looking forward to a very exciting NeoCon trade show this coming June where we are launching an innovative new vision for what we are calling the Immersive Workplace along with exciting introductions across all our varied businesses."

First Quarter Results

Net sales were $284.6 million for the first quarter of 2016, an increase of 6.8%, from the first quarter of 2015. Net sales for the Office segment were $185.3 million during the first quarter of 2016, an increase of 10.5%, when compared with the first quarter of 2015. The increase in the Office segment was led by recent introductions in complementary products including our height-adjustable tables and storage products, as well as solid growth in our core Systems portfolio. Net sales for the Studio segment were $71.5 million during the first quarter of 2016, an increase of 1.9%, when compared with the first quarter of 2015. This increase was primarily driven by HOLLY HUNT, partially offset by weakness in large commercial projects in Europe. Net sales for the Coverings segment were $27.8 million during the first quarter of 2016, a decrease of 2.8%, when compared with the first quarter of 2015. Continued year-over-year growth in Spinneybeck |FilzFelt sales was offset by weakness at KnollTextiles.

Gross profit for the first quarter of 2016 was $107.7 million, an increase of $12.4 million, or 13.1%, when compared with the first quarter of 2015. During the first quarter 2016, gross margin improved to 37.9% from 35.8% in the first quarter of 2015. This improvement was driven mainly by the Office segment, where operating efficiencies and improved fixed-cost leverage from higher volumes were favorable.

Total operating expenses were $75.9 million for the first quarter of 2016, or 26.7% of net sales, compared to $73.0 million, or 27.4% of net sales, for the first quarter of 2015. The increase in operating expenses was related to the increased costs from strategic marketing initiatives, additional headcount, and higher incentive accruals related to increased profitability.

Operating profit for the first quarter of 2016 increased to $31.8 million, or 42.8%, compared to operating profit of $22.3 million for the first quarter of 2015. Operating profit for the Office segment was $16.6 million, or 9.0% of net sales, in the first quarter of 2016, an increase of $9.4 million, or 129.0%, when compared with the first quarter of 2015. Operating profit for the Studio segment was $9.0 million, or 12.6% of net sales, an increase of $0.1 million, or 1.0%, when compared with the first quarter of 2015. Operating income for the Coverings segment was $6.2 million, or 22.4% of net sales, an increase of $0.1 million, or 1.8%, when compared to the first quarter of 2015.

During the first quarter of 2016, other expense was $2.6 million compared to other income of $7.2 million for the first quarter of 2015. Other income and expenses are primarily related to foreign exchange gains and losses. The gain in the first quarter of 2015 was due to the settlement of an outstanding receivable with our Canadian subsidiary. Other expense in the first quarter of 2016 was primarily related to foreign exchange losses that resulted from the revaluation of intercompany balances between our Canadian and US entities. As a result, impacts of foreign exchange increased earnings $0.09 per share in the first quarter of 2015 and reduced earnings by $0.03 per share in the first quarter of 2016. We continue to put measures in place to further reduce the impact of foreign exchange related volatility.

Net income for the first quarter of 2016 was $17.3 million, or $0.36 diluted earnings per share, compared to $17.4 million, or $0.36 diluted earnings per share, for the first quarter of 2015.

The tax rate for the first quarter of 2016 was 37.6% as compared to 36.8% from the first quarter of 2015. The mix of pretax income and the varying effective tax rates in the countries and states in which we operate directly affects our consolidated effective tax rate.

Capital expenditures for the first quarter of 2016 totaled $7.0 million compared to $4.9 million in the first quarter of 2015. During the first quarter of 2016, 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 first quarter of 2015.

"This quarter marks our fifth consecutive quarter of operating margin growth. Our operational improvements are taking root and position us to take full advantage of fixed cost leverage going forward," noted 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.