16.12.2004: Meldung: Herman Miller Results for the Second Quarter FY2005
FINANCIAL HIGHLIGHTS (Dollars in millions, except per share data) Three Months Ended Six Months Ended 11/27/04 11/29/03 Percent 11/27/04 11/29/03 Percent Change Change Net Sales $368.4 $330.3 11.5% $725.7 $654.8 10.8% Gross Margin 120.0 102.0 17.6% 232.0 203.6 13.9% Operating Expenses 94.8 80.8 17.3% 183.4 166.3 10.3% Restructuring Expenses 0.1 4.4 (97.7%) 0.6 8.3 (92.8%) Operating Earnings 25.1 16.8 49.4% 48.0 29.0 65.5% Net Earnings 15.4 9.1 69.2% 29.6 15.2 94.7% Earnings per share - diluted 0.22 0.12 83.3% 0.42 0.21 100.0% Orders 390.3 357.8 9.1% 772.5 681.6 13.3% Backlog 256.4 215.7 18.9%
The company"s consolidated sales for the quarter were $368.4 million, reflecting both year-over-year and sequential growth. Sales were up 11.5% from the same period a year ago and 3.1% from the prior quarter. This represents the fourth consecutive quarter of year-over-year sales growth, and the second quarter in a row of double-digit sales growth. Orders in the quarter were $390.3 million, increasing 9.1% from the prior year and 2.1% from the prior quarter. Ending backlog was $256.4 million, up $40.7 million or 18.9% from the prior year.
"It was another great quarter, with better top-line growth in all areas of the business," said Beth Nickels, Chief Financial Officer. "Our international markets experienced another strong quarter, with sales growth in excess of 40% for the second quarter in a row. Our domestic business continued its trend of steady growth with a sales increase of 6.7% for the quarter. We also added approximately $22 million to our consolidated backlog due to our improved order-entry rates."
Despite significantly higher raw material costs, gross margin at 32.6% for the quarter was a marked improvement over the prior year of 30.9% and also the prior quarter"s 31.4%. Gross margins were positively affected by the leverage gained from additional volume, combined with the favorable initial impacts of the price increase implemented in August.
Operating expenses for the quarter totaled $94.8 million or 25.7% of sales compared to $80.8 million or 24.5% of sales for the same period in fiscal 2004. The prior-year operating expenses included a $5.2 million benefit from the favorable outcome of a lawsuit that had been previously reserved. In addition, the current year expenses include $1.9 million associated with dealer consolidations that were not included in the prior year. The remainder of the increase was due primarily to increases in incentive and benefit costs.
Ms. Nickels added, "The strength of our gross margins demonstrates the benefits of the many changes we have made to our operating model. Our operating efficiencies more than offset approximately $5 million in incremental costs of steel versus this same period a year ago. We also started to see the favorable impact of the price increase that we implemented in August. We should see even greater benefits from that in future quarters."
The $0.1 million of restructuring charges for the quarter were primarily associated with the previously announced relocation of the Canton operations. That move is complete. Modest restructuring charges will be reported in the future as the final Canton relocation costs are incurred.
The company adopted the provisions of FIN 46 in the fourth quarter of the prior year. The current quarter"s results reflect the consolidation of one independent contract furniture dealership to which the company is providing ongoing financial support through a loan. Consolidating the dealer"s results increased the current quarter"s net sales by $2.9 million, orders by $8.3 million, and backlog by $11.6 million. The consolidation also decreased net earnings by $0.3 million. The effect on the company"s balance sheet as of November 27, 2004, was an increase to assets of approximately $1.2 million and liabilities of $1.3 million.
The company"s ending cash position was $146.3 million. Cash flow from operations for the quarter was a very strong $29.4 million compared to $3.3 million for the same period last year. Capital spending for the quarter was $7.3 million compared to $9.3 million for the same period last year. The company also repurchased approximately 1.3 million shares of its stock for $30.3 million, at an average price of $24.08 per share during the quarter.
Third quarter sales traditionally reflect a seasonal decline. However, due to the strong backlog, the company expects sales for the third quarter of fiscal 2005 to be in a range of $355 million to $375 million. This represents an 8%-14% increase over the prior year, and if achieved would represent the fifth quarter in a row of year-over-year sales improvements. Earnings per share are estimated at $.18 to $.23, which reflects the continued impact of raw material cost increases partially offset by favorable impacts of the August price increase.
Brian Walker, Chief Executive Officer, stated, "Our top-line growth this quarter reflects our strategic intent to accelerate growth through continued focus on innovation and market expansion. We are seeing great interest in the Abak(TM) line we introduced this past summer, and we are working on another great lineup of new products for launch next fiscal year. Thanks to the efforts of all the employee-owners of Herman Miller, we will continue to deliver new products that help our customers create great places."
The company has announced a live webcast to discuss the results of the fiscal 2005 second quarter on Thursday, December 16, 2004, at 9:30 a.m. EST. The company encourages all interested parties to log in to the website to obtain presentation materials, which will augment the verbal presentation. To ensure your access to the webcast, you should allow extra time to visit our website at http://www.hermanmiller.com/ to download the streaming software necessary to participate. An online archive of the presentation will be available on the website later that day.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, that are based on management"s beliefs, assumptions, current expectations, estimates, and projections about the office furniture industry, the economy, and the company itself. Words like "anticipates," "believes," "confident," "estimates," "expects," "forecasts," "likely," "plans," "projects," "should," variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what we express or forecast. Furthermore, Herman Miller, Inc., undertakes no obligation to update, amend, or clarify forward-looking statements.
Herman Miller provides complete solutions that help create great places to work. Through research, design, manufacture, and distribution of innovative interior furnishings, complemented by furniture management and strategic consulting services, the company serves organizations and individuals around the world. During fiscal 2004, Herman Miller"s award-winning products and services generated $1.34 billion in revenue. The company was also cited in Fortune magazine as the "Most Admired" company in its industry and was again named among Business Ethics magazine"s "100 Best Corporate Citizens." Herman Miller trades on the NASDAQ stock market under the symbol MLHR. For additional information visit http://hermanmiller.com/ .
Financial highlights for the quarter ended November 27, 2004 follow: Herman Miller, Inc. Condensed Consolidated Statements of Operations (Unaudited) (Dollars in millions, except per share data) Three Months Ended 11/27/04 11/29/03 Net Sales $368.4 100.0% $330.3 100.0% Cost of Goods Sold 248.4 67.4% 228.3 69.1% Gross Margin 120.0 32.6% 102.0 30.9% Operating Expenses 94.8 25.7% 80.8 24.5% Restructuring Expenses 0.1 0.0% 4.4 1.3% Operating Earnings 25.1 6.8% 16.8 5.1% Other Expense, net 2.0 0.5% 2.5 0.8% Earnings Before Taxes 23.1 6.3% 14.3 4.3% Income Taxes 7.7 2.1% 5.2 1.6% Net Earnings $15.4 4.2% $9.1 2.8% Earnings Per Share - Basic $0.22 $0.12 Weighted Average Basic Common Shares 70,162,039 72,849,656 Earnings Per Share - Diluted $0.22 $0.12 Weighted Average Diluted Common Shares 70,668,594 73,248,673 Herman Miller Inc. Condensed Consolidated Statements of Operations (Unaudited) (Dollars in millions, except per share data) Six Months Ended 11/27/04 11/29/03 Net Sales $725.7 100.0% $654.8 100.0% Cost of Goods Sold 493.7 68.0% 451.2 68.9% Gross Margin 232.0 32.0% 203.6 31.1% Operating Expenses 183.4 25.3% 166.3 25.4% Restructuring Expenses 0.6 0.1% 8.3 1.3% Operating Earnings 48.0 6.6% 29.0 4.4% Other Expense, net 3.7 0.5% 5.0 0.8% Earnings Before Taxes 44.3 6.1% 24.0 3.7% Income Taxes 14.7 2.0% 8.8 1.3% Net Earnings $29.6 4.1% $15.2 2.3% Earnings Per Share - Basic $0.42 $0.21 Weighted Average Basic Common Shares 70,672,417 72,859,810 Earnings Per Share - Diluted $0.42 $0.21 Weighted Average Diluted Common Shares 71,260,499 73,210,122 Herman Miller Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (Dollars in millions) Six Months Ended 11/27/04 11/29/03 Net Earnings $29.6 $15.2 Cash Flows provided by Operating Activities 32.2 39.0 Cash Flows used for Investing Activities (14.7) (8.2) Cash Flows used for Financing Activities (65.4) (10.4) Effect of Exchange Rates 5.0 1.4 Net Increase (Decrease) in Cash (42.9) 21.8 Cash, Beginning of Year 189.2 185.5 Cash, End of Period $146.3 $207.3 Herman Miller, Inc. Condensed Consolidated Balance Sheets (Dollars in millions) 11/27/04 5/29/04 (Unaudited) (Audited) Assets Current assets Cash and equivalents $146.3 $189.2 Short-term investments 13.2 10.7 Accounts receivable (net) 144.0 142.4 Inventories 48.8 38.1 Prepaid expenses and other 45.6 50.2 Totals 397.9 430.6 Net property and equipment 196.4 208.5 Other assets 75.7 75.6 Total Assets $670.0 $714.7 Liabilities and Shareholders" Equity Current liabilities Unfunded checks $6.2 $8.6 Current long-term debt 13.0 13.0 Notes Payable 0.0 1.5 Accounts Payable 86.8 90.4 Accrued liabilities 134.8 123.8 Totals 240.8 237.3 Long-term debt 194.1 192.7 Other noncurrent liabilities 66.3 90.1 Shareholders" equity 168.8 194.6 Total Liabilities and Shareholders" Equity $670.0 $714.7
Source: Herman Miller, Inc.