ZEELAND, Mich.,
March 18, 2020 /PRNewswire/
--
- Net sales growth of 8% over prior year
- Operating margins 10 basis points lower than prior year (110
basis points higher on adjusted basis)
- Robust cash flow generation and a strong balance
sheet
Webcast to be held Wednesday, March 18, 2020, at
5:00 PM 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/investors
Herman Miller, Inc. (NASDAQ:
MLHR) today announced results for its third quarter ended
February 29, 2020. Net sales in the quarter totaled
$665.7 million, an increase of 7.5%
from the same quarter last fiscal year. New orders in the third
quarter of $651.7 million were 6.3%
above the prior year level.
On an organic basis, which excludes the impact of acquisitions
and foreign currency translation, net sales and orders in
the third quarter decreased
by 0.5% and 1.4%, respectively, compared to the same
quarter last fiscal year.
Herman Miller reported net
earnings of $0.64 per share on a
diluted basis in the third quarter compared to diluted earnings per
share of $0.66 in the same quarter
last fiscal year. Excluding restructuring expenses and other
special charges, adjusted earnings per share in the third quarter
totaled $0.74 compared to adjusted
earnings per share of $0.64 in the
third quarter of last fiscal year.
Andi Owen, President and Chief
Executive Officer, stated, "Despite the uncertain global economic
environment resulting from coronavirus concerns, we delivered
adjusted earnings per share that exceeded the expectations that we
established at the start of the quarter. While we experienced
uneven demand patterns for sales and orders during the quarter, we
focused our attention on what we could control - with our first
priority to ensure the health and safety of our associates around
the globe. We also remained focused on controlling expenses and
achieving the savings target we previously set in connection with
our profit optimization initiative. Supported by these efforts, we
delivered adjusted operating margin expansion in the quarter of 110
basis points over last year. While we cannot determine the precise
impact of the coronavirus outbreak on our third quarter results, we
do know that the temporary closure of our China facility reduced International sales by
approximately $6 million. Given
the rapidly changing environment surrounding coronavirus, we are
refraining from providing guidance for the upcoming fourth
quarter. While this is clearly a time of near-term
uncertainty, we remain confident the progress that we are making on
our strategic priorities positions us for continued long-term
profitable growth."
Third Quarter Fiscal 2020 Financial Results
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
(Dollars in
millions, except per share data)
|
(Unaudited)
|
(Unaudited)
|
|
Three Months
Ended
|
Nine Months
Ended
|
|
February 29,
2020
|
March 2,
2019
|
%
Chg.
|
February 29,
2020
|
March 2,
2019
|
%
Chg.
|
Net Sales
|
$
|
665.7
|
|
$
|
619.0
|
|
7.5
|
%
|
$
|
2,010.8
|
|
$
|
1,896.2
|
|
6.0
|
%
|
Gross Margin
%
|
36.5
|
%
|
35.7
|
%
|
N/A
|
|
37.0
|
%
|
36.0
|
%
|
N/A
|
|
Operating
Expenses
|
$
|
189.4
|
|
$
|
172.9
|
|
9.5
|
%
|
$
|
562.3
|
|
$
|
533.1
|
|
5.5
|
%
|
Restructuring
Expense
|
$
|
3.5
|
|
$
|
0.3
|
|
1,066.7
|
%
|
$
|
9.6
|
|
$
|
1.7
|
|
464.7
|
%
|
Operating Earnings
%
|
7.6
|
%
|
7.7
|
%
|
N/A
|
|
8.6
|
%
|
7.7
|
%
|
N/A
|
|
Adjusted Operating
Earnings %*
|
9.0
|
%
|
7.9
|
%
|
N/A
|
|
9.5
|
%
|
8.4
|
%
|
N/A
|
|
Net Earnings
Attributable to Herman Miller, Inc.
|
$
|
37.7
|
|
$
|
39.2
|
|
(3.8)
|
%
|
$
|
164.5
|
|
$
|
114.5
|
|
43.7
|
%
|
Earnings Per Share –
Diluted
|
$
|
0.64
|
|
$
|
0.66
|
|
(3.0)
|
%
|
$
|
2.78
|
|
$
|
1.92
|
|
44.8
|
%
|
Adjusted Earnings Per
Share – Diluted*
|
$
|
0.74
|
|
$
|
0.64
|
|
15.6
|
%
|
$
|
2.47
|
|
$
|
2.09
|
|
18.2
|
%
|
Orders
|
$
|
651.7
|
|
$
|
612.8
|
|
6.3
|
%
|
$
|
2,003.3
|
|
$
|
1,950.4
|
|
2.7
|
%
|
Backlog
|
$
|
411.2
|
|
$
|
400.5
|
|
2.7
|
%
|
|
|
|
*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 third quarter of fiscal 2020
totaled 36.5%. This included the impact of special charges totaling
$1.4 million related to the initial
purchase accounting effects of Herman
Miller's investment in HAY. Excluding these items, adjusted
gross margin was 36.8% in the third quarter, representing a 110
basis point increase from the same quarter last year.
Operating expenses in the third quarter were $189.4 million compared to $172.9 million in the same quarter a year ago.
Operating expenses included certain special charges totaling
$4.7 million in the third quarter of
fiscal 2020 and $0.5 million in the
same quarter last year. These items in the current quarter related
primarily to transaction costs and initial purchase accounting
effects of Herman Miller's
investments in HAY and naughtone. Excluding these items, operating
expenses increased by $12.3 million
compared to the same quarter last year, primarily related to the
consolidation of HAY and naughtone.
The Company recognized pre-tax restructuring expense totaling
$3.5 million in the third quarter.
These items related primarily to restructuring actions associated
with profit improvement initiatives.
Herman Miller's effective income
tax rate in the third quarter was 22.4%, compared to 16.0% in the
same quarter last fiscal year.
Jeff Stutz, Chief Financial
Officer, noted, "Gross margin expansion this quarter was fueled by
positive price realization, lower commodity costs and benefits from
our profit improvement initiatives. Strong gross margins and
well-managed operating expenses helped us deliver a 16%
year-over-year improvement in adjusted earnings per share. Our
financial performance also continued to generate robust operating
cash flows and we maintain a strong balance sheet that provides us
with ample liquidity and flexibility to both navigate the uncertain
near-term climate and fuel investment opportunities in support of
our growth strategy."
The Company ended the third quarter with total cash and cash
equivalents of $110.6 million. Cash
flow generated from operations was $49.4
million in the current quarter compared to $39.1 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 third quarter of fiscal 2020:
Organic Sales
Growth by Segment *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Three Months
Ended
|
|
February 29,
2020
|
March 2,
2019
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Net Sales, as
reported
|
$
|
413.4
|
|
$
|
156.1
|
|
$
|
96.2
|
|
$
|
665.7
|
|
$
|
397.0
|
|
$
|
126.0
|
|
$
|
96.0
|
|
$
|
619.0
|
|
% change from
PY
|
4.1
|
%
|
23.9
|
%
|
0.2
|
%
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
Adjustments
|
|
|
|
|
|
|
|
|
Acquisitions
|
(6.4)
|
|
(44.0)
|
|
—
|
|
(50.4)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Currency Translation
Effects (1)
|
(0.2)
|
|
0.8
|
|
—
|
|
0.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Sales,
organic
|
$
|
406.8
|
|
$
|
112.9
|
|
$
|
96.2
|
|
$
|
615.9
|
|
$
|
397.0
|
|
$
|
126.0
|
|
$
|
96.0
|
|
$
|
619.0
|
|
% change from
PY
|
2.5
|
%
|
(10.4)
|
%
|
0.2
|
%
|
(0.5)
|
%
|
|
|
|
|
Organic Order
Growth by Segment *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Three Months
Ended
|
|
February 29,
2020
|
March 2,
2019
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Orders, as
reported
|
$
|
405.9
|
|
$
|
159.4
|
|
$
|
86.4
|
|
$
|
651.7
|
|
$
|
390.9
|
|
$
|
127.0
|
|
$
|
94.9
|
|
$
|
612.8
|
|
% change from
PY
|
3.8
|
%
|
25.5
|
%
|
(9.0)
|
%
|
6.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
Adjustments
|
|
|
|
|
|
|
|
|
Acquisitions
|
(5.9)
|
|
(42.3)
|
|
—
|
|
(48.2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Currency Translation
Effects (1)
|
(0.2)
|
|
0.8
|
|
—
|
|
0.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Orders,
organic
|
$
|
399.8
|
|
$
|
117.9
|
|
$
|
86.4
|
|
$
|
604.1
|
|
$
|
390.9
|
|
$
|
127.0
|
|
$
|
94.9
|
|
$
|
612.8
|
|
% change from
PY
|
2.3
|
%
|
(7.2)
|
%
|
(9.0)
|
%
|
(1.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
Fourth Quarter Fiscal 2020 Guidance
The outbreak of coronavirus has created a high degree of
uncertainty throughout the global economy. Due to this uncertainty,
and the rapidly changing effects of risk mitigation efforts to
control the outbreak around the world, we are not able to
reasonably estimate the impact of the outbreak on our business or
financial results in the near-term. Accordingly, we are not
following our typical practice of issuing guidance for the upcoming
quarter.
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/investors.
The Company will host a webcast to discuss the results of the
third quarter of fiscal 2020 on Wednesday, March 18, 2020, at
5:00 PM ET. To ensure your access to
the webcast, you should allow extra time to visit the Company's
website at
http://investors.hermanmiller.com/events-and-presentations 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. Since its inception in 1905, the Company
has relied on innovative design to help people do great things. The
global design leader has evolved into Herman Miller Group, a family
of brands that collectively offers a variety of products for
environments where people live, learn, work, and heal. The
family of brands includes Colebrook Bosson Saunders, Design Within
Reach, Geiger, HAY, Maars Living Walls, Maharam, naughtone,
Nemschoff, and Herman Miller. For
more information visit www.hermanmiller.com/about-us.
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 retail 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, natural disasters, public health crises,
disease outbreaks, 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 and nine months ended
February 29, 2020 follow:
Herman Miller,
Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Dollars in millions, except per share and common share
data)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
February 29,
2020
|
March 2,
2019
|
|
February 29,
2020
|
March 2,
2019
|
Net Sales
|
$
|
665.7
|
|
100.0
|
%
|
$
|
619.0
|
|
100.0
|
%
|
|
$
|
2,010.8
|
|
100.0
|
%
|
$
|
1,896.2
|
|
100.0
|
%
|
Cost of
Sales
|
422.4
|
|
63.5
|
%
|
398.0
|
|
64.3
|
%
|
|
1,265.9
|
|
63.0
|
%
|
1,214.5
|
|
64.0
|
%
|
Gross
Margin
|
243.3
|
|
36.5
|
%
|
221.0
|
|
35.7
|
%
|
|
744.9
|
|
37.0
|
%
|
681.7
|
|
36.0
|
%
|
Operating
Expenses
|
189.4
|
|
28.5
|
%
|
172.9
|
|
27.9
|
%
|
|
562.3
|
|
28.0
|
%
|
533.1
|
|
28.1
|
%
|
Restructuring
Expense
|
3.5
|
|
0.5
|
%
|
0.3
|
|
—
|
%
|
|
9.6
|
|
0.5
|
%
|
1.7
|
|
0.1
|
%
|
Operating
Earnings
|
50.4
|
|
7.6
|
%
|
47.8
|
|
7.7
|
%
|
|
173.0
|
|
8.6
|
%
|
146.9
|
|
7.7
|
%
|
Gain on Consolidation
of Equity Method Investments
|
—
|
|
—
|
%
|
—
|
|
—
|
%
|
|
30.5
|
|
1.5
|
%
|
—
|
|
—
|
%
|
Other Expenses,
net
|
2.8
|
|
0.4
|
%
|
2.2
|
|
0.4
|
%
|
|
7.5
|
|
0.4
|
%
|
7.8
|
|
0.4
|
%
|
Earnings Before
Income Taxes and Equity Income
|
47.6
|
|
7.2
|
%
|
45.6
|
|
7.4
|
%
|
|
196.0
|
|
9.7
|
%
|
139.1
|
|
7.3
|
%
|
Income Tax
Expense
|
10.6
|
|
1.6
|
%
|
7.3
|
|
1.2
|
%
|
|
35.8
|
|
1.8
|
%
|
27.3
|
|
1.4
|
%
|
Equity Income, net of
tax
|
0.3
|
|
—
|
%
|
1.0
|
|
0.2
|
%
|
|
3.7
|
|
0.2
|
%
|
2.8
|
|
0.1
|
%
|
Net
Earnings
|
37.3
|
|
5.6
|
%
|
39.3
|
|
6.3
|
%
|
|
163.9
|
|
8.2
|
%
|
114.6
|
|
6.0
|
%
|
Net Earnings
Attributable to Redeemable Noncontrolling Interests
|
(0.4)
|
|
(0.1)
|
%
|
0.1
|
|
—
|
%
|
|
(0.6)
|
|
—
|
%
|
0.1
|
|
—
|
%
|
Net Earnings
Attributable to Herman Miller, Inc.
|
$
|
37.7
|
|
5.7
|
%
|
$
|
39.2
|
|
6.3
|
%
|
|
$
|
164.5
|
|
8.2
|
%
|
$
|
114.5
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Amounts per Common
Share Attributable to Herman Miller, Inc.
|
|
Earnings Per Share –
Basic
|
$0.64
|
|
|
$0.67
|
|
|
|
$2.79
|
|
|
$1.94
|
|
|
Weighted Average
Basic Common Shares
|
58,940,060
|
|
58,838,958
|
|
|
58,970,264
|
|
59,087,899
|
|
Earnings Per Share –
Diluted
|
$0.64
|
|
|
$0.66
|
|
|
|
$2.78
|
|
|
$1.92
|
|
|
Weighted Average
Diluted Common Shares
|
59,218,101
|
|
59,127,258
|
|
|
59,266,929
|
|
59,448,294
|
|
Herman Miller,
Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) (Dollars in millions)
|
|
|
Nine Months
Ended
|
|
February 29,
2020
|
March 2,
2019
|
Net
Earnings
|
$
|
163.9
|
|
$
|
114.6
|
|
Net Cash Provided by
Operating Activities
|
191.8
|
|
130.6
|
|
Net Cash Used in
Investing Activities
|
(171.3)
|
|
(142.4)
|
|
Net Cash Used in
Financing Activities
|
(69.8)
|
|
(76.6)
|
|
Effect of Exchange
Rates
|
0.7
|
|
(2.0)
|
|
Change in
Cash
|
(48.6)
|
|
(90.4)
|
|
Cash and Cash
Equivalents, Beginning of Period
|
159.2
|
|
203.9
|
|
Cash and Cash
Equivalents, End of Period
|
$
|
110.6
|
|
$
|
113.5
|
|
Herman Miller,
Inc.
Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in millions)
|
|
|
February 29,
2020
|
June 1,
2019
|
Assets
|
|
|
Current
Assets:
|
|
|
Cash and cash
equivalents
|
$
|
110.6
|
|
$
|
159.2
|
|
Short-term
investments
|
8.9
|
|
8.8
|
|
Accounts and notes
receivable, net
|
221.7
|
|
218.0
|
|
Unbilled accounts
receivable
|
37.9
|
|
34.3
|
|
Inventories,
net
|
200.5
|
|
184.2
|
|
Prepaid expenses and
other
|
56.7
|
|
56.8
|
|
Total Current
Assets
|
636.3
|
|
661.3
|
|
Net property and
equipment
|
341.6
|
|
348.6
|
|
Right of use
assets
|
222.9
|
|
—
|
|
Other
assets
|
785.0
|
|
559.4
|
|
Total
Assets
|
$
|
1,985.8
|
|
$
|
1,569.3
|
|
|
|
|
Liabilities,
Redeemable Noncontrolling Interests and Stockholders'
Equity
|
|
|
Current
Liabilities:
|
|
|
Accounts
payable
|
$
|
180.6
|
|
$
|
177.7
|
|
Accrued
liabilities
|
325.5
|
|
268.4
|
|
Total Current
Liabilities
|
506.1
|
|
446.1
|
|
Long-term
debt
|
275.0
|
|
281.9
|
|
Lease
liabilities
|
188.5
|
|
—
|
|
Other
liabilities
|
107.7
|
|
101.5
|
|
Total
Liabilities
|
1,077.3
|
|
829.5
|
|
Redeemable
Noncontrolling Interests
|
71.7
|
|
20.6
|
|
Stockholders'
Equity
|
836.8
|
|
719.2
|
|
Total Liabilities,
Redeemable Noncontrolling Interests and Stockholders'
Equity
|
$
|
1,985.8
|
|
$
|
1,569.3
|
|
View original
content:http://www.prnewswire.com/news-releases/herman-miller-reports-third-quarter-fiscal-2020-results-301026281.html
SOURCE Herman Miller, Inc.