Herman Miller Inc. (NASDAQ:MLHR) Q1 2020 Earnings Conference Call - Final Transcript

Sep 19, 2019 • 09:30 am ET


Herman Miller Inc. (NASDAQ:MLHR) Q1 2020 Earnings Conference Call - Final Transcript


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Kevin Veltman

As part of this transaction, we upsized our revolver by $100 million from $400 million to $500 million and extended the maturity of the facility by five years to August of 2024. After this transaction, the available capacity on our facility stood at $265 million at the end of the quarter.

With that background, let me move to commentary on the first quarter. We ended the quarter with total cash and cash equivalents of $160 million, which was slightly higher than the cash on hand last quarter. Cash flows from operations in the first quarter were $53 million, reflecting an increase of 60% over the same quarter of last year. Increased earnings were the primary driver of higher operating cash flows in the quarter.

Capital expenditures were $90 million in the quarter. Cash dividends paid in the quarter were $12 million. As a reminder, last quarter we announced an increase of 6% in our quarterly dividend rate that will be paid beginning in October. This increase brings our expected annual payout level to approximately $49 million. We also continued our share repurchase program with repurchases of $8 million during the quarter. We remain in compliance with all debt covenants and as of quarter-end, our gross debt-to-EBITDA ratio was approximately 0.9:1.

Given our current cash balance, ongoing cash flow from operations and total borrowing capacity, we remain well positioned to meet the financing needs of our business moving forward.

With that, I'll turn the call back over to Jeff to cover our sales and earnings guidance for the second quarter of fiscal 2020.

Jeffrey Stutz

Okay. Thank you, Kevin. We expect sales in the second quarter fiscal 2020 to range between $685 million and $705 million. The midpoint of this range implies an organic revenue increase of 7% compared to the same quarter last fiscal year. We expect consolidated gross margin in the second quarter to range between 36.6% and 37.6%. This midpoint gross margin forecast is a 100 basis points higher than the second quarter of fiscal 2019, reflecting improved production leverage, lower steel prices and net benefits from our ongoing profit improvement initiatives.

Operating expenses in the second quarter are expected to range between $189 million and $193 million. We anticipate earnings per share to be between $0.85 per share and $0.89 per share in the period, and our assumed effective tax rate is expected to be between 21% and 23% .

With that, I'll turn the call over to the operator, and we'll take your questions.