Herman Miller Sales, Earnings Skyrocket

September 21, 2005
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ZEELAND — Herman Miller Inc. saw dramatic improvement in nearly every measure in the first quarter of fiscal 2006.

At $430.9 million, sales were up 20.6 percent over the year-ago quarter and 5.7 percent over the previous quarter. At $492.9 million, orders increased 28.9 percent and 17.1 percent, respectively.

Ending backlog was up 15.9 percent ($37.3 million) to $271.8 million, its highest in four years.

This includes incremental net sales of roughly $4 million from the sale of two company owned contract furniture dealerships as well as an additional week in the company’s accounting calendar.

“We generated double-digit sales and order growth in both our domestic and international operations this quarter,” stated CFO Beth Nickels. “Even after adjusting for the extra week, it was still a very strong quarter…”

Due to additional volume and a price increase implemented in August, gross margin improved to 32.9 percent from 31.4 percent a year ago. However, it is a decline from 33.1 percent in the previous quarter.

Operating expenses for the quarter totaled $102.3 million, or 23.7 percent of sales, compared to $88.6 million, or 24.8 percent of sales a year ago.

Nickels said that the quarter’s operating income of 9.1 percent of sales has increased the company’s confidence that it will achieve long-term profitability targets.

“Our operating performance, combined with recent order entry rates, augurs well for our second quarter,” she said.

The company expects sales for the second quarter of fiscal 2006 to be in a range of $430 million to $450 million, which represents a 17 percent to 22 percent increase over the prior year. It estimates earnings per share of 37 cents to 41 cents, an increase of 68 percent to 86 percent over the prior year.

CEO Brian Walker said that while the company has not felt any impact from Hurricane Katrina, he fears higher raw material costs throughout the year, but he believes that last month’s price increase will mitigate the impact.    

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