Herman Miller Inc. (NASDAQ:MLHR) Q1 2021 Earnings Conference Call - Final Transcript

Sep 17, 2020 • 09:30 am ET


Herman Miller Inc. (NASDAQ:MLHR) Q1 2021 Earnings Conference Call - Final Transcript


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Q & A

[Operator Instructions] Our first question comes from Greg Burns with Sidoti & Company.

Greg Burns

Good morning. Thanks for taking the questions. So I guess start-off on the strong margins to get a sense of how sustainable they are across the different segments of the business. I know you have taken some temporary cost actions at the beginning of the pandemic. So I was just wondering if some of that starts to unwind or come back into the P&L just -- can you just give a sense of relative to where we were this quarter, maybe how we should think about margins and some of the temporary items that you're avoiding going forward. Thanks.

Jeffrey Stutz

Yeah, Greg. This is Jeff. I maybe start off here. So you're right. We certainly did as reflected in our results for the quarter and last quarter for that matter, take some fairly aggressive actions to pull back on costs. Some of those things are more structural, some of them are intentionally temporary. And in fact, earlier in the quarter I'm sure you saw -- we announced, we did return some of the cost reductions that were put in place in the form of temporary wage reductions. So those have been brought back.

If you think about kind of the -- at the headline level, the kind of actions that we've taken to reduce costs, we had some workforce reduction actions that we took that equate to somewhere between $35 million and $39 million annually. We had some employee benefit programs that were temporarily reduced, that's probably on the order of $24 million, $25 million annually. That's still in place by the way, that would be exclusive of the wage rollbacks. And then we pulled back in areas like travel and expenses and so forth, which naturally is occurring because of some of the restraints that we're feeling around COVID. So you're looking at somewhere between $85 million and $90 million per year in current expense reductions.

As we roll forward, we have to make a determination when the right time is to bring some of those benefit programs back, that's under evaluation right now. So we're not yet ready to make that call, but that's something that we're evaluating clearly with good results for the first quarter, but I'm sure we'll get into this further on the call, but we've got some order pressures that we're feeling and so we're still expecting that there's going to be some pressure that we're up against. So those cost reductions are under evaluation. We do have -- in addition to those by the way, there's some discretionary and variable type expenses that occur naturally in the business with lower revenue levels.

I would say, moving forward, somewhat offsetting those and it's certainly not offsetting all of those reductions or not even close, but we are going to be making some incremental investments in some of the digital program we mentioned in the shareholder letter, some of the progress we've made, there