24.6.2005: Meldung: Herman Miller, Inc.: Fourth Quarter and Fiscal Year Results Continue to Accelerate
Wednesday June 22, 4:00 pm ET
Webcast to be held Thursday, June 23, 2005, at 9:30 a.m. EDT
ZEELAND, Mich., June 22 / Herman Miller, Inc., today announced results for the fourth quarter and fiscal year ended May 28, 2005. Solid growth continued this quarter, demonstrated by a sales increase of 15.2% and an orders increase of 16.4% from the year-ago period. Gross margin expanded to 33.1% for the quarter. Net earnings for the quarter of $21.6 million, or $0.31 per share, were at the highest level in four years. Included in these amounts is a pre-tax benefit of $13.0 million from the favorable outcome of a U.S. Government contract audit that had been previously reserved, and additional tax charges of $5.6 million, primarily associated with the planned repatriation of cash under the American Jobs Creation Act.
The company"s consolidated orders and sales for the quarter continued to grow both year-over-year and sequentially. Orders were $421.1 million for the quarter, up 16.4% from the same period a year ago and 23.5% from the prior quarter. Sales were $407.5 million for the quarter, up 15.2% from the same period a year ago and 6.6% from the prior quarter. The current quarter"s sales include $2.1 million from the consolidation of an independent contract furniture dealership as required under the provisions of FIN46, which was adopted at the end of the fourth quarter of the prior year. The order backlog ended the quarter at $228.6 million, a 9.1% increase over the prior year and a 6.3% increase from the prior quarter.
"Outstanding performance in our domestic markets helped us to exceed our consolidated sales estimate for the quarter," said Beth Nickels, Chief Financial Officer. "This is the sixth quarter in a row that we"ve seen year- over-year sales growth, and the fourth quarter in a row that it"s been double- digits. Our order rates started out very strong and didn"t slow as we went through the quarter. Our optimism was reinforced by the fantastic showroom traffic we saw last week at NeoCon, our annual trade show in Chicago."
Gross margin for the quarter climbed to 33.1%, the highest rate of the year. Gross margins were positively affected by the leverage gained from additional volume, combined with the favorable impacts of the company"s price increase implemented last August. Margin gains were partially offset by continued increases in raw material costs, incentive compensation accruals, and increased discounting.
Operating expenses for the quarter totaled $89.7 million, or 22.0% of sales, compared to $92.9 million, or 26.3% of sales, for the same period in fiscal 2004. The current quarter operating expenses include a $13.0 million benefit from the reduction of previously established reserves associated with U.S. Government General Services Administration ("GSA") contracts. A favorable contract audit resolution during the quarter prompted the company to evaluate its reserve needs related to all GSA contract years. The current- quarter operating expenses also include $2.0 million associated with dealer consolidations that were not included in the prior year. In addition, the higher volumes drove increases in variable selling costs and incentive compensation accruals.
Income taxes for the quarter totaled $20.8 million, compared to a credit of $2.3 million for the same period in fiscal 2004. During the current quarter the company recorded deferred taxes of $4.4 million in anticipation of repatriating approximately $45 million pursuant to the American Jobs Creation Act of 2004. In addition, the company also recorded $1.2 million of unfavorable tax adjustments due primarily to recent changes in tax laws and deferred tax adjustments. Included in the prior year"s results was a $6.9 million benefit from the favorable closing of prior years" tax audits.
Cash flow from operations for the quarter totaled $36.6 million, compared to $36.5 million for the same period last year. Capital spending for the quarter was $13.8 million, compared to $7.3 million for the same period last year. The company repurchased approximately 1.4 million shares of its stock for $41.1 million, at an average price of $29.72 per share during the quarter. The company"s ending cash position was $154.4 million.
Ms. Nickels added, "The dynamic growth in our operating income reflects the leverage we have created in our business model. In addition, our cash flow generation capabilities allowed us to continue with our share repurchase program and drive even greater improvement in EPS. We"re still developing ways to gain more efficiency in our operating expenses by taking our lean initiatives into the office environment. But overall, we"re very upbeat about the improvements we"ve made."
Fiscal 2005 Financial Results
For the year, consolidated net sales totaled $1.52 billion, up 13.2% from fiscal 2004. Orders increased 13.4% to $1.53 billion. The industry-wide turnaround that began in the second half of last year picked up momentum through fiscal 2005.
Gross margins improved by over a full percentage point to 32.3% of sales, from 31.1% in fiscal 2004. The gain was driven by the prior years" restructuring efforts, combined with leverage from the increased volumes. This was partially offset by significantly higher raw material costs; steel costs alone were approximately $18 million higher than the prior year.
Operating expenses as a percentage of sales declined from 25.7% in fiscal 2004 to 24.2% in fiscal 2005, aided by a $13 million reduction in our GSA reserves. Restructuring charges for the year totaled $1.0 million, compared to $10.3 million in the prior year. Net earnings increased over 60% to $68.0 million, and earnings per share - diluted, increased over 65% to $0.96 in fiscal 2005.
Cash generated from operations was strong again in fiscal 2005 and amounted to $109.3 million, compared to $82.7 million in fiscal 2004. Included in the current and prior year"s cash from operations were contributions to the company"s employee pension funds of $25.6 million and $28.3 million, respectively. Capital spending for the year was $34.9 million compared to $26.7 million for fiscal 2004. During the year the company repurchased approximately 4.9 million shares of its stock for $131.6 million, at an average price of $26.98 per share.
Looking forward, the company expects strong sales growth to continue and estimates first quarter revenue to be in a range of $420 million to $440 million, representing a 17% to 23% increase over the prior year. It is important to note that the first quarter revenue estimate includes the impact of an additional week of sales based on the company"s accounting calendar. Earnings per share are estimated at $0.30 to $0.34.
Brian Walker, Chief Executive Officer, stated, "Two years ago we significantly restructured our business model, and last year we established the four avenues we will take to grow our business. This year our focus will be on implementing our growth strategy. An Innovation award for the Cella chair and a Gold award for Sonare Technologies" Babble sound management device at NeoCon reconfirmed our ability to innovate and create new opportunities. This, coupled with our current performance, is strong evidence that we"re headed in the right direction. We"re excited by the opportunities in front of us and confident we can deliver."
The company has announced a live webcast to discuss the results of fiscal 2005 fourth quarter on Thursday, June 23, 2005, at 9:30 a.m. EDT. 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://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.
Herman Miller helps create great places to work, heal, learn, and live by researching, designing, manufacturing, and distributing innovative interior solutions that support companies, organizations, and individuals all over the world. The company"s award-winning products, complemented by furniture- management and strategic consulting services, generated over $1.51 billion in revenue during fiscal 2005. Herman Miller is widely recognized both for its innovative products and business practices. In fiscal 2004 Herman Miller was named recipient of the prestigious National Design Award for product design from the Smithsonian Institution"s Cooper-Hewitt, National Design Museum. In 2005 the company was again included in Business Ethics magazine"s "100 Best Corporate Citizens" and was cited by Fortune magazine as the "Most Admired" company in its industry. The company trades on the NASDAQ market under the symbol MLHR. For additional information visit http://www.HermanMiller.com .
Source: Herman Miller, Inc.