Herman Miller, Inc., Reports Continued Gains in Financial Results
for First Quarter FY2005
Webcast to be held Thursday, September 16, at 9:30 AM EDT
ZEELAND, Mich., Sept. 15 /PRNewswire-FirstCall/ -- Herman Miller, Inc. (NASDAQ:MLHR), today announced results for the first quarter ended August 28,
2004. Sales increased 10.1% from the year-ago period. Orders and backlog also
were significantly improved over the prior-year levels, with orders up 18.0%
and backlog increasing 24.6%. Net earnings were $14.3 million, or $.20 per
share, an increase of 130.6% over net earnings of $6.2 million for the same
period in the prior year. The results included approximately $0.5 million in
pre-tax restructuring charges, less than $.01 per share net of tax, related to
previously announced actions. The ending cash balance was $155.8 million.
FINANCIAL HIGHLIGHTS (Dollars in millions, except per share data)
Three Months Ended
8/28/2004 8/30/2003 Percent Change
Net Sales $357.3 $324.5 10.1%
Gross Margin 112.1 101.6 10.3%
Operating Expenses 88.6 85.6 3.5%
Restructuring Expenses 0.5 3.8 (86.8%)
Operating earnings 23.0 12.2 88.5%
Net earnings 14.3 6.2 130.6%
Earnings per share - diluted 0.20 0.08 150.0%
Orders 382.3 323.9 18.0%
Backlog 234.5 188.2 24.6% The company's consolidated sales for the quarter were $357.3 million,
reflecting both year-over-year and sequential growth. Sales were up 10.1% from
the year-ago period and 1.0% from the prior quarter. This represents the third
consecutive quarter of year-over-year sales growth. Orders in the quarter were
$382.3 million, increasing 18.0% from the prior year and 5.7% from the prior
quarter. Ending backlog was $234.5 million, up $46.3 million or 24.6% from the
prior year.
"We had a great quarter with double-digit growth rates both in orders and
sales," said Beth Nickels, Chief Financial Officer. "Our international markets
led the way with a greater than 40% increase in sales and more than a 53%
increase in orders. We did see a modest favorable impact from the price
increase that went into effect the beginning of August, but we also had a price
increase last year, so on balance it did not have a significant impact on our
comparisons. Our ending backlog included about $10 million in orders that are
scheduled out past the second quarter; this compares to an $8 million impact
last year. In addition, we have continued to see strong order-entry trends
since the price increase took effect." Gross margin was 31.4% for the quarter, which was a slight improvement over the
31.3% achieved in the same quarter last year. On a sequential basis, gross
margins declined from the 31.8% achieved in the fourth quarter. Gross margins
were positively affected by efficiencies resulting from the Canton, Georgia,
plant consolidation and were negatively impacted by increased raw material
costs, primarily steel.
Operating expenses for the quarter totaled $88.6 million or 24.8% of sales,
compared to $85.6 million or 26.4% of sales for the same period in fiscal 2004. Most of the increased spending was the result of variable selling costs driven
by the higher sales levels, as well as higher current wages and incentive
accruals.
The $0.5 million of restructuring charges for the quarter were primarily
associated with the previously announced relocation of the Canton operations. That move is complete. Modest restructuring charges will be reported in the
future as the final Canton relocation costs are incurred.
The company adopted the provisions of FIN 46 in the fourth quarter of the prior
year. The current quarter's results reflect the consolidation of two
independent contract furniture dealerships to which the company was providing
ongoing financial support through loans and/or financial guarantees. This
action increased the current quarter's net sales by $2.5 million and net
earnings by $0.8 million. Included in the net earnings from FIN 46 dealerships
is a net gain of $0.7 million due to one of the entities transitioning its
business to another independent dealer during the quarter. In addition, the
effect of the remaining FIN 46 entity on the company's balance sheet as of
August 28, 2004, was an increase to assets of approximately $1.0 million and
liabilities of $0.8 million.
The company's ending cash position was $155.8 million. Cash flow from
operations for the quarter totaled $2.8 million compared to $35.7 million for
the same period last year. Included in the current year's cash from operations
was a voluntary contribution of $23.0 million to the company's employee pension
fund. Capital spending for the quarter was $3.8 million compared to $5.5
million for the same period last year. The company also repurchased
approximately 1.4 million shares of its stock for $37.5 million, at an average
price of $27.22 per share during the quarter.
Ms. Nickels added, "The strength of our operating results and cash position
clearly demonstrate the leverage we have in our business model. We saw some
significant increases in raw material costs this quarter, approximately $4
million in steel alone, yet we were still able to achieve favorable margins as
a result of the many structural changes we have implemented. On the cash side,
we continued to fund our strategic initiatives, contributed $23 million in
pension funding, and repurchased $37 million in stock while closing the quarter
with over $155 million in cash." Looking forward, the company expects sales for the second quarter of fiscal
2005 to be in a range of $360 million to $380 million, which represents a
9%-15% increase over the prior year. It estimates earnings per share of $.19
to $.24, which reflects the continued impact of raw material cost increases
combined with slightly higher operating expenses to fund continued growth.
Brian Walker, Chief Executive Officer, stated, "Even though some of the macro
economic factors that drive our business are not improving as fast as
anticipated, our industry still continued to make progress this quarter and
appears poised for growth. Our strategic intent is to grow faster than the
industry through our continued focus on innovation and market expansion. Coupled with our drive for continuous improvement and operational excellence,
our strategy will result in superior value for our customers and shareholders. This quarter's results are evidence of our ability to drive substantial
improvements in profit on modest growth." The company announced a live webcast to discuss the results of the fiscal 2005
first quarter, to be held Thursday, September 16, 2004, at 9:30 a.m. EDT. The
company encourages all interested parties to log in to the website to obtain
presentation materials, which will augment the verbal presentation. To ensure
your access to the webcast, you should allow extra time to visit our website at
http://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.
This press 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," "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. 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.
Herman Miller provides complete solutions that help create great places to
work. Through research, design, manufacture, and distribution of innovative
interior furnishings, complemented by furniture management and strategic
consulting services, the company serves organizations and individuals around
the world. During fiscal 2004, Herman Miller's award-winning products and
services generated $1.34 billion in revenue. The company was also cited in
Fortune magazine as the "Most Admired" company in its industry and was again
named among Business Ethics magazine's "100 Best Corporate Citizens." Herman
Miller trades on the NASDAQ stock market under the symbol MLHR. For additional
information visit HermanMiller.com .
Financial highlights for the quarter ended August 28, 2004 follow: Herman Miller, Inc. Condensed Consolidated Statements of Operations
(Unaudited) (Dollars in millions, except per share data)
Three Months Ended
August 28, 2004 August 30, 2003
Net Sales $357.3 100.0% $324.5 100.0%
Cost of Goods Sold 245.2 68.6% 222.9 68.7%
Gross Margin 112.1 31.4% 101.6 31.3%
Operating Expenses 88.6 24.8% 85.6 26.4%
Restructuring Expenses 0.5 0.1% 3.8 1.2%
Operating Earnings 23.0 6.4% 12.2 3.8%
Other Expense, net 1.7 0.5% 2.5 0.8%
Earnings before Taxes 21.3 6.0% 9.7 3.0%
Income Taxes 7.0 2.0% 3.5 1.1%
Net Earnings 14.3 4.0% 6.2 1.9%
Earnings Per Share - Basic 0.20 0.08
Weighted Average Basic
Common Shares 71,182,794 72,869,965
Earnings Per Share - Diluted 0.20 0.08
Weighted Average Diluted
Common Shares 71,861,847 73,171,573
Herman Miller Inc. Condensed Consolidated Statements of Cash Flows
(Unaudited) (Dollars in millions) Three Months Ended
August 28, 2004 August 30, 2003 Net Earnings $14.3 $6.2
Cash Flows provided by Operating Activities 2.8 35.7
Cash Flows used for Investing Activities (4.4) (7.1)
Cash Flows used for Financing Activities (32.5) (4.7)
Effect of Exchange Rates 0.7 (2.3)
Net (Decrease) Increase in Cash (33.4) 21.6
Cash, Beginning of Year 189.2 185.5
Cash, End of Period $155.8 $207.1
Herman Miller, Inc. Condensed Consolidated Balance Sheets
(Dollars in millions) August 28, 2004 May 29, 2004
(Unaudited)
Assets
Current assets
Cash and equivalents $155.8 $189.2
Short-term investments 10.6 10.7
Accounts receivable (net) 141.9 142.4
Inventories 42.7 38.1
Prepaid Expenses and Other 48.9 50.2
Totals 399.9 430.6
Net property and equipment 200.2 208.5
Other assets 75.3 75.6
Total Assets $675.4 $714.7
Liabilities and Shareholders' Equity
Current liabilities
Unfunded checks $5.5 $8.6
Current long-term debt 13.0 13.0
Notes Payable 0.0 1.5
Accounts Payable 85.1 90.4
Accrued liabilities 132.0 123.8
Totals 235.6 237.3
Long-term debt 194.6 192.7
Other noncurrent liabilities 65.0 90.1
Shareholders' equity Totals 180.2 194.6
Total Liabilities and Shareholders' Equity $675.4 $714.7
DATASOURCE: Herman Miller, Inc.
CONTACT: Joe Nowicki, +1-616-654-5222, , Beth Nickels, +1-616-654-8050, , or Media: Mark Schurman, +1-616-654-5498, , Bruce Buursma, +1-616-654-5770, , all of Herman Miller, Inc.
Web site: http://www.hermanmiller.com/
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