Millerknoll, Inc. · NASDAQ:MLKN
Millerknoll — Miller Herman — Raymond James 37th Annual Institutional Investors Conference (March 2016)
38 slides from Millerknoll's conference presentation, Mar 8, 2016
Slide 1: Delivering Growth by Design
Delivering Growth by Design NASDAQ: MLHR Raymond James 37th Annual Institutional Investors Conference Brian Walker, President and Chief Executive Officer Jeff Stutz, Executive Vice President, Chief Financial Officer March 9, 2016
Slide 2: Forward-looking statements
2 This information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates, and projections about
Slide 3: Company Snapshot
Headquarters: Zeeland, MI, USA Founded: 1905 Employees: 7,500 + FY15 Revenue: $2.14B FY15 Adj. EBITDA: $235M Company Snapshot Over 600 dealers in 109 countries and 32 Design Within Reach retail studios North America 58% Specialty 10% ELA 19% Consumer 13% 3
Slide 4: Our Compelling Story: Investment thesis
4 Our Compelling Story Investment thesis Powerful brands deliver design and innovation leadership A higher ambition culture Unique combination of value-drivers enabling above industry-average growth Compelling financial outlook and opportunity for margin expansion Strong track record of performance
Slide 5: A higher ambition culture
5 A higher ambition culture
Slide 6: Driven by a sense of purpose and values
6 Driven by a sense of purpose and values A higher ambition culture “A business is rightly judged by its products and services, but it must also face scrutiny as to its humanity.” - D.J. De Pree, Herman Miller Founder Nine Consecutive Perfect Scores in Human Rights Campaign Foundation’s Corporate Eq
Slide 7: Powerful brands deliver design and innovation leadership
7 Powerful brands deliver design and innovation leadership
Slide 8: An inspiring brand that customers value
8 An inspiring brand that customers value Powerful brands deliver design and innovation leadership * Twitter followers as of February 2016 (Herman Miller, Allsteel, Haworth, Knoll, and Steelcase) #1 in Brand that Inspires, Contract Magazine Survey World’s Top 10 Most Innovative Companies in Design,
Slide 9: A portfolio of leading global brands
9Powerful brands deliver design and innovation leadership Healthcare Performance textiles Ergonomic work tools Asia distribution Nemschoff Maharam Colebrook Bosson Saunders POSH A portfolio of leading global brands TIMELESS CRAFT The convergence of world-class designers, impeccable craftsmanship, an
Slide 10: Commitment to innovation
10 Commitment to innovation Powerful brands deliver design and innovation leadership – Innovation Priorities: – 22% of our sales in fiscal 2015 were from products developed in the past 4 years – Introduced over 40 new products and extensions in fiscal 2015 – Industry-leading investment in design, re
Slide 11: Design of the Century and Design of the Decade Awards
11 Design of the Century, Time Magazine Three straight Design of the Decade Awards* Powerful brands deliver design and innovation leadership 1980 1900 - 2000 1990 1990 2000 2000 2010 EquaEames Molded Plywood Aeron Setu * Industrial Designer’s Society of America
Slide 12: Living Office framework
12 Bringing innovative solutions to our customers through the Living Office framework Powerful brands deliver design and innovation leadership – An insight-driven and research-based framework for making place a strategic asset – Delivers measurable results through improved: • Workplace Effectiveness
Slide 13: Unique combination of value-drivers enabling above industry-average growth
13 Unique combination of value-drivers enabling above industry-average growth
Slide 14: The global leader dedicated to creating inspiring places
14 LiveWork Heal Learn The global leader dedicated to creating inspiring places Unique combination of value-drivers enabling above industry-average growth
Slide 15: Capitalizing on an expanded total addressable market
Capitalizing on an expanded total addressable market Unique combination of value-drivers enabling above industry-average growth North America (Contract)(1) European (Contract)(2) Target Emerging Markets (Contract)(3) Consumer Lifestyle(4) Healthcare/Education/Hospitality(3) Small/Medium Business(3)
Slide 16: Unparalleled multi-channel reach including direct to consumer
Unparalleled multi-channel reach including direct to consumer Unique combination of value-drivers enabling above industry-average growth – Over 600 contract dealers in 109 countries – 33 Design Within Reach retail studios – Direct to consumer catalog – Multiple global e-commerce storefronts – Opport
Slide 17: Clear path to revenue growth and margin expansion in Consumer
17 Clear path to revenue growth and margin expansion in Consumer business Unique combination of value-drivers enabling above industry-average growth – Double digit revenue growth opportunity from Design Within Reach by transforming legacy studios to larger formats and adding new locations • 4 to 6 n
Slide 18: Positioned for global growth
18 Positioned for global growth Unique combination of value-drivers enabling above industry-average growth – Growing and profitable business outside North America – Favorable trends and demographics in Asia-Pacific – Further growth opportunities: • Leverage Herman Miller and POSH brands in Asia-Paci
Slide 19: Strong track record of performance and healthy returns on capital
19 Strong track record of performance and healthy returns on capital
Slide 20: Organic revenue growth and robust EBITDA growth over last 5 years
20 Organic revenue growth of 8% at a premium to North America Contract industry growth of 5.5%, and robust EBITDA growth over last 5 years Strong track record of performance and healthy returns on capital FY10 FY11 FY12 FY13 FY14 FY15 $1.9B $2.1B$1.8B$1.7B$1.6B $1.3B FY10 FY11 FY12 FY13 FY14 FY15 $2
Slide 21: Focused acquisition strategy accelerates our performance
21 Focused acquisition strategy accelerates our performance Strong track record of performance and healthy returns on capital 2010 2012 2013 2015 Net Sales in FY15 +$470 million Entering New Areas: Audience Channel Geography Product Gross Margin in FY15 +130 bps
Slide 22: Best-in-class lean enterprise delivers leverage
22 Best-in-class lean enterprise delivers leverage Strong track record of performance and healthy returns on capital – Focused improvement through: • Customer first orientation • Waste reduction • Asset efficiency – One of three U.S. companies showcased by Toyota Production System Support Center – F
Slide 23: Robust free cash flow and disciplined capital allocation
Robust free cash flow generation and disciplined approach to capital allocation drives average annual return on invested capital of 23% over last five years Strong track record of performance and healthy returns on capital (1) Cash flow from operations less CAPEX plus domestic pension contributions;
Slide 24: Compelling financial outlook and opportunity for margin expansion
24 Compelling financial outlook and opportunity for margin expansion
Slide 25: Supportive industry trends
25 Housing GDP Forecast 9.2 9.9 11.1 11.3 11.5 13.012.2 13.5 14.4 2009 2010 2011 2012 2013 2014 2015 2016 2017 North America Consumption U.S. Architects Billing Index AIA Consensus Construction Forecast Existing Home Sales (thousands of units) Office (% YOY Growth) Housing Starts (thousands of units
Slide 26: Opportunity for continued above-average revenue performance
Opportunity for continued above-average revenue performance over the next three to five years Compelling financial outlook and opportunity for margin expansion Core Contract Industry 2-3% New Products and Initiatives 1-1.5% Consumer Growth 1-1.5% Estimated Annual Organic Revenue Growth 4-6% Targeted
Slide 27: Operating income growth of 2x to 2.5x organic revenue growth
Operating income growth of 2x to 2.5x the rate of organic revenue growth Compelling financial outlook and opportunity for margin expansion – Structurally higher operating margins driven by: • Expanding business and channel mix • Consumer growth and higher exclusive product mix • Volume leverage • Le
Slide 28: Our Compelling Story: Investment thesis
28 Our Compelling Story Investment thesis Compelling financial outlook and opportunity for margin expansion Powerful brands deliver design and innovation leadership A higher ambition culture Unique combination of value-drivers enabling above industry-average growth Strong track record of performance
Slide 29: Appendix
Appendix
Slide 30: Segment Overviews
Segment Overviews
Slide 31: Appendix – Segment Overviews: North America
31Appendix – Segment Overviews Overview FY15 Percent of Consolidated Revenues Macro-Economic Drivers Five Year Revenue Trend (in US$ millions) FY15 Adj. EBITDA Margin 12.2% Description: Design, manufacture and sale of furniture products for office, education and healthcare environments in the United
Slide 32: Appendix – Segment Overviews: ELA
32 North America 58% Specialty 10% ELA 19% Consumer 13% Appendix – Segment Overviews FY15 Percent of Consolidated Revenues Five Year Revenue Trend (in US$ millions) FY15 Adj. EBITDA Margin Source: CSIL (December 2015) Regional Office Furniture Consumption (in US$ billions) GDP Forecast 223 290 347 3
Slide 33: Appendix – Segment Overviews: Specialty
33 North America 58% Specialty 10% ELA 19% Consumer 13% FY15 Percent of Consolidated Revenues Five Year Revenue Trend (in US$ millions) FY15 Adj. EBITDA Margin 58 80 94 112 206 220 5 YEAR CAGR 31% (14% organic) 9.5% SpecialtyAppendix – Segment Overviews FY10 FY11 FY12 FY13 FY14 FY15 Overview Macro-E
Slide 34: Appendix – Segment Overviews: Consumer
34 North America 58% Specialty 10% ELA 19% Consumer 13% FY15 Percent of Consolidated Revenues Five Year Revenue Trend (in US$ millions) FY15 Adj. EBITDA Margin 48 54 64 64 68 271 5 YEAR CAGR 41% (10% organic) 11% ConsumerAppendix – Segment Overviews FY10 FY11 FY12 FY13 FY14 FY15 Overview Macro-Econo
Slide 35: Non-GAAP financial measures
35 This presentation contains Adjusted EBITDA, Adjusted EBITDA ratios, and Organic Sales Growth, all of which constitute non-GAAP financial measures. Each of these financial measures is calculated by excluding items the Company believes are not indicative of its ongoing operating performance. The Co
Slide 36: Reconciliation: Organic Sales Growth by Reportable Segment
36Appendix –Reconciliation of Non-GAAP Measures Organic Sales Growth (Decline) by Reportable Segment ($ Millions); (unaudited) Sales, as reported Performance Adjustments Dealer Divestitures Cumulative foreign exchange Acquisition-base year Sales, pro forma Compound Annual Growth Rate, as reported Co
Slide 37: Reconciliation: Adjusted EBITDA by Reportable Segment
37Appendix –Herman Miller Inc. Reconciliation of Non-GAAP Measures Adjusted EBITDA by Reportable Segment ($ Millions) (unaudited) Segment Operating Earnings Add: Allocated Depreciation & Amortization Add: Restructuring/Impairment Expenses Adjusted EBITDA Revenue by Segment Adjusted EBITDA Margin Seg
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