Herman Miller, Inc. Wednesday announced results for its second quarter ended December 1, 2018. Net sales in the quarter totaled $652.6 million, an increase of 7.9% from the same quarter last fiscal year. New orders in the second quarter of $702.6 millionwere 11.6% above the prior year level.
On an organic basis, which excludes the impact of foreign currency translation and the adoption of the new revenue recognition standard at the start of fiscal 2019, net sales and orders in the second quarter increased by 7.0% and 10.3%, respectively, compared to the same quarter last fiscal year.
Herman Miller reported net earnings of $0.66 per share on a diluted basis in the second quarter compared to diluted earnings per share of $0.55 in the same quarter last fiscal year. Excluding the impact of restructuring expenses and other charges, adjusted earnings per share in the second quarter totaled $0.75 compared to adjusted earnings per share of $0.57 in the second quarter of last fiscal year.
Andi Owen, Chief Executive Officer, stated, "Strong demand was a clear highlight of our results as we finished the quarter setting all-time records for quarterly net sales and order levels for our Company. Encouragingly, this growth was broad-based across our business segments. These results are a tribute to the talent and effort of our people and demonstrate the meaningful progress we have made on our strategic growth priorities. Our progress on strategic priorities included further integration of the HAY and Maars Living Walls brands into our business after the investments that we made in the first quarter of fiscal 2019. This includes introducing HAY's authentic modern designs to North American customers through the launch of the HAY.com eCommerce site and opening the first dedicated HAY retail studios in Portland, Oregon and Costa Mesa, California during the quarter."
Consolidated gross margin in the second quarter of fiscal 2019 totaled 36.1%, representing a 60-basis point decrease from the level reported in the same quarter of last fiscal year. This year-over-year decrease in gross margin related to the adoption of the new revenue recognition standard (ASC 606) at the beginning of fiscal 2019. This adoption required recording certain product pricing elements as expenses within cost of goods sold that were previously classified on a net basis within sales. Excluding this impact, gross margin remained flat compared to the same quarter last year.
Operating expenses in the second quarter were $182.2 million compared to $170.0 million in the same quarter a year ago. Operating expenses included certain special charges totaling $5.7 million in the second quarter of fiscal 2019. The special charges related primarily to costs associated with the CEO transition and external consulting fees associated with the Company's profit enhancement initiatives. Excluding these items, operating expenses increased by $6.5 million compared to the same quarter last year.
The Company recognized pre-tax restructuring expenses totaling $0.3 million in the second quarter related to the consolidation of certain facilities in China and the United Kingdom that were announced in the fourth quarter of fiscal 2018.
Herman Miller's effective income tax rate in the second quarter was 22.6%, compared to 30.5% in the same quarter last fiscal year. The rate in the current quarter included an adjustment related to recently clarified guidance on the adoption of the U.S. Tax Cuts and Jobs Act. Excluding this adjustment, the effective tax rate in the period was 21.0%. This is lower than the rate in the second quarter of fiscal 2018 primarily due to the reduction in marginal corporate tax rates.
Jeff Stutz, Chief Financial Officer, noted, "Adjusted earnings per share for the quarter exceeded the expectations that we established in September. Profit growth was driven by robust sales growth, well-managed operating expenses and a lower effective tax rate. In our view, the overall macro-economic backdrop for our business is supportive for continued growth, although the ultimate resolution of global trade tensions remains an outlook risk for the business. That said, our strategic focus on profit optimization was designed to help mitigate the potential for inflationary pressures and our teams have line of sight to savings that can offset these pressures."
The Company ended the second quarter with total cash and cash equivalents of $113.6 million, an increase of $11.9 million from the balance at the end of last quarter. Cash flow generated from operations was $58.6 million in the current quarter compared to $62.6 million in the same quarter last fiscal year.
Segment Sales and Orders
The following tables summarize reported and organic segment sales and orders for the second quarter of fiscal 2019:
