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Category: HermanMiller
Date: 21 March 2021 Stock price of Herman Miller (MLHR): $41.81 Market Capital of Herman Miller: $2.47 billion We take a a look at the 3rd quarter 2021 earnings report of Herman Miller (MLHR) a globally recognized leader in design.
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While the post-pandemic world will undoubtedly be different, change always brings opportunity, and we believe that there has never been a greater opportunity for Herman Miller. With our differentiated capabilities and ability to serve both contract and consumer audiences everywhere they work, live, learn, heal, and play, we are confident in our ability to continue creating value for all of our stakeholders."
More About Herman Miller
Herman Miller is a globally recognized leader in design. Since its inception in 1905, the company’s innovative, problem-solving designs and furnishings have inspired the best in people wherever they live, work, learn, heal, and play. In 2018, Herman Miller created Herman Miller Group, a purposefully selected, complementary family of brands that includes Colebrook Bosson Saunders, DWR, Geiger, HAY, Maars Living Walls, Maharam, naughtone, and Nemschoff. Guided by a shared purpose—design for the good of humankind—Herman Miller Group shapes places that matter for customers while contributing to a more equitable and sustainable future for all.
Overview of Herman Miller 3rd quarter 2021 earnings report
Highlights
- Retail and International sales growth helps offset near-term demand pressures in North America Contract
- Retail momentum accelerates with sales growth of 63%, order growth of 81%, and operating margin of 20.1%
- Consolidated operating margin expansion over the prior year
Herman Miller (MLHR) management commentary on 3rd quarter 2021 earnings
To our shareholders:
As we review our company's performance since the onset of the pandemic a year ago, we have much to be proud of and even more to look forward to. We are beginning to see a light at the end of the tunnel and have a renewed sense of optimism about the future.
We have a Retail business that continues to outperform, contract segments backed by a leading group of brands primed to leverage recent growth investments and our global dealer network, and the most talented and committed team in the industry.
While the post-pandemic world will undoubtedly be different, change always brings opportunity, and we believe that there has never been a greater opportunity for Herman Miller. With our differentiated capabilities and ability to serve both contract and consumer audiences everywhere they work, live, learn, heal, and play, we are confident in our ability to continue creating value for all of our stakeholders.
Retail Segment
Momentum continued to accelerate in our Retail businesses, with sales and order growth rates of 63% and 81% over last year respectively. Both sales and orders exceeded the year-over-year growth rates in the prior quarter. Growth was broad-based across our Design Within Reach, HAY, and Herman Miller retail brands. While we have certainly benefited from the surge in demand for home offices generated by the pandemic, with order growth in the category exceeding 326%, the growth we’re experiencing in this segment extended across all of our retail categories. In fact, excluding the home office category and DWR Contract, Retail orders grew by 59% over last year.
North America Contract Segment
Our North America Contract business continued to be impacted by the pandemic with sales and orders down 35% and 38% compared to last year, respectively. Positive signs are emerging – vaccination efforts are progressing, infection and hospitalization rates have dropped dramatically in recent weeks, customers are actively preparing to return to their offices, CEO sentiment measures are improving, and new project inquiries at architecture and design firms reflect a positive trend over the last six months. In fact, we had an improved pace of new projects being added to our sales funnel with 28% sequential improvement from the second quarter and our pipeline data indicates that the back half of calendar 2021 is when many customers are anticipating these new projects will translate into orders associated with returning to their offices.
International Contract Segment
Our International business delivered growth in what remains a challenging demand environment in several key geographies around the world. Net sales were 6% above last year on a reported basis and up 1% on an organic basis. Orders were flat on a reported basis, while down 5% on an organic basis. Regional order growth in mainland Europe was led by the continued strength of the HAY brand, while China and Japan also contributed to quarterly growth. Order demand levels in Mexico and the Middle East were lower than last year.
Earnings and Liquidity
We delivered earnings per share of $0.70 on a reported basis and $0.65 on an adjusted basis for the quarter, a year-over-year increase of 9.4% on a reported basis and a 12.2% decrease on an adjusted basis.
Our liquidity position also remains strong, with cash on hand and availability on our revolving credit facility totaling $662.2 million at the end of the quarter. Cash flow from operations during the quarter totaled $45.6 million. Our gross-debt to EBITDA ratio was 1.0x at quarter-end. With cash on hand of $397.4 million and gross debt of $327.0 million, our balance sheet reflected a net cash position at the end of the quarter. After the end of the quarter, we paid down $50 million of private placement notes at maturity with available cash on hand.
As we review our company's performance since the onset of the pandemic a year ago, we have much to be proud of and even more to look forward to. We are beginning to see a light at the end of the tunnel and have a renewed sense of optimism about the future.
We have a Retail business that continues to outperform, contract segments backed by a leading group of brands primed to leverage recent growth investments and our global dealer network, and the most talented and committed team in the industry.
While the post-pandemic world will undoubtedly be different, change always brings opportunity, and we believe that there has never been a greater opportunity for Herman Miller. With our differentiated capabilities and ability to serve both contract and consumer audiences everywhere they work, live, learn, heal, and play, we are confident in our ability to continue creating value for all of our stakeholders.
Retail Segment
Momentum continued to accelerate in our Retail businesses, with sales and order growth rates of 63% and 81% over last year respectively. Both sales and orders exceeded the year-over-year growth rates in the prior quarter. Growth was broad-based across our Design Within Reach, HAY, and Herman Miller retail brands. While we have certainly benefited from the surge in demand for home offices generated by the pandemic, with order growth in the category exceeding 326%, the growth we’re experiencing in this segment extended across all of our retail categories. In fact, excluding the home office category and DWR Contract, Retail orders grew by 59% over last year.
North America Contract Segment
Our North America Contract business continued to be impacted by the pandemic with sales and orders down 35% and 38% compared to last year, respectively. Positive signs are emerging – vaccination efforts are progressing, infection and hospitalization rates have dropped dramatically in recent weeks, customers are actively preparing to return to their offices, CEO sentiment measures are improving, and new project inquiries at architecture and design firms reflect a positive trend over the last six months. In fact, we had an improved pace of new projects being added to our sales funnel with 28% sequential improvement from the second quarter and our pipeline data indicates that the back half of calendar 2021 is when many customers are anticipating these new projects will translate into orders associated with returning to their offices.
International Contract Segment
Our International business delivered growth in what remains a challenging demand environment in several key geographies around the world. Net sales were 6% above last year on a reported basis and up 1% on an organic basis. Orders were flat on a reported basis, while down 5% on an organic basis. Regional order growth in mainland Europe was led by the continued strength of the HAY brand, while China and Japan also contributed to quarterly growth. Order demand levels in Mexico and the Middle East were lower than last year.
Earnings and Liquidity
We delivered earnings per share of $0.70 on a reported basis and $0.65 on an adjusted basis for the quarter, a year-over-year increase of 9.4% on a reported basis and a 12.2% decrease on an adjusted basis.
Our liquidity position also remains strong, with cash on hand and availability on our revolving credit facility totaling $662.2 million at the end of the quarter. Cash flow from operations during the quarter totaled $45.6 million. Our gross-debt to EBITDA ratio was 1.0x at quarter-end. With cash on hand of $397.4 million and gross debt of $327.0 million, our balance sheet reflected a net cash position at the end of the quarter. After the end of the quarter, we paid down $50 million of private placement notes at maturity with available cash on hand.
Herman Miller (MLHR) stock price history over the last 5 years
The image below shows the stock price history of Herman Miller (MLHR) over the last 5 years. And its been a good time for Legacy Housing stockholders with the stock increasing by 34.9% over the last 5 years.
The stock of Legacy Housing is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Legacy Housing stock is positive at this point in time.
The stock of Legacy Housing is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Legacy Housing stock is positive at this point in time.
Herman Miller (MLHR) stock price history over the last 5 years
Latest stock valuation of Herman Miller
So what is Herman Miller stock worth based on their 3rd quarter 2021 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Herman Miller at $46.70 a stock
We therefore believe the stock of Herman Miller is undervalued at its current price of $41.81
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $46.70 thus a good entry point into Herman Miller would be at $42 or below.
We expect the stock of Herman Miller to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued
We therefore believe the stock of Herman Miller is undervalued at its current price of $41.81
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $46.70 thus a good entry point into Herman Miller would be at $42 or below.
We expect the stock of Herman Miller to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued
Next earnings release of Herman Miller
It is expected that Herman Miller (MLHR) will release their 4th quarter 2021 earnings report in early June 2021
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