Herman Miller Sees Growth

September 20, 2007
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ZEELAND — Herman Miller Inc. showed another period of sales and earnings growth with the release of its first quarter results after the market closed yesterday, but a surprisingly low forecast for the second quarter triggered a negative reaction from investors.

Shares of the company closed on the NASDAQ at $29.08 yesterday, up 32 cents, but the stock fell close to its 52-week low in after-hours trading last night to $27.08. The stock opened this morning at $28.15 and has seen trades as low $27.50.

Despite beating consensus Wall Street estimates by four cents with earnings of 54 cents per share, an increase of 25.6 percent over the prior-year period, the firm fell short of analyst estimates for the second quarter with projections of 51 cents to 57 cents per share. Analysts had been projecting earnings of 59 cents per share for the quarter ending Dec. 1.

Market response notwithstanding, it was a strong quarter for the company. Sales increased 9.3 percent from the year-ago period to $491.7 million, the company’s 15th consecutive quarter of year-over-year sales growth. Improvements in both gross margins and operating expenses drove operating earnings up a half-point to 10.9 percent of sales. Net earnings for the quarter were $33.5 million, an increase of 17.5 percent.

“We continued to experience order growth in our international markets,” said company CEO Brian Walker in a prepared statement. “However, this growth was offset by a reduction in large project orders in the North American market, resulting in a modest decline in total orders and backlog as compared to the prior year. …

“We believe the recent industry forecast and general state of the U.S. economy may suggest a cyclical softening in the North American market.”

Orders in the quarter were $483.8 million, a 3.9 percent decrease, driven by a 5 percent slide in North American orders. Orders abroad increased 6 percent.    

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