ZEELAND, Mich., Sept. 19, 2018 /PRNewswire/ --
- Year-over-year sales growth of 8%; broad-based across all segments
- 9% increase in reported EPS (adjusted EPS growth of 21%)
- Strategic investments in HAY and Maars Living Walls
Webcast to be held Thursday, September 20, 2018, at 9:30 AM ET
NOTE: A data supplement with additional financial information relating to the periods covered by this press release is
available for download from the Company's website at http://www.hermanmiller.com/about-us/investors.html.
Herman Miller, Inc. (NASDAQ: MLHR) today announced results for its first quarter ended September 1, 2018. Net sales in
the quarter totaled $624.6 million, an increase of 7.6% from the same quarter last fiscal year. New
orders in the first quarter of $630.6 million were 6.0% above the prior year level.
Herman Miller reported net earnings of $0.60 per share on a diluted basis in the first quarter
compared to diluted earnings per share of $0.55 in the same quarter last fiscal year. Excluding the
impact of restructuring and impairment expenses, and other special charges, adjusted earnings per share in the first quarter
totaled $0.69 compared to adjusted earnings per share of $0.57 in the
first quarter of last fiscal year.
Andi Owen, Chief Executive Officer, stated, "As I have engaged with stakeholders across the
Herman Miller community in the past month since joining the Company, it has become even more clear to me that the legacy of
innovation and design at the heart of Herman Miller will lay the foundation for our future success. There are tremendous
opportunities ahead to leverage Herman Miller's global multi-channel distribution capabilities and leading portfolio of brands
with both commercial and consumer audiences. These opportunities include leveraging the investments that we made this quarter in
HAY, a leading global design brand in both commercial and consumer furnishings, and Maars Living Walls, a global designer and
manufacturer of interior wall solutions. Our teams are in the early days of integrating these brands into our portfolio and that
work is progressing ahead of schedule. Our momentum is evident from our first quarter results as net sales and order levels
reflected growth across all of our business segments and adjusted earnings exceeded the expectations established at the start of
the quarter. I look forward to working with our leadership team to leverage our key strategic priorities to accelerate the growth
and evolution of our business."
First Quarter Fiscal 2019 Financial Results
FINANCIAL HIGHLIGHTS
|
|
(Dollars in millions, except per share data)
|
(Unaudited)
|
|
Three Months Ended
|
|
9/1/2018
|
9/2/2017
|
% Chg.
|
Net Sales
|
$
|
624.6
|
|
$
|
580.3
|
|
7.6
|
%
|
Gross Margin %
|
36.0
|
%
|
37.4
|
%
|
N/A
|
|
Operating Expenses
|
$
|
178.0
|
|
$
|
165.7
|
|
7.4
|
%
|
Restructuring and Impairment Expenses
|
$
|
1.1
|
|
$
|
2.1
|
|
(47.6)
|
%
|
Operating Earnings %
|
7.4
|
%
|
8.5
|
%
|
N/A
|
|
Adjusted Operating Earnings %*
|
8.4
|
%
|
8.8
|
%
|
N/A
|
|
Adjusted EBITDA*
|
$
|
73.6
|
|
$
|
68.6
|
|
7.3
|
%
|
Net Earnings Attributable to Herman Miller, Inc.
|
$
|
35.8
|
|
$
|
33.1
|
|
8.2
|
%
|
Earnings Per Share – Diluted
|
$
|
0.60
|
|
$
|
0.55
|
|
9.1
|
%
|
Adjusted Earnings Per Share – Diluted*
|
$
|
0.69
|
|
$
|
0.57
|
|
21.1
|
%
|
Orders
|
$
|
630.6
|
|
$
|
594.8
|
|
6.0
|
%
|
Backlog
|
$
|
346.4
|
|
$
|
332.1
|
|
4.3
|
%
|
*Items indicated represent Non-GAAP measurements; see the reconciliations
of Non-GAAP financial measures and related explanations in the supplemental data file available for download at
http://www.hermanmiller.com/about-us/investors.html. A copy of this supplemental data file has also been included with
the earnings press release filed on Form 8-K with the Securities and Exchange Commission.
|
Consolidated gross margin in the first quarter of fiscal 2019 totaled 36.0%, representing a 140 basis point decrease from the
level reported in the same quarter of last fiscal year. Approximately 60 basis points of the year-over-year decrease in gross
margin related to the adoption of the new revenue recognition standard (ASC 606) at the beginning of fiscal 2019. This adoption
required recording certain product pricing elements as expenses within cost of goods sold that were previously classified on a
net basis within sales. Excluding this impact, gross margin decreased by 80 basis points compared to the same quarter last
year.
Operating expenses in the first quarter were $178.0 million compared to $165.7 million in the same quarter a year ago. Operating expenses included certain special charges totaling
$5.1 million in the first quarter of fiscal 2019. The special charges related primarily to costs
associated with the CEO transition and external consulting fees associated with the Company's profit enhancement initiatives.
Excluding these items, operating expenses increased by $7.2 million compared to the same quarter
last year.
The Company recognized pre-tax restructuring and impairment expenses totaling $1.1 million in
the first quarter related to the consolidation of certain facilities in China and the
United Kingdom that were announced last quarter. These costs primarily reflected asset
impairments, severance, outplacement costs and moving expenses.
Herman Miller's effective income tax rate in the first quarter was 20.0%, compared to 30.5% in the same quarter last fiscal
year. This rate is lower than the prior year tax rate primarily due to the lower marginal corporate tax rate that resulted from
the U.S. Tax Cuts and Jobs Act enacted in the third quarter of fiscal 2018.
Jeff Stutz, Chief Financial Officer, noted, "Broad-based sales growth and well-managed
operating expenses propelled our quarterly performance. Gross margins reflected higher commodity and freight expenses as
well as ongoing margin pressure within one of our Specialty businesses. Our continued focus on long-term profit optimization
remains a strategic priority and helped offset some of these margin pressures this quarter. This operating performance combined
with a lower effective tax rate helped drive a 21% increase in adjusted earnings per share compared to last year. While we
believe our business is poised to benefit from our strategic position and a generally strong economic picture, we will have to
navigate the global tariff picture and related commodity pressures in the near-term. Our outlook for the upcoming second quarter
reflects both our current expectations of these exposures as well as benefits from the actions that we are contemplating to help
mitigate those pressures."
The Company ended the first quarter with total cash and cash equivalents of $101.7 million, a
decrease of $102.2 million from the balance at the end of fiscal 2018. The reduction in cash
balances primarily related to the equity and licensing agreement investments of $77 million in HAY
and Maars Living Walls in the first quarter of fiscal 2019. Cash flow generated from operations in the first quarter of
$33.6 million compared to $18.9 million in the same quarter last
fiscal year.
Segment Sales and Orders
The following tables summarize reported and organic segment sales and orders for the first quarter of fiscal 2019:
Organic Sales Growth by Segment *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Three Months Ended
|
|
9/1/18
|
9/2/17
|
|
North
America
|
ELA
|
Specialty
|
Consumer
|
Total
|
North
America
|
ELA
|
Specialty
|
Consumer
|
Total
|
Net Sales, as reported
|
$
|
343.7
|
|
$
|
115.4
|
|
$
|
77.3
|
|
$
|
88.2
|
|
$
|
624.6
|
|
$
|
328.6
|
|
$
|
93.4
|
|
$
|
75.1
|
|
$
|
83.2
|
|
$
|
580.3
|
|
% change from PY
|
4.6
|
%
|
23.6
|
%
|
2.9
|
%
|
6.0
|
%
|
7.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma Adjustments
|
|
|
|
|
|
|
|
|
|
|
Dealer Divestitures
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.8)
|
|
—
|
|
—
|
|
—
|
|
(0.8)
|
|
Currency Translation Effects (1)
|
0.5
|
|
1.2
|
|
—
|
|
—
|
|
1.7
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Impact of Reclassification Related
to New Revenue Recognition Standard
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4.6
|
|
2.1
|
|
0.6
|
|
—
|
|
7.3
|
|
Impact of Change in DWR Shipping
Terms
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(5.0)
|
|
(5.0)
|
|
Net Sales, organic
|
$
|
344.2
|
|
$
|
116.6
|
|
$
|
77.3
|
|
$
|
88.2
|
|
$
|
626.3
|
|
$
|
332.4
|
|
$
|
95.5
|
|
$
|
75.7
|
|
$
|
78.2
|
|
$
|
581.8
|
|
% change from PY
|
3.5
|
%
|
22.1
|
%
|
2.1
|
%
|
12.8
|
%
|
7.6
|
%
|
|
|
|
|
|
Organic Order Growth by Segment *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Three Months Ended
|
|
9/1/18
|
9/2/17
|
|
North
America
|
ELA
|
Specialty
|
Consumer
|
Total
|
North
America
|
ELA
|
Specialty
|
Consumer
|
Total
|
Orders, as reported
|
$
|
345.0
|
|
$
|
125.0
|
|
$
|
80.1
|
|
$
|
80.5
|
|
$
|
630.6
|
|
$
|
334.8
|
|
$
|
108.5
|
|
$
|
75.4
|
|
$
|
76.1
|
|
$
|
594.8
|
|
% change from PY
|
3.0
|
%
|
15.2
|
%
|
6.2
|
%
|
5.8
|
%
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma Adjustments
|
|
|
|
|
|
|
|
|
|
|
Dealer Divestitures
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2.2)
|
|
—
|
|
—
|
|
—
|
|
(2.2)
|
|
Currency Translation Effects (1)
|
0.6
|
|
1.5
|
|
—
|
|
—
|
|
2.1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Impact of Reclassification Related to
New Revenue Recognition Standard
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5.0
|
|
2.1
|
|
0.5
|
|
—
|
|
7.6
|
|
Orders, proforma
|
$
|
345.6
|
|
$
|
126.5
|
|
$
|
80.1
|
|
$
|
80.5
|
|
$
|
632.7
|
|
$
|
337.6
|
|
$
|
110.6
|
|
$
|
75.9
|
|
$
|
76.1
|
|
$
|
600.2
|
|
% change from PY
|
2.4
|
%
|
14.4
|
%
|
5.5
|
%
|
5.8
|
%
|
5.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Currency translation effects represent the estimated net
impact of translating current period sales and orders using the average exchange rates applicable to the
comparable prior year period
|
* Items represent Non-GAAP measurements; see the reconciliations of
Non-GAAP financial measures and related explanations in the supplemental data file available
for download at http://www.hermanmiller.com/about-us/investors.html. A copy of this supplemental data file has also been
included with the earnings press release filed
on Form 8-K with the Securities and Exchange Commission.
|
Second Quarter Fiscal 2019 Guidance
Looking forward, Herman Miller expects net sales in the second quarter of fiscal 2019 to be in the range of $635 million to $655 million. On an organic basis, adjusted for the impact of
reclassification related to the new revenue recognition standard, this forecast implies sales growth of 5% compared to the second
quarter of the prior year at the mid-point of the range. The Company expects adjusted diluted earnings per share to range between
$0.70 to $0.74.
Supplemental Information and Webcast
The Company has created a supplemental data report which provides additional information relevant to its quarterly results.
This document can be accessed via a link on the Investors section of the Company's website at http://www.hermanmiller.com/about-us/investors.html.
The Company will host a webcast to discuss the results of the first quarter of fiscal 2019 on Thursday, September 20,
2018, at 9:30 a.m. ET. To ensure your access to the webcast, you should allow extra time to visit
the Company's website at www.hermanmiller.com to download the streaming
software necessary to participate. An online archive of the presentation will be available on the website later that day.
About Herman Miller
Herman Miller is a globally recognized provider of furnishings and related technologies and services. Headquartered in
West Michigan, the 113-year-old company has relied on innovative design to solve problems
wherever people work, live, learn, and heal. With recognizable designs as part of museum collections worldwide, Herman Miller is
a past recipient of the Smithsonian Institution's Cooper Hewitt National Design Award and has been ranked number one on Contract
Magazine's list of "Brands that Inspire" for four straight years. Known and respected for its leadership in corporate social
responsibility, Herman Miller has earned numerous global sustainability and inclusivity awards including the Human Rights
Foundation's top rating in its Corporate Equality Index for 11 years in a row. In fiscal 2018, the Company generated $2.38 billion in revenue and employed nearly 8,000 people worldwide. Herman Miller trades on the NASDAQ Global
Select Market under the symbol MLHR.
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act, as amended, that are based on management's beliefs, assumptions, current
expectations, estimates, and projections about the office furniture industry, the economy, and the Company itself. Words like
"anticipates," "believes," "confident," "estimates," "expects," "forecasts," "likely," "plans," "projects," and "should,"
variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee
future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing,
extent, likelihood, and degree of occurrence. These risks include, without limitation, the success of our growth strategy, our
success in initiatives aimed at achieving long-term profit optimization goals, employment and general economic conditions, the
pace of economic recovery in the U.S. and in our International markets, the increase in white-collar employment, the willingness
of customers to undertake capital expenditures, the types of products purchased by customers, competitive-pricing pressures, the
availability and pricing of raw materials, our reliance on a limited number of suppliers, our ability to expand globally given
the risks associated with regulatory and legal compliance challenges and accompanying currency fluctuations, changes in future
tax legislation or interpretation of current tax legislation, the ability to increase prices to absorb the additional costs of
raw materials, changes in global tariff regulations, the financial strength of our dealers and the financial strength of our
customers, our ability to locate new DWR studios, negotiate favorable lease terms for new and existing locations and implement
our studio portfolio transformation, our ability to attract and retain key executives and other qualified employees, our ability
to continue to make product innovations, the success of newly-introduced products, our ability to serve all of our markets,
possible acquisitions, divestitures or alliances, our ability to integrate and benefit from acquisitions and investments, the
pace and level of government procurement, the outcome of pending litigation or governmental audits or investigations, political
risk in the markets we serve, and other risks identified in our filings with the Securities and Exchange Commission. Therefore,
actual results and outcomes may materially differ from what we express or forecast. Furthermore, Herman Miller, Inc. undertakes
no obligation to update, amend or clarify forward-looking statements.
Financial highlights for the three months ended September 1, 2018 follow:
Herman Miller, Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Dollars in millions, except per share and common share
data)
|
|
|
Three Months Ended
|
|
September 1, 2018
|
September 2, 2017
|
Net Sales
|
$
|
624.6
|
|
100.0
|
%
|
$
|
580.3
|
|
100.0
|
%
|
Cost of Sales
|
399.5
|
|
64.0
|
%
|
363.4
|
|
62.6
|
%
|
Gross Margin
|
225.1
|
|
36.0
|
%
|
216.9
|
|
37.4
|
%
|
Operating Expenses
|
178.0
|
|
28.5
|
%
|
165.7
|
|
28.6
|
%
|
Restructuring and Impairment Expenses
|
1.1
|
|
0.2
|
%
|
2.1
|
|
0.4
|
%
|
Operating Earnings
|
46.0
|
|
7.4
|
%
|
49.1
|
|
8.5
|
%
|
Other Expenses, net
|
1.9
|
|
0.3
|
%
|
2.6
|
|
0.4
|
%
|
Earnings Before Income Taxes and Equity Income
|
44.1
|
|
7.1
|
%
|
46.5
|
|
8.0
|
%
|
Income Tax Expense
|
8.9
|
|
1.4
|
%
|
14.2
|
|
2.4
|
%
|
Equity Income, net of tax
|
0.7
|
|
0.1
|
%
|
0.8
|
|
0.1
|
%
|
Net Earnings
|
35.9
|
|
5.7
|
%
|
33.1
|
|
5.7
|
%
|
Net Earnings Attributable to Noncontrolling Interests
|
0.1
|
|
—
|
%
|
—
|
|
—
|
%
|
Net Earnings Attributable to Herman Miller, Inc.
|
$
|
35.8
|
|
5.7
|
%
|
$
|
33.1
|
|
5.7
|
%
|
|
|
|
|
|
Amounts per Common Share Attributable to Herman Miller, Inc.
|
|
|
|
|
Earnings Per Share – Basic
|
$0.60
|
|
$0.55
|
|
Weighted Average Basic Common Shares
|
59,370,160
|
|
59,758,610
|
|
Earnings Per Share – Diluted
|
$0.60
|
|
$0.55
|
|
Weighted Average Diluted Common Shares
|
59,869,114
|
|
60,329,269
|
|
Herman Miller, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) (Dollars in millions)
|
|
|
Three Months Ended
|
|
September 1, 2018
|
September 2, 2017
|
Net Earnings
|
$
|
35.9
|
|
$
|
33.1
|
|
Cash Flows provided by Operating Activities
|
33.6
|
|
18.9
|
|
Cash Flows used for Investing Activities
|
(100.4)
|
|
(24.2)
|
|
Cash Flows used for Financing Activities
|
(33.0)
|
|
(13.0)
|
|
Effect of Exchange Rates
|
(2.4)
|
|
2.1
|
|
Change in Cash
|
(102.2)
|
|
(16.2)
|
|
Cash, Beginning of Period
|
203.9
|
|
96.2
|
|
Cash, End of Period
|
$
|
101.7
|
|
$
|
80.0
|
|
Herman Miller, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in millions)
|
|
|
September 1, 2018
|
June 2, 2018
|
ASSETS
|
|
|
Current Assets:
|
|
|
Cash and Cash Equivalents
|
$
|
101.7
|
|
$
|
203.9
|
|
Marketable Securities
|
8.5
|
|
8.6
|
|
Accounts and Notes Receivable, net
|
230.8
|
|
219.3
|
|
Inventories, net
|
163.8
|
|
162.4
|
|
Prepaid Expenses and Other
|
51.2
|
|
51.2
|
|
Total Current Assets
|
556.0
|
|
645.4
|
|
Net Property and Equipment
|
329.8
|
|
331.4
|
|
Other Assets
|
577.9
|
|
502.7
|
|
Total Assets
|
$
|
1,463.7
|
|
$
|
1,479.5
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
Current Liabilities:
|
|
|
Accounts Payable
|
$
|
170.2
|
|
$
|
171.4
|
|
Accrued Liabilities
|
223.0
|
|
242.4
|
|
Total Current Liabilities
|
393.2
|
|
413.8
|
|
Long-term Debt
|
281.9
|
|
275.0
|
|
Other Liabilities
|
94.7
|
|
95.4
|
|
Total Liabilities
|
769.8
|
|
784.2
|
|
Redeemable Noncontrolling Interests
|
20.7
|
|
30.5
|
|
Herman Miller, Inc. Stockholders' Equity
|
673.0
|
|
664.6
|
|
Noncontrolling Interests
|
0.2
|
|
0.2
|
|
Total Stockholders' Equity
|
673.2
|
|
664.8
|
|
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders'
Equity
|
$
|
1,463.7
|
|
$
|
1,479.5
|
|
View original content:http://www.prnewswire.com/news-releases/herman-miller-reports-first-quarter-fiscal-2019-results-300715600.html
SOURCE Herman Miller, Inc.