ZEELAND, Mich., March 17, 2021 /PRNewswire/ --
- Retail and International sales growth helps offset near-term
demand pressures in North America Contract
- Retail momentum accelerates with sales growth of 63%, order
growth of 81%, and operating margin of 20.1%
- Consolidated operating margin expansion over the prior
year
Webcast to be held Thursday, March 18, 2021, at
9:30 am ET
Third Quarter Fiscal 2021 Financial Results
|
(Unaudited)
|
(Unaudited)
|
|
Three Months
Ended
|
Nine Months
Ended
|
(Dollars in
millions, except per share data)
|
February 27,
2021
|
February 29,
2020
|
% Chg.
|
February 27,
2021
|
February 29,
2020
|
% Chg.
|
Net Sales
|
$
|
590.5
|
|
$
|
665.7
|
|
(11.3)
|
%
|
$
|
1,843.6
|
|
$
|
2,010.8
|
|
(8.3)
|
%
|
Gross Margin
%
|
39.1
|
%
|
36.5
|
%
|
N/A
|
39.3
|
%
|
37.0
|
%
|
N/A
|
Operating
Expenses
|
$
|
175.5
|
|
$
|
189.4
|
|
(7.3)
|
%
|
$
|
502.2
|
|
$
|
562.3
|
|
(10.7)
|
%
|
Restructuring
Expenses
|
$
|
0.3
|
|
$
|
3.5
|
|
(91.4)
|
%
|
$
|
1.5
|
|
$
|
9.6
|
|
(84.4)
|
%
|
Operating Earnings
%
|
9.3
|
%
|
7.6
|
%
|
N/A
|
12.0
|
%
|
8.6
|
%
|
N/A
|
Adjusted Operating
Earnings %*
|
9.4
|
%
|
9.0
|
%
|
N/A
|
12.2
|
%
|
9.5
|
%
|
N/A
|
Net Earnings
Attributable to Herman Miller, Inc.
|
$
|
41.5
|
|
$
|
37.7
|
|
10.1
|
%
|
$
|
165.7
|
|
$
|
164.5
|
|
0.7
|
%
|
Earnings Per Share –
Diluted
|
$
|
0.70
|
|
$
|
0.64
|
|
9.4
|
%
|
$
|
2.80
|
|
$
|
2.78
|
|
0.7
|
%
|
Adjusted Earnings Per
Share – Diluted*
|
$
|
0.65
|
|
$
|
0.74
|
|
(12.2)
|
%
|
$
|
2.78
|
|
$
|
2.47
|
|
12.6
|
%
|
Orders
|
$
|
566.1
|
|
$
|
651.7
|
|
(13.1)
|
%
|
$
|
1,751.9
|
|
$
|
2,003.3
|
|
(12.5)
|
%
|
Backlog
|
$
|
379.0
|
|
$
|
411.2
|
|
(7.8)
|
%
|
|
|
|
*Items indicated
represent Non-GAAP measurements; see the reconciliations of
Non-GAAP financial measures and related explanations
below.
|
To our shareholders:
As we review our company's performance since the onset of the
pandemic a year ago, we have much to be proud of and even more to
look forward to. We are beginning to see a light at the end of the
tunnel and have a renewed sense of optimism about the future.
We have a Retail business that continues to outperform, contract
segments backed by a leading group of brands primed to leverage
recent growth investments and our global dealer network, and the
most talented and committed team in the industry.
While the post-pandemic world will undoubtedly be different,
change always brings opportunity, and we believe that there has
never been a greater opportunity for Herman Miller. With our
differentiated capabilities and ability to serve both contract and
consumer audiences everywhere they work, live, learn, heal, and
play, we are confident in our ability to continue creating value
for all of our stakeholders.
Diversified Business Model Delivering Strong Profitability in
the Current Environment
Consolidated net sales for the
quarter of $590.5 million were down
by 11% compared to last year and down 13% organically, which
excludes the impact of foreign currency translation. Our Retail and
International segments delivered a resilient performance, which
helped offset continued pressures on the North America Contract
segment as a result of COVID-19. Orders in the quarter of
$566.1 million were down 13% compared
to the prior year on a reported basis and down 14% organically.
Additional perspective on the demand picture for each of our
business segments follows:
Retail Segment
Momentum
continued to accelerate in our Retail businesses, with sales and
order growth rates of 63% and 81% over last year respectively. Both
sales and orders exceeded the year-over-year growth rates in the
prior quarter. Growth was broad-based across our Design Within
Reach, HAY, and Herman Miller retail brands. While we have
certainly benefited from the surge in demand for home offices
generated by the pandemic, with order growth in the category
exceeding 326%, the growth we're experiencing in this segment
extended across all of our retail categories. In fact, excluding
the home office category and DWR Contract, Retail orders grew by
59% over last year.
North America Contract
Segment
Our North America Contract business continued to be
impacted by the pandemic with sales and orders down 35% and 38%
compared to last year, respectively. Positive signs are emerging –
vaccination efforts are progressing, infection and hospitalization
rates have dropped dramatically in recent weeks, customers are
actively preparing to return to their offices, CEO sentiment
measures are improving, and new project inquiries at architecture
and design firms reflect a positive trend over the last six months.
In fact, we had an improved pace of new projects being added to our
sales funnel with 28% sequential improvement from the second
quarter and our pipeline data indicates that the back half of
calendar 2021 is when many customers are anticipating these new
projects will translate into orders associated with returning to
their offices.
International Contract
Segment
Our International business delivered growth in what
remains a challenging demand environment in several key geographies
around the world. Net sales were 6% above last year on a reported
basis and up 1% on an organic basis. Orders were flat on a reported
basis, while down 5% on an organic basis. Regional order growth in
mainland Europe was led by the
continued strength of the HAY brand, while China and Japan also contributed to quarterly growth.
Order demand levels in Mexico and
the Middle East were lower than
last year.
Operating margin for the quarter was 9.3% compared to 7.6% last
year. On an adjusted basis, our consolidated operating margin of
9.4% was 40 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 39.1% was 260
basis points higher than last year, reflecting strong channel and
product mix. The Retail segment delivered another quarter of strong
profitability with an operating margin of 20.1%. Operating expenses
at the consolidated level, excluding restructuring expenses, were
down $13.9 million from last year due
to the combination of structural and temporary cost reductions we
put in place to weather demand pressures from COVID-19.
We delivered earnings per share of $0.70 on a reported basis and $0.65 on an adjusted basis for the quarter, a
year-over-year increase of 9.4% on a reported basis and a 12.2%
decrease on an adjusted basis.
Our liquidity position also remains strong, with cash on hand
and availability on our revolving credit facility totaling
$662.2 million at the end of the
quarter. Cash flow from operations during the quarter totaled
$45.6 million. Our gross-debt to
EBITDA ratio was 1.0x at quarter-end. With cash on hand of
$397.4 million and gross debt of
$327.0 million, our balance sheet
reflected a net cash position at the end of the quarter. After the
end of the quarter, we paid down $50
million of private placement notes at maturity with
available cash on hand.
Return to Offices is on the Horizon
Our Contract
customers share our optimism. We are having more conversations with
customers about their return to office plans, and importantly, the
tone of these conversations has shifted dramatically – moving from
exploration and ideation to urgency and execution. While many
companies are rethinking their long-term real estate strategies,
the workplace will continue to be an important differentiator for
organizations seeking to attract and retain top talent and build
strong corporate cultures.
This sentiment is supported by data. In a recent Future of Work
report, 93% of executives indicated the office would be important
for attracting and retaining talent in the post-pandemic
environment and 96% felt the office would be an important part of
creating a strong corporate culture post-COVID.1
Additionally, according to a recent PwC survey, 75% of executives
expect at least half of their workforce to be back in the office by
July 2021, 68% believe their
employees need to be in the office at least three days a week to
maintain a distinct company culture, and 87% of employees rated
collaborating with their team members and building relationships as
their top needs for the office.2
Our customers recognize they need to be ready to welcome their
people back to a reimagined workplace, where employees have more
flexibility to choose when and where they work, and office
environments foster collaboration and community-building while also
supporting focused work that is not easily done at home. With
consensus building toward a late summer/early fall return to the
office, more and more of our customers are leaning into our
research and thought leadership around the future of the
office to help them finalize their plans for the future.
Throughout the pandemic we have shared our belief that COVID-19
would accelerate a shift we've long been preparing for, where work
can be done from any number of places and the office will need to
become a destination – a place people want to come rather a place
they are required to be. This is exactly what we're seeing as
customers are developing their post-pandemic workplace plans. This
shift in the office landscape will generate incredible opportunity
for Herman Miller Group as customers around the world rethink their
real estate portfolios, redesign their workplaces, and seek to
provide healthy and productive environments everywhere their people
are working.
A New Day for Herman Miller Retail
Our Retail
business delivered the highest quarterly sales level in its history
this quarter. Year-to-date sales growth of 42% is also well in
excess of industry growth of approximately 5% over the same period
(as measured by the U.S. Census Bureau, Furniture and Home
Furnishings Retail Sales). This exceptional performance is a result
of the intentional investments we've made in this segment over the
past two years. Today we have a differentiated Retail business
built for long-term growth and led by an incredibly talented and
experienced team of experts. They bring a deep understanding of
retail trends and consumer behaviors as well as the discipline
necessary to succeed as a true retailer as they continue to
identify opportunities to grow this business.
The investments we're making in our digital and eCommerce
platforms are driving growth, as illustrated by a 313% increase in
digital orders this quarter. Similar to the relaunch of the DWR
website last summer, a redesign of the Herman Miller eCommerce
experience is anticipated this spring, and HAY's North America website will be refreshed later
in 2021. With a much-improved marketing capability, we were able to
capitalize on the 2020 holiday shopping season with the most
comprehensive seasonal marketing campaign in our company's history
that encompassed all three retail brands.
Building on our strategy to capture new customers through a
variety of premium in-person retail experiences tailored to local
market needs, we are celebrating the opening of several physical
locations. We opened a new small format DWR store in Southampton, NY in early March. Following the
successful opening of our first four Herman Miller Seating stores,
we are opening our next store in Greenwich, CT later this month. Finally, last
week we opened our new location in the Fulton Market area of
Chicago. This space will showcase
the entire Herman Miller Group of brands, including both a contract
showroom space and dedicated retail spaces for Design Within Reach,
HAY, and Herman Miller Seating.
Favorable trends in new home construction, home renovation, and
long-term demand for high-performing home office spaces are
expected for the foreseeable future. In fact, in a recent survey of
1,000 office workers who are working at home due to COVID-19, our
research team found that nearly eight out of ten believe a better
home office setup would help them be more productive and 95% agreed
they need improvements such as an ergonomically designed chair,
extra monitor, or height adjustable desk to feel more comfortable
and healthy working from home.
Given the projections of continued demand for home furnishings,
and our own initiatives to drive growth – including expanded
product assortments, digital marketing, new brick-and-mortar
stores, and further expansion of our gaming portfolio – we are
confident in the long-term potential of our Retail business. We
expect to see double digit sales growth and operating margins in
the low teens going forward for this segment.
International Continues to Outperform
Our global
footprint also provides reasons for optimism. In regions where the
impact of the pandemic has already lessened, our customers are
resuming their workplace investments, giving us confidence that we
will see similar rebounds in other regions as the pandemic
retreats.
The recently acquired HAY brand continues to be an important
contributor to our International growth, with quarterly orders 18%
above last year. The HAY team continues to partner with leading
designers around the globe to create high quality products that are
accessible and appealing to a wide audience.
Additionally, our consumer channel business continues to grow
beyond North America. Our latest
Herman Miller Seating Store opened in Tokyo, Japan in December 2020, and is the first outside
the United States. Consistent with
what we've seen in our North
America stores, this new store is outperforming expectations
and bringing new customers to Herman Miller. Our digital
initiatives are also driving results abroad as we've seen strong
performance from our recently relaunched UK eCommerce store.
Recovery in established markets around the world, our growing
presence in emerging markets, and the opportunity to continue to
capture global market share all reinforce our belief that we have
only just begun to unlock the full potential of a truly global
Herman Miller Group.
Innovation as a Differentiator
One of our greatest
strengths has always been our ability to bring innovative solutions
to market. Of course, this includes product innovation–with our
legacy of designing innovative and disruptive products–but today
our focus extends beyond products and includes new business models,
technology, and customer segments.
Our innovation incubation team is a stand-alone function
responsible for identifying emergent concepts that can drive growth
across the enterprise. Early successes include our entry into
gaming, our Herman Miller Seating Stores, and our Inside
Access program that enables our corporate customers to extend
our partnership as a benefit to their employees seeking to furnish
their home environments. Our recent inclusion in Fast
Company's annual list of the World's Most Innovative
Companies further confirms our long-held belief that our innovation
capabilities continue to differentiate Herman Miller from the
competition.
The latest in a series of innovative solutions designed to
accelerate growth in the Contract business is Herman Miller
Professional – a digital ecosystem designed to meet customer demand
for a simple and efficient design and product specification
solution. Herman Miller Professional will deliver seamless online
experiences to small- and medium-sized businesses, a segment that
has historically been underserved by the traditional contract
furniture model, while also helping our dealers capture new clients
and revenue. Businesses will be able to design their spaces with
product from the Herman Miller family of brands, leverage an online
quoting and purchasing process to complete their order, and select
from several delivery options, including white glove service where
appropriate. North America pilots
are planned to begin in the fourth quarter with broader rollout in
fiscal 2022.
Using Our Business as a Force for Good
Our founder,
D.J. De Pree, believed "a business is rightly judged by its
products and services, but it must also face scrutiny as to its
humanity." More than 100 years after our founding, we are as
committed as ever to operating our company in the best interests of
stockholders while also using our business as a force for good.
This past summer we announced a set of actions we would take to
increase diversity, equity, and inclusion (DEI) in our company and
raise awareness about DEI issues in our industry and our
communities. In our third quarter, progress toward our goals
included:
- Welcoming Cheryl Kern as Vice
President of Global Diversity, Equity, and Inclusion. Cheryl will
help us further refine and expand our DEI strategy.
- Extending mitigating bias training beyond senior leadership to
all managers across our global enterprise.
- Partnering with Michael Ford to
host "Conversations for Change." Michael has been touring the
country with a remixed Eames Lounge Chair with the names of victims
of racism in the US handwritten onto the frame. He's been inviting
people of influence to join him for honest conversations about
racial inequity, social justice, and hope for real and lasting
change.
External recognition, including recently being named as one of
Newsweek's Most Responsible Companies of 2020 and our 14th
consecutive inclusion in the Human Rights Campaign Foundation's
Corporate Equality Index, serves as further validation that we are
having a positive impact in the communities where we live and
work.
While more work remains, we are excited by the progress we have
made toward our goals and are committed to doing our part to make
our company, our industry, and our communities a safer and more
equitable place for everyone.
Outlook
While we are encouraged by positive
signs in each of our businesses, the overall global demand
environment and potential pace of recovery remains uncertain. From
a demand perspective, our contract sales funnel is pointing to
increased demand in the back half of calendar 2021. From a cost
perspective, like other industries, we are experiencing commodity
pressures, especially associated with steel prices. We are also
reinstating our employer retirement contributions, which we
temporarily suspended for the first three quarters of fiscal 2021.
Our ongoing cost reduction initiatives and a planned price increase
will help offset these pressures over time.
We are ready to capitalize on the increased demand expected as
the global contract market begins to recover. We believe that
recovery, along with our expectation for sustained momentum in our
Retail business and our global, multi-channel distribution model,
puts us in a strong position to drive growth in our business as we
reach the other side of the global pandemic.
Focused on the Future
Through a challenging quarter
and difficult year, we've stayed focused on our strategy and remain
committed to our purpose–design for the good of humankind. We are
leveraging our deep understanding of how people work and what it
takes to create exceptional workplaces as we walk alongside our
Contract customers to redesign dynamic workplace solutions that
meet the needs of a changed workforce. At the same time, we are
helping our residential customers around the world create home
environments that inspire and improve post-pandemic living. We plan
to continue investing in diversifying our business and product
portfolios, building a high-performing retail business,
strengthening our omni-channel distribution network, and growing
our digital capabilities. We will call upon the incredible talents
of our teams around the world as we respond with speed and agility
to new opportunities that arise as the world continues to evolve
and emerge from this pandemic.
We appreciate your continued investment in our company and look
forward to growing together in the future.
Andi
Owen
|
|
Jeff
Stutz
|
|
President and Chief
Executive Officer
|
|
Chief Financial
Officer
|
|
Financial highlights for the three and nine months ended
February 27, 2021 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 27,
2021
|
|
February 29,
2020
|
|
February 27,
2021
|
|
February 29,
2020
|
Net Sales
|
$
|
590.5
|
|
100.0
|
%
|
|
$
|
665.7
|
|
100.0
|
%
|
|
$
|
1,843.6
|
|
100.0
|
%
|
|
$
|
2,010.8
|
|
100.0
|
%
|
Cost of
Sales
|
359.6
|
|
60.9
|
%
|
|
422.4
|
|
63.5
|
%
|
|
1,118.4
|
|
60.7
|
%
|
|
1,265.9
|
|
63.0
|
%
|
Gross
Margin
|
230.9
|
|
39.1
|
%
|
|
243.3
|
|
36.5
|
%
|
|
725.2
|
|
39.3
|
%
|
|
744.9
|
|
37.0
|
%
|
Operating
Expenses
|
175.5
|
|
29.7
|
%
|
|
189.4
|
|
28.5
|
%
|
|
502.2
|
|
27.2
|
%
|
|
562.3
|
|
28.0
|
%
|
Restructuring
Expenses
|
0.3
|
|
0.1
|
%
|
|
3.5
|
|
0.5
|
%
|
|
1.5
|
|
0.1
|
%
|
|
9.6
|
|
0.5
|
%
|
Operating
Earnings
|
55.1
|
|
9.3
|
%
|
|
50.4
|
|
7.6
|
%
|
|
221.5
|
|
12.0
|
%
|
|
173.0
|
|
8.6
|
%
|
Gain on Consolidation
of Equity Method Investment
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|
30.5
|
|
1.5
|
%
|
Other (Income)
Expenses, net
|
(1.5)
|
|
(0.3)
|
%
|
|
2.8
|
|
0.4
|
%
|
|
2.2
|
|
0.1
|
%
|
|
7.5
|
|
0.4
|
%
|
Earnings Before
Income Taxes and Equity Income
|
56.6
|
|
9.6
|
%
|
|
47.6
|
|
7.2
|
%
|
|
219.3
|
|
11.9
|
%
|
|
196.0
|
|
9.7
|
%
|
Income Tax
Expense
|
13.0
|
|
2.2
|
%
|
|
10.6
|
|
1.6
|
%
|
|
49.9
|
|
2.7
|
%
|
|
35.8
|
|
1.8
|
%
|
Equity (Loss) Income,
net of tax
|
(0.3)
|
|
(0.1)
|
%
|
|
0.3
|
|
—
|
%
|
|
0.1
|
|
—
|
%
|
|
3.7
|
|
0.2
|
%
|
Net
Earnings
|
43.3
|
|
7.3
|
%
|
|
37.3
|
|
5.6
|
%
|
|
169.5
|
|
9.2
|
%
|
|
163.9
|
|
8.2
|
%
|
Net Earnings (Loss)
Attributable to Redeemable Noncontrolling Interests
|
1.8
|
|
0.3
|
%
|
|
(0.4)
|
|
(0.1)
|
%
|
|
3.8
|
|
0.2
|
%
|
|
(0.6)
|
|
—
|
%
|
Net Earnings
Attributable to Herman Miller, Inc.
|
$
|
41.5
|
|
7.0
|
%
|
|
$
|
37.7
|
|
5.7
|
%
|
|
$
|
165.7
|
|
9.0
|
%
|
|
$
|
164.5
|
|
8.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts per Common
Share Attributable to Herman Miller, Inc.
|
|
Earnings Per Share –
Basic
|
$0.70
|
|
$0.64
|
|
$2.81
|
|
$2.79
|
|
Weighted Average
Basic Common Shares
|
58,979,730
|
|
58,940,060
|
|
58,906,376
|
|
58,970,264
|
|
Earnings Per Share –
Diluted
|
$0.70
|
|
$0.64
|
|
$2.80
|
|
$2.78
|
|
Weighted Average
Diluted Common Shares
|
59,602,638
|
|
59,218,101
|
|
59,212,447
|
|
59,266,929
|
|
Herman Miller, Inc.
Condensed Consolidated
Statements of Cash Flows
|
Nine Months
Ended
|
(Unaudited)
(Dollars in millions)
|
February 27,
2021
|
|
February 29,
2020
|
Cash provided by
(used in):
|
|
|
|
Operating
activities
|
$
|
260.1
|
|
|
$
|
191.8
|
|
Investing
activities
|
(42.9)
|
|
|
(171.3)
|
|
Financing
activities
|
(287.3)
|
|
|
(69.8)
|
|
Effect of exchange rate
changes
|
13.5
|
|
|
0.7
|
|
Net change in cash
and cash equivalents
|
(56.6)
|
|
|
(48.6)
|
|
Cash and cash
equivalents, beginning of period
|
454.0
|
|
|
159.2
|
|
Cash and cash
equivalents, end of period
|
$
|
397.4
|
|
|
$
|
110.6
|
|
Herman Miller, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(Dollars in millions)
|
February 27,
2021
|
|
May 30,
2020
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
397.4
|
|
|
$
|
454.0
|
|
Short-term
investments
|
7.5
|
|
|
7.0
|
|
Accounts receivable,
net
|
190.7
|
|
|
180.0
|
|
Unbilled accounts
receivable
|
29.1
|
|
|
19.5
|
|
Inventories,
net
|
201.0
|
|
|
197.3
|
|
Prepaid expenses and
other
|
42.8
|
|
|
59.3
|
|
Total current
assets
|
868.5
|
|
|
917.1
|
|
Net property and
equipment
|
326.0
|
|
|
330.8
|
|
Right of use
assets
|
222.9
|
|
|
193.9
|
|
Other
assets
|
637.5
|
|
|
612.1
|
|
Total
Assets
|
$
|
2,054.9
|
|
|
$
|
2,053.9
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS'
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
159.4
|
|
|
$
|
128.8
|
|
Short-term borrowings
and current portion of long-term debt
|
52.1
|
|
|
51.4
|
|
Accrued
liabilities
|
288.4
|
|
|
290.0
|
|
Total current
liabilities
|
499.9
|
|
|
470.2
|
|
Long-term
debt
|
274.9
|
|
|
539.9
|
|
Lease
liabilities
|
200.6
|
|
|
178.8
|
|
Other
liabilities
|
170.3
|
|
|
171.6
|
|
Total
Liabilities
|
1,145.7
|
|
|
1,360.5
|
|
Redeemable
Noncontrolling Interests
|
59.1
|
|
|
50.4
|
|
Stockholders'
Equity
|
850.1
|
|
|
643.0
|
|
Total Liabilities,
Redeemable Noncontrolling Interests and Stockholders'
Equity
|
$
|
2,054.9
|
|
|
$
|
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
|
Nine Months
Ended
|
|
February 27,
2021
|
February 29,
2020
|
February 27,
2021
|
February 29,
2020
|
North America
Contract
|
|
|
|
|
|
|
|
|
Net Sales
|
$
|
268.2
|
|
100.0
|
%
|
$
|
413.4
|
|
100.0
|
%
|
$
|
930.2
|
|
100.0
|
%
|
$
|
1,322.5
|
|
100.0
|
%
|
Gross
Margin
|
93.0
|
|
34.7
|
%
|
150.1
|
|
36.3
|
%
|
338.4
|
|
36.4
|
%
|
487.0
|
|
36.8
|
%
|
Total Operating
Expenses
|
81.1
|
|
30.2
|
%
|
98.9
|
|
23.9
|
%
|
239.1
|
|
25.7
|
%
|
310.6
|
|
23.5
|
%
|
Operating
Earnings
|
11.9
|
|
4.4
|
%
|
51.2
|
|
12.4
|
%
|
99.3
|
|
10.7
|
%
|
176.4
|
|
13.3
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
0.4
|
|
0.1
|
%
|
0.3
|
|
—
|
%
|
0.7
|
|
0.1
|
%
|
Restructuring
|
0.2
|
|
0.1
|
%
|
1.4
|
|
0.3
|
%
|
2.6
|
|
0.3
|
%
|
6.9
|
|
0.5
|
%
|
Adjusted Operating
Earnings
|
$
|
12.1
|
|
4.5
|
%
|
$
|
53.0
|
|
12.8
|
%
|
$
|
102.2
|
|
11.0
|
%
|
$
|
184.0
|
|
13.9
|
%
|
|
|
|
|
|
|
|
|
|
International
Contract
|
|
|
|
|
|
|
|
|
Net Sales
|
$
|
165.7
|
|
100.0
|
%
|
$
|
156.1
|
|
100.0
|
%
|
$
|
487.4
|
|
100.0
|
%
|
$
|
388.1
|
|
100.0
|
%
|
Gross
Margin
|
60.0
|
|
36.2
|
%
|
50.8
|
|
32.5
|
%
|
175.6
|
|
36.0
|
%
|
130.9
|
|
33.7
|
%
|
Total Operating
Expenses
|
37.5
|
|
22.6
|
%
|
39.5
|
|
25.3
|
%
|
104.7
|
|
21.5
|
%
|
93.6
|
|
24.1
|
%
|
Operating
Earnings
|
22.5
|
|
13.6
|
%
|
11.3
|
|
7.2
|
%
|
70.9
|
|
14.5
|
%
|
37.3
|
|
9.6
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
5.0
|
|
3.2
|
%
|
0.8
|
|
0.2
|
%
|
5.0
|
|
1.3
|
%
|
Restructuring
|
0.1
|
|
0.1
|
%
|
0.4
|
|
0.3
|
%
|
(1.1)
|
|
(0.2)
|
%
|
1.0
|
|
0.3
|
%
|
Adjusted Operating
Earnings
|
$
|
22.6
|
|
13.6
|
%
|
$
|
16.7
|
|
10.7
|
%
|
$
|
70.6
|
|
14.5
|
%
|
$
|
43.3
|
|
11.2
|
%
|
|
|
|
|
|
|
|
|
|
Retail
|
|
|
|
|
|
|
|
|
Net Sales
|
$
|
156.6
|
|
100.0
|
%
|
$
|
96.2
|
|
100.0
|
%
|
$
|
426.0
|
|
100.0
|
%
|
$
|
300.2
|
|
100.0
|
%
|
Gross
Margin
|
77.9
|
|
49.7
|
%
|
42.4
|
|
44.1
|
%
|
211.2
|
|
49.6
|
%
|
127.0
|
|
42.3
|
%
|
Total Operating
Expenses
|
46.4
|
|
29.6
|
%
|
44.0
|
|
45.7
|
%
|
127.9
|
|
30.0
|
%
|
133.4
|
|
44.4
|
%
|
Operating Earnings
(Loss)
|
31.5
|
|
20.1
|
%
|
(1.6)
|
|
(1.7)
|
%
|
83.3
|
|
19.6
|
%
|
(6.4)
|
|
(2.1)
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
—
|
|
—
|
%
|
0.1
|
|
—
|
%
|
—
|
|
—
|
%
|
Restructuring
|
—
|
|
—
|
%
|
1.7
|
|
1.8
|
%
|
—
|
|
—
|
%
|
1.7
|
|
0.6
|
%
|
Adjusted Operating
Earnings (Loss)
|
$
|
31.5
|
|
20.1
|
%
|
$
|
0.1
|
|
0.1
|
%
|
$
|
83.4
|
|
19.6
|
%
|
$
|
(4.7)
|
|
(1.6)
|
%
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
Operating
Loss
|
$
|
(10.8)
|
|
—
|
%
|
$
|
(10.5)
|
|
—
|
%
|
$
|
(32.0)
|
|
—
|
%
|
$
|
(34.3)
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
0.7
|
|
—
|
%
|
—
|
|
—
|
%
|
1.9
|
|
—
|
%
|
Adjusted Operating
Loss
|
$
|
(10.8)
|
|
—
|
%
|
$
|
(9.8)
|
|
—
|
%
|
$
|
(32.0)
|
|
—
|
%
|
$
|
(32.4)
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Herman Miller,
Inc.
|
|
|
|
|
|
|
|
|
Net Sales
|
$
|
590.5
|
|
100.0
|
%
|
$
|
665.7
|
|
100.0
|
%
|
$
|
1,843.6
|
|
100.0
|
%
|
$
|
2,010.8
|
|
100.0
|
%
|
Gross
Margin
|
230.9
|
|
39.1
|
%
|
243.3
|
|
36.5
|
%
|
725.2
|
|
39.3
|
%
|
744.9
|
|
37.0
|
%
|
Total Operating
Expenses
|
175.8
|
|
29.8
|
%
|
192.9
|
|
29.0
|
%
|
503.7
|
|
27.3
|
%
|
571.9
|
|
28.4
|
%
|
Operating
Earnings
|
55.1
|
|
9.3
|
%
|
50.4
|
|
7.6
|
%
|
221.5
|
|
12.0
|
%
|
173.0
|
|
8.6
|
%
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
6.1
|
|
0.9
|
%
|
1.2
|
|
0.1
|
%
|
7.6
|
|
0.4
|
%
|
Restructuring
|
0.3
|
|
0.1
|
%
|
3.5
|
|
0.5
|
%
|
1.5
|
|
0.1
|
%
|
9.6
|
|
0.5
|
%
|
Adjusted Operating
Earnings
|
$
|
55.4
|
|
9.4
|
%
|
$
|
60.0
|
|
9.0
|
%
|
$
|
224.2
|
|
12.2
|
%
|
$
|
190.2
|
|
9.5
|
%
|
B. Reconciliation of Earnings per Share to Adjusted Earnings
per Share
|
Three Months
Ended
|
Nine Months
Ended
|
|
February 27,
2021
|
February 29,
2020
|
February 27,
2021
|
February 29,
2020
|
Earnings per Share -
Diluted
|
$
|
0.70
|
|
$
|
0.64
|
|
$
|
2.80
|
|
$
|
2.78
|
|
|
|
|
|
|
Less: Gain on
consolidation of equity method investments
|
—
|
|
—
|
|
—
|
|
(0.51)
|
|
Less: Gain on legal
settlement, after tax
|
(0.05)
|
|
—
|
|
(0.05)
|
|
—
|
|
Add: Special charges,
after tax
|
—
|
|
0.06
|
|
0.01
|
|
0.08
|
|
Add: Restructuring
expenses, after tax
|
—
|
|
0.04
|
|
0.02
|
|
0.12
|
|
Adjusted Earnings
per Share - Diluted
|
$
|
0.65
|
|
$
|
0.74
|
|
$
|
2.78
|
|
$
|
2.47
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding (used for Calculating Adjusted Earnings per
Share) – Diluted
|
59,602,638
|
|
59,218,101
|
|
59,212,447
|
|
59,266,929
|
|
Note: The adjustments
above are net of tax. For the three and nine months ended
February 27, 2021 and February 29, 2020, the tax impact
of the adjustments were immaterial.
|
C. Reconciliation of Gross Margin to Adjusted Gross
Margin
|
Three Months
Ended
|
Nine Months
Ended
|
|
February 27,
2021
|
February 29,
2020
|
February 27,
2021
|
February 29,
2020
|
Gross
Margin
|
$
|
230.9
|
|
39.1
|
%
|
$
|
243.3
|
|
36.5
|
%
|
$
|
725.2
|
|
39.3
|
%
|
$
|
744.9
|
|
37.0
|
%
|
Special
Charges
|
—
|
|
—
|
%
|
1.4
|
|
0.3
|
%
|
1.0
|
|
0.1
|
%
|
1.4
|
|
0.1
|
%
|
Adjusted Gross
Margin
|
$
|
230.9
|
|
39.1
|
%
|
$
|
244.7
|
|
36.8
|
%
|
$
|
726.2
|
|
39.4
|
%
|
$
|
746.3
|
|
37.1
|
%
|
D. Organic Sales Growth by Segment
|
Three Months
Ended
|
Three Months
Ended
|
|
February 27,
2021
|
February 29,
2020
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Net Sales, as
reported
|
$
|
268.2
|
|
$
|
165.7
|
|
$
|
156.6
|
|
$
|
590.5
|
|
$
|
413.4
|
|
$
|
156.1
|
|
$
|
96.2
|
|
$
|
665.7
|
|
% change from
PY
|
(35.1)
|
%
|
6.1
|
%
|
62.8
|
%
|
(11.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Currency Translation
Effects (1)
|
(0.5)
|
|
(7.8)
|
|
(0.1)
|
|
(8.4)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Sales,
organic
|
$
|
267.7
|
|
$
|
157.9
|
|
$
|
156.5
|
|
$
|
582.1
|
|
$
|
413.4
|
|
$
|
156.1
|
|
$
|
96.2
|
|
$
|
665.7
|
|
% change from
PY
|
(35.2)
|
%
|
1.2
|
%
|
62.7
|
%
|
(12.6)
|
%
|
|
|
|
|
(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.
|
|
Nine Months
Ended
|
Nine Months
Ended
|
|
February 27,
2021
|
February 29,
2020
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Net Sales, as
reported
|
$
|
930.2
|
|
$
|
487.4
|
|
$
|
426.0
|
|
$
|
1,843.6
|
|
$
|
1,322.5
|
|
$
|
388.1
|
|
$
|
300.2
|
|
$
|
2,010.8
|
|
% change from
PY
|
(29.7)
|
%
|
25.6
|
%
|
41.9
|
%
|
(8.3)
|
%
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Acquisitions
|
(10.6)
|
|
(87.3)
|
|
—
|
|
(97.9)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Currency Translation
Effects (1)
|
(0.3)
|
|
(8.1)
|
|
(0.1)
|
|
(8.5)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Sales,
organic
|
$
|
919.3
|
|
$
|
392.0
|
|
$
|
425.9
|
|
$
|
1,737.2
|
|
$
|
1,322.5
|
|
$
|
388.1
|
|
$
|
300.2
|
|
$
|
2,010.8
|
|
% change from
PY
|
(30.5)
|
%
|
1.0
|
%
|
41.9
|
%
|
(13.6)
|
%
|
|
|
|
|
(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
|
|
February 27,
2021
|
February 29,
2020
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Orders, as
reported
|
$
|
250.0
|
|
$
|
159.9
|
|
$
|
156.2
|
|
$
|
566.1
|
|
$
|
405.9
|
|
$
|
159.4
|
|
$
|
86.4
|
|
$
|
651.7
|
|
% change from
PY
|
(38.4)
|
%
|
0.3
|
%
|
80.8
|
%
|
(13.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Currency Translation
Effects (1)
|
(0.5)
|
|
(7.9)
|
|
(0.1)
|
|
(8.5)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Orders,
organic
|
$
|
249.5
|
|
$
|
152.0
|
|
$
|
156.1
|
|
$
|
557.6
|
|
$
|
405.9
|
|
$
|
159.4
|
|
$
|
86.4
|
|
$
|
651.7
|
|
% change from
PY
|
(38.5)
|
%
|
(4.6)
|
%
|
80.7
|
%
|
(14.4)
|
%
|
|
|
|
|
(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
|
|
Nine Months
Ended
|
Nine Months
Ended
|
|
February 27,
2021
|
February 29,
2020
|
|
North
America
|
International
|
Retail
|
Total
|
North
America
|
International
|
Retail
|
Total
|
Orders, as
reported
|
$
|
824.0
|
|
$
|
483.9
|
|
$
|
444.0
|
|
$
|
1,751.9
|
|
$
|
1,309.5
|
|
$
|
402.4
|
|
$
|
291.4
|
|
$
|
2,003.3
|
|
% change from
PY
|
(37.1)
|
%
|
20.3
|
%
|
52.4
|
%
|
(12.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Acquisitions
|
(7.4)
|
|
(94.3)
|
|
—
|
|
(101.7)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Currency Translation
Effects (1)
|
(0.3)
|
|
(8.5)
|
|
(0.1)
|
|
(8.9)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Orders,
organic
|
$
|
816.3
|
|
$
|
381.1
|
|
$
|
443.9
|
|
$
|
1,641.3
|
|
$
|
1,309.5
|
|
$
|
402.4
|
|
$
|
291.4
|
|
$
|
2,003.3
|
|
% change from
PY
|
(37.7)
|
%
|
(5.3)
|
%
|
52.3
|
%
|
(18.1)
|
%
|
|
|
|
|
(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
|
F. Design Within Reach Studio Metrics
|
Studio
Count
|
Studio Selling
Square Footage
|
|
Three Months
Ended
|
Nine Months
Ended
|
Three Months
Ended
|
Nine Months
Ended
|
|
2/27/21
|
2/29/20
|
2/27/21
|
2/29/20
|
2/27/21
|
2/29/20
|
2/27/21
|
2/29/20
|
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*
|
20.9
|
%
|
1.1
|
%
|
5.8
|
%
|
2.6
|
%
|
|
|
|
|
*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 third quarter of
fiscal 2021 on Thursday, March 18, 2021, 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. These include
statements regarding outlook, future growth opportunities,
expectations regarding the COVID-19 pandemic and recovery and
innovation initiatives. These include statements under the
"Outlook" and "Focused on the Future" sections of this release, as
well as other statements regarding our growth opportunities,
expectations regarding the COVID-19 pandemic and recovery and
innovation initiatives. 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.
1 Ernst & Young, LLP and Urban Land
Institute. Future of Work. October
2020.
2 PwC. US Remote Work Survey. January 2021.
View original
content:http://www.prnewswire.com/news-releases/herman-miller-reports-third-quarter-fiscal-2021-results-301249660.html
SOURCE Herman Miller, Inc.