HM Report Shows Promise

December 18, 2003
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HOLLAND — Even as quarterly sales and earnings fell again, Herman Miller Inc.’s latest quarterly reporter holds some promise for the future.

The company on Wednesday night reported a strong 10.5 percent increase in orders from the previous quarter, from $323.9 million to $357.8 million, and a 14.6 percent increase in backlogged orders, which grew from $188.2 million in the previous quarter to $215.7 million for the period that ended Nov.30.

The backlog was the largest in nine quarters for Herman Miller and the order rate is the best in six quarters.

Customer visits to Herman Miller also are up 30 percent from the previous quarter, spokesman Bruce Buursma said, an indication that a sustained recovery is apparently finally beginning for the beleaguered office furniture industry, which has been mired in a depression for nearly three years.

“We are encouraged by the strong economic trends that are having a positive impact on our business. This truly is a season of hope,” Herman Miller Chairman and CEO Michael Volkema said.

Herman Miller reported second-quarter sales of $330.3 million, down 7.6 percent from the $357.3 million in the same period a year ago. Mid-way through the 2004 fiscal year, Herman Miller’s sales totaled $654.8 million, off 7 percent from the $704.2 million of a year earlier.

Quarterly net income was $9.1 million, or 12 cents per share, down 22.9 percent from $11.8 million, or 16 cents per share a year ago. The results included a $4.4 million pre-tax restructuring charge.

Mid-year net income was $15.2 million, or 21 cents per share, off 29.6 percent from the $21.6 million, or 29 cents per share, for the first six months of the 2003 fiscal year.

Executives said they were expecting the lower sales, given what they termed a “false start” a year ago in the U.S. economic rebound, and are encouraged by the increased order rate and backlog, which don’t translate into recorded sales until product is delivered and installed.

For the current third quarter, which typically sees a drop-off in sales due to the time of year, Herman Miller expects to record sales volumes close to second quarter levels because of the emerging recovery and looks forward “to even greater opportunity in the future,” Volkema said.

Herman Miller expects third quarter sales of $320 million to $335 million and net income of 5 cents to 11 cents per share with a 3-cent-per-share restructuring charge.    

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