ZEELAND, Mich.,
March 21, 2018 /PRNewswire/ --
- Year-over-year sales growth of 10.2%; broad-based across all
segments
- 32% increase in reported EPS (adjusted EPS growth of
28%)
- 580 basis point improvement in Consumer operating margins
over last year
Webcast to be held Wednesday, March 21, 2018, at
5:00 PM ET
Release
|
Immediate
|
Date
|
March 21,
2018
|
Contact
|
Kevin Veltman (616)
654-3973 or kevin_veltman@hermanmiller.com
|
|
Jeff Stutz (616)
654-8538 or jeff_stutz@hermanmiller.com
|
|
Media (616) 654-5977
or media_relations@hermanmiller.com
|
Address
|
Herman Miller, Inc.,
855 East Main Avenue, PO Box 302, Zeeland, MI
49464-0302
|
Internet
|
www.hermanmiller.com
|
NOTE: A data supplement with additional financial information
relating to the periods covered by this press release is available
for download from the Company's website at
http://www.hermanmiller.com/about-us/investors.html.
Herman Miller, Inc. (NASDAQ:
MLHR) today announced results for its third quarter ended
March 3, 2018. Net sales in the quarter totaled $578.4 million, an increase of 10.2% from the
same quarter last fiscal year. New orders in the third quarter of
$563.2 million were 3.7% above the
prior year level.
Herman Miller reported net
earnings of $0.49 per share on a
diluted basis in the third quarter compared to diluted earnings per
share of $0.37 in the same quarter
last fiscal year. Excluding the impact of certain special charges
and the one-time impact of the U.S. Tax Cuts and Jobs Act
recognized in the period, adjusted earnings per share in the third
quarter totaled $0.50, compared to
adjusted earnings per share of $0.39
in the third quarter of last fiscal year.
Brian Walker, Chief Executive
Officer, stated, "Broad-based sales growth across all of our
business segments was a clear highlight for the quarter, led by
strong double-digit growth from our International and Consumer
business segments. We were particularly encouraged that the
acceleration in sales for the Consumer business resulted in
meaningful improvement in operating margins for the segment as we
execute on this important strategic priority. While order levels in
North America reflected the
project-based nature of the industry during the quarter, a
favorable macro-economic picture and the potential for U.S. tax
reform to be a catalyst for industry demand provide a supportive
backdrop going forward. Highlighting our strategy of expanding our
addressable markets, our International, Consumer and Specialty
business segments each delivered strong order growth this quarter.
With our collection of leading brands, a global multi-channel
distribution capability and focus on our five key strategic
priorities, we are well-positioned to drive sustainable long-term
growth."
Third Quarter Fiscal 2018 Financial Results
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
(Dollars in
millions, except per share data)
|
(Unaudited)
|
(Unaudited)
|
|
Three Months
Ended
|
Nine Months
Ended
|
|
3/3/2018
|
3/4/2017
|
%
Chg.
|
3/3/2018
|
3/4/2017
|
%
Chg.
|
|
(13
weeks)
|
(13
weeks)
|
|
(39
weeks)
|
(40
weeks)
|
|
Net Sales
|
$
|
578.4
|
|
$
|
524.9
|
|
10.2
|
%
|
$
|
1,763.2
|
|
$
|
1,701.0
|
|
3.7
|
%
|
Gross Margin
%
|
35.6
|
%
|
37.2
|
%
|
N/A
|
|
36.6
|
%
|
37.8
|
%
|
N/A
|
|
Operating
Expenses
|
$
|
167.5
|
|
$
|
157.8
|
|
6.1
|
%
|
$
|
505.4
|
|
$
|
498.7
|
|
1.3
|
%
|
Restructuring
Expenses
|
$
|
—
|
|
$
|
2.7
|
|
(100.0)
|
%
|
$
|
1.9
|
|
$
|
3.7
|
|
(48.6)
|
%
|
Operating Earnings
%
|
6.6
|
%
|
6.7
|
%
|
N/A
|
|
7.8
|
%
|
8.3
|
%
|
N/A
|
|
Adjusted Operating
Earnings %*
|
7.3
|
%
|
7.0
|
%
|
N/A
|
|
8.2
|
%
|
8.5
|
%
|
N/A
|
|
Adjusted
EBITDA*
|
$
|
61.6
|
|
$
|
52.6
|
|
17.1
|
%
|
$
|
199.5
|
|
$
|
188.0
|
|
6.1
|
%
|
Net Earnings
Attributable to Herman Miller, Inc.
|
$
|
29.8
|
|
$
|
22.5
|
|
32.4
|
%
|
$
|
96.3
|
|
$
|
90.5
|
|
6.4
|
%
|
Earnings Per Share –
Diluted
|
$
|
0.49
|
|
$
|
0.37
|
|
32.4
|
%
|
$
|
1.60
|
|
$
|
1.50
|
|
6.7
|
%
|
Adjusted Earnings Per
Share – Diluted*
|
$
|
0.50
|
|
$
|
0.39
|
|
28.2
|
%
|
$
|
1.64
|
|
$
|
1.52
|
|
7.9
|
%
|
Orders
|
$
|
563.2
|
|
$
|
543.2
|
|
3.7
|
%
|
$
|
1,787.4
|
|
$
|
1,714.7
|
|
4.2
|
%
|
Backlog
|
$
|
341.7
|
|
$
|
331.6
|
|
3.0
|
%
|
|
|
|
*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 2018
totaled 35.6%, representing a 160 basis point decrease from the
level reported in the same quarter of last fiscal year. Operating
expenses in the third quarter were $167.5
million compared to $157.8
million in the same quarter a year ago. Operating expenses
included certain special charges totaling $3.9 million in the third quarter of fiscal 2018.
These items related primarily to costs associated with the planned
CEO transition announced in February and external consulting fees
associated with the Company's profit enhancement initiatives.
Herman Miller's effective income
tax rate in the third quarter was 19.0%, compared to 29.8% in the
same quarter last fiscal year. The effective tax rate in the third
quarter includes the impact of the recently enacted U.S. Tax Cuts
and Jobs Act (the "Act"). In addition to a lower ongoing U.S. tax
rate, the third quarter rate reflects adjustments related to the
initial application of the Act, including the re-measurement of net
current and deferred tax liabilities and the required recognition
of tax expense associated with the deemed repatriation of
accumulated foreign earnings. Excluding the impact of these initial
application adjustments, the adjusted effective tax rate for the
quarter was 25.8%.
Jeff Stutz, Chief Financial
Officer, noted, "The organization has continued to do a nice job
adjusting overall spending levels in response to ongoing gross
margin pressures across the business, including the impact of
competitive price discounting, commodity cost inflation and
shifting product mix. These efforts were aided by further progress
towards the overall cost reduction targets we outlined last year.
While a portion of these savings are being utilized to help fund
growth initiatives and offset inflationary pressures, this
initiative remains a key component in achieving our long-term
profitability target. The combination of strong operating
performance and the benefit of a lower U.S. tax rate helped drive a
28% increase in adjusted earnings per share this quarter."
Mr. Stutz continued, "While we continue to feel our business is
poised to benefit from our strategic position and a generally
strong economic picture, sluggish order rates in North America this quarter and ongoing
discounting, product mix and commodity pressures are reflected in
our outlook for the upcoming fourth quarter."
The Company ended the third quarter with total cash and cash
equivalents of $193.0 million, an
increase of $96.8 million from the
balance at the end of fiscal 2017. Cash flow generated from
operations in the third quarter of $29.2
million compared to $27.8
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 2018:
Organic Sales
Growth (Decline) by Segment *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Three Months
Ended
|
|
3/3/18
|
3/4/17
|
|
North
America
|
ELA
|
Specialty
|
Consumer
|
Total
|
North
America
|
ELA
|
Specialty
|
Consumer
|
Total
|
Net Sales, as
reported
|
$
|
316.4
|
|
$
|
102.6
|
|
$
|
72.6
|
|
$
|
86.8
|
|
$
|
578.4
|
|
$
|
294.5
|
|
$
|
88.0
|
|
$
|
69.3
|
|
$
|
73.1
|
|
$
|
524.9
|
|
% change from
PY
|
7.4
|
%
|
16.6
|
%
|
4.8
|
%
|
18.7
|
%
|
10.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
Adjustments
|
|
|
|
|
|
|
|
|
|
|
Dealer
Divestitures
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2.6)
|
|
—
|
|
—
|
|
—
|
|
(2.6)
|
|
Currency Translation
Effects (1)
|
(1.1)
|
|
(5.0)
|
|
—
|
|
(0.1)
|
|
(6.2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Sales,
organic
|
$
|
315.3
|
|
$
|
97.6
|
|
$
|
72.6
|
|
$
|
86.7
|
|
$
|
572.2
|
|
$
|
291.9
|
|
$
|
88.0
|
|
$
|
69.3
|
|
$
|
73.1
|
|
$
|
522.3
|
|
% change from
PY
|
8.0
|
%
|
10.9
|
%
|
4.8
|
%
|
18.6
|
%
|
9.6
|
%
|
|
|
|
|
|
Organic Order
Growth (Decline) by Segment *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Three Months
Ended
|
|
3/3/18
|
3/4/17
|
|
North
America
|
ELA
|
Specialty
|
Consumer
|
Total
|
North
America
|
ELA
|
Specialty
|
Consumer
|
Total
|
Orders, as
reported
|
$
|
294.7
|
|
$
|
113.9
|
|
$
|
71.2
|
|
$
|
83.4
|
|
$
|
563.2
|
|
$
|
318.3
|
|
$
|
85.5
|
|
$
|
66.3
|
|
$
|
73.1
|
|
$
|
543.2
|
|
% change from
PY
|
(7.4)
|
%
|
33.2
|
%
|
7.4
|
%
|
14.1
|
%
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
Adjustments
|
|
|
|
|
|
|
|
|
|
|
Dealer
Divestitures
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6.9)
|
|
—
|
|
—
|
|
—
|
|
(6.9)
|
|
Currency Translation
Effects (1)
|
(1.1)
|
|
(5.1)
|
|
—
|
|
(0.1)
|
|
(6.3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Orders,
proforma
|
$
|
293.6
|
|
$
|
108.8
|
|
$
|
71.2
|
|
$
|
83.3
|
|
$
|
556.9
|
|
$
|
311.4
|
|
$
|
85.5
|
|
$
|
66.3
|
|
$
|
73.1
|
|
$
|
536.3
|
|
% change from
PY
|
(5.7)
|
%
|
27.3
|
%
|
7.4
|
%
|
14.0
|
%
|
3.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
* 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 2018 Guidance
Looking forward, Herman Miller
expects net sales in the fourth quarter of fiscal 2018 to be in the
range of $590 million to $610 million. On an organic basis, adjusted for
the impact of dealer divestitures and foreign currency translation,
this forecast implies sales growth of 4% compared to the fourth
quarter of the prior year at the mid-point of the range.
On a GAAP basis, diluted earnings per share for the fourth
quarter of fiscal 2018 is expected to range between $0.49 to
$0.53. The Company expects adjusted
diluted earnings per share to range between $0.56 to $0.60.
Adjusted earnings per share excludes an estimated $6 million to $7
million of pre-tax restructuring and other charges expected
in the fourth quarter of fiscal 2018.
This earnings per share guidance reflects an anticipated
effective tax rate of 23% to 25% for the fourth quarter of fiscal
2018. Looking ahead, we expect our full year tax rate in fiscal
2019 to be 21% to 23%, which reflects a full year of the lower U.S.
federal tax rate, anticipated mix of domestic and foreign earnings
and the impact of state income taxes.
Supplemental Information and Webcast
The Company has created a supplemental data report which
provides additional information relevant to its quarterly results.
This document can be accessed via a link on the Investors section
of the Company's website at
http://www.hermanmiller.com/about-us/investors.html.
The Company will host a live webcast to discuss the results of
the third quarter of fiscal 2018 on Wednesday, March 21, 2018,
at 5:00 p.m. ET. To ensure your
access to the webcast, you should allow extra time to visit the
Company's website at www.hermanmiller.com to download the streaming
software necessary to participate. An online archive of the
presentation will be available on the website later that day.
About Herman Miller
Herman Miller is a globally
recognized provider of furnishings and related technologies
and services. Headquartered in West
Michigan, the 112-year-old company has relied on innovative
design to solve problems wherever people work, live, learn, and
heal. With recognizable designs as part of museum collections
worldwide, Herman Miller is a past
recipient of the Smithsonian Institution's Cooper Hewitt National
Design Award and has been ranked number one on Contract Magazine's
list of "Brands that Inspire" for four straight years. Known and
respected for its leadership in corporate social responsibility,
Herman Miller has earned numerous
global sustainability and inclusivity awards including the Human
Rights Foundation's top rating in its Corporate Equality Index for
11 years in a row. In fiscal 2017, the Company generated
$2.28 billion in revenue and employed
nearly 8,000 people worldwide. Herman
Miller trades on the NASDAQ Global Select Market under the
symbol MLHR.
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act, as amended, that
are based on management's beliefs, assumptions, current
expectations, estimates, and projections about the office furniture
industry, the economy, and the Company itself. Words like
"anticipates," "believes," "confident," "estimates," "expects,"
"forecasts," "likely," "plans," "projects," and "should,"
variations of such words, and similar expressions identify such
forward-looking statements. These statements do not guarantee
future performance and involve certain risks, uncertainties, and
assumptions that are difficult to predict with regard to timing,
extent, likelihood, and degree of occurrence. These risks include,
without limitation, the success of our growth strategy, our success
in initiatives aimed at achieving long-term cost saving 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, the financial strength of our dealers and the financial
strength of our customers, our ability to locate new DWR studios,
negotiate favorable lease terms for new and existing locations and
implement our studio portfolio transformation, our ability to
attract and retain key executives and other qualified employees,
our ability to continue to make product innovations, the success of
newly-introduced products, our ability to serve all of our markets,
possible acquisitions, divestitures or alliances, the pace and
level of government procurement, the outcome of pending litigation
or governmental audits or investigations, political risk in the
markets we serve, and other risks identified in our filings with
the Securities and Exchange Commission. Therefore, actual results
and outcomes may materially differ from what we express or
forecast. Furthermore, Herman
Miller, Inc., undertakes no obligation to update, amend or
clarify forward-looking statements.
Financial highlights for the three and nine months ended
March 3, 2018 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
|
|
March 3,
2018
|
March 4,
2017
|
|
March 3,
2018
|
March 4,
2017
|
|
(13
weeks)
|
(13
weeks)
|
|
(39
weeks)
|
(40
weeks)
|
Net Sales
|
$
|
578.4
|
|
100.0
|
%
|
$
|
524.9
|
|
100.0
|
%
|
|
$
|
1,763.2
|
|
100.0
|
%
|
$
|
1,701.0
|
|
100.0
|
%
|
Cost of
Sales
|
372.6
|
|
64.4
|
%
|
329.4
|
|
62.8
|
%
|
|
1,118.5
|
|
63.4
|
%
|
1,057.6
|
|
62.2
|
%
|
Gross
Margin
|
205.8
|
|
35.6
|
%
|
195.5
|
|
37.2
|
%
|
|
644.7
|
|
36.6
|
%
|
643.4
|
|
37.8
|
%
|
Operating
Expenses
|
167.5
|
|
29.0
|
%
|
157.8
|
|
30.1
|
%
|
|
505.4
|
|
28.7
|
%
|
498.7
|
|
29.3
|
%
|
Restructuring
Expenses
|
—
|
|
—
|
%
|
2.7
|
|
0.5
|
%
|
|
1.9
|
|
0.1
|
%
|
3.7
|
|
0.2
|
%
|
Operating
Earnings
|
38.3
|
|
6.6
|
%
|
35.0
|
|
6.7
|
%
|
|
137.4
|
|
7.8
|
%
|
141.0
|
|
8.3
|
%
|
Other Expenses,
net
|
2.1
|
|
0.4
|
%
|
3.0
|
|
0.6
|
%
|
|
7.7
|
|
0.4
|
%
|
10.4
|
|
0.6
|
%
|
Earnings Before
Income Taxes and Equity Income
|
36.2
|
|
6.3
|
%
|
32.0
|
|
6.1
|
%
|
|
129.7
|
|
7.4
|
%
|
130.6
|
|
7.7
|
%
|
Income Tax
Expense
|
6.9
|
|
1.2
|
%
|
9.5
|
|
1.8
|
%
|
|
35.4
|
|
2.0
|
%
|
41.1
|
|
2.4
|
%
|
Equity Income, net of
tax
|
0.7
|
|
0.1
|
%
|
—
|
|
—
|
%
|
|
2.2
|
|
0.1
|
%
|
1.1
|
|
0.1
|
%
|
Net
Earnings
|
30.0
|
|
5.2
|
%
|
22.5
|
|
4.3
|
%
|
|
96.5
|
|
5.5
|
%
|
90.6
|
|
5.3
|
%
|
Net Earnings
Attributable to Noncontrolling Interests
|
0.2
|
|
—
|
%
|
—
|
|
—
|
%
|
|
0.2
|
|
—
|
%
|
0.1
|
|
—
|
%
|
Net Earnings
Attributable to Herman Miller, Inc.
|
$
|
29.8
|
|
5.2
|
%
|
$
|
22.5
|
|
4.3
|
%
|
|
$
|
96.3
|
|
5.5
|
%
|
$
|
90.5
|
|
5.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Amounts per Common
Share Attributable to Herman Miller, Inc.
|
|
|
|
|
|
|
|
|
|
Earnings Per Share –
Basic
|
$0.50
|
|
|
$0.38
|
|
|
|
$1.61
|
|
|
$1.51
|
|
|
Weighted Average
Basic Common Shares
|
59,691,709
|
|
|
59,846,034
|
|
|
|
59,753,271
|
|
|
59,910,844
|
|
|
Earnings Per Share –
Diluted
|
$0.49
|
|
|
$0.37
|
|
|
|
$1.60
|
|
|
$1.50
|
|
|
Weighted Average
Diluted Common Shares
|
60,362,084
|
|
|
60,383,186
|
|
|
|
60,296,728
|
|
|
60,421,978
|
|
|
Herman Miller,
Inc.
Condensed
Consolidated Statements of Cash Flows
(Unaudited) (Dollars
in millions)
|
|
|
|
Nine Months
Ended
|
|
March 3,
2018
|
March 4,
2017
|
|
(39
weeks)
|
(40
weeks)
|
Net
Earnings
|
$
|
96.5
|
|
$
|
90.6
|
|
Cash Flows provided
by Operating Activities
|
110.7
|
|
122.1
|
|
Cash Flows used for
Investing Activities
|
(42.5)
|
|
(99.0)
|
|
Cash Flows provided
by / (used for) Financing Activities
|
28.3
|
|
(29.6)
|
|
Effect of Exchange
Rates
|
0.3
|
|
0.0
|
|
Change in
Cash
|
96.8
|
|
(6.5)
|
|
Cash, Beginning of
Period
|
96.2
|
|
84.9
|
|
Cash, End of
Period
|
$
|
193.0
|
|
$
|
78.4
|
|
Herman Miller,
Inc.
Condensed
Consolidated Balance Sheets
(Unaudited) (Dollars
in millions)
|
|
|
|
|
|
|
March 3,
2018
|
June 3,
2017
|
ASSETS
|
|
|
Current
Assets:
|
|
|
Cash and Cash
Equivalents
|
$
|
193.0
|
|
$
|
96.2
|
|
Marketable
Securities
|
8.4
|
|
8.6
|
|
Accounts and Notes
Receivable, net
|
195.1
|
|
186.6
|
|
Inventories,
net
|
169.4
|
|
152.4
|
|
Prepaid Expenses and
Other
|
44.4
|
|
48.1
|
|
Total Current
Assets
|
610.3
|
|
491.9
|
|
Net Property and
Equipment
|
330.0
|
|
314.6
|
|
Other
Assets
|
503.0
|
|
499.8
|
|
Total
Assets
|
$
|
1,443.3
|
|
$
|
1,306.3
|
|
|
|
|
LIABILITIES &
STOCKHOLDERS' EQUITY
|
|
|
Current
Liabilities:
|
|
|
Accounts
Payable
|
162.5
|
|
148.4
|
|
Accrued
Liabilities
|
222.4
|
|
237.3
|
|
Total Current
Liabilities
|
384.9
|
|
385.7
|
|
Long-term
Debt
|
275.0
|
|
199.9
|
|
Other
Liabilities
|
101.8
|
|
108.4
|
|
Total
Liabilities
|
761.7
|
|
694.0
|
|
Redeemable
Noncontrolling Interests
|
24.3
|
|
24.6
|
|
Herman Miller, Inc.
Stockholders' Equity
|
657.1
|
|
587.5
|
|
Noncontrolling
Interests
|
0.2
|
|
0.2
|
|
Total
Stockholders' Equity
|
657.3
|
|
587.7
|
|
Total Liabilities,
Redeemable Noncontrolling Interests and Stockholders'
Equity
|
$
|
1,443.3
|
|
$
|
1,306.3
|
|
View original
content:http://www.prnewswire.com/news-releases/herman-miller-reports-third-quarter-fiscal-2018-results-300617735.html
SOURCE Herman Miller, Inc.