0000066382-16-000070.txt : 20160316 0000066382-16-000070.hdr.sgml : 20160316 20160316160659 ACCESSION NUMBER: 0000066382-16-000070 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20160316 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160316 DATE AS OF CHANGE: 20160316 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MILLER HERMAN INC CENTRAL INDEX KEY: 0000066382 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE FURNITURE [2520] IRS NUMBER: 380837640 STATE OF INCORPORATION: MI FISCAL YEAR END: 0528 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15141 FILM NUMBER: 161509758 BUSINESS ADDRESS: STREET 1: 855 E MAIN AVE STREET 2: PO BOX 302 CITY: ZEELAND STATE: MI ZIP: 49464-0302 BUSINESS PHONE: 6166543000 MAIL ADDRESS: STREET 1: 8500 BYRON RD CITY: ZEELAND STATE: MI ZIP: 49464 FORMER COMPANY: FORMER CONFORMED NAME: MILLER HERMAN FURNITURE CO DATE OF NAME CHANGE: 19690610 FORMER COMPANY: FORMER CONFORMED NAME: MICHIGAN STAR FURNITURE CO DATE OF NAME CHANGE: 19671116 FORMER COMPANY: FORMER CONFORMED NAME: STAR FURNITURE CO DATE OF NAME CHANGE: 19671116 8-K 1 hmi8k_02272016.htm 8-K 8-K
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: March 16, 2016
(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 March 16, 2016, Herman Miller, Inc. issued a press release announcing its financial results for the quarter ended February 27, 2016. A copy of the press release is attached as Exhibit 99.1. Also, a copy of the supplemental financial data for the quarter ended February 27, 2016 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 March 16, 2016.
99.2        Supplemental financial data for the quarter ended February 27, 2016.




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:
March 16, 2016
HERMAN MILLER, INC.
 
 
 
 (Registrant)
 
 
 
By:
/s/ Kevin J. Veltman
 Kevin J. Veltman
 
 
 
 
Vice President of Investor Relations & Treasurer (Duly Authorized Signatory for Registrant)


















 EX-99.1 2 hmi02272016ex991.htm EXHIBIT 99.1 Exhibit


Herman Miller Reports Third Quarter Fiscal 2016 Results
•
Organic net sales increase of 5.5%
•
24% growth in adjusted diluted earnings per share
•
Strong operating cash flow generation
Webcast to be held Thursday, March 17, 2016, at 9:30 AM ET
Release
Immediate
Date
March 16, 2016
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 third quarter ended February 27, 2016. Net sales in the quarter totaled $536.5 million, an increase of 3.9% from the same quarter last fiscal year. New orders in the third quarter of $508.8 million were 1.7% above the prior year level. On an organic basis, which adjusts for foreign currency translation, net sales and orders in the third quarter increased 5.5% and 3.3%, respectively, from the same quarter last fiscal year.

Herman Miller reported net earnings of $0.46 per share on a diluted basis in the third quarter. This compares to diluted earnings per share of $0.35 in the same quarter last fiscal year. Adjusted diluted earnings were $0.37 per share in the third quarter of last year. The translation impact from year-over-year changes in currency exchange rates had an unfavorable impact on earnings per share of approximately $0.02 in the third quarter of fiscal 2016.

Brian Walker, Chief Executive Officer, stated “We delivered strong performance this quarter, executing on our strategy of providing inspiring designs across an unrivaled multi-channel distribution network. Consolidated revenue growth was within the range we anticipated and overall profitability exceeded expectations, driven by continued gross margin expansion and well controlled operating expenses. Despite continued challenges specific to our Consumer business segment, our results this quarter demonstrate progress and we remain confident that the fundamental value drivers of that business will deliver improved performance and value going forward. We are particularly pleased with the continued strength of our North America business, demonstrating the clear impact of our investments in new products, refreshed showrooms, and solutions-based selling approach.”















-more-


Third Quarter Fiscal 2016 Financial Results

FINANCIAL HIGHLIGHTS (Dollars in millions, except per share data)
 
 
 
 
(Unaudited)
 
(Unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
 
2/27/2016
2/28/2015
% Chg.
2/27/2016
2/28/2015
% Chg.
Net Sales
$
536.5

$
516.4

3.9
 %
$
1,682.3

$
1,591.5

5.7
%
Gross Margin %
38.7
%
36.9
%
N/A

38.6
%
36.6
%
N/A

Operating Expenses
$
163.5

$
151.2

8.1
 %
$
494.1

$
453.6

8.9
%
Restructuring and Impairment Expenses
$
—

$
1.9

N/A

$
—

$
1.9

N/A

Operating Earnings %
8.3
%
7.2
%
N/A

9.2
%
7.9
%
N/A

Adjusted Operating Earnings % *
8.3
%
7.6
%
N/A

9.2
%
8.7
%
N/A

Adjusted EBITDA*
$
56.0

$
51.7

8.3
 %
$
194.1

$
175.7

10.5
%
Net Earnings Attributable to Herman Miller, Inc.
$
27.9

$
21.0

32.9
 %
$
96.1

$
74.1

29.7
%
Earnings Per Share – Diluted
$
0.46

$
0.35

31.4
 %
$
1.59

$
1.23

29.3
%
Adj. Earnings Per Share – Diluted *
$
0.46

$
0.37

24.3
 %
$
1.59

$
1.35

17.8
%
Orders
$
508.8

$
500.5

1.7
 %
$
1,673.5

$
1,589.6

5.3
%
Backlog
$
313.3

$
316.6

(1.0
)%
 
 
 
*Items indicated, as well as other measures that are "adjusted", 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 furnished on Form 8-K with the Securities and Exchange Commission.

Jeff Stutz, Chief Financial Officer, noted, "Strong overall earnings performance this quarter was highlighted by continued gross margin expansion driven by a range of factors, including supportive commodity costs, favorable product mix, and an ongoing focus on operational efficiency. We’re also pleased with the focus of our Herman Miller team members to continually balance the investments required for future growth with prudent control over operating expenses. These factors combined to drive a 24% year-over-year increase in adjusted earnings per share and robust operating cash flow generation.”

Herman Miller's consolidated gross margin in the third quarter of fiscal 2016 totaled 38.7%, representing a 180 basis point improvement over the level reported in the same quarter of last fiscal year.
Operating expenses in the third quarter were $163.5 million compared to $151.2 million in the same quarter a year ago. This represents a year-over-year increase of $12.3 million, the majority of which relates to spending on new product launch and marketing initiatives, higher incentive accruals and variability from higher net sales.
Herman Miller’s effective income tax rate in the third quarter was 29.8% compared to 33.6% in the same quarter last fiscal year. This tax rate is lower than the prior year due to higher U.S. tax incentives for manufacturing and research and development activities.

The company ended the third quarter with total cash and cash equivalents of $55.3 million. Cash flow generated from operations in the third quarter was $52.7 million compared to $29.1 million in the same quarter last fiscal year. Through the first nine months of fiscal 2016, operating cash flows were $125.9 million compared to $109.8 million during the same period of the prior year.








-more-


Segment Sales and Orders Results

North American Furniture Solutions
Net sales for the third quarter of fiscal 2016 within Herman Miller’s North American reportable segment were $312.7 million, an increase of 5.6% from the same quarter last fiscal year. On an organic basis, excluding the negative impact of changes in foreign currency translation, segment sales increased 6.6% on a year-over-year basis. New orders in the third quarter totaled $296.3 million, an increase of 5.0% from the year ago period. On an organic basis segment orders in the third quarter were 6.1% higher than last year.

ELA Furniture Solutions
Net sales within the ELA segment totaled $98.9 million in the third quarter of fiscal 2016. This represents a 1.6% increase from the same quarter of last fiscal year. New orders in this segment totaled $94.5 million in the third quarter, representing a year-over-year decrease of 5.5%. On a constant-currency basis, segment sales increased 7.0%, while orders were 0.8% lower than the third quarter of last year.

Specialty
Net sales in the third quarter within Herman Miller’s Specialty segment totaled $54.7 million. This represents an 8.3% increase in sales from the same quarter last year, reflecting broad-based growth across the three Specialty brands - Geiger, Maharam and the Herman Miller Collection. New orders in the quarter of $53.5 million increased 0.6% from the year ago period.

Consumer
The Consumer segment reported net sales in the quarter of $70.2 million, which were 3.3% lower than last year. Orders in the third quarter of $64.5 million were 0.8% below the prior year. This year-over-year decrease in orders continues to reflect some ongoing pressures from previously outlined factors. However, the trend this quarter represents significant improvement from the relative order comparison in the second quarter.

Fourth Quarter Fiscal 2016 Guidance

Looking forward, Herman Miller expects net sales in the fourth quarter of fiscal 2016 to be in the range of $560 million to $580 million. On an organic basis, adjusted for the impact of foreign currency translation, this forecast implies sales growth of approximately 5% at the mid-point of the range. The year-over-year negative impact of foreign currency translation on net sales is expected to be approximately $6 million. Diluted earnings per share in the quarter are expected to range between $0.57 and $0.61 per share. This guidance reflects a net earnings benefit of approximately $0.06 per share associated primarily with an anticipated gain on the sale of a former manufacturing facility in the United Kingdom.
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 third quarter of fiscal 2016 on Thursday, March 17, 2016, 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 global company has relied on innovative design for over 100 years to solve problems for people wherever they work, live, learn, and heal. Herman Miller’s designs are part of museum collections worldwide, and the company is a past recipient of the Smithsonian Institution's Cooper Hewitt National Design Award. Known and respected for its leadership in corporate social responsibility, Herman Miller has been included in the Dow Jones Sustainability World Index for the past 12 years, and has earned the Human Rights Campaign Foundation’s top rating in its Corporate Equality Index for the past nine years. In fiscal 2015, the company generated $2.14 billion in revenue and employed over 7,000 people worldwide. Herman Miller trades on the NASDAQ Global Select Market under the symbol MLHR.

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,” 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, 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.



-more-


Financial highlights for the quarter ended February 27, 2016, follow:

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


Three Months Ended
      
February 27, 2016
February 28, 2015
Net Sales
$
536.5

100.0
%
$
516.4

100.0
%
Cost of Sales
328.7

61.3
%
325.9

63.1
%
Gross Margin
207.8

38.7
%
190.5

36.9
%
Operating Expenses
163.5

30.5
%
151.2

29.3
%
Restructuring and Impairment Expenses
—

—
%
1.9

0.4
%
Operating Earnings
44.3

8.3
%
37.4

7.2
%
Other Expenses, net
4.4

0.8
%
5.4

1.0
%
Earnings Before Income Taxes and Equity Income
39.9

7.4
%
32.0

6.2
%
Income Tax Expense
11.9

2.2
%
10.8

2.1
%
Equity Income, net of tax
0.2

—
%
—

—
%
Net Earnings
28.2

5.3
%
21.2

4.1
%
Net Earnings Attributable to Noncontrolling Interests
0.3

0.1
%
0.2

—
%
Net Earnings Attributable to Herman Miller, Inc.
$
27.9

5.2
%
$
21.0

4.1
%









Amounts per Common Share Attributable to Herman Miller, Inc.








Earnings Per Share – Basic

$0.46




$0.35



Weighted Average Basic Common Shares
59,885,597



59,550,289



Earnings Per Share – Diluted

$0.46




$0.35



Weighted Average Diluted Common Shares
60,450,848



60,098,189










-more-


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

 
Nine Months Ended
      
February 27, 2016
February 28, 2015
Net Sales
$
1,682.3

100.0
%
$
1,591.5

100.0
%
Cost of Sales
1,033.3

61.4
%
1,009.7

63.4
%
Gross Margin
649.0

38.6
%
581.8

36.6
%
Operating Expenses
494.1

29.4
%
453.6

28.5
%
Restructuring and Impairment Expenses
—

—
%
1.9

0.1
%
Operating Earnings
154.9

9.2
%
126.3

7.9
%
Other Expenses, net
12.3

0.7
%
14.8

0.9
%
Earnings Before Income Taxes and Equity Income
142.6

8.5
%
111.5

7.0
%
Income Tax Expense
46.1

2.7
%
37.3

2.3
%
Equity Income, net of tax
0.4

—
%
0.1

—
%
Net Earnings
96.9

5.8
%
74.3

4.7
%
Net Earnings Attributable to Noncontrolling Interests
0.8

—
%
0.2

—
%
Net Earnings Attributable to Herman Miller, Inc.
$
96.1

5.7
%
$
74.1

4.7
%
 
 
 
 
 
Amounts per Common Share Attributable to Herman Miller, Inc.
 
 
 
 
Earnings Per Share – Basic

$1.61

 

$1.25

 
Weighted Average Basic Common Shares
59,837,132

 
59,430,575

 
Earnings Per Share – Diluted

$1.59

 

$1.23

 
Weighted Average Diluted Common Shares
60,406,676

 
59,996,867

 



-more-



Herman Miller, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) (Dollars in millions)

 
Nine Months Ended
      
February 27, 2016
February 28, 2015
Net Earnings
$
96.9

$
74.3

Cash Flows provided by Operating Activities
125.9

109.8

Cash Flows used for Investing Activities
(58.0
)
(200.5
)
Cash Flows provided by (used for) Financing Activities
(76.6
)
50.7

Effect of Exchange Rates
0.3

0.3

Change in Cash
(8.4
)
(39.7
)
Cash, Beginning of Period
63.7

101.5

Cash, End of Period
$
55.3

$
61.8




-more-


Herman Miller, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in millions)
 
February 27, 2016
May 30, 2015
ASSETS
 
 
Current Assets:
 
 
Cash and Cash Equivalents
$
55.3

$
63.7

Marketable Securities
7.3

5.7

Accounts and Notes Receivable, net
183.9

189.6

Inventories, net
135.3

129.6

Prepaid Expenses and Other
53.6

74.9

Total Current Assets
435.4

463.5

Net Property and Equipment
265.4

249.5

Other Assets
487.8

479.7

Total Assets
$
1,188.6

$
1,192.7

 
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
 
 
Current Liabilities:
 
 
Accounts Payable
143.5

164.7

Accrued Liabilities
216.6

198.7

Total Current Liabilities
360.1

363.4

Long-term Debt
240.2

289.8

Other Liabilities
67.9

88.8

Total Liabilities
668.2

742.0

Redeemable Noncontrolling Interests
27.6

30.4

Herman Miller, Inc. Stockholders' Equity
492.0

419.8

Noncontrolling Interests
0.8

0.5

Total Stockholders' Equity
492.8

420.3

Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity
$
1,188.6

$
1,192.7




-end-
 EX-99.2 3 hmi02272016ex992.htm EXHIBIT 99.2 Exhibit


Herman Miller, Inc. Supplemental Financial Data
Nine Months Ended 2/27/2016
(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
Nine Months Ended 2/27/2016
(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
Nine Months Ended
Net Sales
 
2/27/2016
2/28/2015
2/27/2016
2/28/2015
North America
 
$
312.7

$
296.0

$
998.9

$
932.4

ELA
 
98.9

97.3

302.1

307.0

Specialty
 
54.7

50.5

170.2

160.5

Consumer
 
70.2

72.6

211.1

191.6

Corporate
 
—

—

—

—

Total
 
$
536.5

$
516.4

$
1,682.3

$
1,591.5

 
 
 
 
 
 
% Change in Net Sales
 
 
 
 
 
North America
 
5.6
 %
 
7.1
 %
 
ELA
 
1.6
 %
 
(1.6
)%
 
Specialty
 
8.3
 %
 
6.0
 %
 
Consumer
 
(3.3
)%
 
10.2
 %
 
Corporate
 
n/a

 
n/a

 
Total
 
3.9
 %
 
5.7
 %
 
 
 
 
 
 
 
Operating Earnings (Loss)
 
 
 
 
 
North America
 
$
30.6

$
26.7

$
112.8

$
95.2

ELA
 
6.8

6.2

20.7

19.7

Specialty
 
3.4

1.9

11.9

7.6

Consumer
 
2.8

4.6

9.3

8.4

Corporate
 
0.7

(2.0
)
0.2

(4.6
)
Total
 
$
44.3

$
37.4

$
154.9

$
126.3

 
 
 
 
 
 
Operating Earnings % Net Sales
 
 
 
 
 
North America
 
9.8
 %
9.0
%
11.3
 %
10.2
%
ELA
 
6.9
 %
6.4
%
6.9
 %
6.4
%
Specialty
 
6.2
 %
3.8
%
7.0
 %
4.7
%
Consumer
 
4.0
 %
6.3
%
4.4
 %
4.4
%
Corporate
 
n/a

n/a

n/a

n/a

Total
 
8.3
 %
7.2
%
9.2
 %
7.9
%





Herman Miller, Inc. Supplemental Financial Data
Nine Months Ended 2/27/2016
(Unaudited) ($ in millions except per share data and square footage metrics)

II. Non-GAAP Financial Measures
This presentation contains certain non-GAAP financial measures; including Adjusted Earnings per Share, Adjusted Operating Earnings, Adjusted EBITDA, and Organic Growth (Decline). Adjusted Earnings per Share and Adjusted Operating Earnings are calculated by excluding from Earnings per Share and Operating Earnings items that we believe are not indicative of our ongoing operating performance. For the periods covered by this release, such items consist of expenses associated with restructuring actions taken to adjust our cost structure to the current business climate, acquisition-related inventory adjustments and transaction expenses associated with our acquisition of DWR. Adjusted EBITDA is calculated by excluding depreciation, amortization and other net income or expenses from Adjusted Operating Earnings. We present Adjusted Earnings per Share, Adjusted Operating Earnings, and Adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe them to be useful in analyzing ongoing results from operations. Organic Growth (Decline) represents the change in revenue and orders, excluding currency translation effects and the impacts of acquisitions and divestitures.

Adjusted Earnings per Share, Adjusted Operating Earnings, 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
Nine Months Ended
 
 
2/27/2016
2/28/2015
2/27/2016
2/28/2015
Earnings per Share - Diluted
 
$
0.46

$
0.35

$
1.59

$
1.23

Add: Restructuring Expenses
 
—

0.02

—

0.02

Add: Acquisition-Related Inventory Adjustments
 
—

—

—

0.08

Add: Acquisition Expenses
 
—

—

—

0.02

Adjusted Earnings per Share – Diluted
 
$
0.46

$
0.37

$
1.59

$
1.35

 
 
 
 
 
 
Weighted Average Shares Outstanding (used for Calculating Adjusted Earnings per Share) – Diluted
 
60,450,848

60,098,189

60,406,676

59,996,867

 
 
 
 
 
 
B. Reconciliation of Operating Earnings to Adjusted Operating Earnings and Adjusted EBITDA
 
Three Months Ended
Nine Months Ended
 
 
2/27/2016
2/28/2015
2/27/2016
2/28/2015
Operating Earnings
 
$
44.3

$
37.4

$
154.9

$
126.3

Add: Restructuring Expenses
 
—

1.9

—

1.9

Add: Acquisition-Related Inventory Adjustments
 
—

—

—

7.8

Add: Acquisition Expenses
 
—

—

—

2.2

Adjusted Operating Earnings
 
$
44.3

$
39.3

$
154.9

$
138.2

 
 
 
 
 
 
Other Income (Expense), net
 
(0.6
)
(1.0
)
(0.7
)
(1.1
)
Add: Depreciation and Amortization
 
12.3

13.4

39.9

38.6

Adjusted EBITDA
 
$
56.0

$
51.7

$
194.1

$
175.7

 
 
 
 
 
 




Herman Miller, Inc. Supplemental Financial Data
Nine Months Ended 2/27/2016
(Unaudited) ($ in millions except per share data and square footage metrics)
C. Reconciliation of Operating Earnings to Adjusted Operating Earnings and Adjusted EBITDA by Segment





















Three Months Ended
Three Months Ended

2/27/16
2/28/15

North America
ELA
Specialty
Consumer
Corporate
Total
North America
ELA
Specialty
Consumer
Corporate
Total
Operating Earnings (Loss)
$
30.6

$
6.8

$
3.4

$
2.8

$
0.7

$
44.3

$
26.7

$
6.2

$
1.9

$
4.6

$
(2.0
)
$
37.4

% Net Sales
9.8
%
6.9
%
6.2
%
4.0
%
n/a

8.3
%
9.0
%
6.4
%
3.8
%
6.3
%
n/a

7.2
%

























Add: Restructuring / Impairment Expenses
—

—

—

—

—

—

—

—

—

—

1.9

1.9

Adjusted Operating Earnings (Loss)
$
30.6

$
6.8

$
3.4

$
2.8

$
0.7

$
44.3

$
26.7

$
6.2

$
1.9

$
4.6

$
(0.1
)
$
39.3

% Net Sales
9.8
%
6.9
%
6.2
%
4.0
%
n/a

8.3
%
9.0
%
6.4
%
3.8
%
6.3
%
n/a

7.6
%













Other Income (Expense), net
—

—

—

—

(0.6
)
(0.6
)
—

—

—

—

(1.0
)
(1.0
)
Add: Depreciation and Amortization
6.1

2.2

1.7

2.2

0.1

12.3

7.2

1.9

1.9

2.3

0.1

13.4

Adjusted EBITDA
$
36.7

$
9.0

$
5.1

$
5.0

$
0.2

$
56.0

$
33.9

$
8.1

$
3.8

$
6.9

$
(1.0
)
$
51.7

% Net Sales
11.7
%
9.1
%
9.3
%
7.1
%
n/a

10.4
%
11.5
%
8.3
%
7.5
%
9.5
%
n/a

10.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 

Nine Months Ended
Nine Months Ended

2/27/16
2/28/15

North America
ELA
Specialty
Consumer
Corporate
Total
North America
ELA
Specialty
Consumer
Corporate
Total
Operating Earnings (Loss)
$
112.8

$
20.7

$
11.9

$
9.3

$
0.2

$
154.9

$
95.2

$
19.7

$
7.6

$
8.4

$
(4.6
)
$
126.3

% Net Sales
11.3
%
6.9
%
7.0
%
4.4
%
n/a

9.2
%
10.2
%
6.4
%
4.7
%
4.4
%
n/a

7.9
%

























Add: Restructuring / Impairment Expenses
—

—

—

—

—

—

—

—

—

—

1.9

1.9

Add: Acquisition-Related Inventory Adjustments
—

—

—

—

—

—

—

—

—

7.8

—

7.8

Acquisition Expenses
—

—

—

—

—

—

—

—

—

—

2.2

2.2

Adjusted Operating Earnings (Loss)
$
112.8

$
20.7

$
11.9

$
9.3

$
0.2

$
154.9

$
95.2

$
19.7

$
7.6

$
16.2

$
(0.5
)
$
138.2

% Net Sales
11.3
%
6.9
%
7.0
%
4.4
%
n/a

9.2
%
10.2
%
6.4
%
4.7
%
8.5
%
n/a

8.7
%

























Other Income (Expense), net
—

—

—

—

(0.7
)
(0.7
)
—

—

—

—

(1.1
)
(1.1
)
Add: Depreciation and Amortization
21.0

6.6

5.5

6.5

0.3

39.9

21.4

6.3

5.4

5.3

0.2

38.6

Adjusted EBITDA
$
133.8

$
27.3

$
17.4

$
15.8

$
(0.2
)
$
194.1

$
116.6

$
26.0

$
13.0

$
21.5

$
(1.4
)
$
175.7

% Net Sales
13.4
%
9.0
%
10.2
%
7.5
%
n/a

11.5
%
12.5
%
8.5
%
8.1
%
11.2
%
n/a

11.0
%









Herman Miller, Inc. Supplemental Financial Data
Nine Months Ended 2/27/2016
(Unaudited) ($ in millions except per share data and square footage metrics)
D. Organic Sales Growth (Decline) by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Three Months Ended
 
2/27/16
2/28/15
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Net Sales, as reported
$
312.7

$
98.9

$
54.7

$
70.2

$
536.5

$
296.0

$
97.3

$
50.5

$
72.6

$
516.4

% change from PY
5.6
%
1.6
 %
8.3
%
(3.3
)%
3.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Currency Translation Effects (1)
2.7

5.2

0.1

0.2

8.2

—

—

—

—

—

Net sales, proforma
$
315.4

$
104.1

$
54.8

$
70.4

$
544.7

$
296.0

$
97.3

$
50.5

$
72.6

$
516.4

% change from PY
6.6
%
7.0
 %
8.5
%
(3.0
)%
5.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
Nine Months Ended
 
2/27/16
2/28/15
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Net Sales, as reported
$
998.9

$
302.1

$
170.2

$
211.1

$
1,682.3

$
932.4

$
307.0

$
160.5

$
191.6

$
1,591.5

% change from PY
7.1
%
(1.6
)%
6.0
%
10.2
 %
5.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Currency Translation Effects (1)
11.4

24.4

0.5

0.7

37.0

—

—

—

—

—

Acquisition
—

—

—

(35.4
)
(35.4
)
—

—

—

—

—

Acquisition Intercompany Elimination
—

—

—

5.2

5.2

—

—

—

—

—

Net sales, proforma
$
1,010.3

$
326.5

$
170.7

$
181.6

$
1,689.1

$
932.4

$
307.0

$
160.5

$
191.6

$
1,591.5

% change from PY
8.4
%
6.4
 %
6.4
%
(5.2
)%
6.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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





Herman Miller, Inc. Supplemental Financial Data
Nine Months Ended 2/27/2016
(Unaudited) ($ in millions except per share data and square footage metrics)
E. Organic Order Growth (Decline) by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Three Months Ended
 
2/27/16
2/28/15
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Orders, as reported
$
296.3

$
94.5

$
53.5

$
64.5

$
508.8

$
282.3

$
100.0

$
53.2

$
65.0

$
500.5

% change from PY
5.0
%
(5.5
)%
0.6
%
(0.8
)%
1.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Currency Translation Effects (1)
3.1

4.7

0.1

0.2

8.1

—

—

—

—

—

Orders, proforma
$
299.4

$
99.2

$
53.6

$
64.7

$
516.9

$
282.3

$
100.0

$
53.2

$
65.0

$
500.5

% change from PY
6.1
%
(0.8
)%
0.8
%
(0.5
)%
3.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
Nine Months Ended
 
2/27/16
2/28/15
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Orders, as reported
$
977.4

$
315.4

$
173.2

$
207.5

$
1,673.5

$
914.3

$
324.2

$
163.5

$
187.6

$
1,589.6

% change from PY
6.9
%
(2.7
)%
5.9
%
10.6
 %
5.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Currency Translation Effects (1)
9.9

25.5

0.5

0.7

36.6

—

—

—

—

—

Acquisition
—

—

—

(33.1
)
(33.1
)
—

—

—

—

—

Acquisition Intercompany Elimination
—

—

—

4.1

4.1

—

—

—

—

—

Orders, proforma
$
987.3

$
340.9

$
173.7

$
179.2

$
1,681.1

$
914.3

$
324.2

$
163.5

$
187.6

$
1,589.6

% change from PY
8.0
%
5.2
 %
6.2
%
(4.5
)%
6.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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





Herman Miller, Inc. Supplemental Financial Data
Nine Months Ended 2/27/2016
(Unaudited) ($ in millions except per share data and square footage metrics)

F. Design Within Reach Studio Metrics
 
 
 
 
 
Studio Count
 
Three Months Ended
Nine Months Ended
 
February 27, 2016
February 28, 2015
February 27, 2016
February 28, 2015*
Beginning of Period
32

37

33

39

Studio Openings
—

—

1

3

Studio Closings
(2
)
(3
)
(4
)
(8
)
End of Period
30

34

30

34

 
 
 
 
 
 
Studio Selling Square Footage
 
Three Months Ended
Nine Months Ended
 
February 27, 2016
February 28, 2015
February 27, 2016
February 28, 2015*
Beginning of Period
257,961

251,198

248,440

235,466

Studio Openings
—

—

15,115

36,986

Studio Expansions
—

—

3,906

2,681

Studio Closings
(6,166
)
(6,600
)
(15,666
)
(30,535
)
End of Period
251,795

244,598

251,795

244,598

 
 
 
 
 
 
Studio Revenue Metrics
 
Three Months Ended
Nine Months Ended
 
February 27, 2016
February 28, 2015
February 27, 2016
February 28, 2015*
Average Studio Square Footage
254,878

247,898

250,118

240,032

Annualized Net Sales per Square Foot
$
589

$
656

$
629

$
719

Comparable Studio Sales
(4.8
)%
7.6
%
(4.8
)%
5.0
%

*Fiscal year 2015 figures are presented on a pro forma basis and represent DWR measures as of the beginning of the fiscal period

Note: Consumer segment sales also include sales through eCommerce, two outlet stores, and wholesale channels.






Herman Miller, Inc. Supplemental Financial Data
Nine Months Ended 2/27/2016
(Unaudited) ($ in millions except per share data and square footage metrics)

G. Sales and Earnings Guidance - Upcoming Quarter
 
Company Guidance
 
 
Q4 Fiscal 2016
Net Sales
 
$560 million to $580 million
Gross Margin %
 
38% to 39%
Operating Expenses*
 
$165 million to $169 million
Effective Tax Rate*
 
28% to 30%
Earnings Per Share, Diluted*
 
$0.57 to $0.61

* Reflects the impact of a $3.5 million net gain related primarily to the sale of a former UK manufacturing facility.




Herman Miller, Inc. Supplemental Financial Data
Nine Months Ended 2/27/2016
(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.