ZEELAND, Mich., Dec. 16, 2020 /PRNewswire/ --
- Retail and International momentum helps offset near-term demand
pressures in North America Contract
- Gross margin of 39.0% reflects an increase of 110 basis points
from last year
- Strong expense control with operating expenses down
$18.1 million from last year
- Continued quarterly operating margin expansion over the prior
year, including Retail operating margin of 16.7%
Webcast to be held Thursday, December 17, 2020, at
9:30 am ET
Second Quarter Fiscal 2021 Financial Results
|
(Unaudited)
|
(Unaudited)
|
|
Three Months
Ended
|
Six Months
Ended
|
(Dollars in
millions, except per share data)
|
November 28,
2020
|
November 30,
2019
|
% Chg.
|
November 28,
2020
|
November 30,
2019
|
% Chg.
|
Net Sales
|
$
|
626.3
|
|
$
|
674.2
|
|
(7.1)
|
%
|
$
|
1,253.0
|
|
$
|
1,345.2
|
|
(6.9)
|
%
|
Gross Margin
%
|
39.0
|
%
|
37.9
|
%
|
N/A
|
|
39.4
|
%
|
37.3
|
%
|
N/A
|
|
Operating
Expenses
|
$
|
170.8
|
|
$
|
188.9
|
|
(9.6)
|
%
|
$
|
326.6
|
|
$
|
372.9
|
|
(12.4)
|
%
|
Restructuring
Expenses
|
$
|
2.4
|
|
$
|
4.2
|
|
(42.9)
|
%
|
$
|
1.2
|
|
$
|
6.1
|
|
(80.3)
|
%
|
Operating Earnings
%
|
11.3
|
%
|
9.3
|
%
|
N/A
|
|
13.3
|
%
|
9.1
|
%
|
N/A
|
|
Adjusted Operating
Earnings %*
|
11.7
|
%
|
10.1
|
%
|
N/A
|
|
13.5
|
%
|
9.7
|
%
|
N/A
|
|
Net Earnings
Attributable to Herman Miller, Inc.
|
$
|
51.3
|
|
$
|
78.6
|
|
(34.7)
|
%
|
$
|
124.2
|
|
$
|
126.8
|
|
(2.1)
|
%
|
Earnings Per Share –
Diluted
|
$
|
0.87
|
|
$
|
1.32
|
|
(34.1)
|
%
|
$
|
2.10
|
|
$
|
2.14
|
|
(1.9)
|
%
|
Adjusted Earnings Per
Share – Diluted*
|
$
|
0.89
|
|
$
|
0.88
|
|
1.1
|
%
|
$
|
2.13
|
|
$
|
1.72
|
|
23.8
|
%
|
Orders
|
$
|
629.7
|
|
$
|
674.9
|
|
(6.7)
|
%
|
$
|
1,185.7
|
|
$
|
1,351.6
|
|
(12.3)
|
%
|
Backlog
|
$
|
403.4
|
|
$
|
400.6
|
|
0.7
|
%
|
|
|
|
|
*Items indicated
represent Non-GAAP measurements; see the reconciliations of
Non-GAAP financial measures and related explanations
below.
|
To our shareholders:
We hope you remain safe and well as we all continue to navigate
the challenges associated with the COVID-19 pandemic.
Our fiscal 2021 second quarter financial results further
validate our strategic direction in the midst of continued global
economic uncertainty. Our teams around the world have once again
harnessed the creativity and resiliency that defines the Herman
Miller Group spirit to build on our momentum and further
differentiate our family of brands. Our ability to strategically
leverage these brands across multiple global channels and an
unwavering commitment to authored design remain core to our
success. This customer-centric approach continues to make it easier
for customers around the globe to connect with our brands as they
seek solutions to meet their needs for both workplace and home
environments.
Strong Financial Performance in the Current
Environment
Consolidated net sales for the quarter were down
by 7% compared to last year and down 15% organically, which
excludes the impacts of acquisitions and foreign currency
translation. Orders in the quarter were down 7% compared to the
prior year on a reported basis and down 15% organically. We've
provided some additional perspective on the demand picture for each
of our business segments below:
Retail Segment
Our
Retail business continued to deliver strong results, with quarterly
orders up 41% over last year. The Home Office category once again
led demand, and was up more than 270% over last year. At the same
time, the ongoing "nesting" trend among consumers who have been
inspired to invest in their homes during the pandemic continued
through the quarter, resulting in positive year-over-year demand
across multiple product categories, notably Upholstery, Outdoor,
Storage, and Accessories.
North America Contract
Segment
We continued to feel the effect of the pandemic in
our North America Contract business this fall as a result of
COVID-19 surges and rising case levels throughout the region. North
America Contract customers remained hesitant to make decisions
about their post-COVID workplaces given the uncertainty, resulting
in a year-over-year order decline of 33%.
International Contract
Segment
Orders for the International segment were 40% higher
than last year on a reported basis, while down 3% on an organic
basis. The Asia-Pacific and
mainland Europe regions delivered
year-over-year growth, while demand in Mexico and the United Kingdom remained challenged due to
COVID-19. HAY, which we acquired a majority position in last year,
was a clear bright spot again this quarter, delivering order growth
of 20% over last year.
Operating margin for the quarter was 11.3% compared to 9.3% last
year. On an adjusted basis, our consolidated operating margin of
11.7% was 160 basis points higher than last year. These results
were driven by a combination of gross margin expansion and our
continued focus on managing operating expenses. Gross margin of
39.0%, which was 110 basis points higher than last year, reflected
strong channel and product mix. Our Retail segment delivered
another strong quarter of profitability with an operating margin of
16.7%. At the same time, operating expenses, excluding
restructuring expenses, were down $18.1
million from last year due to a combination of structural
and temporary cost reductions that we put in place to weather the
demand pressures from COVID-19 on our business.
We delivered earnings per share of $0.87 on a reported basis and $0.89 on an adjusted basis for the quarter, which
reflected a year-over-year decrease of 34.1% on a reported basis
and a 1.1% increase on an adjusted basis.
We remain well-positioned with a strong and flexible balance
sheet, with combined liquidity from cash on hand and availability
on our revolving credit facility of $643.1 million at the end of the quarter.
Cash flow from operations during the quarter of $98.7 million reflected an increase of 10.2% over
last year. Our gross-debt to EBITDA ratio of 1.1x is well below the
maximum level of 3.5x outlined in our commercial lending
covenants.
Positioned to Meet the Changing World of Work
The
COVID-19 pandemic has dramatically accelerated the trend toward a
more distributed work model and the strategic investments we have
made position us well to capitalize on this transformational
opportunity. These investments include the expansion of our Retail
business and the additions of naughtone and HAY, which bring
significant strength to our Ancillary and Residential product
portfolios.
The almost overnight shift to work from home caused by the
pandemic has validated the notion that not all work needs to be
done in the office and that people can be productive working from a
dynamic network of locations as long as they have the proper tools
and technology. The last ten months have reinforced our belief that
workplaces serve an important purpose in creating and sustaining
corporate culture and community, that people crave human
interaction and long to feel connected to and part of something
bigger than themselves, and that there is important work that
cannot be done well from home.
In the wake of COVID-19, we believe offices can, and will,
thrive when they offer employees a better experience than can be
had anywhere else, but organizations will have to evolve their
workplaces to meet the changed needs and expectations of their
employees. Our research points to future workplace experiences that
include both productive home office setups and corporate offices
that are easily accessible and highly flexible for group and
individual needs.
This past quarter, we helped our customers rethink their future
workplace strategies while prototyping new approaches in our own
facilities. For employees working at Herman Miller's recently
redesigned Retail headquarters in Stamford, CT, we've evolved our flexible work
policies and empowered team members to work from where they feel is
best on a given day. This includes equipping them with furniture
and technology to support working from home while also improving
the design of our corporate office through a range of
modifications, including:
- Adding social areas for team members to informally connect to
strengthen team culture
- Providing highly-flexible workshop environments to accelerate
product development
- Designating a portion of the space as a "quiet zone" to support
both creative and focused work
- Furnishing our offices with flexible solutions to enable
employees to adapt the space over time
Not only are we well-positioned to reach consumers directly to
help them upgrade their home offices, we are also able to respond
to a growing ask from corporate customers who are looking to
provide productive home office solutions for their employees. Our
global Inside Access program provides support in 66
countries, and upcoming program enhancements include the launch of
several dedicated customer websites as well as targeted work from
home promotions designed to increase the share of non-seating
products through this channel.
The trends we're seeing in our International business also give
us reason to be optimistic about the future, as markets that are
recovering from the pandemic have been showing year-over-year
growth. Our performance outside of North
America is further validation of our strategy to accelerate
profitable growth by developing a high performing sales team,
capturing greater share of our International dealers' business, and
leveraging the opportunities created by the recent additions of HAY
and naughtone in these regions. Early progress on global vaccines
indicates a post-COVID future is on the horizon, which we expect
will accelerate the demand from customers who are looking to begin
redesigning their workspaces.
We are uniquely positioned to serve our customers through
multiple channels with the most comprehensive portfolio of products
in the industry. We are confident in our ability to partner with
them to solve for the next generation workplace by providing
authentic modern designs for their workplaces and their homes.
Strategic Progress
We have remained focused on
creating value for our stakeholders even as we respond to the
challenges created by the pandemic. We entered the second quarter
with a clear set of priorities, and we are very pleased with the
progress we've made toward achieving our goals across all our
strategic pillars.
Accelerating Growth in Retail
Our Retail
business is critical to our overall growth and continues to exceed
our expectations. This growth is partially driven by COVID-related
shifts in the way consumers are investing in and upgrading their
homes, including a focus on home offices. The 219% increase this
quarter in Retail eCommerce orders further validates this shift and
affirms our growing leadership position. That said, we have only
just scratched the surface in terms of the potential of our Retail
business and we continue to differentiate ourselves in this
segment.
Herman Miller Concept
Stores
Perhaps most notable for the quarter, our first
Herman Miller retail seating concept
stores opened in Los Angeles and
New York City. In the early days,
these stores have exceeded our expectations as we seek to educate
customers about the health benefits of ergonomic seating. Sales and
customer traffic at both locations are pacing well ahead of early
expectations. The stores are introducing a whole new customer
segment to Herman Miller with 82% of
visitors to these stores being new to our business.
It goes without saying that
launching an in-person retail concept in the midst of a global
pandemic was a bold move. The team reacted very quickly, pivoting
to open these stores in response to our consumer's desire to
"test-drive" these highly considered home office solutions before
making an investment. We opened two additional stores this month –
including our first international location in Tokyo, Japan as well as Austin, Texas – with additional store openings
planned for later in the fiscal year.
Capitalizing on the Holiday
Shopping Season
Our 2020 holiday shopping campaign, which
began driving demand late in the quarter, was the most
comprehensive marketing and advertising initiative in the history
of our Retail business. Promotions included both Black Friday and
Cyber Week sales across all three Retail brands (Herman Miller, DWR, and HAY), gaming-specific
purchase incentives, and a national performance seating campaign
that included a connected TV commercial. With record sales on the
first day of our Holiday Sale and November orders up more than 60%
over last year, we are encouraged by the strong early results from
these promotions. Our ability to activate these campaigns
simultaneously across brands and channels is further testament to
our growing expertise and the talent we've added to both our
marketing and retail teams in the past year. We are well-positioned
to carry this momentum into the second half of the fiscal year as
customers continue to invest in their homes and home offices.
Gaming Growth
We are
very pleased with the ongoing momentum from our entry into the
rapidly growing gaming market. We extended our portfolio during the
second quarter to include Special Gaming Editions of both the
Aeron® and Sayl® Chair. We have seen incredibly strong and
sustained customer engagement in this new category for Herman Miller in the early days, with more than
one million users visiting our gaming website since launch in late
July. We have received hundreds of media mentions and our
influencer strategy continues to gain traction. We have partnered
directly with nearly 200 content creators to generate excitement
and sustained coverage of our gaming portfolio.
We believe, and have already seen,
that we can make a large impact in the gaming industry by helping
to unlock the performance of all players. As part of that, we are
focused on partnering with industry leaders in gaming technology,
entertainment, and performance. We are excited about, and committed
to, our partnership with Logitech G to deliver next
generation innovation in this category.
Digital Differentiation in North
America and International Contract
Digital
innovation is core to our strategy to differentiate Herman Miller
Group in the Contract business. We have made considerable
investments in our websites and digital tools to improve project
planning, idea generation, and specification capabilities. We will
continue to expand on these solutions as part of our goal to
provide a global, integrated specification capability for the
entire Herman Miller Group portfolio of products.
Equally as important, we continue to develop innovative digital
tools that will improve the effectiveness of, and differentiate,
our dealer network. This past quarter, we completed beta testing
for Compass, our proprietary generative design tool that
uses artificial intelligence to create dynamic floor plans
populated with Herman Miller Group product, and we started rollout
across our North America dealer
network. Compass is one of several solutions in our Atlas
Digital Suite, an integrated set of technology solutions for
our dealers.
Delivering Against Our Better World
Aspirations
Our Better World strategic pillar
focuses on our commitments to our people, planet, and communities.
We aspire to create a better world in all we do and our people
around the world are united in our purpose: "Design for the good of
humankind."
As part of our diversity, equity, and inclusion promise, we
committed to removing barriers to voting in the US by holding our
first "Day of Purpose," a paid day off for employees around the
world on November 3, 2020. This
allowed our US-based employees to exercise their right to vote–and
united our employees in a common purpose to serve our communities.
Together, our 7,500+ employees spent the day giving back to causes
that are important to them in more than 70 communities around the
world. Our global Day of Purpose was an extraordinary day of giving
and exemplifies the power of the Herman Miller Group to be a force
for positive change in our communities.
In addition, we were thrilled to be included in Investor's
Business Daily list of the Top 50 Best Environmental, Social, and
Corporate Governance (ESG) Companies in 2020. This is the second
consecutive year we have received this recognition, and we are the
only company from the household and office furniture category to be
included in the list. Recognition like this validates our continued
commitment to use our business as a force for good and is a
testament to the incredible work our people do every day to drive
results that benefit both our stakeholders and our planet.
Outlook
While we are encouraged by the sustained
momentum we've experienced over the past two quarters, the overall
global demand environment remains uncertain due to the ongoing
pandemic. As a result, we are continuing to suspend quarterly sales
and earnings guidance. However, there are certain factors that we
believe are relevant for investors developing estimates for our
business in the upcoming quarter. Historically, the third quarter
of our fiscal year has reflected sequentially lower sales levels
from the second quarter by approximately 5% to 6% due to a seasonal
slowdown in activity during the holiday period in the Contract
business. This seasonal impact typically results in lower gross
margins during the quarter due to less production leverage from our
manufacturing facilities.
As we look ahead to fiscal 2022, it is important to note that
our spending levels this year have benefited from temporary
reductions in wages, benefit programs, and certain discretionary
items such as travel and entertainment. While some of these costs,
such as temporary salary reductions, have already been reinstated
and are reflected in our current run rates, other categories will
be phased in over time as we evaluate the business conditions
surrounding the global pandemic. While we will remain diligent in
managing our overall cost structure in line with the demand
environment, we expect that temporary cost savings in fiscal 2021
of approximately $50 million to
$60 million will be largely
re-established in fiscal 2022.
While the revenue picture for fiscal 2022 remains uncertain, we
are encouraged by global progress relative to COVID-19 vaccines,
which we believe will help release pent-up demand for office
spaces. We expect to see many organizations make decisions about
investments in their workplaces in the coming months, as they begin
planning for employees to return to their offices. Of course, the
magnitude and timing of this demand remains dependent on vaccine
distribution and ongoing pandemic recovery efforts. We also believe
our Retail strategic initiatives, including new store roll-outs,
product assortment expansion, gaming, and a range of digital
initiatives position our Retail segment for continued growth. These
demand drivers will help support reestablishing these costs.
Commitment to Differentiation and Long-Term Value
Creation
Our second quarter results reflect another quarter
of positive momentum. Our ability to overcome the challenges
brought on by the pandemic further validates our strategy and
reinforces the power of Herman Miller Group. We have an incredibly
talented and highly capable team of people who have done an
extraordinary job navigating these turbulent times. They continue
to lean into the initiatives that are differentiating our business
and creating new opportunities for our organization. Together we
are committed to creating long-term value for our shareholders and
we will continue to leverage our extensive strengths and
capabilities to deliver on our vision for Herman Miller Group.
We wish you all a very happy, healthy, and safe holiday season.
We look forward to sharing in an exciting 2021 and appreciate your
continued investment in Herman
Miller.
Andi
Owen
|
|
Jeff
Stutz
|
|
President and Chief
Executive Officer
|
|
Chief Financial
Officer
|
|
Financial highlights for the three and six months ended
November 28, 2020 follow:
Herman Miller,
Inc.
|
Condensed
Consolidated Statements of Operations
|
|
(Unaudited)
(Dollars in millions, except per share and common share
data)
|
Three Months
Ended
|
|
Six Months
Ended
|
November 28,
2020
|
|
November 30,
2019
|
|
November 28,
2020
|
|
November 30,
2019
|
Net Sales
|
$
|
626.3
|
|
100.0
|
%
|
|
$
|
674.2
|
|
100.0
|
%
|
|
$
|
1,253.0
|
|
100.0
|
%
|
|
$
|
1,345.2
|
|
100.0
|
%
|
Cost of
Sales
|
382.1
|
|
61.0
|
%
|
|
418.7
|
|
62.1
|
%
|
|
758.8
|
|
60.6
|
%
|
|
843.6
|
|
62.7
|
%
|
Gross
Margin
|
244.2
|
|
39.0
|
%
|
|
255.5
|
|
37.9
|
%
|
|
494.2
|
|
39.4
|
%
|
|
501.6
|
|
37.3
|
%
|
Operating
Expenses
|
170.8
|
|
27.3
|
%
|
|
188.9
|
|
28.0
|
%
|
|
326.6
|
|
26.1
|
%
|
|
372.9
|
|
27.7
|
%
|
Restructuring
Expenses
|
2.4
|
|
0.4
|
%
|
|
4.2
|
|
0.6
|
%
|
|
1.2
|
|
0.1
|
%
|
|
6.1
|
|
0.5
|
%
|
Operating
Earnings
|
71.0
|
|
11.3
|
%
|
|
62.4
|
|
9.3
|
%
|
|
166.4
|
|
13.3
|
%
|
|
122.6
|
|
9.1
|
%
|
Gain on Consolidation
of Equity Method Investment
|
—
|
|
—
|
%
|
|
30.5
|
|
4.5
|
%
|
|
0.0
|
|
0.0
|
%
|
|
30.5
|
|
2.3
|
%
|
Other Expenses,
net
|
2.2
|
|
0.4
|
%
|
|
2.6
|
|
0.4
|
%
|
|
3.7
|
|
0.3
|
%
|
|
4.7
|
|
0.3
|
%
|
Earnings Before
Income Taxes and Equity Income
|
68.8
|
|
11.0
|
%
|
|
90.3
|
|
13.4
|
%
|
|
162.7
|
|
13.0
|
%
|
|
148.4
|
|
11.0
|
%
|
Income Tax
Expense
|
16.2
|
|
2.6
|
%
|
|
12.9
|
|
1.9
|
%
|
|
36.9
|
|
2.9
|
%
|
|
25.2
|
|
1.9
|
%
|
Equity Income, net of
tax
|
0.2
|
|
—
|
%
|
|
1.2
|
|
0.2
|
%
|
|
0.4
|
|
—
|
%
|
|
3.4
|
|
0.3
|
%
|
Net
Earnings
|
52.8
|
|
8.4
|
%
|
|
78.6
|
|
11.7
|
%
|
|
126.2
|
|
10.1
|
%
|
|
126.6
|
|
9.4
|
%
|
Net Earnings (Loss)
Attributable to Redeemable Noncontrolling Interests
|
1.5
|
|
0.2
|
%
|
|
—
|
|
—
|
%
|
|
2.0
|
|
0.2
|
%
|
|
(0.2)
|
|
—
|
%
|
Net Earnings
Attributable to Herman Miller, Inc.
|
$
|
51.3
|
|
8.2
|
%
|
|
$
|
78.6
|
|
11.7
|
%
|
|
$
|
124.2
|
|
9.9
|
%
|
|
$
|
126.8
|
|
9.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts per Common
Share Attributable to Herman Miller, Inc.
|
|
Earnings Per Share –
Basic
|
|
$0.87
|
|
|
$1.33
|
|
|
$2.11
|
|
|
$2.15
|
Weighted Average
Basic Common Shares
|
|
58,908,094
|
|
|
59,061,731
|
|
|
58,869,699
|
|
|
58,985,366
|
Earnings Per Share –
Diluted
|
|
$0.87
|
|
|
$1.32
|
|
|
$2.10
|
|
|
$2.14
|
Weighted Average
Diluted Common Shares
|
|
59,267,398
|
|
|
59,402,001
|
|
|
59,043,928
|
|
|
59,318,982
|
Herman Miller,
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
Six Months
Ended
|
(Unaudited)
(Dollars in millions)
|
November 28,
2020
|
|
November 30,
2019
|
Cash provided by
(used in):
|
|
|
|
Operating
activities
|
$
|
214.6
|
|
|
$
|
142.4
|
|
Investing
activities
|
(24.4)
|
|
|
(82.1)
|
|
Financing
activities
|
(276.9)
|
|
|
(40.6)
|
|
Effect of exchange rate
changes
|
10.6
|
|
|
(1.9)
|
|
Net change in cash
and cash equivalents
|
(76.1)
|
|
|
17.8
|
|
Cash and cash
equivalents, beginning of period
|
454.0
|
|
|
159.2
|
|
Cash and cash
equivalents, end of period
|
$
|
377.9
|
|
|
$
|
177.0
|
|
Herman Miller,
Inc.
|
Condensed
Consolidated Balance Sheets
|
|
(Unaudited)
(Dollars in millions)
|
November 28,
2020
|
|
May 30,
2020
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
377.9
|
|
|
$
|
454.0
|
|
Short-term
investments
|
7.2
|
|
|
7.0
|
|
Accounts receivable,
net
|
193.0
|
|
|
180.0
|
|
Unbilled accounts
receivable
|
33.0
|
|
|
19.5
|
|
Inventories,
net
|
191.0
|
|
|
197.3
|
|
Prepaid expenses and
other
|
35.8
|
|
|
59.3
|
|
Total current
assets
|
837.9
|
|
|
917.1
|
|
Net property and
equipment
|
325.9
|
|
|
330.8
|
|
Right of use
assets
|
225.6
|
|
|
193.9
|
|
Other
assets
|
639.1
|
|
|
612.1
|
|
Total
Assets
|
$
|
2,028.5
|
|
|
$
|
2,053.9
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS'
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
164.4
|
|
|
$
|
128.8
|
|
Short-term borrowings
and current portion of long-term debt
|
52.3
|
|
|
51.4
|
|
Accrued
liabilities
|
290.8
|
|
|
290.0
|
|
Total current
liabilities
|
507.5
|
|
|
470.2
|
|
Long-term
debt
|
274.9
|
|
|
539.9
|
|
Lease
liabilities
|
205.7
|
|
|
178.8
|
|
Other
liabilities
|
185.6
|
|
|
171.6
|
|
Total
Liabilities
|
1,173.7
|
|
|
1,360.5
|
|
Redeemable
Noncontrolling Interests
|
56.5
|
|
|
50.4
|
|
Stockholders'
Equity
|
798.3
|
|
|
643.0
|
|
Total Liabilities,
Redeemable Noncontrolling Interests and Stockholders'
Equity
|
$
|
2,028.5
|
|
|
$
|
2,053.9
|
|
Non-GAAP Financial Measures and Other Supplemental
Data
This presentation contains certain non-GAAP financial
measures such as Adjusted Earnings per Share, Adjusted Operating
Earnings (Loss), Adjusted Gross Margin, and Organic Growth
(Decline). Adjusted Earnings per Share represents reported diluted
earnings per share excluding the impact from adjustments related to
restructuring expenses and other special charges or gains,
including related taxes. Adjusted Operating Earnings (Loss)
represents reported operating earnings plus restructuring expenses
and other special charges. Adjusted Gross Margin represents gross
margin plus other special charges. Restructuring expenses include
actions involving facilities consolidation and optimization,
targeted workforce reductions, and costs associated with an early
retirement program. Special charges include costs related to CEO
transition, acquisition-related costs, and certain costs arising as
a direct result of COVID-19. Organic Growth represents the change
in sales and orders, excluding currency translation effects and the
impact of acquisitions. The Company believes these non-GAAP
measures are useful for investors as they provide financial
information on a more comparative basis for the periods
presented.
Adjusted Earnings per Share, Adjusted Operating Earnings (Loss),
Adjusted Gross Margin, and Organic Growth (Decline) are not
measurements of our financial performance under GAAP and should not
be considered an alternative to the related GAAP measurement. These
non-GAAP measures have limitations as analytical tools and should
not be considered in isolation or as a substitute for analysis of
our results as reported under GAAP. Our presentation of non-GAAP
measures should not be construed as an indication that our future
results will be unaffected by unusual or infrequent items. We
compensate for these limitations by providing equal prominence of
our GAAP results.
Certain tables below summarize select financial information, for
the periods indicated, related to each of the Company's reportable
segments. The North America Contract segment includes the
operations associated with the design, manufacture, and sale of
furniture products for work-related settings, including office,
education, and healthcare environments, throughout the United States and Canada. The business associated with the
Company's owned contract furniture dealer is also included in the
North America Contract segment. North America Contract also
includes the operations associated with the design, manufacture,
and sale of high-craft furniture products and textiles including
Geiger wood products, Maharam textiles, Nemschoff healthcare and
Herman Miller Collection products.
The International Contract segment includes the operations
associated with the design, manufacture, and sale of furniture
products, primarily for work-related settings, in the EMEA,
Latin America and Asia-Pacific geographic regions. The Retail
segment includes operations associated with the sale of modern
design furnishings and accessories to third party retail
distributors, as well as direct to consumer sales through
e-commerce and Design Within Reach, HAY, and Herman Miller retail stores and studios.
Corporate costs represent unallocated expenses related to general
corporate functions, including, but not limited to, certain legal,
executive, corporate finance, information technology,
administrative and acquisition-related costs.
A. Reconciliation of Operating Earnings to Adjusted Operating
Earnings by Segment
|
Three Months
Ended
|
Six Months
Ended
|
|
November 28,
2020
|
November 30,
2019
|
November 28,
2020
|
November 30,
2019
|
North America
Contract
|
|
|
|
|
|
|
|
|
Net Sales
|
$
|
323.1
|
|
100.0
|
%
|
$
|
450.6
|
|
100.0
|
%
|
$
|
661.9
|
|
100.0
|
%
|
$
|
909.3
|
|
100.0
|
%
|
Gross
Margin
|
116.2
|
|
36.0
|
%
|
169.3
|
|
37.6
|
%
|
245.2
|
|
37.0
|
%
|
337.0
|
|
37.1
|
%
|
Total Operating
Expenses
|
80.6
|
|
24.9
|
%
|
106.8
|
|
23.7
|
%
|
157.8
|
|
23.8
|
%
|
211.6
|
|
23.3
|
%
|
Operating
Earnings
|
35.6
|
|
11.0
|
%
|
62.5
|
|
13.9
|
%
|
87.4
|
|
13.2
|
%
|
125.4
|
|
13.8
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
0.1
|
|
—
|
%
|
0.2
|
|
—
|
%
|
0.3
|
|
—
|
%
|
0.2
|
|
—
|
%
|
Restructuring
|
0.8
|
|
0.2
|
%
|
3.8
|
|
0.8
|
%
|
2.4
|
|
0.4
|
%
|
5.5
|
|
0.6
|
%
|
Adjusted Operating
Earnings
|
$
|
36.5
|
|
11.3
|
%
|
$
|
66.5
|
|
14.8
|
%
|
$
|
90.1
|
|
13.6
|
%
|
$
|
131.1
|
|
14.4
|
%
|
|
|
|
|
|
|
|
|
|
International
Contract
|
|
|
|
|
|
|
|
|
Net Sales
|
$
|
168.1
|
|
100.0
|
%
|
$
|
118.2
|
|
100.0
|
%
|
$
|
321.7
|
|
100.0
|
%
|
$
|
232.0
|
|
100.0
|
%
|
Gross
Margin
|
60.7
|
|
36.1
|
%
|
40.3
|
|
34.1
|
%
|
115.7
|
|
36.0
|
%
|
80.1
|
|
34.5
|
%
|
Total Operating
Expenses
|
37.3
|
|
22.2
|
%
|
27.5
|
|
23.3
|
%
|
67.3
|
|
20.9
|
%
|
54.2
|
|
23.4
|
%
|
Operating
Earnings
|
23.4
|
|
13.9
|
%
|
12.8
|
|
10.8
|
%
|
48.4
|
|
15.0
|
%
|
25.9
|
|
11.2
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
(0.3)
|
|
(0.2)
|
%
|
0.1
|
|
0.1
|
%
|
0.8
|
|
0.2
|
%
|
0.1
|
|
—
|
%
|
Restructuring
|
1.6
|
|
1.0
|
%
|
0.4
|
|
0.3
|
%
|
(1.2)
|
|
(0.4)
|
%
|
0.6
|
|
0.3
|
%
|
Adjusted Operating
Earnings
|
$
|
24.7
|
|
14.7
|
%
|
$
|
13.3
|
|
11.3
|
%
|
$
|
48.0
|
|
14.9
|
%
|
$
|
26.6
|
|
11.5
|
%
|
|
|
|
|
|
|
|
|
|
Retail
|
|
|
|
|
|
|
|
|
Net Sales
|
$
|
135.1
|
|
100.0
|
%
|
$
|
105.4
|
|
100.0
|
%
|
$
|
269.4
|
|
100.0
|
%
|
$
|
203.9
|
|
100.0
|
%
|
Gross
Margin
|
67.3
|
|
49.8
|
%
|
45.9
|
|
43.5
|
%
|
133.3
|
|
49.5
|
%
|
84.5
|
|
41.4
|
%
|
Total Operating
Expenses
|
44.7
|
|
33.1
|
%
|
46.8
|
|
44.4
|
%
|
81.5
|
|
30.3
|
%
|
89.4
|
|
43.8
|
%
|
Operating Earnings
(Loss)
|
22.6
|
|
16.7
|
%
|
(0.9)
|
|
(0.9)
|
%
|
51.8
|
|
19.2
|
%
|
(4.9)
|
|
(2.4)
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
—
|
|
—
|
%
|
0.1
|
|
—
|
%
|
—
|
|
—
|
%
|
Adjusted Operating
Earnings (Loss)
|
$
|
22.6
|
|
16.7
|
%
|
$
|
(0.9)
|
|
(0.9)
|
%
|
$
|
51.9
|
|
19.3
|
%
|
$
|
(4.9)
|
|
(2.4)
|
%
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
Operating
Loss
|
$
|
(10.6)
|
|
—
|
%
|
$
|
(12.0)
|
|
—
|
%
|
$
|
(21.2)
|
|
—
|
%
|
$
|
(23.8)
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
0.9
|
|
—
|
%
|
—
|
|
—
|
%
|
1.2
|
|
—
|
%
|
Adjusted Operating
Loss
|
$
|
(10.6)
|
|
—
|
%
|
$
|
(11.1)
|
|
—
|
%
|
$
|
(21.2)
|
|
—
|
%
|
$
|
(22.6)
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Herman Miller,
Inc.
|
|
|
|
|
|
|
|
|
Net Sales
|
$
|
626.3
|
|
100.0
|
%
|
$
|
674.2
|
|
100.0
|
%
|
$
|
1,253.0
|
|
100.0
|
%
|
$
|
1,345.2
|
|
100.0
|
%
|
Gross
Margin
|
244.2
|
|
39.0
|
%
|
255.5
|
|
37.9
|
%
|
494.2
|
|
39.4
|
%
|
501.6
|
|
37.3
|
%
|
Total Operating
Expenses
|
173.2
|
|
27.7
|
%
|
193.1
|
|
28.6
|
%
|
327.8
|
|
26.2
|
%
|
379.0
|
|
28.2
|
%
|
Operating
Earnings
|
71.0
|
|
11.3
|
%
|
62.4
|
|
9.3
|
%
|
166.4
|
|
13.3
|
%
|
122.6
|
|
9.1
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
(0.2)
|
|
—
|
%
|
1.2
|
|
0.2
|
%
|
1.2
|
|
0.1
|
%
|
1.5
|
|
0.1
|
%
|
Restructuring
|
2.4
|
|
0.4
|
%
|
4.2
|
|
0.6
|
%
|
1.2
|
|
0.1
|
%
|
6.1
|
|
0.5
|
%
|
Adjusted Operating
Earnings
|
$
|
73.2
|
|
11.7
|
%
|
$
|
67.8
|
|
10.1
|
%
|
$
|
168.8
|
|
13.5
|
%
|
$
|
130.2
|
|
9.7
|
%
|
B. Reconciliation of Earnings per Share to Adjusted Earnings
per Share
|
Three Months
Ended
|
Six Months
Ended
|
|
November 28,
2020
|
November 30,
2019
|
November 28,
2020
|
November 30,
2019
|
Earnings per Share -
Diluted
|
$
|
0.87
|
|
$
|
1.32
|
|
$
|
2.10
|
|
$
|
2.14
|
|
|
|
|
|
|
Less: Gain on
consolidation of equity method investments
|
—
|
|
(0.51)
|
|
—
|
|
(0.51)
|
|
Add: Special charges,
after tax
|
—
|
|
0.02
|
|
0.01
|
|
0.02
|
|
Add: Restructuring
expenses, after tax
|
0.02
|
|
0.05
|
|
0.02
|
|
0.07
|
|
Adjusted Earnings
per Share - Diluted
|
$
|
0.89
|
|
$
|
0.88
|
|
$
|
2.13
|
|
$
|
1.72
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding (used for Calculating Adjusted Earnings per
Share) – Diluted
|
59,267,398
|
|
59,402,001
|
|
59,043,928
|
|
59,318,982
|
|
|
Note: The adjustments
above are net of tax. For the three and six months ended
November 28, 2020 and November 30, 2019, the tax impact
of the adjustments were immaterial.
|
C. Reconciliation of Gross Margin to Adjusted Gross
Margin
|
Three Months
Ended
|
Six Months
Ended
|
|
November 28,
2020
|
November 30,
2019
|
November 28,
2020
|
November 30,
2019
|
Gross
Margin
|
$
|
244.2
|
|
39.0
|
%
|
$
|
255.5
|
|
37.9
|
%
|
$
|
494.2
|
|
39.4
|
%
|
$
|
501.6
|
|
37.3
|
%
|
Special
Charges
|
—
|
|
—
|
%
|
—
|
|
—
|
%
|
1.0
|
|
0.1
|
%
|
—
|
|
—
|
%
|
Adjusted Gross
Margin
|
$
|
244.2
|
|
39.0
|
%
|
$
|
255.5
|
|
37.9
|
%
|
$
|
495.2
|
|
39.5
|
%
|
$
|
501.6
|
|
37.3
|
%
|
D. Organic Sales Growth by Segment
|
Three Months
Ended
|
Three Months
Ended
|
|
November 28,
2020
|
November 30,
2019
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Net Sales, as
reported
|
$
|
323.1
|
|
$
|
168.1
|
|
$
|
135.1
|
|
$
|
626.3
|
|
$
|
450.6
|
|
$
|
118.2
|
|
$
|
105.4
|
|
$
|
674.2
|
|
% change from
PY
|
(28.3)
|
%
|
42.2
|
%
|
28.2
|
%
|
(7.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
Adjustments
|
|
|
|
|
|
|
|
|
Acquisitions
|
(3.5)
|
|
(47.8)
|
|
—
|
|
(51.3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Currency Translation
Effects (1)
|
(0.1)
|
|
(1.4)
|
|
—
|
|
(1.5)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Sales,
organic
|
$
|
319.5
|
|
$
|
118.9
|
|
$
|
135.1
|
|
$
|
573.5
|
|
$
|
450.6
|
|
$
|
118.2
|
|
$
|
105.4
|
|
$
|
674.2
|
|
% change from
PY
|
(29.1)
|
%
|
0.6
|
%
|
28.2
|
%
|
(14.9)
|
%
|
|
|
|
|
|
(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.
|
|
Six Months
Ended
|
Six Months
Ended
|
|
November 28,
2020
|
November 30,
2019
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Net Sales, as
reported
|
$
|
661.9
|
|
$
|
321.7
|
|
$
|
269.4
|
|
$
|
1,253.0
|
|
$
|
909.3
|
|
$
|
232.0
|
|
$
|
203.9
|
|
$
|
1,345.2
|
|
% change from
PY
|
(27.2)
|
%
|
38.7
|
%
|
32.1
|
%
|
(6.9)
|
%
|
|
|
|
|
Proforma
Adjustments
|
|
|
|
|
|
|
|
|
Acquisitions
|
(10.6)
|
|
(87.3)
|
|
—
|
|
(97.9)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Currency Translation
Effects (1)
|
0.2
|
|
(0.3)
|
|
—
|
|
(0.1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Sales,
organic
|
$
|
651.5
|
|
$
|
234.1
|
|
$
|
269.4
|
|
$
|
1,155.0
|
|
$
|
909.3
|
|
$
|
232.0
|
|
$
|
203.9
|
|
$
|
1,345.2
|
|
% change from
PY
|
(28.4)
|
%
|
0.9
|
%
|
32.1
|
%
|
(14.1)
|
%
|
|
|
|
|
|
(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.
|
E. Organic Order Growth by Segment
|
Three Months
Ended
|
Three Months
Ended
|
|
November 28,
2020
|
November 30,
2019
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Orders, as
reported
|
$
|
293.1
|
|
$
|
177.1
|
|
$
|
159.5
|
|
$
|
629.7
|
|
$
|
435.3
|
|
$
|
126.4
|
|
$
|
113.2
|
|
$
|
674.9
|
|
% change from
PY
|
(32.7)
|
%
|
40.1
|
%
|
40.9
|
%
|
(6.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
Adjustments
|
|
|
|
|
|
|
|
|
Acquisitions
|
(3.0)
|
|
(52.7)
|
|
—
|
|
(55.7)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Currency Translation
Effects (1)
|
(0.1)
|
|
(1.7)
|
|
—
|
|
(1.8)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Orders,
organic
|
$
|
290.0
|
|
$
|
122.7
|
|
$
|
159.5
|
|
$
|
572.2
|
|
$
|
435.3
|
|
$
|
126.4
|
|
$
|
113.2
|
|
$
|
674.9
|
|
% change from
PY
|
(33.4)
|
%
|
(2.9)
|
%
|
40.9
|
%
|
(15.2)
|
%
|
|
|
|
|
|
(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
|
|
Six Months
Ended
|
Six Months
Ended
|
|
November 28,
2020
|
November 30,
2019
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Orders, as
reported
|
$
|
573.9
|
|
$
|
324.0
|
|
$
|
287.8
|
|
$
|
1,185.7
|
|
$
|
903.5
|
|
$
|
243.1
|
|
$
|
205.0
|
|
$
|
1,351.6
|
|
% change from
PY
|
(36.5)
|
%
|
33.3
|
%
|
40.4
|
%
|
(12.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
Adjustments
|
|
|
|
|
|
|
|
|
Acquisitions
|
(7.4)
|
|
(94.3)
|
|
—
|
|
(101.7)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Currency Translation
Effects (1)
|
0.2
|
|
(0.6)
|
|
—
|
|
(0.4)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Orders,
organic
|
$
|
566.7
|
|
$
|
229.1
|
|
$
|
287.8
|
|
$
|
1,083.6
|
|
$
|
903.5
|
|
$
|
243.1
|
|
$
|
205.0
|
|
$
|
1,351.6
|
|
% change from
PY
|
(37.3)
|
%
|
(5.8)
|
%
|
40.4
|
%
|
(19.8)
|
%
|
|
|
|
|
|
(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
|
F. Design Within Reach Studio Metrics
|
Studio
Count
|
Studio Selling
Square Footage
|
|
Three Months
Ended
|
Six Months
Ended
|
Three Months
Ended
|
Six Months
Ended
|
|
11/28/20
|
11/30/19
|
11/28/20
|
11/30/19
|
11/28/20
|
11/30/19
|
11/28/20
|
11/30/19
|
Beginning of
Period
|
34
|
|
34
|
|
34
|
|
35
|
|
376,052
|
|
376,052
|
|
376,052
|
|
382,547
|
|
Studio
Openings
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
8,730
|
|
Studio
Closings
|
—
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
—
|
|
—
|
|
(15,225)
|
|
End of
Period
|
34
|
|
34
|
|
34
|
|
34
|
|
376,052
|
|
376,052
|
|
376,052
|
|
376,052
|
|
Comparable Studios,
End of Period*
|
34
|
|
30
|
|
34
|
|
30
|
|
|
|
|
|
Non-Comparable
Studios, End of Period
|
—
|
|
4
|
|
4
|
|
4
|
|
|
|
|
|
DWR Comparable Brand
Sales*
|
(2.9)
|
%
|
3.9
|
%
|
(1.7)
|
%
|
3.4
|
%
|
|
|
|
|
*DWR comparable brand
sales reflect the year-over-year change in net sales across the
multiple channels that DWR serves, including studios, outlets,
contract, catalog, phone and e-commerce. Comparable studios reflect
studios that were fully operational for the applicable current and
prior year periods.
|
Note: Retail segment sales also include sales through
e-commerce, outlet store, call center and wholesale channels.
Q&A Webcast
The Company will host a live question
and answer webcast to discuss the results of the second quarter of
fiscal 2021 on Thursday, December 17, 2020, at 9:30 am 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 leader in design. Since its inception in 1905, the
company's innovative, problem-solving designs and furnishings have
inspired the best in people wherever they live, work, learn, heal,
and play. In 2018, Herman Miller
created Herman Miller Group, a purposefully selected, complementary
family of brands that includes Colebrook Bosson Saunders, DWR,
Geiger, HAY, Maars Living Walls, Maharam, naughtone, and Nemschoff.
Guided by a shared purpose—design for the good of humankind—Herman
Miller Group shapes places that matter for customers while
contributing to a more equitable and sustainable future for all.
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.
View original
content:http://www.prnewswire.com/news-releases/herman-miller-reports-second-quarter-fiscal-2021-results-301194498.html
SOURCE Herman Miller, Inc.