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Key Takeaways From Herman Miller's 4th-Quarter Results

GuruFocus.com
·3 mins read

Herman Miller Inc. (NASDAQ:MLHR) released its fourth-quarter 2020 results after the closing bell on June 29. Owing to the coronavirus pandemic and the resulting lockdowns, the furniture maker's business operations were significantly impacted, taking a toll on its quarterly numbers.

Snapshot of the quarter

The Zeeland, Michigan-based company recorded an adjusted loss per share of 11 cents. That compares with adjusted earnings of 78 cents per share reported in the year-ago quarter. Revenue of $475.7 million plunged 29% on a year-over-year basis. Barring the impact of acquisitions and foreign currency translations, net sales dropped roughly 35% to $437.1 million in the quarter.


In North America, revenue amounted to $275.6 million, down 36.5%. Sales tumbled 13.3% to $114.7 million in the international segment and 18.6% to $85.4 million in the retail segment.

New orders plunged 19% to $535.3 million. The backlog amounted to $470.8 million, which reflected a gain of 19.4% from the prior-year quarter.

Company's response to the pandemic

Due to the pandemic, the company struggled to generate revenue during the quarter. As a result, the company had to take few steps to offset the effect of lower demand. Herman Miller temporarily reduced salaries and lowered retirement contributions.

The company claims to have adequate liquidity and is confident that it will be able to navigate through the foreseeable future until the prevailing circumstances improve and recover. At quarter-end, the company had cash and cash equivalent of $454 million. Cash generated from operations for the quarter came in at $30 million.

To further strengthen its liquidity, the company suspended its share repurchase program and dividend payment.

Looking ahead

As more people are working from home, demand for home office furnishings and supplies are expected to rise. However, the company is likely to face stiff competition from the current as well as new players in the worldwide home office equipment market. To have an edge over the competition, the company would need to increase its research spending and identity the habits and preferences of the modern residential worker.

In a statement, President and CEO Andi Owen was very optimistic about the company's prospects. She said:


"As we look ahead, we are encouraged - the global economy is beginning to restart and our strategy positions us extremely well for the opportunities ahead. We are actively applying our knowledge and research capabilities to help our customers re-imagine both their office spaces and their home environments. Our multi-channel distribution model supports a diverse revenue base that allows us to reach commercial and residential audiences across the globe. In particular, our digital transformation roadmap has become even more of an imperative and we expect these investments will help us leverage opportunities to serve the changing needs of our customers in the months ahead."



Guidance

Herman Miller pulled its financial forecast for the 2021 fiscal year, citing the global uncertainty caused by the Covid-19 pandemic.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.