Wednesday, office furniture systems maker Herman Miller, Inc. (MLHR) reported a sharp decline in first quarter profit as sales plunged from the same period last year on weaker demand caused by adverse economic conditions. Adjusted earnings for the quarter, however, came in above analysts' consensus, while revenues fell short.
The Zeeland, Michigan-based company posted a first quarter net income of $8.4 million or $0.14 per share, compared to $33.4 million or $0.60 per share in the year ago period.
Results for the quarter included charges associated with the company's previously announced restructuring actions and debt tender offer.
On an adjusted basis, net income for the quarter was $0.22 per share, compared to adjusted net income of $0.60 per share in the year ago quarter. On average, four analysts polled by Thomson Reuters expected the company to earn $0.19 per share for the quarter. Analysts' estimates typically exclude special items.
In the sequential fourth quarter, Herman Miller reported net earnings of $7.2 million or $0.14 per share, compared to $39.5 million or $0.71 per share a year back. Adjusted earnings were $0.20 per share, compared to $0.71 per share a year earlier.
Net sales for the quarter under reveiw declined 32.4% to $324.0 million from $479.1 million last year. Analysts expected the company to report revenues of $325.90 million for the quarter.
Sales for the quarter included a partial period of activity from the acquisition of Nemschoff, Inc., which was completed on June 24, 2009. Sales from Nemschoff were about $15.3 million in the first quarter.
North American segment sales declined 32% to $269.7 million from the same period in the prior year. Sales of the non-North American segment were $41.8 million, a 40.4% decline from a year ago. Changes in foreign currency exchange rates reduced consolidated sales by about $6 million compared to the prior year first quarter.
Consolidated orders for the quarter were $322.1 million, compared to $535.2 million in the same quarter last year. Orders in the prior year first quarter were impacted by the announcement of a general price increase, which was effective in August 2008.
Herman Miller said the timing of this price increase effectively "pulled" orders of about $35 million into the first quarter that would have otherwise been entered in the second quarter of last year.
Gross margin declined 70 basis points to 33.2% compared to the year ago period. But the decline was not severe in comparison with the steep decline in sales as a result of lower commodity prices and restructuring related cost savings.
Operating expenses for the first quarter include a charge of $4.5 million associated with the completion of a debt tender offer. Restructuring charges were $2.6 million.
Commenting on the results, Greg Bylsma, Chief Financial Officer, said, "While we are still facing economic headwinds, our results this quarter are encouraging on several fronts. The rate of decline in order levels has slowed over the past two quarters and we are seeing continued signs of stabilization in market demand. The restructuring actions taken in the past year have dramatically improved our ability to operate profitably on a much lower revenue base."
In the fourth quarter, Herman Miller's net sales plunged 38.4% to $319.9 million from the previous year.
Amongst others in the industry, HNI Corp. (HNI) reported second quarter sales of $383.0 million and a net loss of $1.4 million or $0.03 per share, compared to net income of $13.5 million or $0.30 per share on net sales of $613.1 million in the prior year.
MLHR closed Wednesday's regular trading on the Nasdaq at $19.15, up $0.61 or 3.29%. In the past 52-week period, the stock has traded in the range of $18.51 - $19.25, with an average 3-month volume of 0.45 million shares.
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