Herman Miller (NASDAQ:MLHR) -- it's the type of company that can easily go unnoticed. The company produces a plethora of office furniture and is best known for its sleek, ergonomically correct chair designs. But, let's face it -- it's office furniture, which isn't too exciting. That is, unless you've had the privilege of sitting in one of its comfortable, multi-adjustable chairs for an eight-hour day. At that point, you grow to appreciate the company. Well, if you take a peek at Herman Miller's financial situation, you quickly grow to respect it as well.
The company released results for the second quarter and once again posted solid numbers. Net earnings came in at $15.4 million, or $0.22 per share, an increase of 69.2%. Sales for the quarter grew by 11.5%, making the latest quarter its fourth consecutive one with year-over-year sales growth. International markets were particularly impressive, generating more than 40% growth in sales.
Herman Miller was greatly rewarded by its improvements in its operating model, which helped propel gross margins to 32.6% of sales despite increases in the cost of raw materials. The company also reported positive results from its price increases, which were implemented in August.
All that's still not enough for you to get excited about a company making office furniture? Well, if you're a true Fool, you'll really appreciate this next bit of info. Cash flow from operations sat firmly at $29.4 million at the end of the quarter compared with $3.3 million last year, giving the company $22.1 million in free cash flow for the quarter vs. the prior quarter's negative free cash flow.
Herman Miller is predicting continued strength into the third quarter of fiscal 2005 based largely on its backlog, which grew 18.9% in the latest quarter. The company is estimating an increase in sales in the 8% to 14% range, and I'm in no position to doubt it.
The company has proved its ability to modify its business practices to improve performance and offset higher material costs, and it continues to gain market share with its innovative designs. So don't sit on it any longer. This is one company to get excited about. It deserves a closer look.
Fool contributor Mike Cianciolo welcomes feedback and doesn't own shares in Herman Miller.
