Herman Miller, Inc. (NASDAQ: MLHR) stock lost over 9.6% in the pre market session of 19th December, 2019 (as of 8:30 am GMT-5; Source: Google finance) after the company posted mixed results for the second quarter of FY 20. The company has posted the consolidated gross margin in the second quarter of fiscal 2020 of 37.9%, which is a 180-basis point increase from the level reported in the same quarter of last fiscal year. Gross margin has improved by 15 basis points this quarter due to a favorable exclusion by the Office of the United States Trade Representative, which resulted in a refund of tariffs paid over the past 12 months. Gross margin expansion was mainly due to price realization, favorable steel costs, and continued savings from the profit improvement initiatives. The Company had ended the second quarter with total cash and cash equivalents of $177 million. Cash flow generated from operations has increased to $89.6 million in the current quarter compared to $58.6 million in the same quarter last fiscal year.
MLHR in the second quarter of FY 20 has reported the adjusted earnings per share of 88 cents, beating the analysts’ estimates for the adjusted earnings per share of 87 cents, according to Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 3.3 percent to $674.20 million in the second quarter of FY 20, missing the analysts’ estimates for revenue by 3.17%. Operating expenses in the second quarter had risen to $188.9 million compared to $182.2 million in the same quarter a year ago. New orders in the second quarter were of $674.9 million, which is 4.2% below the prior year level. Second quarter sales were affected due to lower than anticipated order levels, which reflected the uneven demand patterns we’re seeing across the broader industry and the natural variability in a project-driven business. Order rate fell during the second quarter were due to a particularly challenging growth comparison in the prior year second quarter, which reflected consolidated organic order growth of 10%. Going forward, the company is excited about the additional investments in HAY and naughtone that give the company majority ownership of these fast-growing design brands.
For the third quarter of fiscal 2020, Herman Miller expects net sales to be in the range of $672 million to $692 million. This guidance reflects the sales growth of 3% compared to the third quarter of last year at the mid-point of the range. The Company expects diluted earnings per share to be in the range of $0.68 to $0.72.