MillerKnoll (MLKN) 26 Jun 242024 Q4 Earnings call transcript

Good evening, and welcome to MillerKnoll's Quarterly Earnings Conference Call.

As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Chief Financial Officer, Jeff Stutz. Please go ahead.

Thank you. to quarter welcome call. XXXX and evening, our fiscal fourth conference Good joined Executive Chief Andy I'm Owen, Officer. by Retail. Propst, available Also during of Debbie of the John Global President are Michael, Q&A President Contract; Americas session and

our Before I turn regarding call over information. safe please to forward-looking harbor Andy, the remember

and to expressed other During may factors management forward-looking cause information be unknown those and the that discuss call, known implied. risks, results different that or than the is actual may involves uncertainties and

context of the these in obligation in these we information factors, The detailed forward-looking the or statements. evaluate no are of today's forward-looking which Please supplement assume update to statements today, release. press are as and

on We financial may our which non-GAAP our also website are posted metrics, Investor millerknoll.com. at to described Relations reconciled refer certain and release in press

my it's to pleasure call turn Andy. over that, with And to the

brands scale joining demand Jeff, we our to the finish. with tonight. operating us to MillerKnoll everyone, wrapped we strong align the report year, half, thanks, anticipated contract in environment the Thanks, economic fiscal by to across a we the Throughout took our and to channels proof business and boost proud global leveraging our in future XXXX retail the improvement of actions business. back and with costs collective for diversified our I'm that year and of up shared business operations. and

quarter. the team share delivered in margin fourth Our significant per earnings growth and

this and for ourselves quarter. heading and a are we we've now, addition, key In consolidated environment direction, levels and benefit upcoming position we across growth remain to productive, in improving a and the of quarter for organic market business optimistic contribute strong a delivered that contract year. business put positive from agile as an momentum strong in our our for see to adjusted We're result. activity Right will to X.X% shift. We've order the demand of the a our and healthy markets

look share financials Jeff to our work about and outlook. like at our few a highlights the underway, closer and then I'd a provide will

We and are exhibits. the Fulton second in our lab our nature immersive and enthusiasts process NeoCon that design events around Chicago and both sustainability [indiscernible] designing At to are our rigorous this showroom, the commitment fiscal underscored Chicago year and XXXX always test to experiences our thrilled X products our Both design month, present. ensure with days and Design through Copenhagen. the quality put innovation we including to Market DNA sustainability several of Days in globe experience

house In a shopping ASICS. Japanese packed Copenhagen, flagship And brand the showcasing creating both with customers and brand's spaces intentional hosted approach outdoors. to our HAY showroom, indoors was events with new fun several including we [indiscernible] sportswear collaborations, partnership

our to back during were and is Design pre-COVID at close Traffic appointments year-over-year. Days up NeoCon showrooms at levels

invest More with to our We're In importantly, that, to return-to-office our platforms enhanced MillerKnoll tools the MillerKnoll solve through year and to specific conversations design with opportunity. positioned project with we'll well is showrooms ideas our customers have support theoretical the in And contract believe there impact shifted. They've dealers. we business needs. moved ahead these and programs needs. fuel from digital

York showrooms our to and our that leadership MillerKnoll together our sustainability. both of and ways spaces designing open This in Angeles bring enhanced in fall, new collective in spotlight newly Los finding We're own brands dealer we'll our New showrooms. London,

chair. and Design for new products private deliver launches launched at over our up Day, We're month, Tugendhat unique This awards Cove also ramping customers. for product Knoll's Percy NaughtOne's Knoll's industry capturing Hannah Collection XX solutions offices chairs, and to we Morrison to

lower versatile Vantum X a task carbon showcase and the chair new enhancement Chair Herman addition, Gaming refreshed ergonomic with In Miller Mirra the footprint. with

introduced Muuto lighting. a design, ancillary X and at cabinets seating, tables collections new and introduced of Settle [indiscernible], outdoor And new coffee HAY day

vehicle, international business Knoll dealers Miller legacy transitioning continue to and a full Herman growth and we is Our contract MillerKnoll dealers.

quarter, cities. in we transitioned countries XX This and XX XX dealers

we closed physical clients. new out XX new even expanding We've at added year close allowing our presence high-performing dealers and schedule, the more as MillerKnoll Through we the our in countries dealers we're XXX distribution customers full align and X XX In our year, in ahead us responsive our showrooms, expand fiscal of international to international look cities addition footprint. With onboarded. regions. to be with dealer to and

opened quarter, new in dealers This showrooms MillerKnoll Indonesia. and Singapore India,

despite do X% our the short optimizing our retail macroeconomic delivered We're long-term significant We to work still growth. year-over-year for Turning organic growth retail. conditions drive faces. order term while industry engine tough to sales orders the the to of continuing in

We show complementary to traffic, inventory we're store our expand our our maintain collections. efforts. continuing improvements management, and foot densifying our with these saw by capture margin We assortment I'm And a space optimizing assortment. sorry, focus more product on -- to productivity complementary more huge sales to and less continue to of strong due to

business basis in margin points our a year-over-year XXX gross retail were adjusted up on Our basis.

to We spaces that build help tools retail our and customers drive fewer larger with beautiful provide also returns. orders continue

to place tools New design stores. reach Miller that easier and design configurator more services and orders make on-site Herman and it within rewarding

design San will experiences invest our tested look applying format the in stores we reach new Francisco. and to the we we such As within newest at future, stores as

pent-up are beginning Association declines and it. ease year-over-year bit. harness In of addition, demand home sales reported Realtors to to we in The retail is sales are that beginning We a flatten. prepared to existing are home there National in negative trends believe

and around is customers important sustainability our innovation, with the consideration along associates globe. for an Finally,

we across of encompasses have a and design and business big decades. it Our nurtured and that projects, legacy practices work sustainable of builds hundreds small. collective on extends for Today, our

our As I We on. doing the sustainability Design acting showcased in exhibited Chicago. of shared an efforts we're Days mentioned, we many things

[indiscernible] using like our materials Now more products recycled circular embracing in and to from incorporating content our design. bio-based

for were in our the us rating past from rated During we gold months. by metal the putting EcoVadis in top the recognized efforts, EcoVadis XX the companies of X% quarter, also

Sustainable leveraging XXXX waste Innovation for Award and to ocean-bound Steel the also We plastic. single-use work our plastics reduce received

All we're focused of ahead. to say, and the in year optimistic on this growth

With our that, it financials. back closer Jeff turn look to will for a at I

by first our Andy. providing of by an I'll overview Thanks, followed year both full performance for fourth the and quarter our fiscal few start in the into targets full some and insights highlights quarter and year. a outlook

performance adjusted tax of generated we benefits. quarter, our well as well the fourth share, driven margin the midpoint guidance, earnings $X.XX per gross above diluted by as favorable strong of For

organic totaled same the representing ago. the X.X% an in a from $XXX At million, decrease the of consolidated level, quarter net sales quarter year fourth

New same reflecting orders million in at last approximately the of from the the fourth consolidated quarter, growth year. X% quarter level totaled $XXX organic

The that the the demand order growth This million. ended Contract increase in the throughout the we've to order period $XXX million at indicators Americas a validated been improving were this quarter improved picture year year-over-year backlog, demand which to by segment. return sequential in drive consolidated monitoring helped $XX a of

mix improvements by points on Our the driven performance gross clear and at from margin a quarter On These basis XXX realization, points basis the and consolidated inventory XX.X% gross by channel and of numbers. price sequential margin line in benefits a year-over-year were performance. basis XXX and respectively. a improved the management, highlight quarter product was basis, in

points the for operating was adjusted period, year-over-year. X.X% XXX margin is which consolidated up Our basis

flows sheet. Turning in to cash balance the

the This under quarter management we us flow million quarter, limit operations, several fourth comfortably efforts. our factors, primarily $XX finished in in debt-to-EBITDA a maximum generated by including lender the with of defined capital, cash of We working our agreements. inventory driven putting from reduction approximately to meaningful net ratio a attributed X.XXx,

year, With for now the were reported Contract our a quarter fourth down reported up quarter year. our net on sales the I'll new by take third while XX.X% summarize segment. and X.X% of from the this to $XXX a that, Within from on segment, million quarter $XXX XX.X% increased a of orders sequentially moment Americas were performance basis basis, million previous of

orders points begin the fiscal giving operating quarter the each improved confidence the quarter, steadily sales Fourth result new contract as Americas increased segment leverage positive, down resulting year. on costs. impact from was same which last XXX funnel lower overhead the a and basis margin as and month year During the and us fixed X.X%, we activations remain fourth of in volume additions of is adjusted quarter

from the in this in year, order our led we potential for growth. East. very quarter, and past in International segment. business Korea, terms strong new of this India, past segment, optimistic orders last We sales our with quarter million, to up and Specialty year. Contract flat the $XXX year-over-year, remain Net organically the demand patterns about Middle growth Turning were million and of essentially This totaled most new totaled benefited for China while which X.X% $XXX

improving also Europe in We parts of of quarter. saw demand signs this

progress of great MillerKnoll improving making we sell expanding distribution half footprint. network the XXX% now able the is fiscal global to by transition team expect is and the To and MillerKnoll our collective, of to end XXXX. international date, Our over

a reported sales on slightly quarter segment. basis. a X.X% our Net of Global on in Retail fourth organic million, $XXX to the decline Moving were an representing up basis year-over-year and

same supporting is a million, demand period growth. combines North growth strong favorably broader $XXX data, on to importantly, new above-industry nationally. a reported digital of an furnishing the in to under growth the markets on just we presence industry basis. and out This compared basis X% with and were in stands lot And further up which quarter longer term organic runway in-store down experiences our have excellent last the in organic year orders investment and New X% for formula, relative a retail America

continue conditions. margins The efforts we inventory reduced to drive challenging goods are North response, spending optimization heavily to levels and and segment. have compared mix despite product year-ago market helped effective levels efficiency. focusing demand housing the on discretionary in affect In America us substantially operational gross improved demand management These realize this on slowdown to

established brand Additionally, are prioritizing most to while awareness investments we're also scale. in channels better our brands and in our order leverage enhancing

improved this and savings $X.XX year, achieved our amount played with run rate respect of an annualized remarkable stated acquisition role fiscal the synergies of earnings helping year-end, significantly throughout importantly, these $X.X target. deliver For us the share. have And goals savings year. were year adjusted cost cost and net originally stated achieving million, sales per an above well full $XXX in to made We earnings important as our totaled billion, progress past

optimistic few ramping. on XXXX. our our me contract data is with business are points my activity interest the the Overall, we fiscal of suggesting outlook new and conclude of remarks for Let elements comments multitude prepared as given we enter a in the year,

the pre-COVID and is Andy improved shows has and around Traffic to including at recent mentioned. globe, close Copenhagen, as U.S., Italy trade the levels

we which with segment, are bullish eventually investments an will these we housing believe growth prospects We addition, of retail in market, In assortment the expansion. our the and stores coupled in benefit on planned from our to believe share. share for improvements new be And adjusted year the to point $X.XX expect active $X.XX earnings we in be sales accordingly, per XXXX, fiscal net XXXX factors year to of per above range and ahead. fiscal to

to first to in and vacation. consumers between $X.XX. and the per net summer sales I remind the million, share we business. that earnings $X.XX look seasonality to $XXX experiences retail we into and want towards see We quarter quarter, $XXX adjusted between tend million Taking and expect to that be months consideration, our as be everyone spending the for demand As of shift to first the lighter

the of operator. Okay. your now over overview take We'll to With I'll the that happy the to questions. be numbers. call turn

[Operator Benchmark the of line Your Company. Reuben the with comes from first Instructions] question Garner

growth some commercial that of side. to trends Andy, more Nice the inflection. referenced see on you investments positive

time are what a and amounts you're I growth think of those first while. that -- wondered investments could exactly if obviously, but investing, into in elaborate where I for maybe coming targeted it's always you in this the know, I kind And year? dollar going

can focused. Reuben. It's if don't dollar you clarify we're a great question, tell amounts, know where I I I'll but

dealers as we'll our MillerKnoll our easier remarks, pre-acquisition side, us. talking the we're footprint. in platforms to also mentioned market. business the contract We'll to expanding in make showrooms with my small contract very international for in the wholesale investing of and retail that digital as will tools contract really which, in and global and expanding know, front, brand, And in Knoll and about do help it invest continue to them build On reach was continue you I our the the international

as in North And well Herman in as America start both then invest our very business, as we and our Miller track, DWR the we'll opening expand healthy. stores stores has business retail in assortment. see And continue continue been to to that to

we we innovating going add, last offer, in as last at spending we're the a the what thinking but finally would product of X couple and of And thing rationalizing also our time we the great is years brands lot spend assortment, to look launch. products I about Reuben, time

look So more products than you'll we all future. towards new as the see our brands of

Great.

the Sorry, I of at first end was on part. mute the

So deal, perspective? and give the Jeff, Knoll left talk all was the you've quarter. you And couple lot if of us gross pieces looking that? of within gave Obviously, an about down of year, I of the you if look last in cost mentioned that break at wondering moving cost synergy performance kind got price very out you kind you a because updated could could a from are bridge us margin, I of if from strong. with kind range guided what know over kind parts what of the gross years the margin a in you're you could this for of and of range

Yes. for Reuben, year. the didn't fall full We I'm margin for going give a to guide short.

guide our think, the sequentially idea What we lookout I So quantifying with will an the from first provide of highlight, I And maybe we'll for move you kind fall to parts. on that. of QX. I'm we the as going factors some the for. short quarter that some into moving I'll we to be expect of QX of did give But the start --

benefit some from. do quarter. in was a believe to net benefit fourth have still we year-over-year factor we improvement big That pricing the in the But

that later planned in is QX. as actions basis into much summer. XX expectation benefit be net here pricing the could of sequentially improvement got as Our moving points price for We've

just So roll will FY I to move expect comment. generic some as in pricing as 'XX a we continue we benefit throughout see

I to our does retail QX on in guide from Also a in seasonality sequential the QX, prepared business. the change my assume, mentioned remarks,

mix channel first quarter negative be based could seasonality. just some have points, as XXX simply we'll So as much in that the basis upon

retail that the gross you it's from of away at because rotation margins expense summer the structurally business, that sales got that as higher You've in know. comes months margin in

in in is think where up. freight And of parts but -- bit going distribution. into our partially move some labor that some benefit production So a by and overhead I QX, business to as we're offset little expected benefit of ramp we and see levels

So us, think fiscal in generally the the sequential up. I opportunity terms we of move kind think, this pick as -- that's view of the into speaking, is for comes from year, next I volume leg next big margin

the it thus So in And labor that manner that something as business. help lookout pressure. a improved overhead should absorption, on really significant volume this for far, pricing will Obviously, is improvements lookout our in we we obviously, we're us. discounting on see we the get which always always is we're seen factories, for not and the unit have and but in

there's John, to going that would specific from margins add perspective anything would I And you relate don't a know contract forward. if

No.

-- got competitive a market. I as business in we're approach think we've business think good larger day-to-day opportunities. balance And the being a to as contract I mid-market between discounting and strategic very we've well got and

expecting that we're a position. be we'll in So a from significantly perspective still positive margin

kind of from off strong of has for Or volume or me. continues strength? what the despite that covers? reasonable of a anything quarter depressed And quick a one be led one as Retail a kind very standpoint margin unusual in Okay. is to environment, is last build baseline that otherwise to mix

there correct? and due or to, was you're Reuben, you're about what unusual anything I think asking breaking retail am up, if that's but margins I

right. That's Yes.

then and let I'll Debbie start add. I'll

think real our retail we last customer inventory couple delivery, making seeing is products that expanding the of in really years place, mile the over needs. last margins what you're I operational we're satisfying focus on have that our on the and right in efficiency, our our sure sure making

a attention execution there's think there is I up adding some and healthy margins. to really of that lot infrastructural

our we of to inventory everyone through. remember that little also like year, overinvestment had work suffered through You'll last bit way else we a in

a bulk little So year-over-year, that's not the elevation of that's it. bit of an but

add you to would margins? what Debbie,

been we've over increased the of the over upholstery. just increased design in And developing additionally, we've Yes. selling that categories into I through driven that services in this quarters we've to mix some the are seen our investing helping such like has shipping would increases drive year. which more last add products, as revenue higher-margin helped freight year cost tools, several offset our those ship course inbound of which

that margin to I baseline is continue So can a we're pleased performance. would build of. say we with this in really off

question comes & Sidoti with Your next line Greg Burns Company. of the from

incremental just follow those the growth the from 'XX looking margins How some you're than a in bit planning up the year. outlook in maybe guidance making like I spent you because outlined margins that 'XX. on What's how of much incremental investments implies or investments expected versus in margin earlier, of I wanted next based detract just a of of Jeff, for margins assumed from to is some what maybe to terms for you on lower guidance much in little detraction was the on the revenue? maybe

I Actually, issue take with Yes. might that.

it 'XX. through margin improved at factors. I'm retail growth are volume rolling That's assumes some our didn't the in driven outlook Those because factory. and that not FY in we in modest expansion higher in total big continued our unit to And think I provide structurally by again, guide. quote efficiency margins going the

this in business. added incremental there's line maybe I margin see yet. benefit to can But we get we top growth, some if expansion pricing be some some think should

they making that the that X and efficiencies these as teams companies has our together able When hard last great assortments do the together, into added finding and the up products that years the as margin we X quite see actually efficient work more to over have you ways bit are we of put been a found as come build sure to that part. we've to ways, better to a product opposed rationalization

margin up And as X that for showing the is bank the so of years. the last in part that we realize put synergies we've

for. the I you where of channel is looking give more potential where in I'm still the that together, you initiatives to while, to bring up lot to full I'm on update kind are a about like Okay. Can dealer just sense. And That a dealer domestic Do makes Is you the, you but dealers the there bringing domestically for needs internationally. in benefit network feel terms at completed us an operating curve maybe are integrated realizing talked been it's -- assuming have of network domestically? full its to the of you dealer Like yet? guess, happen you at of learning speed? dealer the the terms

why you the that expert John, take don't You're here. one?

Sure. the that have showroom terms on We've the investment their the product floors, et in the displaying cetera. learning been positioning really impressed the product, dealers made product, with of

the we're think well really aligned. We're stable. very I network -- is

who with a them effectively. dealers. are legacy tools literally And dealer dealer can't is to Miller MillerKnoll the You comfortable tell legacy MillerKnoll all is more They versus become Herman anymore. help they've who a sell

that couple of our a going consolidations in really had position in We've some key the are country. strengthen around markets strategic to markets

continuing shape network the to we think and still upside. good I think do, in like I is really I feel there's however, grow. So

the the times comfortable for XX is usually lead with products, projects more As months. X, they X, become

momentum we'll So from on. goes I see as them time continued think

Tower Gordon from of the question Research. next Your Brian comes Water with line

guess or have any traveling to call, not for changed think are And could And the especially like from quarter. evidence apologizes on equilibrium or my reach question there's being at years? employee is, margin would strong of trends point? North be, you congratulations in that then work do the with internationally? follow-up spend sort customers, seen to that plateaued my this both here, that's employee performance you any return has per you an to increases America it of make maybe the this that per hybrid on, that Or we Bud evidence I work see space talking able he's over any past some in terms sort of of today. meaningful when with seeing couple you're and

Thanks, Brian.

to office to the work far the trend -- return when As working as all return because time. I whole also in we've been

we're we're of think I think out I don't -- plateaued.

more still in climbing value projects bring remarks, often are looking mentioned prepared And not. how more they we're are specific about their really at their that people I a of the decisive mode like think sort no my together to debating much I want of longer in together. are than teams being

world sometimes many days X world, and think hybrid has but that in I X time. from X week to hybrid gone X week, a to full people to days are a a

research but continue be So for I think data that it work our favorably how think it there in we the themselves will on world is seeing see will us the learning out to healthy to evolve evolve, together based that still and and industry also together. I is the but for everyone about

contract. We're question, far thought ask I seeing is collaborative John, on work in the and it space into think not base in second depends space. to reevaluate But we hybrid what for say we're business it and as employees, as really seeing to they do. more business I want certainly as how We're this. would. you that they the not it and their a The as about decline on really add much think seeing workspaces purpose I'll average, add to would trying people and as environment,

Yes, that, I with would agree Andy.

the one, Number time making think is cautious leaders in sort enough because people I about we space still talk out people last various we space X they X them as for of to trying every X and X to were organizations, problems the same you ask they're outfitting what some of everybody for as regards. they're solve comes as really think heads are space. of in sorting the week, team days, collaborative maybe come understand on the days a sure we're As And week. if they need spaces Andy our a between that. benefits people space, fair a of I right? to or I the is months itself still said, XX And as days going attract into you back environment, balance have how to amount space, being if down coming in work in think

So with, I types are our think with them every those working the single that. that are clients to of and we're solve grappling things for day them help

have did guys the going a I the side out retail the Great. question Herman broken over retail what second of on longer versus term, Great. is of network any be like the you stores? percentage Miller business. Have reach guidance of designed the to within sort

Brian, is this Jeff.

kind broken out have of guidance. We any that forward in the not

I both look America, I these doing white are before, And you learning such about DWR have space these in as North and be. Brian, the And brands can exceptionally we're said for nascent When and at concepts we businesses still big this a well. is Herman Miller, business. that here see, these day every how

So we're but as of And space. I stores, learning adding exploring new go, we phases. tons white think as I on said, still in the

reach We we add site site, market a for XXX% a have in Brian, second additive. first Herman location Miller the in a it's almost a when by switching design within

strategies. Design each is to and work sell the can of of brand door So targeting them region fashion, opportunity that with those customer a an a that to serve as important as we see so brands we're Miller there marketplace go-to-market an third-party within and our and purest is different customer Herman in independently And site-by-site. brands. market the design that modern collective

the from Alex comes with of line question Craig-Hallum next Group. Your Fuhrman Capital

were in of bit about lot process side, a are a Last far progressing projects contract pipeline the as a orders. that quarter, hadn't in of talked you'd the along your today? Can into you how leads talk funnel on but yet that those sales your expected? through about And looks turned funnel having projects lot pretty you little

John, to take that? do you want

funnel from last lot are, CRM, -- to. a of has We're I'd significantly to X% ordered, not QX. prior that a for the Alex. still one, It Sure. the another question, activity projects seeing mentioned QX perspective. grew was that from be We year. happy in Thanks actually marked over quarter up from sequentially yet our but

So evidenced before the obviously, it starting funnel still, right? that order And but the bit the flow is longer hits than it is the in to growth by a platform, are it it's like we and QX. as Some It of see in continues. still still growing. we'd activity stays activity through, order choppy there

consumer buying. when business That's be comes hear. Thank retail, now tough year you with couple expectation a good really just you is holiday been for to it really that for expecting a the the Okay. this a demand in Starting another of furniture? on that. to year season years row away of demand. are and of of What in tough it's terms going consumer the quarters to now, obviously and couple for is there an furniture weak that The sounds healthy this profitable

had of really for Debbie. is for proud just This Thanks Alex. the We're the question, performance QX. we

[indiscernible] marketing we're I that furnishing on the traffic growth. of year organic home a impact whole furnishing capabilities driving is trend small global of our year-over-year. And market being we're we half to so But continue developing spend of to been in to capitalize saw the we're the the to feeling those year-over-year. given was advantage stores of sites, OI XX% tough. the traffic continues home and with expect the with as curve. the some that substantially think context was will QX we this our we're amount we've of especially that getting significant, back it market to taking higher we're the growth our that open average optimistic that furnishings and use down ready up, down that plus X% order And and And believe in we to value

are questions at closing no further Andy I'll turn There this and back remarks. President Owen, time. to CEO, the for floor

you updating in your quarter. everyone. We tonight. joining next us we Thanks, and for continued you appreciate to interest forward MillerKnoll, Thank look

This you joining. concludes today's call. for thank We

may You disconnect. now