Herman Miller's Getting Soft: Fool by Numbers

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On Sept. 20, Herman Miller (Nasdaq: MLHR) released first-quarter earnings for the period ended Sept. 1.

• Sales at Herman Miller rose 9.3% to $491.7 million, but weakness in the U.S. market led to a decline in the company's total orders and backlog.
• Earnings improved by 26.8% to $33.5 million, or $0.54 per share, which was better than expected. However, the office furnishings specialist projected second-quarter results of $0.51 to $0.57 per share, which is below estimates of $0.59 per share.
• The company plans to focus on increasing scale in high-growth areas while it waits out the slowdown in the U.S.
• Folks over at the Motley Fool CAPS community have seen their scores slip as Herman Miller's stock keeps falling. They haven't lost faith yet, though, giving the stock a four-star rating (out of a possible five), while competitor Steelcase (NYSE: SCS) earns three stars.

(Figures in millions, except per-share data.)

Income Statement Highlights

	Q1 2008	Q1 2007	Change
Sales	$491.7	$449.7	9.3%
Net Profit	$33.5	$28.5	17.5%
EPS	$0.54	$0.43	25.6%
Diluted Shares	62.2	65.6	(5.1%)

Get back to basics with the income statement.

Margin Checkup

	Q1 2008	Q1 2007	Change*
Gross Margin	34.1%	33.9%	0.2
Operating Margin	10.9%	10.2%	0.8
Net Margin	6.8%	6.3%	0.5

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2008	Q1 2007	Change
Cash + ST Invest.	$81.4	$57.0	42.8%
Accounts Rec.*	$189.8	$179.0	6.0%
Inventory	$60.0	$58.2	3.1%

Liabilities	Q1 2008	Q1 2007	Change
Accounts Payable	$119.1	$116.3	2.4%
Long-Term Debt	$174.1	$176.4	(1.3%)

*Net of current portion.

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q1 2008	Q1 2007	Change
Cash from Ops	$31.8	($6.4)	N/A
Capital Expenditures	$8.9	$7.6	17.1%
Free Cash Flow	$22.9	($14.0)	N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

• Herman Miller's Backlog Hurts
• Foolish Forecast: It's Herman Miller Time
• Herman Miller Can't Afford to Relax