Document
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: July 2, 2018
(Date of earliest event reported)
HERMAN MILLER, INC.
(Exact name of registrant as specified in its charter)

Michigan
(State or Other Jurisdiction of
incorporation)
001-15141
(Commission File No.)
38-0837640 
(IRS Employer
Identification no.)
 
 
 
855 East Main Avenue
Zeeland, Michigan
(Address of Principal Executive Offices)
 
49464
(Zip Code)
 
(616) 654-3000
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[__]     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[__]     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[__]     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[__]     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))








Item 2.02.     Results of Operations and Financial Condition
On July 2, 2018, Herman Miller, Inc. issued a press release announcing its financial results for the quarter ended June 2, 2018. A copy of the press release is attached as Exhibit 99.1. Also, a copy of the supplemental financial data for the quarter ended June 2, 2018 is attached as Exhibit 99.2.
The information in this Form 8-K and the attached Exhibits shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.    Financial Statements and Exhibits.
Exhibits.
99.1        Press release dated July 2, 2018.
99.2        Supplemental financial data for the quarter ended June 2, 2018.





SIGNATURE
        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated:
July 2, 2018
HERMAN MILLER, INC.
 
 
 
 (Registrant)
 
 
 
By:
/s/ Kevin J. Veltman
 Kevin J. Veltman
 
 
 
 
Vice President of Investor Relations & Treasurer (Duly Authorized Signatory for Registrant)


















Exhibit


Herman Miller Reports Fourth Quarter Fiscal 2018 Results
Record net sales of $618 million and strong, broad-based order growth of 9%
Significant Consumer profitability improvement (+450 basis points over prior year)
Dividend increase of 10%
Webcast to be held Tuesday, July 3, 2018, at 9:30 AM ET
Release
Immediate
Date
July 2, 2018
Contact
Kevin Veltman (616) 654-3973 or kevin_veltman@hermanmiller.com
 
Jeff Stutz (616) 654-8538 or jeff_stutz@hermanmiller.com
 
Media (616) 654-5977 or media_relations@hermanmiller.com
Address
Herman Miller, Inc., 855 East Main Avenue, PO Box 302, Zeeland, MI 49464-0302
Internet
www.hermanmiller.com

NOTE: A data supplement with additional financial information relating to the periods covered by this press release is available for download from the Company’s website at http://www.hermanmiller.com/about-us/investors.html.

Herman Miller, Inc. (NASDAQ: MLHR) today announced results for its fourth quarter ended June 2, 2018. Net sales in the quarter totaled $618.0 million, an increase of 7.1% from the same quarter last fiscal year. New orders in the fourth quarter of $620.8 million were 9.3% above the prior year level.

Herman Miller reported net earnings of $0.53 per share on a diluted basis in the fourth quarter compared to diluted earnings per share of $0.55 in the same quarter last fiscal year. Excluding the impact of restructuring expenses and other special charges recognized in the period, adjusted earnings per share in the fourth quarter totaled $0.66 compared to adjusted earnings per share of $0.64 in the fourth quarter of last fiscal year.

For the full fiscal year, net sales were $2,381.2 million, reflecting a year-over-year increase of 4.5%. On an organic basis, net sales increased by 6.5% compared to last fiscal year. Diluted earnings per share for the full year totaled $2.12 compared to $2.05 last year. On an adjusted basis, diluted earnings per share totaled $2.30 in fiscal 2018 compared to $2.16 in fiscal 2017.

The Company also announced an increase in its quarterly cash dividend to $0.1975 per share payable in October 2018. This change represents an increase of 10% from the previous dividend payout of $0.18 per share.

Brian Walker, Chief Executive Officer, stated, "Strong net sales and order growth were a clear highlight of our results this quarter as we finished the fiscal year setting all-time records for quarterly and annual sales for our Company. Order growth for the quarter was broad-based across all of our business segments. As a result of our strong financial position, the Board of Directors approved a 10% increase in our quarterly dividend payout - an action that reflects the confidence of the Board and our leadership team in the power of our long-term strategy. These results are a tribute to the talent and effort of our people and they demonstrate the meaningful progress we have made on our strategic priorities."

Mr. Walker added, “We are very excited to add Maars Living Walls and HAY to our collection of leading brands with the equity and licensing investments that we announced in June. The investments directly support our strategic priorities. Maars significantly enhances our dealer eco-system initiative with their industry leading designs and performance capabilities in the fast-growing moveable wall category. The investments in HAY immediately impact our focus on scaling the Consumer business given their deep catalog and renowned reputation as a design leader of furniture and lifestyle accessories at accessible price points. These additions to the Herman Miller family of brands serve our ultimate goal of expanding the size of the addressable markets we serve, and add fuel to our effort to leverage our global multi-channel distribution capability.”









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Fourth Quarter Fiscal 2018 Financial Results
FINANCIAL HIGHLIGHTS
 
 
 
 
 
 
(Dollars in millions, except per share data)
(Unaudited)
(Unaudited)
 
Three Months Ended
Twelve Months Ended
 
6/2/2018
6/3/2017
% Chg.
6/2/2018
6/3/2017
% Chg.
 
(13 weeks)

(13 weeks)

 
(52 weeks)

(53 weeks)

 
Net Sales
$
618.0

$
577.2

7.1
 %
$
2,381.2

$
2,278.2

4.5
%
Gross Margin %
36.9
%
38.3
%
N/A

36.7
%
37.9
%
N/A

Operating Expenses
$
184.3

$
162.3

13.6
 %
$
689.8

$
660.9

4.4
%
Restructuring and Impairment Expenses
$
3.9

$
8.8

N/A

$
5.7

$
12.5

N/A

Operating Earnings %
6.5
%
8.6
%
N/A

7.5
%
8.4
%
N/A

Adjusted Operating Earnings %*
8.4
%
10.2
%
N/A

8.3
%
8.9
%
N/A

Adjusted EBITDA*
$
71.5

$
76.0

(5.9
)%
$
271.0

$
265.1

2.2
%
Net Earnings Attributable to Herman Miller, Inc.
$
31.8

$
33.4

(4.8
)%
$
128.1

$
123.9

3.4
%
Earnings Per Share – Diluted
$
0.53

$
0.55

(3.6
)%
$
2.12

$
2.05

3.4
%
Adjusted Earnings Per Share – Diluted*
$
0.66

$
0.64

3.1
 %
$
2.30

$
2.16

6.5
%
Orders
$
620.8

$
568.1

9.3
 %
$
2,408.2

$
2,282.9

5.5
%
Backlog
$
344.5

$
322.6

6.8
 %
 
 
 
*Items indicated represent Non-GAAP measurements; see the reconciliations of non-GAAP financial measures and related explanations in the supplemental data file available for download at http://www.hermanmiller.com/about-us/investors.html. A copy of this supplemental data file has also been included with the earnings press release filed on Form 8-K with the Securities and Exchange Commission.

Consolidated gross margin in the fourth quarter of fiscal 2018 totaled 36.9%, representing a 140 basis point decrease from the level reported in the same quarter of last fiscal year. Cost of Sales in the current year include special charges totaling $1.5 million related to increased freight and distribution costs directly resulting from previously announced facility consolidation actions in the Company's Chinese manufacturing operations.
Operating expenses in the current year fourth quarter were $184.3 million compared to $162.3 million in the same quarter a year ago. Operating expenses included special charges totaling $6.4 million in the fourth quarter of fiscal 2018. These items related primarily to costs associated with the planned CEO transition announced in February and external consulting fees associated with the Company's profit enhancement initiatives. Excluding these items, operating expenses increased by $15.6 million compared to the same quarter last year.
The Company recognized pre-tax restructuring and impairment expenses totaling $3.9 million in the fourth quarter related mainly to the China facility consolidation. These expenses primarily reflect severance associated with targeted workforce reductions, retention costs and moving expenses.

Herman Miller’s effective income tax rate in the fourth quarter was 18.3%, compared to 29.9% in the same quarter last fiscal year. Excluding adjustments recorded in the quarter related to initial impacts of adopting the U.S. Tax Cuts and Jobs Act, the normalized effective tax rate in the period was approximately 19.8%. This is lower than the rate in the fourth quarter of 2017 due to the reduction in marginal corporate tax rates and incremental R&D tax credits recognized in the current quarter.

Jeff Stutz, Chief Financial Officer, noted, "We are particularly encouraged by the results of our Consumer business this quarter. Strong year-over-year growth in segment operating margins was driven by a record level of quarterly revenue and the initial realization benefits from our profit optimization efforts. On a consolidated basis, adjusted earnings for the quarter exceeded the expectations that we established in March, driven mainly by above-forecast sales volumes and a lower effective tax rate. In our view, the overall macro-economic backdrop for our business is supportive for continued growth, although inflationary pressures remain an outlook risk for the business. With that said, our strategic focus on profit optimization is yielding benefit, and we are further expanding this work with the goal of offsetting these pressures and delivering on our long-term profitability goals.”

The Company ended the fourth quarter with total cash and cash equivalents of $203.9 million, an increase of $10.9 million from the balance at the end of the third quarter. Cash flow generated from operations in the fourth quarter and full fiscal year was $55.8 million and $166.5 million, respectively. This compared to $80.0 million and $202.1 million in the respective periods last fiscal year.



-more-



Segment Sales and Orders

The following tables summarize reported and organic segment sales and orders for the fourth quarter of fiscal 2018:
Organic Sales Growth (Decline) by Segment *


















Three Months Ended
Three Months Ended

6/2/18
6/3/17

North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Net Sales, as reported
$
309.2

$
125.4

$
83.2

$
100.2

$
618.0

$
321.0

$
92.6

$
73.6

$
90.0

$
577.2

% change from PY
(3.7
)%
35.4
%
13.0
%
11.3
%
7.1
%
 
 
 
 
 





















Proforma Adjustments




















Dealer Divestitures





(4.4
)



(4.4
)
Currency Translation Effects (1)
(1.2
)
(5.1
)
(0.1
)
(0.1
)
(6.5
)





Net Sales, organic
$
308.0

$
120.3

$
83.1

$
100.1

$
611.5

$
316.6

$
92.6

$
73.6

$
90.0

$
572.8

% change from PY
(2.7
)%
29.9
%
12.9
%
11.2
%
6.8
%










Organic Order Growth (Decline) by Segment *
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Three Months Ended
 
6/2/18
6/3/17
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Orders, as reported
$
323.5

$
110.8

$
84.8

$
101.7

$
620.8

$
311.6

$
89.8

$
75.8

$
90.9

$
568.1

% change from PY
3.8
%
23.4
%
11.9
%
11.9
%
9.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Dealer Divestitures





(1.9
)



(1.9
)
Currency Translation Effects (1)
(1.1
)
(3.2
)

(0.1
)
(4.4
)





Orders, organic
$
322.4

$
107.6

$
84.8

$
101.6

$
616.4

$
309.7

$
89.8

$
75.8

$
90.9

$
566.2

% change from PY
4.1
%
19.8
%
11.9
%
11.8
%
8.9
%
 
 
 
 
 
(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.
 
 
 
 
 
 
 
 
 
 
 
* Items represent Non-GAAP measurements; see the reconciliations of non-GAAP financial measures and related explanations in the supplemental data file available for download at http://www.hermanmiller.com/about-us/investors.html. A copy of this supplemental data file has also been included with the earnings press release filed on Form 8-K with the Securities and Exchange Commission.

First Quarter Fiscal 2019 Guidance

Looking forward, Herman Miller expects net sales in the first quarter of fiscal 2019 to be in the range of $610 million to $630 million. This forecast includes the impact of adopting the new revenue recognition standard (ASC 606) at the beginning of fiscal 2019. This adoption results in recording certain product pricing elements as expenses within cost of goods sold going forward that were previously classified on a net basis within sales, effectively increasing revenues when compared to reported net sales in fiscal 2018. On an organic basis, adjusted for the adoption of the new revenue recognition standard, which would have increased prior year sales by approximately $7 million, as well as the impact of a dealer divestiture, this forecast implies organic sales growth of 6% compared to the first quarter of the prior year at the mid-point of the range. Diluted earnings per share in the quarter are expected to range from $0.63 to $0.67 per share.
Supplemental Information and Webcast

The Company has created a supplemental data report which provides additional information relevant to its quarterly results. This document can be accessed via a link on the Investors section of the Company's website at http://www.hermanmiller.com/about-us/investors.html.

The Company will host a live webcast to discuss the results of the fourth quarter of fiscal 2018 on Tuesday, July 3, 2018, at 9:30 a.m. ET. To ensure your access to the webcast, you should allow extra time to visit the Company’s website at www.hermanmiller.com to download the streaming software necessary to participate. An online archive of the presentation will be available on the website later that day.



-more-



About Herman Miller
Herman Miller is a globally recognized provider of furnishings and related technologies and services. Headquartered in West Michigan, the 113-year-old company has relied on innovative design to solve problems wherever people work, live, learn, and heal. With recognizable designs as part of museum collections worldwide, Herman Miller is a past recipient of the Smithsonian Institution's Cooper Hewitt National Design Award and has been ranked number one on Contract Magazine’s list of “Brands that Inspire” for four straight years. Known and respected for its leadership in corporate social responsibility, Herman Miller has earned numerous global sustainability and inclusivity awards including the Human Rights Foundation’s top rating in its Corporate Equality Index for 11 years in a row. In fiscal 2018, the Company generated $2.38 billion in revenue and employed nearly 8,000 people worldwide. Herman Miller trades on the NASDAQ Global Select Market under the symbol MLHR.

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates, and projections about the office furniture industry, the economy, and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” "likely,” “plans,” “projects,” and “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. These risks include, without limitation, the success of our growth strategy, our success in initiatives aimed at achieving long-term cost saving goals, employment and general economic conditions, the pace of economic recovery in the U.S., and in our International markets, the increase in white-collar employment, the willingness of customers to undertake capital expenditures, the types of products purchased by customers, competitive-pricing pressures, the availability and pricing of raw materials, our reliance on a limited number of suppliers, our ability to expand globally given the risks associated with regulatory and legal compliance challenges and accompanying currency fluctuations, changes in future tax legislation or interpretation of current tax legislation, the ability to increase prices to absorb the additional costs of raw materials, the financial strength of our dealers and the financial strength of our customers, our ability to locate new retail studios, negotiate favorable lease terms for new and existing locations and implement our studio portfolio transformation, our ability to attract and retain key executives and other qualified employees, our ability to continue to make product innovations, the success of newly-introduced products, our ability to serve all of our markets, possible acquisitions, divestitures or alliances, the pace and level of government procurement, the outcome of pending litigation or governmental audits or investigations, political risk in the markets we serve, and other risks identified in our filings with the Securities and Exchange Commission. Therefore, actual results and outcomes may materially differ from what we express or forecast. Furthermore, Herman Miller, Inc., undertakes no obligation to update, amend or clarify forward-looking statements.


-more-



Financial highlights for the quarter ended June 2, 2018, follow:

Herman Miller, Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Dollars in millions, except per share and common share data)

Three Months Ended
 
Twelve Months Ended
      
June 2, 2018
June 3, 2017
 
June 2, 2018
June 3, 2017
      
(13 weeks)
(13 weeks)
 
(52 weeks)
(53 weeks)
Net Sales
$
618.0

100.0
%
$
577.2

100.0
%
 
$
2,381.2

100.0
%
$
2,278.2

100.0
%
Cost of Sales
389.7

63.1
%
356.3

61.7
%
 
1,508.2

63.3
%
1,414.0

62.1
%
Gross Margin
228.3

36.9
%
220.9

38.3
%
 
873.0

36.7
%
864.2

37.9
%
Operating Expenses
184.3

29.8
%
162.3

28.1
%
 
689.8

29.0
%
660.9

29.0
%
Restructuring and Impairment Expenses
3.9

0.6
%
8.8

1.5
%
 
5.7

0.2
%
12.5

0.5
%
Operating Earnings
40.1

6.5
%
49.8

8.6
%
 
177.5

7.5
%
190.8

8.4
%
Other Expenses, net
1.6

0.3
%
2.8

0.5
%
 
9.4

0.4
%
13.2

0.6
%
Earnings Before Income Taxes and Equity Income
38.5

6.2
%
47.0

8.1
%
 
168.1

7.1
%
177.6

7.8
%
Income Tax Expense
7.1

1.1
%
14.1

2.4
%
 
42.4

1.8
%
55.1

2.4
%
Equity Income, net of tax
0.8

0.1
%
0.6

0.1
%
 
3.0

0.1
%
1.6

0.1
%
Net Earnings
32.2

5.2
%
33.5

5.8
%
 
128.7

5.4
%
124.1

5.4
%
Net Earnings Attributable to Noncontrolling Interests
0.4

0.1
%
0.1

%
 
0.6

%
0.2

%
Net Earnings Attributable to Herman Miller, Inc.
$
31.8

5.1
%
$
33.4

5.8
%
 
$
128.1

5.4
%
$
123.9

5.4
%









 
 
 
 
 
Amounts per Common Share Attributable to Herman Miller, Inc.








 
 
 
 
 
Earnings Per Share – Basic

$0.53




$0.56



 

$2.15

 

$2.07

 
Weighted Average Basic Common Shares
59,526,820



59,751,684



 
59,681,268

 
59,871,805

 
Earnings Per Share – Diluted

$0.53




$0.55



 

$2.12

 

$2.05

 
Weighted Average Diluted Common Shares
60,094,769



60,460,171



 
60,311,305

 
60,554,589

 






Herman Miller, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) (Dollars in millions)
 
Twelve Months Ended
      
June 2, 2018
June 3, 2017
 
(52 weeks)
(53 weeks)
Net Earnings
$
128.7

$
124.1

Cash Flows provided by Operating Activities
166.5

202.1

Cash Flows used for Investing Activities
(62.7
)
(116.3
)
Cash Flows used for Financing Activities
2.5

(74.6
)
Effect of Exchange Rates
1.4

0.1

Change in Cash
107.7

11.3

Cash, Beginning of Period
96.2

84.9

Cash, End of Period
$
203.9

$
96.2




-more-



Herman Miller, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in millions)
 
June 2, 2018
June 3, 2017
ASSETS
 
 
Current Assets:
 
 
Cash and Cash Equivalents
$
203.9

$
96.2

Marketable Securities
8.6

8.6

Accounts and Notes Receivable, net
219.3

186.6

Inventories, net
162.4

152.4

Prepaid Expenses and Other
51.2

48.1

Total Current Assets
645.4

491.9

Net Property and Equipment
331.4

314.6

Other Assets
502.7

499.8

Total Assets
$
1,479.5

$
1,306.3

 
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
 
 
Current Liabilities:
 
 
Accounts Payable
$
171.4

$
148.4

Accrued Liabilities
242.4

237.3

Total Current Liabilities
413.8

385.7

Long-term Debt
275.0

199.9

Other Liabilities
95.4

108.4

Total Liabilities
784.2

694.0

Redeemable Noncontrolling Interests
30.5

24.6

Herman Miller, Inc. Stockholders' Equity
664.6

587.5

Noncontrolling Interests
0.2

0.2

Total Stockholders' Equity
664.8

587.7

Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity
$
1,479.5

$
1,306.3




-end-
Exhibit


Herman Miller, Inc. Supplemental Financial Data
Twelve Months Ended June 2, 2018
(Unaudited) ($ in millions except per share data and square footage metrics)






Earnings Release Data Supplement
Herman Miller, Inc. (together with its consolidated subsidiaries, the "Company", "we", "our" or "us") provides this supplement to assist investors in evaluating the Company's financial and operating results and metrics. We suggest that the narratives to each of the tables included in this supplement be read in conjunction with the financial tables. The financial information included in this supplement contains certain non-GAAP financial measures, as explained in more detail in Section II below.













Herman Miller, Inc. Supplemental Financial Data
Twelve Months Ended June 2, 2018
(Unaudited) ($ in millions except per share data and square footage metrics)

I. Operating Segment Information

The table below summarizes select financial information, for the periods indicated, related to each of the Company’s reportable segments. The North American Furniture Solutions 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 and Canada. The business associated with the Company's owned contract furniture dealers is also included in the North American Furniture Solutions segment. The ELA Furniture Solutions segment includes EMEA, Latin America, and Asia-Pacific. ELA includes the operations associated with the design, manufacture, and sale of furniture products, primarily for work-related settings, in these aforementioned geographic regions. The Specialty segment includes the operations associated with the design, manufacture, and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles, Nemschoff and Herman Miller Collection products. The Consumer segment includes 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 retail studios. 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.
 
 
Three Months Ended
Twelve Months Ended
Net Sales
 
6/2/2018
6/3/2017
% change
6/2/2018
6/3/2017
% change
North America
 
$
309.2

$
321.0

(3.7
)%
$
1,284.4

$
1,276.6

0.6
 %
ELA
 
125.4

92.6

35.4
 %
434.5

385.5

12.7
 %
Specialty
 
83.2

73.6

13.0
 %
305.4

298.0

2.5
 %
Consumer
 
100.2

90.0

11.3
 %
356.9

318.1

12.2
 %
Total
 
$
618.0

$
577.2

7.1
 %
$
2,381.2

$
2,278.2

4.5
 %
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
 
 
 
 
North America
 
$
107.6

$
119.6

(10.0
)%
$
448.9

$
468.1

(4.1
)%
ELA
 
40.9

32.8

24.7
 %
144.2

133.1

8.3
 %
Specialty
 
31.5

29.9

5.4
 %
116.6

122.2

(4.6
)%
Consumer
 
48.3

38.6

25.1
 %
163.3

140.8

16.0
 %
Total
 
$
228.3

$
220.9

3.3
 %
$
873.0

$
864.2

1.0
 %
 
 
 
 
 
 
 
 
Gross Margin % Net Sales
 
 
 
 
 
 
 
North America
 
34.8
%
37.3
 %


35.0
%
36.7
%


ELA
 
32.6
%
35.4
 %


33.2
%
34.5
%


Specialty
 
37.9
%
40.6
 %


38.2
%
41.0
%


Consumer
 
48.2
%
42.9
 %


45.8
%
44.3
%


Total
 
36.9
%
38.3
 %


36.7
%
37.9
%


 
 
 
 
 
 
 
 
Operating Earnings (Loss)
 
 
 
 
 
 
 
North America
 
$
34.7

$
50.3

(31.0
)%
$
166.3

$
176.0

(5.5
)%
ELA
 
9.4

8.8

6.8
 %
35.5

35.9

(1.1
)%
Specialty
 
3.2

(4.1
)
(178.0
)%
8.9

8.1

9.9
 %
Consumer
 
8.4

2.9

189.7
 %
13.9

4.8

189.6
 %
Corporate Unallocated Expenses
 
(15.6
)
(8.1
)
n/a

(47.1
)
(34.0
)
n/a

Total
 
$
40.1

$
49.8

(19.5
)%
$
177.5

$
190.8

(7.0
)%
 
 
 
 
 
 
 
 
Operating Earnings % Net Sales
 
 
 
 
 
 
 
North America
 
11.2
%
15.7
 %


12.9
%
13.8
%


ELA
 
7.5
%
9.5
 %


8.2
%
9.3
%


Specialty
 
3.8
%
(5.6
)%


2.9
%
2.7
%


Consumer
 
8.4
%
3.2
 %


3.9
%
1.5
%


Corporate
 
n/a

n/a



n/a

n/a



Total
 
6.5
%
8.6
 %


7.5
%
8.4
%










II. Non-GAAP Financial Measures

This presentation contains certain non-GAAP financial measures such as Adjusted Earnings per Share, Adjusted Operating Earnings (Loss), Adjusted EBITDA and Organic Growth (Decline). Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact of restructuring expenses and other charges or gains, including related taxes. Adjusted Operating Earnings (Loss) represents reported operating earnings plus restructuring expenses, impairment expenses and other charges. These items include certain restructuring expenses related to actions involving targeted workforce reductions and freight and distribution costs related to facility consolidations, as well as non-recurring costs related to the planned CEO transition, third party consulting costs related to the Company's profit enhancement initiatives, a non-recurring gain from a dealer divestiture, and the one-time impact of adopting the U.S. Tax Cuts and Jobs Act. Adjusted EBITDA is calculated by excluding depreciation and amortization from Adjusted Operating Earnings (Loss) and including equity income and other income and expenses. Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects and the impacts of acquisitions, divestitures, changes in DWR shipping terms and the extra week in fiscal 2017. 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 twelve months ended June 3, 2017 included 53 weeks of operations as compared to a standard 52-week period. The additional week is required periodically in order to more closely align Herman Miller’s fiscal year with the calendar months.

Adjusted Earnings per Share, Adjusted Operating Earnings (Loss), Adjusted EBITDA and Organic Growth (Decline) 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.

A. Reconciliation of Earnings per Share to Adjusted Earnings per Share
 
Three Months Ended
Twelve Months Ended
 
6/2/2018
6/3/2017
6/2/2018
6/3/2017
Earnings per Share - Diluted
$
0.53

$
0.55

$
2.12

$
2.05

 
 
 
 
 
Less: One-time impact of adopting U.S. Tax Cuts and Jobs Act
(0.01
)

(0.05
)

Add: Other special charges
0.09


0.16


Less: Gain on sale of dealer



(0.02
)
Add: Impairment charges

0.07


0.07

Add: Restructuring expenses
0.05

0.02

0.07

0.06

Adjusted Earnings per Share - Diluted
$
0.66

$
0.64

$
2.30

$
2.16

 
 
 
 
 
Weighted Average Shares Outstanding (used for Calculating Adjusted Earnings per Share) – Diluted

60,094,769

60,460,171

60,311,305

60,554,589

B. Reconciliation of Operating Earnings and Net Income to EBITDA
 
 
Three Months Ended
Three Months Ended
 
6/2/18
6/3/17
 
North America
ELA
Specialty
Consumer
Corporate
Total
North America
ELA
Specialty
Consumer
Corporate
Total
Operating Earnings (Loss)
$
34.7

$
9.4

$
3.2

$
8.4

$
(15.6
)
$
40.1

$
50.3

$
8.8

$
(4.1
)
$
2.9

$
(8.1
)
$
49.8

% Net Sales
11.2
%
7.5
%
3.8
%
8.4
%
n/a

6.5
%
15.7
%
9.5
%
(5.6
)%
3.2
%
n/a

8.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Add: Special charges

2.0



5.9

7.9







Add: Impairment charges








7.1



7.1

Add: Restructuring expenses

3.9




3.9

0.7

0.1

0.3

0.6


1.7

Adjusted Operating Earnings (Loss)
$
34.7

$
15.3

$
3.2

$
8.4

$
(9.7
)
$
51.9

$
51.0

$
8.9

$
3.3

$
3.5

$
(8.1
)
$
58.6

% Net Sales
11.2
%
12.2
%
3.8
%
8.4
%
n/a

8.4
%
15.9
%
9.6
%
4.5
 %
3.9
%
n/a

10.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense), net




1.3

1.3





1.0

1.0

Depreciation and Amortization
8.7

2.5

3.0

3.1

0.2

17.5

7.9

2.2

2.6

2.7

0.4

15.8

Equity Income, net of tax
0.4

0.3

0.1



0.8

0.3

0.4

(0.1
)


0.6

Adjusted EBITDA
$
43.8

$
18.1

$
6.3

$
11.5

$
(8.2
)
$
71.5

$
59.2

$
11.5

$
5.8

$
6.2

$
(6.7
)
$
76.0

% Net Sales
14.2
%
14.4
%
7.6
%
11.5
%
n/a

11.6
%
18.4
%
12.4
%
7.9
 %
6.9
%
n/a

13.2
%





Herman Miller, Inc. Supplemental Financial Data
Twelve Months Ended June 2, 2018
(Unaudited) ($ in millions except per share data and square footage metrics)

 
Twelve Months Ended
Twelve Months Ended
 
6/2/18
6/3/17
 
North America
ELA
Specialty
Consumer
Corporate
Total
North America
ELA
Specialty
Consumer
Corporate
Total
Operating Earnings (Loss)
$
166.3

$
35.5

$
8.9

$
13.9

$
(47.1
)
$
177.5

$
176.0

$
35.9

$
8.1

$
4.8

$
(34.0
)
$
190.8

% Net Sales
12.9
%
8.2
%
2.9
%
3.9
%
n/a

7.5
%
13.8
%
9.3
%
2.7
%
1.5
%
n/a

8.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Add: Special charges

2.5



11.3

13.8







Add: Impairment charges








7.1



7.1

Less: Gain on sale of dealer






(0.7
)




(0.7
)
Add: Restructuring expenses
1.8

3.9




5.7

2.9

1.0

0.9

0.6


5.4

Adjusted Operating Earnings (Loss)
$
168.1

$
41.9

$
8.9

$
13.9

$
(35.8
)
$
197.0

$
178.2

$
36.9

$
16.1

$
5.4

$
(34.0
)
$
202.6

% Net Sales
13.1
%
9.6
%
2.9
%
3.9
%
n/a

8.3
%
14.0
%
9.6
%
5.4
%
1.7
%
n/a

8.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income, net




4.1

4.1





2.0

2.0

Depreciation and Amortization
33.4

10.2

10.5

12.1

0.7

66.9

28.3

9.4

9.4

10.2

1.6

58.9

Equity Income, net of tax
1.2

1.3

0.6


(0.1
)
3.0

0.8

0.9

0.2


(0.3
)
1.6

Adjusted EBITDA
$
202.7

$
53.4

$
20.0

$
26.0

$
(31.1
)
$
271.0

$
207.3

$
47.2

$
25.7

$
15.6

$
(30.7
)
$
265.1

% Net Sales
15.8
%
12.3
%
6.5
%
7.3
%
n/a

11.4
%
16.2
%
12.2
%
8.6
%
4.9
%
n/a

11.6
%
 
Three Months Ended
Twelve Months Ended
 
6/2/18
6/3/17
6/2/18
6/3/17
Net Earnings
$
32.2

$
33.5

$
128.7

$
124.1

Add: Interest expense
2.9

3.8

13.5

15.2

Add: Income tax expense
7.1

14.1

42.4

55.1

Add: Depreciation and Amortization
17.5

15.8

66.9

58.9

Add: Special charges
7.9


13.8


Add: Restructuring expenses
3.9

1.7

5.7

5.4

Add: Impairment charges

7.1


7.1

Less: Gain on sale of dealer




(0.7
)
Adjusted EBITDA
$
71.5

$
76.0

$
271.0

$
265.1


C. Organic Sales Growth (Decline) by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Three Months Ended
 
6/2/18
6/3/17
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Net Sales, as reported
$
309.2

$
125.4

$
83.2

$
100.2

$
618.0

$
321.0

$
92.6

$
73.6

$
90.0

$
577.2

% change from PY
(3.7
)%
35.4
%
13.0
%
11.3
%
7.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Dealer Divestitures





(4.4
)



(4.4
)
Currency Translation Effects (1)
(1.2
)
(5.1
)
(0.1
)
(0.1
)
(6.5
)





Net Sales, organic
$
308.0

$
120.3

$
83.1

$
100.1

$
611.5

$
316.6

$
92.6

$
73.6

$
90.0

$
572.8

% change from PY
(2.7
)%
29.9
%
12.9
%
11.2
%
6.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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.







Herman Miller, Inc. Supplemental Financial Data
Twelve Months Ended June 2, 2018
(Unaudited) ($ in millions except per share data and square footage metrics)
 
Twelve Months Ended
Twelve Months Ended
 
6/2/18
6/3/17
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Net Sales, as reported
$
1,284.4

$
434.5

$
305.4

$
356.9

$
2,381.2

$
1,276.6

$
385.5

$
298.0

$
318.1

$
2,278.2

% change from PY
0.6
%
12.7
%
2.5
%
12.2
%
4.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Dealer Divestitures





(25.8
)



(25.8
)
Currency Translation Effects (1)
(3.9
)
(12.6
)
(0.1
)
(0.2
)
(16.8
)





Impact of Extra Week in FY17





(21.7
)
(6.3
)
(4.3
)
(4.7
)
(37.0
)
Impact of Change in DWR Shipping Terms



(5.0
)
(5.0
)





Net sales, organic
$
1,280.5

$
421.9

$
305.3

$
351.7

$
2,359.4

$
1,229.1

$
379.2

$
293.7

$
313.4

$
2,215.4

% change from PY
4.2
%
11.3
%
3.9
%
12.2
%
6.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 (Decline) by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Three Months Ended
 
6/2/18
6/3/17
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Orders, as reported
$
323.5

$
110.8

$
84.8

$
101.7

$
620.8

$
311.6

$
89.8

$
75.8

$
90.9

$
568.1

% change from PY
3.8
%
23.4
%
11.9
%
11.9
%
9.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Dealer Divestitures





(1.9
)



(1.9
)
Currency Translation Effects (1)
(1.1
)
(3.2
)

(0.1
)
(4.4
)





Orders, organic
$
322.4

$
107.6

$
84.8

$
101.6

$
616.4

$
309.7

$
89.8

$
75.8

$
90.9

$
566.2

% change from PY
4.1
%
19.8
%
11.9
%
11.8
%
8.9
%
 
 
 
 
 
 
Twelve Months Ended
Twelve Months Ended
 
6/2/18
6/3/17
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Orders, as reported
$
1,294.1

$
451.2

$
308.4

$
354.5

$
2,408.2

$
1,285.4

$
384.9

$
294.2

$
318.4

$
2,282.9

% change from PY
0.7
%
17.2
%
4.8
%
11.3
%
5.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Dealer Divestitures





(24.2
)



(24.2
)
Currency Translation Effects (1)
(3.5
)
(10.8
)
(0.1
)
(0.2
)
(14.6
)





Impact of Extra Week in FY17





(20.0
)
(8.1
)
(4.8
)
(4.0
)
(36.9
)
Orders, organic
$
1,290.6

$
440.4

$
308.3

$
354.3

$
2,393.6

$
1,241.2

$
376.8

$
289.4

$
314.4

$
2,221.8

% change from PY
4.0
%
16.9
%
6.5
%
12.7
%
7.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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.






Herman Miller, Inc. Supplemental Financial Data
Twelve Months Ended June 2, 2018
(Unaudited) ($ in millions except per share data and square footage metrics)

E. Design Within Reach Studio Metrics
 
 
Studio Count
Studio Selling Square Footage
 
Three Months Ended
Twelve Months Ended
Three Months Ended
Twelve Months Ended
 
6/2/18
6/3/17
6/2/18
6/3/17
6/2/18
6/3/17
6/2/18
6/3/17
Beginning of Period
32

31

31

29

357,387

308,189

317,456

246,481

Studio Openings

1

3

8


13,267

43,579

100,551

Studio Expansions






4,500


Studio Closings

(1
)
(2
)
(6
)

(4,000
)
(8,148
)
(29,576
)
End of Period
32

31

32

31

357,387

317,456

357,387

317,456

Comparable Studios, End of Period
26

23

21

22

 
 
 
 
Non-Comparable Studios, End of Period
6

8

11

9

 
 
 
 
 
Studio Revenue Metrics
 
Three Months Ended
Twelve Months Ended
 
6/2/18
6/3/17
6/2/18
6/3/17
Average Studio Square Footage
357,387

312,823

337,422

281,969

Annualized Net Sales per Square Foot, All Studios
$
621

$
632

$
563

$
609

DWR Comparable Brand Sales*
11.6
%
18.6
%
11.8
%
9.3
%
Annualized Net Sales per Square Foot, Comparable Studios
$
708

$
751

$
676

$
676

*Fiscal 2017 figures are presented on a pro forma basis using a 52-week average to normalize results for the impact of an extra week of operations in the first quarter of fiscal 2017. DWR comparable brand sales reflects the year-over-year change in net sales across the multiple channels that DWR serves, including studios, outlets, contract, catalog, phone and e-commerce.

Note: Consumer segment sales also include sales through eCommerce, outlet store, call center and wholesale channels.
F. Sales and Earnings Guidance - Upcoming Quarter
Company Guidance
 
Q1 Fiscal 2019
Net Sales
$610 million to $630 million
Gross Margin %
36.25% - 37.25%
Adjusted Operating Expenses
$175 million to $179 million
Effective Tax Rate
21% - 23%
Earnings Per Share, Diluted
$0.63 to $0.67

G. Reconciliation of Reported to Adjusted Effective Tax Rate
Three Months Ended
 
June 2, 2018
Effective Tax Rate, Reported
18.3
%
Re-measurement of net deferred tax liability
0.9
%
Tax expense from deemed repatriation of foreign earnings
0.6
%
Effective Tax Rate, Adjusted
19.8
%








Herman Miller, Inc. Supplemental Financial Data
Twelve Months Ended June 2, 2018
(Unaudited) ($ in millions except per share data and square footage metrics)

H. Fiscal 2019 Revenue Recognition Adoption: Impact on Net Sales

Summary of costs included in Net Sales in Fiscal 2018 for which comparable amounts in future periods will be reflected in Cost of Sales effective at the start of Fiscal 2019 as part of adoption of new revenue recognition rules (ASC 606).
 
Three Months Ended
Fiscal Year Ended
 
September 2, 2017
December 2, 2017
March 3, 2018
June 2, 2018
June 2, 2018
Net Sales
 
 
 
 
 
North America
$
4.6

$
5.3

$
5.9