Herman Miller offers hopes for office products sector

ZEELAND, Mich. — Office furniture manufacturer Herman Miller posted strong fourth quarter results and offered an indication that demand may finally pick up for other segments of the office products world.

The company reported net sales for the quarter ended June 1 of $460 million, an increase of 9.3% from $420.7 the same quarter last fiscal year. For the full fiscal year, net sales were $1.8 billion, reflecting a year-over-year increase of 2.9% from $1.7 billion.

"Our fourth quarter earnings were fueled by topline growth and strong margins, driving a significant increase in adjusted earnings per share,” said CEO Brian Walker. “Beyond this strong financial performance, we advanced and accelerated our strategy with the acquisition of Maharam. This acquisition creates a highly complementary and leading presence for us in the margin-rich textiles and wall coverings categories, with further opportunities to extend Maharam's reach into new consumer and international markets. The acquisition was followed by this month's public introduction of our Living Office vision and the unveiling of multiple new and innovative designs for the office landscape. Collectively our financial performance and strategic actions give us great momentum and a springboard for further success in the year ahead."

Sales within Herman Miller's North American reportable segment were $311.5 million for the quarter, up 8.9% from $286 million the prior year.

The non-North American reportable segment reported net sales of $99 million for the quarter, representing an increase of 2.1% from $97 million the year ago period. This sales growth was driven by the company's acquisition of Posh Office Systems, which contributed only a partial quarter of revenue in the fourth quarter of fiscal 2012.

Herman Miller's consolidated gross margin in the fourth quarter was 35.4% compared to 35.7% in the same quarter last fiscal year. The company's gross margin in the prior year fourth quarter was favorably impacted by year-end accrual adjustments and a pension-related curtailment gain. Excluding the impact of these adjustments, the company's consolidated fourth quarter gross margin was approximately flat on a year-over-year basis. Herman Miller's gross margin in the fourth quarter improved sequentially from 34% in the third quarter of fiscal 2013.

"We ended fiscal 2013 on a strong note, having achieved quarterly sales, earnings and cash flow generation at or near their highest levels in more than four years,” said CFO Greg Bylsma. “The sequential improvement in gross margin this quarter was particularly encouraging, driven primarily by better than expected production leverage and the addition of Maharam. Our teams continue to execute our strategy and are balancing forward investment with solid capital and expense management."