Office furniture maker Herman Miller Inc. (MLHR), Wednesday reported a decline in profit for the first quarter, hurt mainly by lower revenues at its North American division and higher expenses. Herman Miller's earnings for the quarter fell short of analysts' expectations, as did revenues.
Herman Miller also detailed an outlook for the second quarter, which is expected to miss current estimates. Investors were disappointed with the news, which dragged down Herman Miller shares by about seven percent in after hours.
Herman Miller's North American segment sales, the biggest contributor to the top line, dropped 3.1 percent, while new orders declined 11.1 percent. The segment had been negatively impacted by slowdown in sales and orders to the US federal government and within the healthcare sector.
Chief Executive Brian Walker said, "Soft demand from the federal government and healthcare customers offset positive growth in orders from commercial customers in North America."
On a positive side, sales at the non-North American division, which is a smaller segment, rose 11.4 percent to $94.6 million. Sales for Specialty and Consumer segment dropped 18.5 percent to $34.8 million, year-over-year.
Herman Miller's net sales for the quarter decreased 1.8 percent to $449.7 million from $458.1 million last year. Analysts estimated revenues of $455.13 million for the quarter.
Gross margin declined to 33.3 percent from 33.7 percent, negatively impacted by a weak Euro, higher pension expenses and unfavorable product mix.
Operating expenses, as a percent of sales, increased to 25.6 percent from 24.6 percent last year. Michigan-based Herman Miller's first-quarter profit dropped to $20.0 million or $0.34 per share from $24.6 million or $0.42 per share last year. Adjusted earnings were $0.38 per share. Analysts polled by Thomson Reuters expected earnings of $0.39 per share for the quarter. Analysts' estimates typically exclude special items.
Looking forward to the second quarter, the company expects earnings of $0.17 to $0.21 per share, and adjusted earnings of $0.37 to $0.41 per share. Herman Miller expects second quarter revenues of $445 million to $465 million. Analysts currently expect earnings of $0.42 per share on revenues of $472.83 million for the second-quarter.
MLHR closed Wednesday's trading on the Nasdaq at $20.31. In after hours, the stock lost $1.51 or 7.43%.
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