Herman Miller Q3 profit beats on solid organic growth; stock jumps

Furniture maker Herman Miller (MHLR) reported a marked growth in third-quarter sales, aided by robust order growth across all business segments. Consequently, earnings increased from last year and topped expectations, driving the company’s stock sharply higher during Wednesday’s after-hours session.

At $0.64 per share, adjusted earnings were higher by 28% compared to the third quarter of 2018 and also above the Wall Street estimates. Reported profit moved up to $39.2 million or $0.66 per share from $29.8 million or $0.49 per share in the prior-year period. During the quarter, margins benefitted from production leverage, favorable mix, and profit optimization initiatives.

Driving the earnings growth, net sales rose to $619 million in the third quarter from $578.4 million in the comparable period a year ago but fell short of expectations. There was an 8.4% growth in organic sales, with all business segments registering an annual increase.

During the quarter, margins benefitted from production leverage, favorable mix, and profit optimization

Andi Owen, CEO of Herman Miller said, “While there is much work ahead to realize our strategic vision, our results this quarter offer a clear demonstration that we are moving in a positive direction and have a solid foundation of capabilities to build upon.”

Encouraged by the positive third-quarter results, the management currently predicts a 5% increase in fourth-quarter net sales to $645-$665 million – at the mid-point of the range. Adjusted earnings are estimated to be between $0.76 per share and $0.80 per share in the current quarter.

The analysts’ consensus recommendation for Herman Miller’s shares is buy as the company continues to benefit from the recent spurt in the demand for residential and office furniture.

Also see: Herman Miller Q2 2019 Earnings Conference Call Transcript

The shares have been maintaining a steady uptrend, after slipping to an eight-month low towards the end of last year. They gaining about 18% since the beginning of the year. The stock closed Wednesday’s regular trading lower but rose sharply during the extended session following the earnings report.

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