Kimball International, Inc. (NASDAQ:KBAL) Q1 2020 Earnings Conference Call - Final Transcript
Nov 05, 2019 • 11:00 am ET
Kristine L. Juster
points, and at the same time, selling and administrative costs decreased 160 basis points, while beginning our strategic investments in Kimball International Connect. We are very pleased with the adjusted EBITDA performance of $23.8 million or 11.8%, up 190 basis points.
And finally, adjusted EPS increased 29% to $0.40 compared to $0.31 a year ago. Our Q1 performance gives us confidence that we are gaining traction in both our sustaining gross margin improvement and our ability to transform to a more cost-efficient operating model. We do expect our revenues to ramp in the back half of the year as our investments start to take hold against specific strategic initiatives.
Turning to Slide five for a view of macroeconomic indicators we track for the industry, most notably since last quarter. This may increase their forecast for 2019 U.S. office furniture to 7.4%, but there are 2020 outlook is forecasted to be lower at 2.2% due to the anticipated slowing in the U.S. economy. The report cited interest rate cuts slowing GDP and capital spending in a tougher trade environment. As factors for the lower level of growth in 2020. Macro trends working in our favor include the tight labor market and a shift to more collaborative, resimercial working environment.
The Architecture Billings Index by AIA, which serves as a leading indicator of non-residential construction activity was 49.7 in September, up from 47.2 in August. So we're still below the 50 mark, it is much improved. It was also encouraging to see the design contracts index rebounding to 54.4 from 47.9 in August as firms saw an increasing number of clients signed contracts for new projects. RevPAR or Revenue Per Available Room is a leading indicator for our Hospitality business.
Forecast for calendar 2020 estimate growth of 1%, which is in line with 1.1% forecasted growth in 2019. We continue to see strong activity, especially as it relates to the second half of fiscal year driven by the strength in the Vegas market. We believe our brand positioning, and our growth strategy will help to mitigate risks of a slowing market as we are strategically shifting our focus to higher growth markets. We are putting ourselves in a better position to react as we continue to execute against our transformation plan, while leveraging new ways of working to include our program management office capability and diligent operating rhythm. We will continue to remain focused on understanding changes in demand patterns and we will respond accordingly.
Moving into our progress in deployment of the Kimball International Connect strategy. Looking at Slide six, you'll see a new slide depicting our brand positioning, relative size of the brands today and more importantly the path and differentiation we are driving through our Connect Strategy. The vertical axis is a continuum from standard product type to custom product. And the horizontal axis reflects from Commercial to Hospitality environment. We continue to expand the National and Kimball product portfolios to deeper into the resimercial category types.