Millerknoll, Inc. · NASDAQ:MLKN
Millerknoll — Miller Herman — Investor Day (May 2019)
47 slides from Millerknoll's investor day presentation, May 9, 2019
Slide 1: All Together Now: Herman Miller Investor Day
NASDAQ: MLHR All Together Now Herman Miller Investor Day May 9, 2019 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This information contains forward-looking These statements do not guarantee future performance portfolio transformation, our ability to attract and retain statements within the meaning of Section 27A and involve certain risks, uncertainties, and assumptions key executives
Slide 3: Company Snapshot, Foundational Insights, Strategic Priorities, Financial Outlook
Company Snapshot Foundational Insights Strategic Priorities Financial Outlook 3
Slide 4: Company Snapshot
COMPANY SNAPSHOT Headquarters: FY18 Revenue: $2.38B Omni-Channel Zeeland, MI, USA FY18 Adj. Operating distribution model Founded: 1905 Income: $197M • Over 600 contract dealers in 109 countries Employees: ~8,000 • 37 retail studios • Multiple global e-commerce storefronts FY18 REVENUE MIX North Amer
Slide 5: Foundational Insights section
Company Snapshot Foundational Insights Strategic Priorities Financial Outlook 5
Slide 6: Foundational Insights: The world around us is changing
FOUNDATIONAL INSIGHTS The world around us is changing HermanMiller
Slide 7: Foundational Insights
FOUNDATIONAL INSIGHTS DIGITAL RISE OF DIRECT-TO-CONSUMER GROWING OPPORTUNITY IN GLOBAL DISRUPTION BUSINESS MODELS MARKETS & RETAIL BUSINESSES MATURE NA CHANGES IN WHERE TSI IMPERATIVE CONTRACT MARKET & HOW PEOPLE WORK 7
Slide 8: Strategic Priorities section
Company Snapshot Foundational Insights Strategic Priorities Financial Outlook 8
Slide 9: Our strategy is centered around four strategic priorities
STRATEGIC PRIORITIES Our strategy is centered around four strategic priorities BUILD A CUSTOMER- UNLOCK THE POWER OF CENTRIC, DIGITALLY-ENABLED ONE HERMAN MILLER 1 2 BUSINESS MODEL REINFORCE OUR COMMITMENT ACCELERATE TO OUR PEOPLE, OUR PLANET, PROFITABLE GROWTH 3 4 & OUR COMMUNITIES 9
Slide 10: Unlock the Power of One Herman Miller
STRATEGIC PRIORITIES UNLOCK THE POWER OF ONE HERMAN MILLER OBJECTIVES: Build an agile, Simplify and tailor our Continue to lead in collaborative, go-to-market approach Product Innovation globally-connected across all businesses organization fit for continuous evolution 10
Slide 11: Build an agile, collaborative, globally-connected organization
STRATEGIC PRIORITIES: UNLOCK THE POWER OF ONE HERMAN MILLER Objective: Build an agile, collaborative, globally-connected organization fit for continuous evolution Making structural changes that To: take us from: WORKING WITHIN SILOS COLLABORATION DUPLICATION OF WORK FEWER REDUNDANT EFFORTS REGIONAL
Slide 12: Simplify and tailor our go-to-market approach
STRATEGIC PRIORITIES: UNLOCK THE POWER OF ONE HERMAN MILLER Objective: Simplify and tailor our go-to-market approach From NORTH AMERICA (LEGACY) SPECIALTY OFFICE HEALTHCARE EDUCATION GEIGER NEMSCHOFF COLLECTION MAHARAM To NORTH AMERICA (NEW STRUCTURE*) *The Company is in the process of evaluating th
Slide 13: Simplify and tailor our go-to-market approach: Herman Miller Group
STRATEGIC PRIORITIES: UNLOCK THE POWER OF ONE HERMAN MILLER Objective: Simplify and tailor our go-to-market approach Herman Miller Group 13
Slide 14: Our Evolving Product Offer
STRATEGIC PRIORITIES: UNLOCK THE POWER OF ONE HERMAN MILLER Objective: Continue to lead in Product Innovation across all businesses Our Evolving Product Offer FIVE YEARS AGO TODAY Maharam Geiger Maharam Nemschoff Geiger Nemschoff Premium Premium Maars naughtone Herman Miller DWR Herman Miller CBS CB
Slide 15: All Together Now – Salone del Mobile, Milan
STRATEGIC PRIORITIES: UNLOCK THE POWER OF ONE HERMAN MILLER All Together Now – Salone del Mobile, Milan 15
Slide 16: All Together Now – Salone del Mobile, Milan
STRATEGIC PRIORITIES: UNLOCK THE POWER OF ONE HERMAN MILLER All Together Now – Salone del Mobile, Milan 16
Slide 17: Build a Customer-Centric, Digitally-Enabled Business Model
STRATEGIC PRIORITIES BUILD A CUSTOMER-CENTRIC, DIGITALLY-ENABLED BUSINESS MODEL OBJECTIVES: Leverage deep Drive step-change in Strengthen our core understanding of our data, analytics, technology backbone customer journeys marketing, and brand to deliver inspired capabilities products and frictionle
Slide 18: Leverage deep understanding of customer journeys
STRATEGIC PRIORITIES: BUILD A CUSTOMER-CENTRIC, DIGITALLY-ENABLED BUSINESS MODEL Objective: Leverage deep understanding of customer journeys to deliver inspired products and frictionless customer experiences Foster end-to-end Create a seamless and engagement personalized experience Tend to the custo
Slide 19: Drive step-change in data, analytics, marketing, and brand
STRATEGIC PRIORITIES: BUILD A CUSTOMER-CENTRIC, DIGITALLY-ENABLED BUSINESS MODEL Objective: Drive step-change in our data, analytics, marketing, and brand capabilities Bolster data analytics and digital marketing capabilities • Starts with addressing capability gaps (e.g. data science) • Personaliza
Slide 20: Strengthen our core technology backbone
STRATEGIC PRIORITIES: BUILD A CUSTOMER-CENTRIC, DIGITALLY-ENABLED BUSINESS MODEL Objective: Strengthen our core technology backbone Deepen our focus on • Talent that can drive growth (vs. enable) • Digital and business leaders (vs. technical leaders) • Building new capabilities • Agility • Key digit
Slide 21: Accelerate Profitable Growth
STRATEGIC PRIORITIES ACCELERATE PROFITABLE GROWTH OBJECTIVES: Strengthen & evolve Drive outsized growth Expand our the core Contract in International Retail business business 21
Slide 22: North America Overview
STRATEGIC PRIORITIES: ACCELERATE PROFITABLE GROWTH North America Overview 5 Year CAGR: 3.5% (3.8% organic) $1,564 $1,575 $1,590 $1,462 $1,422 $294 $298 $305 $1,334 $279 $286 $182 $1,269 $1,277 $1,284 $1,152 $1,143 $1,176 NORTH AMERICA SPECIALTY 22
Slide 23: Strengthen and evolve the core Contract business
STRATEGIC PRIORITIESPRIORITIES: ACCELERATE PROFITABLE GROWTH Objective: Strengthen & evolve the core Contract business Go-to-market Alignment Digital Tools New Products Profit Improvement 23
Slide 24: International Overview
STRATEGIC PRIORITIES: ACCELERATE PROFITABLE GROWTH International Overview 5 Year CAGR: 3% (8% organic) $435 $410 $413 $377 $392 $385 24
Slide 25: Drive outsized growth in International
STRATEGIC PRIORITIES: ACCELERATE PROFITABLE GROWTH Objective: Drive outsized growth in International Expand Dealer Enter New Grow Ancillary Align Global Execute Profitability Distribution Product Categories Accounts Team Improvement Initiatives 25
Slide 26: Retail Overview
STRATEGIC PRIORITIES: ACCELERATE PROFITABLE GROWTH Retail Overview 5 Year CAGR: 41% (21% organic) $357 $318 $289 $271 $64 $68 26
Slide 27: Expand our Retail business
STRATEGIC PRIORITIES: ACCELERATE PROFITABLE GROWTH Objective: Expand our Retail business Capability Delivery Experience Global Retail Profitability Improvement Initiatives 27
Slide 28: Design Within Reach Studio Transformation
STRATEGIC PRIORITIES: ACCELERATE PROFITABLE GROWTH Design Within Reach Studio Transformation DWR Nashville DWR Larkspur image © Alfred Yan 28
Slide 29: Launch HAY in North America
STRATEGIC PRIORITIES: ACCELERATE PROFITABLE GROWTH Launch HAY in North America HAY Portland 29
Slide 30: Reinforce Our Commitment to Our People, Planet, & Communities
STRATEGIC PRIORITIES REINFORCE OUR COMMITMENT TO OUR PEOPLE, OUR PLANET, & OUR COMMUNITIES OBJECTIVES: Build, develop, and Shape an inclusive and Elevate our Total retain and world-class diverse work force Societal Impact talent (Better World) Commitment 30
Slide 31: Creating A Better World
STRATEGIC PRIORITIES Creating A Better World “A business is rightly judged by its products Sustainability and services, but it must also face scrutiny Sustainability Leader for the Last Fourteen Years in the RobecoSAM Sustainability Yearbook as to its humanity.” - D.J. De Pree, Herman Miller Founder
Slide 32: Financial Outlook section
Company Snapshot Foundational Insights Strategic Priorities Financial Outlook 32
Slide 33: Strong track record of financial performance
FINANCIAL OUTLOOK Strong track record of financial performance • Organic revenue growth of 6% at a premium to North America Contract industry growth of 3% • Robust EPS growth over past 5 years • Healthy free cash flow generation Revenue Adjusted EPS Adj. Free Cash Flow(1) ($ billions) ($ millions) (
Slide 34: Disciplined capital allocation approach focused on value creation
FINANCIAL OUTLOOK Disciplined capital allocation approach focused on value creation STRONG & FLEXIBLE CAPITAL RETURNS SUPPORT GROWTH TARGETED M&A BALANCE SHEET TO SHAREHOLDERS ($ millions) Investments in Design Within Q3 FY19 ($ millions) R&D CAPEX Reach, naughtone, HAY, and Cash $114M DIVIDENDS SHA
Slide 35: Focused acquisition and partnership strategy
FINANCIAL OUTLOOK Focused acquisition and partnership strategy F Y10 FY12 FY13 FY15 FY16 FY19 Strategic Rationale Audience Channel Geography Product 35
Slide 36: Supportive economic backdrop
FINANCIAL OUTLOOK Supportive economic backdrop US Architectural AIA Consensus BIFMA (2) Billings Index Office Construction Order Growth(1) > 50 Forecast(2) +5.4% CY18 11 out of last +5.1% CY19 12 months US Tax Reform • Job creation US Housing Starts(3) • Lower tax rates +5.7% CY20 • Cash repatriatio
Slide 37: Opportunity for continued above-average revenue performance
FINANCIAL OUTLOOK Opportunity for continued above-average revenue performance over the next three to five years Revenue Core Contract Industry 2-3% New Products and Initiatives 1-2% Retail Growth 1-2% Estimated Annual Organic Revenue Growth 4-7% Targeted Acquisitions 2-3% Estimated Annual Revenue Gr
Slide 38: Operating income growth of 2x to 2.5x organic revenue growth
FINANCIAL OUTLOOK Operating income growth of 2x to 2.5x the rate of organic revenue growth Structurally higher operating margins driven by: • Growth in high margin product categories • Digital transformation • Retail growth and optimization • Scale advantages • Profit improvement initiatives 38
Slide 39: Our Compelling Story
FINANCIAL OUTLOOK Our Compelling Story 1 2 3 4 Distinct Capabilities Clear strategic priorities Strong track record of financial performance and compelling outlook 39
Slide 40: Questions?
Questions? 40
Slide 41: Herman Miller
HermanMiller
Slide 42: Foundational Insights: strategic framework summary
FOUNDATIONAL INSIGHTS SHAPING CONTEXT DIGITAL DTC INT’L + RETAIL GROWTH MATURE NA MARKET ANCILLARY TSI IMPERATIVE SOURCES OF COMPETITIVE ADVANTAGE PRODUCT LIBRARY INNOVATION & DESIGN OUR PEOPLE GLOBAL SCALE OMNICHANNEL REACH VISION Inspiring designs to help people do great things. REINFORCE OUR COMM
Slide 43: Appendix – Reconciliation of Non-GAAP Measures
APPENDIX – RECONCILIATION OF NON-GAAP MEASURES This presentation contains Organic Sales Growth, These non-GAAP financial measures are not measures Adjusted Operating Income, and Adjusted Earnings of financial performance under GAAP and should not Per Share, all of which constitute non-GAAP financial
Slide 44: Organic Sales Growth by Reportable Segment
APPENDIX – RECONCILIATION OF NON-GAAP MEASURES Organic Sales Growth (Decline) by Reportable Segment ($ Millions); (unaudited) North America International Specialty Retail Total 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 Sales, as reported $ 1,151.6 $ 1,284.4 $ 377.3 $ 434.5 $ 182.0 $ 305.4 $
Slide 45: Adjusted Operating Income by Reportable Segment
APPENDIX – RECONCILIATION OF NON-GAAP MEASURES Adjusted Operating Income by Reportable Segment ($ Millions); (unaudited) FY18 Consolidated North America Specialty International Retail Corporate Operating Earnings $ 177.5 $ 166.3 $ 8.9 $ 35.5 $ 13.9 $ (47.1) Add: Restructuring/Impairment Expenses 5.7
Slide 46: Adjusted Earnings per Share
APPENDIX – RECONCILIATION OF NON-GAAP MEASURES Adjusted Earnings per Share ($ Millions); (unaudited) FY13 FY14 FY15 FY16 FY17 FY18 Earnings per Share – Diluted $ 1.16 $ (0.37) $ 1.62 $ 2.26 $ 2.05 $ 2.12 Add: Acquisition-related Adjustments $ 0.01 $ 0.10 Add: Legacy Pension Expenses $ 0.30 $ 1.76 Ad
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