| Herman Miller Inc. (MLHR), Wednesday said its profit for the fourth quarter slumped from a year ago, hurt by a huge drop in quarterly sales reflecting weaker demand, amid the economic downturn. Orders were down 34.9% for the quarter, while North American sales declined 35.1%. The furniture maker, separately, said it completed the acquisition of Nemschoff, while tendering an offer to retire up to $75 million aggregate principal amount of its outstanding 7.125% Notes due 2011. The company also amended its Unsecured Revolving Credit Facility.
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| | | {loadposition contentad} | | | | | For the fourth quarter, net earnings of Herman Miller plummeted to $7.2 million or $0.14 per share from $39.5 million or $0.71 per share in the corresponding quarter last year. {loadposition link_basicecon}
Quarterly results reflect restructuring charges of $4.6 million on actions taken to adjust cost structure to the current business climate. Excluding restructuring charges, adjusted earnings were equal to $0.20 per share, compared to $0.71 per share in the year-earlier quarter. On average, four analysts polled by Thomson Reuters expected earnings of $0.18 per share for the quarter. Analysts' estimate typically excludes one-time items. The Zeeland, Michigan-based company's net sales for the quarter plunged 38.4% to $319.9 million from $519.1 million in the same quarter a year ago, coming in below Street estimates of $339.03 million. Greg Bylsma, Chief Financial Officer said, "Business levels this quarter reflect the economic slow down facing most industries today." In the sequentially preceding third quarter, Herman Miller reported a slip to loss of $5.2 million or $0.10 per share, as sales declined 28.5% to $354.4 million from the comparable quarter last year. Among others in the industry, HNI Corp. (HNI) in April slipped to a loss of $11.89 million or $0.27 per share in the first quarter, as sales witnessed a 28% decline to $405.67 million. Another peer, Steelcase Inc. (SCS) reported a break-even net income for the first quarter of fiscal 2010. Net income for the quarter was $22.1 million or $0.16 per share, while revenue declined 33.1% to $545.6 million from the same quarter a year ago. Herman Miller's North American sales for the quarter under review declined 35.1% to $268.3 million in the prior year, while non-North American sales were $44.1 million, a 53.4% decline from a year ago. Sales were also impacted by the foreign currency translation, reducing sales by $9.5 million. Orders for the quarter were $324.1 million, down 34.9% from a year ago, with North American orders declining 33.4% and non-North American orders dropping 45.4% over the prior year. Gross margin was down at 32.5% of sales, compared to 34.9% in the year-earlier quarter, despite an improvement of 260 basis points from 29.9% in the prior quarter. Operating expenses for the quarter were $376.5 million, compared to $447.0 million for the year-earlier quarter. For fiscal year 2009, net earnings was $68.0 million or $1.25 per share, down 55.4% from $152.3 million or $2.56 per share a year ago. On an adjusted basis, earnings were $1.59 per share, compared to $2.61 per share last year. Sales for the period reflected a decline of 19.0% at $1.63 billion, compared to $2.01 billion in the same period a year ago. The Street expected earnings of $1.55 per share on revenues of $1.65 billion for the year. Commenting on the decline, Bylsma added, "We know the current year will be just as difficult, but our new additions of the Legrand alliance, the Nemschoff acquisition, and a long list of new products that were launched at NeoCon last week have our team optimistic and focused on our future." In another development, Herman Miller closed the transaction of Nemschoff, Inc. on June 24, 2009, purchased through a combination of $32 million in cash and issuance of 2.04 million company shares. The deal also includes the payment of additional amount upon satisfying certain milestones. Herman Miller also noted that Mark Nemschoff and Paul Nemschoff will remain actively engaged in the business, with Nemschoff joining Board. Paul Nemschoff would retain an executive role at Nemschoff and join Herman Miller's broader healthcare leadership team. Separately, Herman Miller also announced a modified Dutch Auction tender offer for a portion of its outstanding 7.125% Notes due 2011, offering to purchase for cash up to $75.00 million aggregate principal amount of the Notes. The Tender Offer commenced today and will expire on July 22, 2009. The company revealed a tender offer to retire up to $75 million aggregate principal amount of its outstanding 7.125% Notes due 2011, in accordance with the modified Dutch Auction procedures set forth in the Offer to Purchase, dated June 24, 2009, and outlined in a separate release. The tender offer commenced today and will expire on July 22, 2009. Herman Miller also amended its Unsecured Revolving Credit Facility to provide increased financial flexibility including an increase in the leverage coverage to 3.5 times debt to EBITDA and a reduction in the size of the revolver to $150 million. On August 6, 2008, brokerage Longbow, initiated Herman Miller shares to 'Neutral', with a mean target of $28.50. MLHR closed Wednesday's regular trading at $14.06, up $0.08 or 0.57%, no a volume of 0.27 million shares. In after-house, the stock further gained $0.04 or 0.28%, to trade at $14.10. In the last 52-week period, the stock traded it the range of $7.91 to $30.54, with a three-month average volume of 0.42 million shares.
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