Market News

Herman Miller Highlights New Risk Factor After Closing Knoll Acquisition

Herman Miller (MLHR) is an American office and home furniture company with a global footprint. The company operates through multiple brands and describes itself as a leader in modern design. See Analysts’ Top Stocks on TipRanks

Let’s take a look at Herman Miller’s latest financial performance, corporate updates, and newly added risk factor. (See Herman Miller stock charts on TipRanks).

Fiscal Q1 Financial Results

Herman Miller reported revenue of $789.7 million for its Fiscal 2022 first-quarter ended August 28. That compared to $626.8 million in the same quarter last year and beat the consensus estimate of $654.47 million. Internal projections called for Q1 revenue in the range of $640 million to $670 million.

Herman Miller posted adjusted EPS of $0.49, which dropped from $1.24 in the same quarter last year and missed the consensus estimate of $0.56. The company had forecast adjusted EPS in the range of $0.52 to $0.58. Herman Miller ended Q1 with $235.1 million in cash.

For Q2, the company anticipates revenue in the range of $1.03 billion to $1.07 billion. The midpoint of the revenue guidance implies 67% year-over-year growth. The company expects Q2 adjusted EPS in the band of $0.55 to $0.61.

Corporate Updates

Herman Miller has completed the acquisition of fellow furniture producer Knoll for $1.8 billion in cash and stock. The combined company will have 19 brands and a presence in more than 100 countries. Herman Miller’s Q2 financial outlook includes expected contributions from Knoll.

“With a broader portfolio, scaled global footprint, and advanced digital capabilities, we will be poised to meet our customers everywhere they live and work,” commented Herman Miller CEO Andi Owen.

At its coming annual meeting, Herman Miller will seek shareholder approval to change its name to HermanKnoll. Management has said that the integration of Knoll is proceeding smoothly. The combined company expects to achieve $100 million in cost synergies within two years of completing the merger.

During Q1, Herman Miller borrowed $1.12 billion through a mix of term loans and a revolving credit facility to fund the acquisition of Knoll.

Risk Factors

The new TipRanks Risk Factors tool shows 25 risk factors for Herman Miller. Since August 2021, the company has updated its risk profile with one new risk factor under the Production category.

Herman Miller tells investors that its operations have experienced shortages of qualified labor. It goes on to say that its suppliers have also been hit by a lack of qualified personnel. The company warns that if the labor shortages continue, its business could be adversely affected, and its earnings could decrease significantly.

The majority of Herman Miller’s risk factors fall under the Production category, with 36% of the total risks. That is above the sector average of 20%. Herman Miller’s shares have gained about 11% since the beginning of 2021.

Analysts’ Take

Following Herman Miller’s fiscal Q1 report, Benchmark Co. analyst Reuben Garner reiterated a Buy rating on Herman Miller stock with a price target of $55. Garner’s price target suggests 46.20% upside potential.

Consensus among analysts is a Moderate Buy based on 1 Buy. The average Herman Miller price target of $55 implies 46.20% upside potential to current levels.

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