Knoll (KNL) 23 Jul 202020 Q2 Earnings call transcript

Good afternoon, and welcome to the Knoll Inc Second Quarter 2020 Question-and-Answer session. This call is being recorded. This call is also being webcast.

In addition, this call may offer statements that are forward-looking statements including without limitation, statements regarding Knoll's long-term revenue and profitability growth goals, future outlook for the industry and economy, ability to integrate acquired businesses and expectations with respect to future leverage. These forward-looking statements are based largely on the Company's current expectations and are subject to a number of risks and uncertainties, certain of which are beyond the Company's control. Report materially factors, forward-looking risks the including described Knoll's differ result as identified Securities may and in many XX-K of the Annual and results Exchange from filings statements the a and its Commission. Actual other Form with on factors and environment uncertainties. cautionary These current are pandemic COVID-XX relevant particularly the statements has the in where created significant

non-GAAP earnings that also today our be considered to of financial forward-looking released include context turn GAAP measures Andrew CEO comparable are may over remarks. today statements included for call most should today. measures. now Cogan, in these uncertainty. the will of Knoll, Chairman and of call of letter I All the the The the to earlier the opening Reconciliations measures financial references within to

Thank afternoon and good you, operator, everybody.

second XXXX The possible quarter people, that made, experienced. thoughtful. report pandemic pleased quarter It responding focus and of really results, of we've agility our clients. to a any our context, and on ever unlike our From to progress our true our strategy. second In test are communities, pandemic, we've culture, of the its was was we adjusted quarter impact COVID-XX the and was the start well as as solidly people

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questions. to Thank the like up we'd your to call open Now, you.

with Sidoti Burns [Operator from instructions] comes and Our Company. Gregory first question

is Your open. line

So, could off e-commerce your you Andrew the opportunity. and ended up, maybe Muuto with we start where on

I were Knoll maybe like specifically, channel. it in your you but just strategy a But developing expectations can have seems brand? your e-commerce your now dedicated like now channel, the talk Muuto working pivoted on and about, using Muuto think general you're e-commerce you you and for might

Sure, to to towards opportunity now, strategy expanded accessible I America working a we -- market early was range make really as products that a for our were but operate work-from-home offer, those home. Muuto.com think to of tremendous geared North channel XX dedicated a and felt goal our from hasn't American Muuto pivoting people there particularly, now, in absolutely. vastly particularly to were And the changed, bring North products is launch with

what So, is done. follows. really I that's the strategy as exactly we've mean,

iconic own that most in include layering really start in broader Knoll for to someone home the then seating, ergonomic one accessories, can range that's days towards at the home they're Fully, accessories, Fully, and almost desk outlet more and a height- spending pieces this weeks create It's computer strategy. a focused offerings Fully office two workplace, sitting then really I'm where tables, to very We contiguous the our from just cases B got The it's brand, your one idea of furnish spaces the a our And home vibe kind in both in who's, geared ergonomic it's holistic on brand, and the it's the now good young, tables With a home. temporary it's light, seating. the with high-adjustable Fully better have kind living some Plus and mix really the on great that we adjustable with three in that. that pieces time are in a a with and of environment attitude. ergonomic and but Muuto.com height cannot a and to adjustable was living you like the of pros desk outdoor a corp. have of that now to dining working from and cord at and ship living It's a and office, that

gives with have we And Fully's of more the and classic so a points little good price price in to range level better range. within got of points, kind now the price entry our your Muuto the us, bit points range then and are a it those higher

breadth the launched were but a and grow easy, XXX% ago. our there's weeks. so increases we're order, are We're seeing, we the over rate, seeing where that the per increases So, day conversion we we're in ways. a we market XX% and steadily we're in and few year quadruple, And opportunity think can volume first is now and seeing tremendous the in, seeing we've traffic it albeit, large, different in it again, certainly, serve since comparisons this, and segment

I just in and think up And e-commerce So, the are Knoll quarter we're think workplace but to think we're of player business is Fully's here. do XXX% the be I this onto here. part be mix, surface incredibly a doubled, scratching second well-positioned a I will permanent something. was more the

Then how maybe segment we color particularly just early and release you But could far? walk quarter patterns. the could throughout some the looked July around the us order so just about, you office gave of in the around they've through part in trended talk press how orders,

Yes, sure.

seen you've I the think listen, if you -- BIFMA as data.

in in But from May. a levels the mean, and and lessening I tracking some decline. carefully entered June, XX% April was, all are saw our been new funnel, of a And opportunities trying right lessening very saw think think ways, And were also kind And now, the with we're looks sequential troughed the force rate patterns of down like. nice we improvement of that in these handle order to of we've then then May, I the entered were sales correlated, the what we get down pretty in in in to nice the was numbers. I in being looked sequential those encouraging that XX% April May. we the improvement what in think into I saw like, we industry for they because of order line bleakest two much we about opportunities June. was really in a us. months And be new in future

and much there palatable a then, some June. I level more as were So, got we think bottoming into maybe

in But I seeing that's got think think as you that's the other other a much first little declined our I year. shipments QX, out in is, workplace if half were the numbers why, weaker. our of decline May in kind if the the on think sales were half, guidance, In of QX, were they at the And quarter. a of each first stronger. strong little pretty about leveled and we half, certainly than you were the shipments back the thing kind were XX% look through a I tracked side. look we're weaker, and April talking in you Orders better at interesting the orders orders

we're forecasting I thing the obviously with our state is that of is you remember, about revenue XX%, over actually, And is and which kind position local. includes So, if growing grow and quickly. which Knoll to of in probably residential. think of our XX%. year, activity is Today now other you our XX% in space. most-diversified factor in the then, driven, this out very in our government, sector federal That's strong players we're when outpace one That XX% to -commerce think of specifically,

those right office categories diversification traditional think our I their where abandoning higher business hard we without and no half as exposure. now our margin, wealthy I are and reimagine into half this opportunity are commercial is categories you of not play a in that in the workplace market diversification. approximately again, point And serve will leading or really that business retrofit clients to think remember think get very workplaces. those over pure And the

is it this behind, talk where bankers, Okay. capital felt can to you shaking the lastly, maybe to were to you going about going opposed COVID? if thought were at it quarter, here, And working you But surely rationale the stock maybe not. you like worst was EBITDA just like out going talk you or process with be to push just threshold the be up assuring maybe breached this the seem just against your as Just doesn't it could behind seems preferred about because like then, if raise? X% the of that the

$XXX Absolutely, liquidity. sheet. We've well, bulletproof back I think firstly, we the million half enter got of with balance

forma on I is our our half pro basis leverage X.X covenant. of a think

an digitally an I One, was and were we the able twofold. rate, think has future two, at to the continue the be of attract move don't I can M&A this. design, higher more really a we're holds come of high towards thinking front focused up number businesses. now, I one. very as think capital was pivot with Number that. our think we significant we raise the very fact and could an on capital, investor use And that margin price capital on right what space do behind Knoll, we high to out business opportunities knows think mix margin, and XX% going X.X%, who appreciation we anyone the maybe to believe brand, And we for in they're conversion really native favorable through to some felt the residential, we really the

were, I And now room spot million. expense like side think of I smart you the as and from company better will it number well, side having about have $XX if guidance reductions, we drive position phenomenal to we're standpoint, in both we're on advantage capital, we at think of breathing and feel talking what we've that that now sure on performance, I We then residential place now others last having expense about being workplace a opportunities a period, of frankly, can as gave. two, million quarter number released are investments well, leverage take we're $XX some aren't to operating So, we million XX this I one. operating just you was from Well, talking the in of that the business. in think the about more look the tell

So, like constraints. now I or we're feel less a a lot constrained little less

think us do of that to freedom to top bottom proactively. investments, smart to was outperform line. both a And will on us for allow we I thing think and In terms that continue the

our comfortable very we're stuff so all we are and and, our did benefit be. what's all know the outcome And and will I with why it folders the think to and

of [Operator you. Steven Research. next Ramsey Thank from question Our instructions] comes Thompson

is open. line Your

more start sales, maybe residential you to spending workplace. what to they you, is good clearly driving due broader is is to unique how can your evolved Maybe with homes the I or to talk trends that maybe the it and talk compared through shelter-in-place to performance quarter? guess on on

Sure.

an saw quite weren't into the terms went this, news quarter, in levels. We in work-from-home explosion furnishings. to everything. we in shipped, be and Fully, if I I could these honest, have as inventory a of bit think lockdowns probably And demand this immediately somewhat constrained more Fully just for think we

the, really think of is the I were doubling up we quarter. So e-commerce in the taken in demand XXX% literally aback by the

we really So, and Fully's replenishing some inventory had inventory to from time Asia. spend comes

clearly point the enduring. will we to of there's lag, because for a and get inventory some spending is, was pull power in lead Fully. held there. will full some the And that we beyond there. able I down. back see be believe which can tops good the back there there the coming facility, So, Their that think that marketing better as lag news are It's unleash producing much times Fully really we demand no place it we but started are But investments now. They be driving we business was to August, I

We have on we since now that gas the haven't right And, the inventory. because doing don't foot middle business in really March. our work replenishing down it of let seen the really we

but spending think work-from-home, of a people of of has back be whether, working be companies home start more and with and challenges, be your a a encouraged I And little uncomfortable bearing dining I from And there, going at But the factor I it's super shelf's whatever forward as step your chair clearly, frankly, kind and all which XX, think it myself, table table. to dining there balanced you strategies saw mean, started then, hours we're employ. will with and I one spending, category. and I high-adjustable a dining I I comfortably environment. XX go we'll I day. investment that and the I we about will can August, forward, think of would and ran are much So, in time Knoll invested table you're healthily. more I working its task the a move that and And going going and to much work-from-home up, chair, think continued efficiently in regardless prospects work from to regeneration that to work more see to working

of that's in rug to homes we're it, and sofas thing the it, this is see really things. all that, about does walking Knoll it's work-from-home other that's out, a is it's their happening little Fully job, The the nice that, of idea redoing a behind just the everyone's and hide kind this of starting they're not ergonomic the looks around job worn a but which nice piece and saying, about think and other I rooms

So, I kind in the discretionary on people, as much. spending move terms ladder see, think home of you're consumers going traveling of aren't are up the to what of folks

And to like into And Even so, able reopen our of we higher the dollars had two were go everything. come that. and HOLLY is We're been and at showrooms in there and home. the the back really I discretionary think end we that closed. the shut were HUNT more quarter manufacturing showrooms will actually locations HOLLY with and to HUNT stuff down many end as seeing activity the all residential we've that, higher constrained,

reopen So, have as a forth back a business a started that things well. are little as bit, seeing direction we close trend positive and little bit. in and But to

a is brand It brand, invest got workplace. We've fluid. So, the and lives more in crossover. that's in It the homes, products is won't the I Knoll that people do home. in think a lives

fabulous, do And and We're we embraced days, the it's And that really ourselves opportunity the We if easy was on one three in included. shipped Knoll launched accessible for the that right can philosophy with. great. think website, shipping I to it Knoll, easy going we to in as order. tremendous works team business the the Muuto, sale a in of is Plus midst now, go work-from-home. which make

a So, here. Knoll of there's upside I think tremendous amount for

would go the backlog QX in things? a evolved side in sales workplace, driver will or And pretty picture be Great. how manner? has are, customers about new that out then, levels where on a the orders office at backlogs those on backlogs timely therefore And to normalized thinking in of

pretty things things going think Well, much now time, and in operating I are and coming out. on we things

job Michigan amazing in our Grand to Pennsylvania, Rapids facility of and doing an and there pandemic, frankly the did closing as in and moving production Our pandemic of in midst seamlessly as quit the both one it everything. the midst his and a

still businesses weren't what little really of shipping. to the wasn't have through. Europe I'd of elevated so, bit probably other DatesWeiser or say probably our as for a work chunk of quarter. Again, the meaningful we wasn't two Knoll and really really HOLLY terms of second backlog's shipping I And HUNT shipping half mentioned a some in thirds

So, QX though I than mentioned, some were orders think think they weaker. weaker but to we those shipments were had But even about move to stronger we again, I headwinds, in QX, as through. in but shipments our have orders backlog an had

think starts XX% now. shipments growth. about, I I again, being and would And in the talked expect weaker in half we normalize approximately expect blended to would And no we orders to back and it line. with, decline residential a track workplace

and second even QX and on half, in And do QX? range. question you declined, you for Or much that, have more any for somewhat line there? QX if me that down then expectations last sales modest, Is QX to the XX% be trend has greater expect

evenly really than don't mean, credibly it now. the what we this color saying can think you I think pretty to more expect at be right across that's give that I I back. point, we're we

remarks. to over Mr. I turn am call Cogan questions time. for at further no showing this you. closing back any Thank the would I

as hope where different deeply we and Knoll in and for I this social than new in commitment want for Great. M&A of inclusion, to deeply principle with later much much By Modernism on live the here are on in the the the universal difference, Knoll, in demonstrating reflective our a are made power taking of advantage could leveraging on design color we've space interest call Across your they're of client service, With desires other ourselves the Thank extension, with work. that think one's clear to thank in make the suffering, to all to months continued opportunity all make the agnostic us recommit and utility, constellation, their is join of work. to that our mix, means improving is got would in for players many doing. to adores bulletproof government stronger we them that teamwork to and genius in take I will we is environment LGBTQ forward and the working diversity we a very hard a this mix modern Knoll. to balance out as working you our gives skin, kind Knoll flexibility to to responding positioned can moment of our do live we're, everyone we've to well commitment to think towards like well communities look founded and We Knoll was appreciate one build thrive the residential was make we that inclusion at in that we're associates this as a come And why now, the side. building creating progress to by I equality. about appreciate and other how in ways. quality the of leadership investments to and room Knoll more fairer and design many color council on beauty. meaningful Knoll born commenting breathing our the at opportunities diversity strategic way with the of close associates good, design good world us and that ahead. allow we so then design sheet

a ownership you Knoll, to care, in you interested talking of everybody. everyone. your good evening. safe the forward Take Thank be the third to for Have end and continued and look at quarter. we'll So

for and gentlemen, day. conclude today's this a have you participating does and conference. Ladies wonderful Thank

disconnect. all may You