Herman Miller (MLHR) Tops Q2 EPS by 32c

Herman Miller (NASDAQ: MLHR) reported Q2 EPS of $0.89, $0.32 better than the analyst estimate of $0.57. Revenue for the quarter came in at $626.3 million versus the consensus estimate of $585.5 million.

Outlook
While we are encouraged by the sustained momentum we've experienced over the past two quarters, the overall global demand environment remains uncertain due to the ongoing pandemic. As a result, we are continuing to suspend quarterly sales and earnings guidance. However, there are certain factors that we believe are relevant for investors developing estimates for our business in the upcoming quarter. Historically, the third quarter of our fiscal year has reflected sequentially lower sales levels from the second quarter by approximately 5% to 6% due to a seasonal slowdown in activity during the holiday period in the Contract business. This seasonal impact typically results in lower gross margins during the quarter due to less production leverage from our manufacturing facilities.

As we look ahead to fiscal 2022, it is important to note that our spending levels this year have benefited from temporary reductions in wages, benefit programs, and certain discretionary items such as travel and entertainment. While some of these costs, such as temporary salary reductions, have already been reinstated and are reflected in our current run rates, other categories will be phased in over time as we evaluate the business conditions surrounding the global pandemic. While we will remain diligent in managing our overall cost structure in line with the demand environment, we expect that temporary cost savings in fiscal 2021 of approximately $50 million to $60 million will be largely re-established in fiscal 2022.

While the revenue picture for fiscal 2022 remains uncertain, we are encouraged by global progress relative to COVID-19 vaccines, which we believe will help release pent-up demand for office spaces. We expect to see many organizations make decisions about investments in their workplaces in the coming months, as they begin planning for employees to return to their offices. Of course, the magnitude and timing of this demand remains dependent on vaccine distribution and ongoing pandemic recovery efforts. We also believe our Retail strategic initiatives, including new store roll-outs, product assortment expansion, gaming, and a range of digital initiatives position our Retail segment for continued growth. These demand drivers will help support reestablishing these costs.

For earnings history and earnings-related data on Herman Miller (MLHR) click here.

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