ZEALAND – Herman Miller Inc. had to deal with several market disruptions as he struggled to integrate the newly acquired company Knoll Inc. in its operations at the start of its new fiscal year.
The company, which will eventually do business as MillerKnoll Inc. after shareholder approval – this week released its results report for the first quarter of its 2022 fiscal year which ended on August 28. The period showed that strong order growth was tempered by operational challenges of rising commodity costs, labor shortages and shipping delays.
Zeeland-based Herman Miller completed his transformational acquisition of Knoll for $ 1.8 billion on July 19, and the two activities were combined for about the second half of the quarter. The company this week reaffirmed its goal of acquiring $ 100 million in cost synergies over the course of two years.
“From the early days of integration, our global teams have demonstrated extraordinary operational discipline,” said Andi Owen, President and CEO of Herman Miller, on a call with brokerage analysts. . “They are performing well against our plans, and they are on track to meet our timeline to deliver $ 100 million in cost synergies within two years of closing the deal.”
Combining the dealer networks of the two companies so that all dealers provide the full product portfolio is a key element in achieving the expected cost synergies.
“One of the main areas of focus of the integration is bringing together our two main contract dealer networks in the Americas,” said Owen. “And while there is still a lot of work to be done, we have made considerable progress. “
Herman Miller generated $ 789.7 million in sales for the quarter, an organic increase of 0.4%, which excludes the $ 156.4 million sales increase added by the Knoll acquisition.
Orders reached $ 916.5 million, an organic increase of 34.5% over the same period last year.
Global Retail was the bright spot among the company’s reconfigured segments, which included traditional retail in North America and international retail. Segment sales increased 30.7% while orders increased 22.2%.
“I would say our retail strategy has paid off,” Owen said. “I think we were very thoughtful in the way we thought of our direct-to-consumer business, and that we knew that one of our strengths is our ability to provide healthy and ergonomic seating to a plus. wide variety of people with the hybrid working environment that we see.
“Our Herman Miller seating stores have been very successful and we see continued growth in our retail business,” she added.
The Americas retail contracts segment, however, weakened, mirroring the existing North American contract segment combined with the Latin America contracts and Handy Design segments. The segment as a whole was down 12.2 percent from last year. However, the first quarter of last year benefited from a large order book. The first quarter of this year brought the company with labor shortages and supply chain challenges.
The most significant of these disruptions were commodity costs and inflationary pressures. Herman Miller ended the quarter with gross margins of 35.1% versus 39.9% last year.
Herman Miller’s chief financial officer Jeff Stutz estimated that raw materials, mainly steel, had eroded margins by 120 basis points while shipping costs were down 70 basis points.
Herman Miller implemented a price hike in June and Knoll did the same before the acquisition. As a combined company, Herman Miller has forecast additional price increases for its current second quarter.
Herman Miller reported a net loss of $ 59.9 million, or 93 cents per share, in the first quarter. Adjusted for acquisition and integration costs, amortization of purchased intangibles, debt extinguishment costs, restructuring costs and other special charges, executives said the company’s profit would have been 49 cents per share, compared to adjusted earnings of $ 1.24 per share a year ago.