Herman Miller, Inc. Supplemental Financial Data
Three Months Ended September 3, 2016
(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
Three Months Ended September 3, 2016
(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 operating 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 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. The Corporate category consists primarily of unallocated corporate expenses including, if applicable to the periods shown, acquisition-related costs, and other unallocated corporate costs.
| Three Months Ended | |||||||
| Net Sales | 9/3/2016 | 8/29/2015 | |||||
| North America | $ | 365.1 | $ | 338.1 | |||
| ELA | 97.3 | 102.5 | |||||
| Specialty | 60.8 | 57.8 | |||||
| Consumer | 75.4 | 67.0 | |||||
| Corporate | — | — | |||||
| Total | $ | 598.6 | $ | 565.4 | |||
| % Change in Net Sales | |||||||
| North America | 8.0 | % | |||||
| ELA | (5.1 | )% | |||||
| Specialty | 5.2 | % | |||||
| Consumer | 12.5 | % | |||||
| Corporate | n/a | ||||||
| Total | 5.9 | % | |||||
| Operating Earnings (Loss) | |||||||
| North America | $ | 43.3 | $ | 40.8 | |||
| ELA | 7.2 | 6.6 | |||||
| Specialty | 5.3 | 4.3 | |||||
| Consumer | 0.7 | 3.8 | |||||
| Corporate | (0.1 | ) | (0.4 | ) | |||
| Total | $ | 56.4 | $ | 55.1 | |||
| Operating Earnings % Net Sales | |||||||
| North America | 11.9 | % | 12.1 | % | |||
| ELA | 7.4 | % | 6.4 | % | |||
| Specialty | 8.7 | % | 7.4 | % | |||
| Consumer | 0.9 | % | 5.7 | % | |||
| Corporate | n/a | n/a | |||||
| Total | 9.4 | % | 9.7 | % | |||
Herman Miller, Inc. Supplemental Financial Data
Three Months Ended September 3, 2016
(Unaudited) ($ in millions except per share data and square footage metrics)
II. Non-GAAP Financial Measures
This presentation contains certain non-GAAP financial measures such as EBITDA and Organic Growth (Decline). EBITDA is calculated by excluding depreciation and amortization from operating earnings and including other income and expenses. Organic Growth (Decline) represents the change in revenue and orders, excluding currency translation effects and the impacts of acquisitions, divestitures and the extra week in fiscal 2017. The quarter included 14 weeks of operations as compared to a standard 13-week period. The additional week is required periodically in order to more closely align Herman Miller’s fiscal year with the calendar months.
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 Operating Earnings to EBITDA
| Three Months Ended | ||||||
| 9/3/2016 | 8/29/2015 | |||||
| Operating Earnings | $ | 56.4 | $ | 55.1 | ||
| Other Income (Expense), net | 0.6 | (0.5 | ) | |||
| Add: Depreciation and Amortization | 13.9 | 13.7 | ||||
| EBITDA | $ | 70.9 | $ | 68.3 | ||
B. Reconciliation of Operating Earnings to EBITDA by Segment
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||
| 9/3/16 | 8/29/15 | |||||||||||||||||||||||||||||||||||
| North America | ELA | Specialty | Consumer | Corporate | Total | North America | ELA | Specialty | Consumer | Corporate | Total | |||||||||||||||||||||||||
| Operating Earnings (Loss) | $ | 43.3 | $ | 7.2 | $ | 5.3 | $ | 0.7 | $ | (0.1 | ) | $ | 56.4 | $ | 40.8 | $ | 6.6 | $ | 4.3 | $ | 3.8 | $ | (0.4 | ) | $ | 55.1 | ||||||||||
| % Net Sales | 11.9 | % | 7.4 | % | 8.7 | % | 0.9 | % | n/a | 9.4 | % | 12.1 | % | 6.4 | % | 7.4 | % | 5.7 | % | n/a | 9.7 | % | ||||||||||||||
| Other Income (Expense), net | — | — | — | — | 0.6 | 0.6 | — | — | — | — | (0.5 | ) | (0.5 | ) | ||||||||||||||||||||||
| Add: Depreciation and Amortization | 7.4 | 2.3 | 1.8 | 2.3 | 0.1 | 13.9 | 7.7 | 2.1 | 1.8 | 2.0 | 0.1 | 13.7 | ||||||||||||||||||||||||
| EBITDA | $ | 50.7 | $ | 9.5 | $ | 7.1 | $ | 3.0 | $ | 0.6 | $ | 70.9 | $ | 48.5 | $ | 8.7 | $ | 6.1 | $ | 5.8 | $ | (0.8 | ) | $ | 68.3 | |||||||||||
| % Net Sales | 13.9 | % | 9.8 | % | 11.7 | % | 4.0 | % | n/a | 11.8 | % | 14.3 | % | 8.5 | % | 10.6 | % | 8.7 | % | n/a | 12.1 | % | ||||||||||||||
(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 | ||||||||||||||||||||||||||||||||||||
| C. Organic Sales Growth (Decline) by Segment | ||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||
| 9/3/16 | 8/29/15 | |||||||||||||||||||||||||||||
| North America | ELA | Specialty | Consumer | Total | North America | ELA | Specialty | Consumer | Total | |||||||||||||||||||||
| Net Sales, as reported | $ | 365.1 | $ | 97.3 | $ | 60.8 | $ | 75.4 | $ | 598.6 | $ | 338.1 | $ | 102.5 | $ | 57.8 | $ | 67.0 | $ | 565.4 | ||||||||||
| % change from PY | 8.0 | % | (5.1 | )% | 5.2 | % | 12.5 | % | 5.9 | % | ||||||||||||||||||||
| Proforma Adjustments | ||||||||||||||||||||||||||||||
| Dealer Divestitures | — | — | — | — | — | — | (8.8 | ) | — | — | (8.8 | ) | ||||||||||||||||||
Currency Translation Effects (1) | 0.3 | 3.2 | — | 0.1 | 3.6 | — | — | — | — | — | ||||||||||||||||||||
| Impact of Extra Week in FY17 | (22.7 | ) | (6.3 | ) | (3.3 | ) | (4.7 | ) | (37.0 | ) | — | — | — | — | — | |||||||||||||||
| Net Sales, proforma | $ | 342.7 | $ | 94.2 | $ | 57.5 | $ | 70.8 | $ | 565.2 | $ | 338.1 | $ | 93.7 | $ | 57.8 | $ | 67.0 | $ | 556.6 | ||||||||||
| % change from PY | 1.4 | % | 0.5 | % | (0.5 | )% | 5.7 | % | 1.5 | % | ||||||||||||||||||||
(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 | |||||||||||||||||||||||||||||
| 9/3/16 | 8/29/15 | |||||||||||||||||||||||||||||
| North America | ELA | Specialty | Consumer | Total | North America | ELA | Specialty | Consumer | Total | |||||||||||||||||||||
| Orders, as reported | 347.7 | $ | 109.8 | $ | 67.0 | $ | 71.1 | $ | 595.6 | $ | 331.9 | $ | 108.2 | $ | 58.4 | $ | 64.8 | $ | 563.3 | |||||||||||
| % change from PY | 4.8 | % | 1.5 | % | 14.7 | % | 9.7 | % | 5.7 | % | ||||||||||||||||||||
| Proforma Adjustments | ||||||||||||||||||||||||||||||
| Dealer Divestitures | — | — | — | — | — | — | (15.9 | ) | — | — | $ | (15.9 | ) | |||||||||||||||||
Currency Translation Effects (1) | 0.4 | 2.0 | — | — | 2.4 | — | — | — | — | — | ||||||||||||||||||||
| Impact of Extra Week in FY17 | (21.0 | ) | (8.1 | ) | (3.8 | ) | (4.0 | ) | (36.9 | ) | — | — | — | — | — | |||||||||||||||
| Orders, proforma | $ | 327.1 | $ | 103.7 | $ | 63.2 | $ | 67.1 | $ | 561.1 | $ | 331.9 | $ | 92.3 | $ | 58.4 | $ | 64.8 | $ | 547.4 | ||||||||||
| % change from PY | (1.4 | )% | 12.4 | % | 8.2 | % | 3.5 | % | 2.5 | % | ||||||||||||||||||||
(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 | ||||||||||||||||||||||||||||||
Herman Miller, Inc. Supplemental Financial Data
Three Months Ended September 3, 2016
(Unaudited) ($ in millions except per share data and square footage metrics)
| E. Design Within Reach Studio Metrics | ||||||
| Studio Count | ||||||
| Three Months Ended | ||||||
| September 3, 2016 | August 29, 2015 | |||||
| Beginning of Period | 29 | 33 | ||||
| Studio Openings | 3 | — | ||||
| Studio Closings | (2 | ) | (1 | ) | ||
| End of Period | 30 | 32 | ||||
| Studio Selling Square Footage | ||||||
| Three Months Ended | ||||||
| September 3, 2016 | August 29, 2015 | |||||
| Beginning of Period | 246,481 | 248,440 | ||||
| Studio Openings | 35,353 | — | ||||
| Studio Expansions | — | — | ||||
| Studio Closings | (9,091 | ) | (2,000 | ) | ||
| End of Period | 272,743 | 246,440 | ||||
| Studio Revenue Metrics | ||||||
| Three Months Ended | ||||||
| September 3, 2016 | August 29, 2015 | |||||
| Average Studio Square Footage | 259,612 | 247,440 | ||||
| Annualized Net Sales per Square Foot | $ | 583 | $ | 625 | ||
| DWR Comparable Brand Sales* | 1.3 | % | 0.6 | % | ||
*Fiscal year 2017 figures are presented on a pro forma basis using a 13-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, two outlet stores, and wholesale channels.
Herman Miller, Inc. Supplemental Financial Data
Three Months Ended September 3, 2016
(Unaudited) ($ in millions except per share data and square footage metrics)
F. New and Expanded Design Within Reach Locations
 | |
| Washington DC. (Georgetown) | |
| Date Opened: August 2016 | |
| Square Footage: 11,353 | |
| Manhasset, New York |  |
| Date Opened: June 2016 | |
| Square Footage: 12,000 | |
Herman Miller, Inc. Supplemental Financial Data
Three Months Ended September 3, 2016
(Unaudited) ($ in millions except per share data and square footage metrics)
 | |
| Austin, Texas | |
| Date Opened: August 2016 | |
| Square Footage: 12,000 | |
| G. Sales and Earnings Guidance - Upcoming Quarter | Company Guidance | ||
| Q2 Fiscal 2017 | |||
| Net Sales | $580 million to $600 million | ||
| Gross Margin % | 37.5% - 38.5% | ||
| Operating Expenses | $171 million to $174 million | ||
| Effective Tax Rate | 31% - 33% | ||
| Earnings Per Share, Diluted | $0.52 to $0.56 | ||
Herman Miller, Inc. Supplemental Financial Data
Three Months Ended September 3, 2016
(Unaudited) ($ in millions except per share data and square footage metrics)
Forward Looking Statements
This information 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,” “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, 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, 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 DWR studios, negotiate favorable lease terms for new and existing locations and the implementation of 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. |