Herman Miller Has Strong Quarter

December 22, 2005
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ZEELAND — Herman Miller Inc. met Wall Street’s expectations with reports of another high-growth quarter yesterday afternoon. For the second quarter that ended on Dec. 3, profits skyrocketed 81.2 percent coupled with a sales increase of 18.9 percent over the year-ago quarter.

Orders were up 11.1 percent over the previous year to $433.5 million. Sales rose to $438.2 million. Operating earnings grew to 10.1 percent of sales based on efficiency gains in both gross margin and operating expenses.  Net earnings were $27.9 million, or 40 cents per share, up from $15.4 million a year ago. The ending cash balance of $149.7 million benefited from robust operating cash flows of $44.2 million.

Both orders and sales saw sequential growth in addition to the year-over-year gains — despite an extra week in the previous quarter.

“We are delighted with the continued growth of our top line,” said Chief Financial Officer Beth Nickels in a statement Wednesday afternoon.

Gross margin of 32.8 percent increased slightly from 32.6 percent for the same quarter last year and remained consistent with the previous quarter’s 32.9 percent.  Compared to the prior year, gross margin has benefited from additional volume and a favorable price increase.

Operating expenses for the quarter totaled $99.7 million, or 22.8 percent of sales, compared to $94.8 million, or 25.7 percent of sales a year ago.

“Everyone did a great job of managing costs again this quarter,” Nickels stated. “Gross margin improved year-over-year and operating expenses as a percentage of sales hit the lowest level in over four years. These two factors combined to drive operating income of over 10 percent of sales.”

Herman Miller’s ending cash position was $149.7 million.  Cash flow from operations for the quarter totaled $44.2 million compared to $29.4 million for the same period last year.  Capital spending for the quarter was $11.6 million compared to $7.3 million for the same period last year. The company also repurchased approximately 900,000 shares of its stock for $26.6 million at an average price of $28.87 per share during the quarter.

The company expects sales for the third quarter of fiscal 2006 to be in a range of $410 million to $430 million, a 7 percent to 13 percent increase over the prior year in a seasonally impacted quarter.

“The economic uncertainty that existed after this summer’s storms has eased,” CEO Brian Walker stated. “The key economic factors that drive our industry continue to improve.  Office furniture demand has grown at a double-digit rate. Our focus on continuous improvement has allowed us to meet the challenges of higher material and fuel costs while significantly improving overall profitability.”    

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