ZEELAND, Mich., Sept. 29, 2021 /PRNewswire/ --
- Completed acquisition of Knoll, Inc. during the quarter,
creating the preeminent leader in modern design
- Subject to shareholder approval at this year's annual meeting,
our Board elected to change our name to MillerKnoll, Inc.
- Strong demand and the Knoll acquisition drove quarterly orders
of $916.5 million, an increase of
64.8% compared to the prior year period, up 34.5%* organically
- Net sales increased 26.0% from the prior year to $789.7 million inclusive of a partial quarter net
sales of $156.4 million from the
Knoll acquisition, and up 0.4% organically compared to prior
year
- Integration proceeding smoothly; reaffirming expectation for
$100 million run-rate cost synergies
within two years of closing
Webcast to be held Wednesday, September 29, 2021, at
5:30 PM ET
First Quarter Fiscal 2022 Financial Results
|
(Unaudited)
|
|
Three Months
Ended
|
(Dollars in
millions, except per share data)
|
August 28,
2021
|
August 29,
2020
|
% Chg.
|
Net Sales
|
$
|
789.7
|
|
$
|
626.8
|
|
26.0
|
%
|
Gross Margin
%
|
35.1
|
%
|
39.9
|
%
|
N/A
|
Adjusted Gross Margin
%*
|
35.9
|
%
|
40.0
|
%
|
N/A
|
Operating
Expenses
|
$
|
330.3
|
|
$
|
154.6
|
|
113.6
|
%
|
Adjusted Operating
Expenses*
|
$
|
235.2
|
|
$
|
155.8
|
|
51.0
|
%
|
Operating Earnings
(Loss) %
|
(6.7)
|
%
|
15.2
|
%
|
N/A
|
Adjusted Operating
Earnings %*
|
6.2
|
%
|
15.3
|
%
|
N/A
|
Net Earnings
(Loss) Attributable to Herman Miller, Inc.
|
$
|
(61.5)
|
|
$
|
73.0
|
|
N/A
|
Earnings (Loss) Per
Share – Diluted
|
$
|
(0.93)
|
|
$
|
1.24
|
|
N/A
|
Adjusted Earnings Per
Share – Diluted*
|
$
|
0.49
|
|
$
|
1.24
|
|
(60.5)
|
%
|
Orders
|
$
|
916.5
|
|
$
|
556.0
|
|
64.8
|
%
|
Backlog
|
$
|
835.9
|
|
$
|
400.0
|
|
109.0
|
%
|
*Items indicated
represent Non-GAAP measurements; see the reconciliations of
Non-GAAP financial measures and related explanations
below.
|
To our shareholders:
We had a strong start to fiscal 2022, as we experienced robust
demand across our business while also successfully completing our
acquisition of Knoll. Going forward, we are pleased to share that
we will operate under the name MillerKnoll, and become one of the
largest and most influential design companies in the world. The
integration is progressing smoothly as we bring together the best
of both organizations, and we are confident in our ability to
deliver on our previously outlined cost synergy targets. Our teams
across the organization are energized and focused on our purpose –
design for the good of humankind.
Acquisition of Knoll and Changes in Reportable
Segments
In connection with Herman
Miller's acquisition of Knoll, Inc. completed on
July 19, 2021, and now operating as
MillerKnoll, we are reporting results under four business
segments:
- Global Retail – reflects the legacy North America Retail
segment and now includes International Retail
- Americas Contract – reflects the legacy North America Contract
segment now combined with Latin
America and Design Within Reach Contract
- International Contract – reflects contract business outside the
Americas
- Knoll – the acquired consolidated Knoll business will initially
be reflected as a stand-alone segment
Performance Highlights
We continue to experience strong momentum in our Global Retail
and International Contract segments. Demand is accelerating in the
Americas Contract and Knoll segments as our customers prepare to
return to their offices and adapt them for the future of work.
Order levels increased over the prior year for all reportable
segments. We believe that this positive order demand is an
indicator of the strength of our business strategy, and underscores
our confidence in the future as we lead the industry in redefining
modern design as MillerKnoll.
Financial Results
The following table highlights non-comparable items that
impacted U.S. GAAP net earnings per diluted share, defined as
earnings per diluted share adjusted, to exclude the impact of
special charges, acquisition and integration-related expenses,
expense related to debt extinguishment, and intangible asset
amortization related to the Knoll acquisition. The table also
includes an adjustment for the impact of the Knoll acquisition
including Knoll's net income, the impact of increased interest
expense from financing of the Knoll acquisition, and the impact of
additional shares issued for the Knoll acquisition for the purpose
of pro forma earnings per share. This pro forma earnings per share
excludes items that are non-comparable to the diluted earnings per
share guidance given in the June 2021
earnings release.
|
Three Months
Ended
|
|
August 28,
2021
|
August 29,
2020
|
Earnings (Loss) per
Share - Diluted
|
$
|
(0.93)
|
|
$
|
1.24
|
|
|
|
|
Non-comparable
items:
|
|
|
Add: Special charges,
after tax
|
—
|
|
0.01
|
|
Add: Amortization of
purchased intangibles, after tax
|
0.37
|
|
—
|
|
Add: Acquisition and
integration charges, after tax
|
0.90
|
|
—
|
|
Add: Debt
extinguishment, after tax
|
0.15
|
|
—
|
|
Add: Restructuring
expenses, after tax
|
—
|
|
(0.01)
|
|
Adjusted Earnings
per Share - Diluted
|
$
|
0.49
|
|
$
|
1.24
|
|
Less: Knoll net
income
|
(0.10)
|
|
—
|
|
Add: Impact of
increased interest expense on financing of Knoll
acquisition
|
0.02
|
|
—
|
|
Add: Impact of
additional shares issued for Knoll acquisition
|
0.06
|
|
—
|
|
Pro Forma Earnings
per Share - Diluted, for purpose of comparison to June Guidance
¹
|
$
|
0.47
|
|
$
|
1.24
|
|
|
|
|
Weighted Average
Shares Outstanding (to Calculate Adjusted Earnings per Share) –
Diluted
|
66,302,214
|
|
58,964,268
|
|
Note: The adjustments
above are net of tax. For the three months ended August 28,
2021, the tax impact of the adjustments was $0.30. For the three
months ended August 29, 2020, the tax impact of the
adjustments was immaterial.
|
¹Pro Forma Earnings
per share, excluding impacts of the Knoll acquisition, presented to
provide a comparison to guidance issued on June 28, 2021 for Herman
Miller on a stand-alone basis.
|
Herman Miller, Inc.
Consolidated Results Highlights
Our consolidated operating results for the three months ended
August 28, 2021 included the results
of Knoll beginning on July 19, 2021,
the date the transaction closed.
First quarter consolidated net sales were $789.7 million, an increase of 26.0%, and an
increase of 0.4% organically, which excludes the impact of the
Knoll acquisition and foreign currency translation. Orders in the
quarter of $916.5 million were up
64.8% compared to the prior year period and up 34.5% organically.
As a reminder, sales levels in the prior year period were elevated
due to COVID-related manufacturing and retail studio shutdowns
resulting in higher backlog at the start of the quarter. On an
organic basis, demand trends reflected sequential improvement in
orders of $59 million, up 8.5% as
compared to the fourth quarter of 2021. While order demand was
strong, our ability to produce and ship orders in the near-term was
impacted by global supply chain and labor supply disruptions. We
estimate this adversely impacted net sales by approximately
$30 million during the first
quarter.
Gross margin for the quarter was 35.1% compared to 39.9% during
the prior year period, reflecting higher commodity costs and other
inflationary pressures. On an adjusted basis, excluding
$6.3 million of purchase price
accounting adjustments related to fair value revaluation of
inventory, adjusted gross margin was 35.9% compared to 40.0% in the
prior year. We implemented a price increase in the first quarter to
help offset inflationary pressures in the contract business and are
planning additional price increases in the second quarter to
further mitigate these pressures.
Reported consolidated operating expenses for the quarter were
$330.3 million, compared to
$154.6 million in the same period
last year. Consolidated adjusted operating expenses of
$235.2 million, excluding
non-comparable items totaling $95.1
million, were up 51.0% from last year primarily due to the
inclusion of $49.0 million of
operating expenses related to Knoll, as well as the reinstatement
of employee wages and benefits that had been temporarily suspended
last year in response to the COVID-19 pandemic. We continue to
manage our operating expenses carefully and will remain ready to
adapt with evolving market dynamics.
Operating margin for the quarter was (6.7)% compared to 15.2%
during the prior year period. On an adjusted basis, which
excludes acquisition and integration charges of $68.9 million, purchase price accounting
adjustments of $6.3 million, and
$26.2 million of amortization related
to the acquired Knoll intangible assets, consolidated operating
margin was 6.2% compared to 15.3% in the prior year. Similar to net
sales levels, prior year operating margin benefited from a
combination of shipments of elevated backlog at the beginning of
the quarter and swift spending reductions at the same time to
navigate the global pandemic.
Herman Miller, Inc. reported a
net loss per share of $0.93 in the
first quarter compared to diluted earnings per share of
$1.24 for the same period a year ago.
The results in the current quarter include $1.42 per share related to non-comparable items.
Adjusted earnings per share were $0.49 in the first quarter, compared to adjusted
earnings per share of $1.24 for the
same period a year ago. These items are listed in the table above,
which we are providing for comparison with other results and are
the most directly comparable U.S. GAAP measures.
During the quarter, we entered into a new credit agreement,
borrowing $1,115.0 million through a
combination of a revolving credit facility, Term Loan A, and Term
Loan B borrowings to fund the Knoll acquisition. At the end of the
first quarter, our cash on hand and availability on our revolving
credit facility totaled $629.7
million. Cash used in operating activities during the
quarter totaled $51.7 million. Our
net-debt to EBITDA ratio, including expected cost synergies from
the Knoll acquisition, was 2.3x at quarter-end.
Business Segment Highlights
Additional perspective on the trends for each of our business
segments follows:
Global Retail Segment
Our Global Retail business
maintained its strong momentum with sales and orders up 30.7% and
22.2% over the prior year period, respectively. This is on top of
strong growth this time last year, with orders growing 90% on a two
year stack. We continue to outpace the US home furnishings industry
with our growth numbers.
Design Within Reach, HAY and
Herman Miller experienced strong
demand in the quarter, with all categories except outdoor
performing ahead of prior year, including workspace which is
proving resilient to return-to-office trends. Assortment growth
across both core and new categories drove the majority of
incremental volume in the quarter.
In the quarter we opened new
Herman Miller Seating Stores in Boston, Dallas, and Seattle, bringing our global fleet of seating
stores to 11. All are bringing new customers to the brand, a
testament to our brick-and-mortar retail strategy, and we have
plans to roll out additional locations in the months ahead.
This year we are making key
infrastructure investments in our Global Retail business that are
intended to improve our order management, planning and allocation,
and point of sales capabilities. These investments will build on
our scalable and customer-centric digital foundation, enable Retail
growth, and improve our customer experience. Additionally,
promotions such as our one-year anniversary gaming sale are driving
global demand, and planned price increases will help offset
increased labor and material costs.
Americas Contract
Segment
Sales for the Americas decreased
12.1% from the prior year period due to elevated backlog levels in
the segment at the beginning of last year and labor and supply
disruptions in the current quarter.
Orders for the quarter were 43.4%
higher than the prior year period. This reflects further
improvement in the demand environment as our customers continue to
develop their return to office plans, even as the timing remains in
flux due to the COVID-19 Delta variant. Our leading indicators
continue to reflect robust and accelerating growth; order pipeline
increased 14% sequentially from the fourth quarter of fiscal 2021
and mock up activity and contract activations are all stronger than
year-ago levels.
Looking ahead, our growth
initiatives are gaining traction, setting the stage for ongoing
revenue expansion. The recently launched Herman Miller Professional
site supports the evolving needs of small- and medium-sized
businesses and has continued to reach new customers since it
launched, with a 140% increase in accounts registered on the
platform in the quarter. Tailored marketing has attracted more new
users, and assortment growth across all product categories has
supported those customers in finding what they need to outfit their
businesses.
International Contract
Segment
International sales increased by
5.3% compared to the prior year, while orders grew 34.7%. This
strong order pacing was worldwide, with each of our regions
experiencing increased order rates from the prior year.
Southeast Asia, Greater China, Australia, South
Korea, UK, and India were
especially strong. As a result, International Contract reported its
highest backlog in company history, growing 42% over the prior
year. Similarly, both HAY and naughtone achieved year-over-year
demand growth, reinforcing our position that collaborative spaces
will be an important component of office planning in the
post-pandemic era.
Strengthening global account
activity stands as a testament to the deliberate focus and
organizational structure we have put in place to drive growth with
multi-national organizations. Significant global account wins in
China, India, and Europe affirm our position that employers
around the world will continue to prioritize and invest in their
workplaces as they look to differentiate their employee experience
and build high-performing global cultures.
Knoll Segment
Following the closing of the
acquisition of Knoll, we began the work of integrating our two
businesses. Providing dealers and customers with a broader combined
portfolio that will deliver beauty, joy, efficiency, and utility
remains core to our efforts as we work to ensure the ongoing
integration is seamless for all stakeholders. We are confident in
our ability to generate $100 million
of run-rate cost synergies within two years of closing, driven
primarily by procurement, SG&A, and supply chain savings. We
also expect to generate significant revenue synergies across the
combined business through enhanced scale, cross-selling, and
digital and eCommerce opportunities.
The Knoll segment experienced
positive order momentum in the quarter, with total orders
increasing approximately 29.3% versus the prior year. Knoll
North America workplace orders are
benefiting from customers' return to work plans, with particular
focus on how to best support their employees in the new ecosystem
of hybrid work. Additionally, overall mock up spending
increased while new funnel pipeline adds grew 18% from the prior
year, and taken together are key indicators of accelerating future
growth.
Knoll's residential business
experienced strong order growth in both North America and Europe in the quarter, bolstered by the
one-year anniversary of Knoll's eCommerce platform and the recent
consolidation of Muuto into the Knoll distribution systems to
simplify the order process for dealers and customers. In July,
Holly Hunt introduced enhanced
website functionality with an in-stock, to-the-trade, online
eCommerce site. Further expansion of the site later this year will
offer textiles, leather, and wall coverings. Holly Hunt sustained strong growth through the
calendar year, and delivered the highest orders level in company
history during the quarter. Fully also introduced a new European
eCommerce storefront in the quarter and saw its commercial business
begin to rebound in the quarter.
MillerKnoll is Creating a Better World
Designing a more diverse, equitable, and sustainable world
remains a core pillar of MillerKnoll's strategy. Across our
company, industry, and communities, our team continues to make
meaningful progress.
Key initiatives include:
- Integrating ocean-bound plastic into the Aeron Chair as
part of our commitment to use 50% recycled content in all materials
by 2030. As a member of NextWave Plastics, we are partnering with
organizations that share our commitment to preventing harmful
plastics from reaching our oceans. On September 1, 2021, Herman
Miller announced that its entire portfolio of Aeron Chairs
will contain ocean-bound plastic, including a new color, Onyx Ultra
Matte, that will contain up to 2.5 pounds of ocean-bound plastic
per chair. Aeron is the latest in a growing list of products
Herman Miller has reengineered to
incorporate ocean-bound plastic, including parts of the recently
launched OE1 Workplace Collection, the Sayl Chair in Europe, and the Revenio textile collection.
The company is also reducing its footprint by adding ocean-bound
plastic to returnable shipping crates and poly bags. Based on
annual sales forecast, Herman Miller
estimates these efforts will divert up to 234 metric tons of
plastic from the ocean each year, equivalent to preventing nearly
400,000 milk jugs or up to 23 million plastic bottles from entering
the ocean annually.
- Initiating the Diversity in Design (DID) Collaborative
in partnership with other DID member companies to increase
representation of Black creatives in design in the United States, increase design career
opportunities for Black youth, and increase the educational
pipeline that leads to full-time employment for Black students in
design. The DID Collaborative recently named Todd Palmer, former Executive Director of the
Chicago Architecture Biennial, as its first director. As part of
MillerKnoll's Diversity, Equity, and Inclusion team, Todd and the
DID team will advance the Collaborative's long-term strategy and
bring the shared vision to life.
- Partnering with Habitat for Humanity as part of Knoll's
commitment to supporting more inclusive and diverse communities. In
December 2020, Knoll joined Habitat
for Humanity as a cause marketing partner. When initial planned
construction projects were paused due to the pandemic, Knoll
leveraged its eCommerce site to fundraise for the organization,
generating more than 500 contributions to Habitat for Humanity from
Knoll customers who opted to make a donation as part of the
checkout process on Knoll's website. Knoll associates participated
in Habitat builds in Chicago and
Toronto in September 2021 with two additional builds planned
for later in the fiscal year.
- Achieving WELL v2 Gold and Well Health-Safety Rating at
Fulton Market in Chicago,
continuing Herman Miller's
leadership in this area as a founding member of the U.S. Green
Building Council and the first furniture manufacturer to register
as a WELL Portfolio participant. Herman
Miller's Chicago Fulton Market building recently achieved
WELL v2 Gold, which is the most rigorously tested and vetted
version of the WELL Building Standard (WELL) to date, making it the
premier framework for advancing health and well-being around the
world. Buildings across the footprint of Herman Miller, Knoll and the collective of
brands maintain a number of green and healthy certifications
including LEED, BREEAM, and WELL v1.
Our customers and employees share our commitment to creating a
more equitable and sustainable world and we will continue to invest
in initiatives that further our progress and unite us in this
shared purpose.
Outlook
Our second quarter fiscal 2022 guidance includes the full impact
of Knoll for the quarter. We expect sales in the second quarter of
fiscal 2022 to range between $1,025
million and $1,065 million.
The mid-point of this range implies a revenue increase of 67%
compared to the same quarter last fiscal year on a reported basis
and 12% on an organic basis, excluding the impact of the Knoll
acquisition and foreign currency translation. Our forecast for the
second quarter also considers the near-term impacts of supply chain
disruptions and inflationary pressures. We anticipate adjusted
earnings per share to be between $0.55 and $0.61. As
the company cannot predict some elements that are included in
reported GAAP results, we provide certain guidance on a non-GAAP
basis as further discussed in the non-GAAP financial measures
section below.
Entering the Next Chapter for MillerKnoll
With a broader portfolio of complementary brands, enhanced scale
and capabilities, and the financial strength of our diversified
business, MillerKnoll is uniquely positioned to imagine a more
sustainable, caring, and beautiful world for everyone. There is
much to be excited about as we come together to solidify
MillerKnoll's position as the leader in modern design and create
enhanced value for all our stakeholders.
Thank you for your continued support of our company. We look
forward to continuing this journey with you.
Andi
Owen
|
|
Jeff
Stutz
|
President and Chief
Executive Officer
|
|
Chief Financial
Officer
|
Financial highlights for the three months ended August 28,
2021 follow:
Herman Miller,
Inc.
|
Condensed
Consolidated Statements of Operations
|
|
(Unaudited)
(Dollars in millions, except per share and common share
data)
|
Three Months
Ended
|
August 28,
2021
|
|
August 29,
2020
|
Net Sales
|
$
|
789.7
|
|
100.0
|
%
|
|
$
|
626.8
|
|
100.0
|
%
|
Cost of
Sales
|
512.2
|
|
64.9
|
%
|
|
376.8
|
|
60.1
|
%
|
Gross
Margin
|
277.5
|
|
35.1
|
%
|
|
250.0
|
|
39.9
|
%
|
Operating
Expenses
|
235.2
|
|
29.8
|
%
|
|
155.8
|
|
24.9
|
%
|
Restructuring
Expenses
|
—
|
|
—
|
%
|
|
(1.2)
|
|
(0.2)
|
%
|
Acquisition and
Integration Charges
|
95.1
|
|
12.0
|
%
|
|
—
|
|
—
|
%
|
Operating (Loss)
Earnings
|
(52.8)
|
|
(6.7)
|
%
|
|
95.4
|
|
15.2
|
%
|
Other Expenses,
net
|
18.0
|
|
2.3
|
%
|
|
1.6
|
|
0.3
|
%
|
Earnings (Loss)
Before Income Taxes and Equity Income
|
(70.8)
|
|
(9.0)
|
%
|
|
93.8
|
|
15.0
|
%
|
Income Tax (Benefit)
Expense
|
(10.8)
|
|
(1.4)
|
%
|
|
20.6
|
|
3.3
|
%
|
Equity Income, net of
tax
|
0.1
|
|
—
|
%
|
|
0.2
|
|
—
|
%
|
Net (Loss)
Earnings
|
(59.9)
|
|
(7.6)
|
%
|
|
73.4
|
|
11.7
|
%
|
Net Earnings (Loss)
Attributable to Redeemable Noncontrolling Interests
|
1.6
|
|
0.2
|
%
|
|
0.4
|
|
0.1
|
%
|
Net (Loss)
Earnings Attributable to Herman Miller, Inc.
|
$
|
(61.5)
|
|
(7.8)
|
%
|
|
$
|
73.0
|
|
11.6
|
%
|
|
|
|
|
|
|
Amounts per Common
Share Attributable to Herman Miller, Inc.
|
Earnings (Loss) Per
Share – Basic
|
($0.93)
|
|
$1.24
|
Weighted Average
Basic Common Shares
|
66,302,214
|
|
58,831,305
|
Earnings (Loss) Per
Share – Diluted
|
($0.93)
|
|
$1.24
|
Weighted Average
Diluted Common Shares
|
66,302,214
|
|
58,964,268
|
Herman Miller,
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
Three Months
Ended
|
(Unaudited)
(Dollars in millions)
|
August 28,
2021
|
|
August 29,
2020
|
Cash provided by
(used in):
|
|
|
|
Operating
activities
|
$
|
(51.7)
|
|
|
$
|
115.9
|
|
Investing
activities
|
(1,104.7)
|
|
|
(5.1)
|
|
Financing
activities
|
1,001.6
|
|
|
(276.5)
|
|
Effect of exchange rate
changes
|
(6.5)
|
|
|
8.3
|
|
Net change in cash
and cash equivalents
|
(161.3)
|
|
|
(157.4)
|
|
Cash and cash
equivalents, beginning of period
|
396.4
|
|
|
454.0
|
|
Cash and cash
equivalents, end of period
|
$
|
235.1
|
|
|
$
|
296.6
|
|
Herman Miller,
Inc.
|
Condensed
Consolidated Balance Sheets
|
|
(Unaudited)
(Dollars in millions)
|
August 28,
2021
|
|
May 29,
2021
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
235.1
|
|
|
$
|
396.4
|
|
Short-term
investments
|
8.0
|
|
|
7.7
|
|
Accounts receivable,
net
|
283.3
|
|
|
204.7
|
|
Unbilled accounts
receivable
|
24.3
|
|
|
16.4
|
|
Inventories,
net
|
446.2
|
|
|
213.6
|
|
Prepaid expenses and
other
|
138.8
|
|
|
52.7
|
|
Total current
assets
|
1,135.7
|
|
|
891.5
|
|
Net property and
equipment
|
611.7
|
|
|
327.2
|
|
Right of use
assets
|
421.9
|
|
|
214.7
|
|
Other
assets
|
2,291.2
|
|
|
628.5
|
|
Total
Assets
|
$
|
4,460.5
|
|
|
$
|
2,061.9
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS'
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
327.4
|
|
|
$
|
178.4
|
|
Short-term borrowings
and current portion of long-term debt
|
22.6
|
|
|
2.2
|
|
Short-term lease
liability
|
101.2
|
|
|
69.0
|
|
Accrued
liabilities
|
355.6
|
|
|
251.2
|
|
Total current
liabilities
|
806.8
|
|
|
500.8
|
|
Long-term
debt
|
1,298.4
|
|
|
274.9
|
|
Lease
liabilities
|
376.2
|
|
|
196.9
|
|
Other
liabilities
|
430.9
|
|
|
162.7
|
|
Total
Liabilities
|
2,912.3
|
|
|
1,135.3
|
|
Redeemable
Noncontrolling Interests
|
72.6
|
|
|
77.0
|
|
Stockholders'
Equity
|
1,475.6
|
|
|
849.6
|
|
Total Liabilities,
Redeemable Noncontrolling Interests and Stockholders'
Equity
|
$
|
4,460.5
|
|
|
$
|
2,061.9
|
|
Non-GAAP Financial Measures and Other Supplemental
Data
This presentation contains non-GAAP financial measures that are
not in accordance with, nor an alternative to, generally accepted
accounting principles (GAAP) and may be different from non-GAAP
measures presented by other companies. These non-GAAP financial
measures are not measurements of our financial performance under
GAAP and should not be considered an alternative to the related
GAAP measurement. These non-GAAP measures have limitations as
analytical tools and should not be considered in isolation or as a
substitute for analysis of our results as reported under GAAP. Our
presentation of non-GAAP measures should not be construed as an
indication that our future results will be unaffected by unusual or
infrequent items. We compensate for these limitations by providing
equal prominence of our GAAP results. Reconciliations of these
non-GAAP measures to the most directly comparable financial
measures calculated and presented in accordance with GAAP are
provided in the financial tables included within this presentation.
The Company believes these non-GAAP measures are useful for
investors as they provide financial information on a more
comparative basis for the periods presented.
The non-GAAP financial measures referenced within this
presentation include: Adjusted Earnings per Share, Pro Forma
Earnings per Share, Adjusted Operating Earnings (Loss), Adjusted
Gross Margin, and Organic Growth (Decline).
Adjusted Earnings per Share represents reported diluted earnings
per share excluding the impact from adjustments related to
acquisition and integration charges, amortization of purchased
intangibles, debt extinguishment charges, restructuring expenses
and other special charges or gains, including related taxes. These
adjustments are described further below.
Pro Forma Earnings per share represents reported diluted
earnings per share, adjusted for the Adjusted Earnings Per Share
items noted above, and further adjusted to exclude the impacts of
the Knoll acquisition. These impacts include the net income
generated by Knoll, the increased interest expense on Knoll merger
financing and the increased share count related to the Knoll
acquisition. The purpose of this measure is to assist with
comparison of Q1 fiscal year 2022 results to the guidance issued in
June 2021.
Adjusted Operating Earnings (Loss) represents reported operating
earnings plus acquisition and integration charges, amortization of
purchased intangibles, debt extinguishment charges, restructuring
expenses and other special charges. These adjustments are
described further below.
Adjusted Gross Margin represents gross margin plus amortization
of purchased intangibles and other special charges. These
adjustments are described further below.
Organic Growth represents the change in sales and orders,
excluding currency translation effects and the impact of
acquisitions.
Acquisition and Integration
Charges: Costs related directly to the Knoll acquisition
including legal, accounting and other professional fees as well as
integration-related costs. Integration-related costs include
severance, accelerated stock-based compensation expenses and other
cost reduction efforts or reorganization initiatives.
Amortization of Purchased
Intangibles: Includes expenses associated with the fair value
adjustment to inventory and amortization of acquisition related
intangibles acquired as part of the Knoll acquisition. The revenue
generated by the associated intangible assets has not been excluded
from the related non-GAAP financial measure. We exclude the impact
of the amortization of purchased intangibles, including the fair
value adjustment to inventory, as such non-cash amounts were
significantly impacted by the size of the Knoll acquisition.
Furthermore, we believe that this adjustment enables better
comparison of our results as Amortization of Purchased Intangibles
will not recur in future periods once such intangible assets have
been fully amortized. Any future acquisitions may result in the
amortization of additional intangible assets. Although we exclude
the Amortization of Purchased Intangibles in these non-GAAP
measures, we believe that it is important for investors to
understand that such intangible assets were recorded as part of
purchase accounting and contribute to revenue generation.
Debt Extinguishment
Charges: Includes expenses associated with the
extinguishment of debt as part of financing the Knoll acquisition.
We excluded these items from our non-GAAP measures because they
relate to a specific transaction and are not reflective of our
ongoing financial performance.
Restructuring
expenses: Include actions involving facilities
consolidation and optimization, targeted workforce reductions, and
costs associated with an early retirement program.
Special
charges: Include certain costs arising as a direct result
of COVID-19.
Tax Related Items: We
excluded the income tax benefit/provision effect of the tax related
items from our non-GAAP measures because they are not associated
with the tax expense on our ongoing operating results.
Certain tables below summarize select financial information, for
the periods indicated, related to each of the Company's reportable
segments. The Americas Contract segment includes the operations
associated with the design, manufacture, and sale of furniture
products for work-related settings, including office, education,
and healthcare environments, throughout the United States, Canada and Latin
America. The business associated with the Company's owned
contract furniture dealer is also included in the Americas Contract
segment. Americas Contract also includes the operations associated
with the design, manufacture, and sale of high-craft furniture
products and textiles including Geiger wood products, Maharam
textiles, naughtone and Nemschoff products. The International
Contract segment includes the operations associated with the
design, manufacture, and sale of furniture products, primarily for
work-related settings, in the EMEA and Asia-Pacific geographic regions. The Global
Retail segment includes the global operations associated with the
sale of modern design furnishings and accessories to third party
retail distributors, as well as direct to consumer sales through
eCommerce and Design Within Reach, HAY, and Herman Miller retail stores and studios. The
Knoll segment includes the global operations associated with the
design, manufacture, and sale of furniture products within the
Knoll constellation of brands. Corporate costs represent
unallocated expenses related to general corporate functions,
including, but not limited to, certain legal, executive, corporate
finance, information technology, administrative and
acquisition-related costs.
A. Reconciliation
of Operating Earnings to Adjusted Operating Earnings by
Segment
|
|
|
Three Months
Ended
|
|
August 28,
2021
|
August 29,
2020
|
Americas
Contract
|
|
|
|
|
Net Sales
|
$
|
325.3
|
|
100.0
|
%
|
$
|
370.1
|
|
100.0
|
%
|
Gross
Margin
|
100.1
|
|
30.8
|
%
|
139.0
|
|
37.6
|
%
|
Total Operating
Expenses
|
89.6
|
|
27.5
|
%
|
81.1
|
|
21.9
|
%
|
Operating
Earnings
|
10.5
|
|
3.2
|
%
|
57.9
|
|
15.6
|
%
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
0.3
|
|
0.1
|
%
|
Restructuring
|
—
|
|
—
|
%
|
1.6
|
|
0.4
|
%
|
Acquisition and
Integration Charges
|
1.0
|
|
0.3
|
%
|
—
|
|
—
|
%
|
Adjusted Operating
Earnings
|
$
|
11.5
|
|
3.5
|
%
|
$
|
59.8
|
|
16.2
|
%
|
|
|
|
|
|
International
Contract
|
|
|
|
|
Net Sales
|
$
|
99.0
|
|
100.0
|
%
|
$
|
94.0
|
|
100.0
|
%
|
Gross
Margin
|
33.7
|
|
34.0
|
%
|
33.3
|
|
35.4
|
%
|
Total Operating
Expenses
|
22.4
|
|
22.6
|
%
|
17.1
|
|
18.2
|
%
|
Operating
Earnings
|
11.3
|
|
11.4
|
%
|
16.2
|
|
17.2
|
%
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
1.0
|
|
1.1
|
%
|
Restructuring
|
—
|
|
—
|
%
|
(2.8)
|
|
(3.0)
|
%
|
Adjusted Operating
Earnings
|
$
|
11.3
|
|
11.4
|
%
|
$
|
14.4
|
|
15.3
|
%
|
|
|
|
|
|
Global
Retail
|
|
|
|
|
Net Sales
|
$
|
212.6
|
|
100.0
|
%
|
$
|
162.7
|
|
100.0
|
%
|
Gross
Margin
|
92.7
|
|
43.6
|
%
|
77.7
|
|
47.8
|
%
|
Total Operating
Expenses
|
64.9
|
|
30.5
|
%
|
46.2
|
|
28.4
|
%
|
Operating
Earnings
|
27.8
|
|
13.1
|
%
|
31.5
|
|
19.4
|
%
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
0.1
|
|
0.1
|
%
|
Adjusted Operating
Earnings
|
$
|
27.8
|
|
13.1
|
%
|
$
|
31.6
|
|
19.4
|
%
|
|
|
|
|
|
Knoll
|
|
|
|
|
Net Sales
|
$
|
156.4
|
|
100.0
|
%
|
$
|
—
|
|
—
|
%
|
Gross
Margin
|
51.0
|
|
32.6
|
%
|
—
|
|
—
|
%
|
Total Operating
Expenses
|
104.6
|
|
66.9
|
%
|
—
|
|
—
|
%
|
Operating
Loss
|
(53.6)
|
|
(34.3)
|
%
|
—
|
|
—
|
%
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
—
|
|
—
|
%
|
Amortization of
Purchased Intangibles
|
32.5
|
|
20.8
|
%
|
—
|
|
—
|
%
|
Acquisition and
Integration Charges
|
29.4
|
|
18.8
|
%
|
—
|
|
—
|
%
|
Adjusted Operating
Earnings
|
$
|
8.3
|
|
5.3
|
%
|
$
|
—
|
|
—
|
%
|
|
|
|
|
|
Intersegment
Sales
|
|
|
|
|
Net Sales
Elimination
|
$
|
(3.6)
|
|
100.0
|
%
|
$
|
—
|
|
—
|
%
|
|
|
|
|
|
Corporate
|
|
|
|
|
Operating
Loss
|
$
|
(48.8)
|
|
—
|
%
|
$
|
(10.2)
|
|
—
|
%
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Acquisition and
Integration Charges
|
38.5
|
|
—
|
%
|
—
|
|
—
|
%
|
Adjusted Operating
(Loss)
|
$
|
(10.3)
|
|
—
|
%
|
$
|
(10.2)
|
|
—
|
%
|
|
|
|
|
|
Herman Miller,
Inc.
|
|
|
|
|
Net Sales
|
$
|
789.7
|
|
100.0
|
%
|
$
|
626.8
|
|
100.0
|
%
|
Gross
Margin
|
277.5
|
|
35.1
|
%
|
250.0
|
|
39.9
|
%
|
Total Operating
Expenses
|
330.3
|
|
41.8
|
%
|
154.6
|
|
24.7
|
%
|
Operating (Loss)
Earnings
|
(52.8)
|
|
(6.7)
|
%
|
95.4
|
|
15.2
|
%
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Special
Charges
|
—
|
|
—
|
%
|
1.4
|
|
0.2
|
%
|
Restructuring
|
—
|
|
—
|
%
|
(1.2)
|
|
(0.2)
|
%
|
Amortization of
Purchased Intangibles
|
32.5
|
|
11.7
|
%
|
—
|
|
—
|
%
|
Acquisition and
Integration Charges
|
68.9
|
|
8.7
|
%
|
—
|
|
—
|
%
|
Adjusted Operating
Earnings
|
$
|
48.6
|
|
6.2
|
%
|
$
|
95.6
|
|
15.3
|
%
|
B. Reconciliation
of Gross Margin to Adjusted Gross Margin
|
|
|
Three Months
Ended
|
|
August 28,
2021
|
August 29,
2020
|
Gross
Margin
|
$
|
277.5
|
|
35.1
|
%
|
$
|
250.0
|
|
39.9
|
%
|
Amortization of
Purchased Intangibles
|
6.3
|
|
0.8
|
%
|
—
|
|
—
|
%
|
Special
Charges
|
—
|
|
—
|
%
|
1.0
|
|
0.1
|
%
|
Adjusted Gross
Margin
|
$
|
283.8
|
|
35.9
|
%
|
$
|
251.0
|
|
40.0
|
%
|
C. Organic Sales
Growth by Segment
|
|
|
Three Months
Ended
|
|
August 28,
2021
|
|
Americas
|
International
|
Retail
|
Knoll
|
Intersegment
Elimination
|
Total
|
Net Sales, as
reported
|
$
|
325.3
|
|
$
|
99.0
|
|
$
|
212.6
|
|
$
|
156.4
|
|
$
|
(3.6)
|
|
$
|
789.7
|
|
% change from
PY
|
(12.1)
|
%
|
5.3
|
%
|
30.7
|
%
|
N/A
|
N/A
|
26.0
|
%
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Acquisitions
|
—
|
|
—
|
|
—
|
|
$
|
(156.4)
|
|
3.6
|
(152.8)
|
|
Currency Translation
Effects (1)
|
(0.8)
|
|
(4.7)
|
|
(1.8)
|
|
—
|
|
|
(7.3)
|
|
Net Sales,
organic
|
$
|
324.5
|
|
$
|
94.3
|
|
$
|
210.8
|
|
$
|
—
|
|
$
|
—
|
|
$
|
629.6
|
|
% change from
PY
|
(12.3)
|
%
|
0.3
|
%
|
29.6
|
%
|
N/A
|
N/A
|
0.4
|
%
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
August 29,
2020
|
|
Americas
|
International
|
Retail
|
Knoll
|
Intersegment
Elimination
|
Total
|
Net Sales, as
reported
|
$
|
370.1
|
|
$
|
94.0
|
|
$
|
162.7
|
|
$
|
—
|
|
$
|
—
|
|
$
|
626.8
|
|
(1) Currency
translation effects represent the estimated net impact of
translating current period sales and orders using the average
exchange rates applicable to the comparable prior year
period
|
D. Organic Order
Growth by Segment
|
|
|
Three Months
Ended
|
|
August 28,
2021
|
|
Americas
|
International
|
Retail
|
Knoll
|
Intersegment
Elimination
|
Total
|
Orders, as
reported
|
$
|
434.4
|
|
$
|
121.1
|
|
$
|
199.5
|
|
$
|
164.5
|
|
$
|
(3.0)
|
|
$
|
916.5
|
|
% change from
PY
|
43.4
|
%
|
34.7
|
%
|
22.2
|
%
|
N/A
|
N/A
|
64.8
|
%
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Acquisitions
|
—
|
|
—
|
|
—
|
|
(164.5)
|
|
3.0
|
|
(161.5)
|
|
Currency Translation
Effects (1)
|
(1.0)
|
|
(4.3)
|
|
(1.8)
|
|
—
|
|
—
|
|
(7.1)
|
|
Orders,
organic
|
$
|
433.4
|
|
$
|
116.8
|
|
$
|
197.7
|
|
$
|
—
|
|
$
|
—
|
|
$
|
747.9
|
|
% change from
PY
|
43.1
|
%
|
29.9
|
%
|
21.1
|
%
|
N/A
|
N/A
|
34.5
|
%
|
Note: Knoll orders
for the six week period from July 19 to August 31 in the prior
fiscal year were $127.2 million, reflecting an increase of 29.3%
versus the comparable period in the prior year.
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
August 29,
2020
|
|
Americas
|
International
|
Retail
|
Knoll
|
Intersegment
Elimination
|
Total
|
Orders, as
reported
|
$
|
302.9
|
|
$
|
89.9
|
|
$
|
163.2
|
|
$
|
—
|
|
$
|
—
|
|
$
|
556.0
|
|
(1) Currency
translation effects represent the estimated net impact of
translating current period sales and orders using the average
exchange rates applicable to the comparable prior year
period
|
E. Design Within
Reach Studio Metrics
|
|
|
Studio
Count
|
Studio Selling
Square Footage
|
|
Three Months
Ended
|
Three Months
Ended
|
|
8/28/21
|
8/29/20
|
8/28/21
|
8/29/20
|
Beginning of
Period
|
35
|
|
34
|
|
378,252
|
|
376,052
|
|
Studio
Openings
|
|
—
|
|
|
—
|
|
Studio
Closings
|
—
|
|
—
|
|
—
|
|
—
|
|
End of
Period
|
35
|
|
34
|
|
378,252
|
|
376,052
|
|
Comparable Studios,
End of Period*
|
34
|
|
34
|
|
|
|
Non-Comparable
Studios, End of Period
|
1
|
|
—
|
|
|
|
DWR Comparable Brand
Sales*
|
53.9
|
%
|
9.1
|
%
|
|
|
*DWR comparable brand
sales reflect the year-over-year change in net sales across the
multiple channels that DWR serves, including studios, outlets,
contract, catalog, phone and eCommerce. Comparable studios reflect
studios that were fully operational for the applicable current and
prior year periods.
|
Note: Retail segment
sales also include sales through eCommerce, outlet store, call
center and wholesale channels.
|
F. Sales and
Earnings Guidance - Upcoming Quarter
|
|
|
Company
Guidance
|
|
Q2 FY2022
|
Net Sales
|
$1,025 million to
$1,065 million
|
Gross Margin
%
|
35.6% -
36.6%
|
Operating
Expenses
|
$305 million to $311
million
|
Effective Tax
Rate
|
23% - 25%
|
Earnings Per Share,
Diluted
|
$0.55 to
$0.61
|
Q&A Webcast
The Company will host a live question and answer webcast to
discuss the results of the first quarter of fiscal 2022 on
Wednesday, September 29, 2021, at 5:30
PM ET. To ensure your access to the webcast, you should
allow extra time to visit the Company's website at
http://investors.hermanmiller.com/events-and-presentations to
download the streaming software necessary to participate. An online
archive of the presentation will be available on the website later
that day.
About MillerKnoll
MillerKnoll is a collective of dynamic brands and one of the
largest and most influential modern design companies in the world.
The company is a result of a deep legacy of design, innovation, and
social good. MillerKnoll is an assumed name of Herman Miller, Inc., as described in our proxy
statement filed with the SEC on August 31,
2021. The Company is seeking shareholder approval to change
the name of the Company to MillerKnoll, Inc. The MillerKnoll brand
portfolio includes Herman Miller,
Knoll, Colebrook Bosson Saunders, DatesWeiser, DWR, Edelman Leather, Fully, Geiger, HAY,
Holly Hunt, KnollExtra, Knoll
Office, KnollStudio, KnollTextiles, Maars Living Walls, Maharam,
Muuto, naughtone, and Spinneybeck|FilzFelt. Guided by a shared
vision, common values, and a steadfast commitment to design,
MillerKnoll innovates and designs the future while contributing to
a more equitable and sustainable future for all.
Forward-Looking Statements
This communication includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements relate to future events and anticipated results of
operations, business strategies, the anticipated benefits of the
transaction, the anticipated impact of the transaction on the
combined company's business and future financial and operating
results, the expected amount and timing of synergies from the
transaction, and other aspects of our operations or operating
results. These forward-looking statements generally can be
identified by phrases such as "will," "expects," "anticipates,"
"foresees," "forecasts," "estimates" or other words or phrases of
similar import. It is uncertain whether any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do, what impact they will have on the
results of operations and financial condition of Herman Miller or the price of Herman Miller's stock. These forward-looking
statements involve certain risks and uncertainties, many of which
are beyond Herman Miller's control,
that could cause actual results to differ materially from those
indicated in such forward-looking statements, including but not
limited to: the impact of public health crises, such as pandemics
(including coronavirus (COVID-19)) and epidemics, and any related
company or government policies and actions to protect the health
and safety of individuals or government policies or actions to
maintain the functioning of national or global economies and
markets; the risk that the anticipated benefits of the merger with
Knoll will not be realized on the anticipated timing or at all;
risks related to the additional debt incurred in connection with
the merger; Herman Miller's ability
to comply with its debt covenants and obligations; the risk that
the anticipated benefits of the merger will be more costly to
realize than expected; the effect of the announcement of the merger
on the ability of Herman Miller or
Knoll to retain and hire key personnel and maintain relationships
with customers, suppliers and others with whom Herman Miller or Knoll does business, or on
Herman Miller's or Knoll's operating
results and business generally; the ability of Herman Miller to successfully integrate Knoll's
operations; the ability of Herman
Miller to implement its plans, forecasts and other
expectations with respect to Herman
Miller's business after the completion of the transaction
and realize expected synergies; business disruption following the
merger; general economic conditions; the availability and pricing
of raw materials; the financial strength of our dealers and the
financial strength of our customers; the success of
newly-introduced products; the pace and level of government
procurement; and the outcome of pending litigation or governmental
audits or investigations. For additional information about other
factors that could cause actual results to differ materially from
those described in the forward-looking statements, please refer to
Herman Miller's periodic reports and
other filings with the SEC, including the risk factors identified
in Herman Miller's most recent
Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. The
forward-looking statements included in this communication are made
only as of the date hereof. Herman
Miller does not undertake any obligation to update any
forward-looking statements to reflect subsequent events or
circumstances, except as required by law.
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content:https://www.prnewswire.com/news-releases/herman-miller-inc-reports-first-quarter-fiscal-2022-results-301388191.html
SOURCE Herman Miller, Inc.