KNL - Earnings call transcript Q3 2020

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Operator

Good afternoon everyone, and welcome to the Knoll, Inc.

Third 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, including, without limitations, 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. the based to the and a of are are but current uncertainties, statements which subject are number beyond forward-looking largely company’s on expectations certain These control. company’s of risks many Knoll’s Exchange differ filings may with its risks statements result factors from Actual Commission. on factors, described Form results the in materially including and other and report as the forward-looking a Securities of annual identified and and XX-K, pandemic COVID-XX created These current are environment cautionary significant particularly the the statements uncertainties. in relevant where has

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

Andrew Cogan

quarter. Good are a of well. tracking levels. pleased activity the finds to fifth incoming Thank levels the shipment as you. experienced elevated quarter from order hope from grew you’re orders our third our that year decline XX%. sales from the results of e-commerce business office benefited we XXX% in dramatically improvement third approximately residential and still solid levels XX% declined second depressed are by Today year we the a shipments quarter the higher safe we in $XXX in for during sales total Total quarter primarily million grew business current heading this financial we and very you period the announced compared afternoon driven third XX%. everyone. We into and in below backlog sequential saw comprising of Nonetheless approximately up ago Knoll and the sales prior a a margin

number completed we've of and in the of we delayed being to new most the significant even starts have awarded our furnishings. to office the cases delayed continue and false been see been the clients, corporate a projects With return where workplace for buildings

the the will working indispensable a workplace term a this Over to bump of see do doubt different businesses and but return should ecosystem the when that a that is will permanent environment me a itself robust work no increase person workplace will that well of in brand long also office collaborative part more nice remain an the than that can includes product design landscape and be options growth. capabilities. synthesis The the we workers a component both home. pressure importance office to likely we only be in is more crux an create to like that workplaces the a Knoll work-from-home a continues in well-designed All overall of bodes people elevate ancillary with space the with where and remotely. at colleagues a space for The collaboration becomes space draw will for

may be have to particularly pandemic that and There already who by daunted challenges that but guide accelerate proud trends that Let long-term to we in the the those at has we of pandemic that posed are if results believe helped particularly me reported us we the the space building anything the Knoll head office are on. take the are by strategies will we forward. add

the are there, the teams. pieces excitement have and faster but the in just can is pivoting keep opportunity place in see and we we Now our to harder

questions. your We’re to happy take now

Operator

from of comes first Our Greg & Sidoti Burns Instructions] [Operator the question Company. from line

Your line is now open.

Greg Burns

they've to quantitative give in the third numbers the Can were the maybe some how much workplace. quarter first more down trended into in the Sorry us order to you first and orders order part fourth patterns in maybe get how relative the of around -- second of quarter? terms quarter just

Andrew Cogan

into [ph] from months, three, our -- Good or XX%, over sequential Hey, Listen, the I on And a saw we look the that. QX industry improvement five we've at down done from data, really nice side. four, Well. the you. think around overall than to that the order last in QX workplace better Greg. hear pattern. We nicely is XX%

in are I and in part. there, you other as what's working, happening our a can see to e-commerce XX% the think ways talked continue now process work and all expect from about. our of from for workplace to all we our the -- But mix, really the in bit residential what of and our Today, us we businesses. the our less channels challenge. little saw in solid be growing growth happening business, home to what's And that's workplace in other the a business, while people we in today,

in orders shared Now, then we our you're to decline in commentary we as about the talked somewhere our to business we're declining up. probably bottoming period, the over to we XXXX But industry less than XX% the point. demand pleased with in this XXXX XX% turn earnings looking at and see starting release, think again, at

Greg Burns

just have customers, third in view what with your And press over change -- the is and seeing is few kind incrementally in of or longer taking gotten a the Okay. quarters? quarters that XX% any last by shrinking around things over release shaped of view it worse kind you’re or BIFMA market at or this few the for having next XX% guess that around least. months I recovery the Has you're the conversations maybe decline

Andrew Cogan

of were business. think And you were talking in call, of last we No, the in actually, half. I back we the the third see better talking when about shipment things declines did have maybe XX% particularly terms we gotten incrementally Again, -- quarter. can in we mix better in our

be in the would space, XXX% our start start who kind substantively has we of think workplace-oriented. again different improved point actually looking And where than business it's it's as at to So positioned. our is But that improved. they mix differentiate think view because this people everyone the think of I I part someone is at important

to feels lot right you levels. like dot-com the industry, They're a the I subleased think I now. above levels me, at look to as XXXX XXXX look we at decline. this mean the

You the kind It me of look reminds absorption. periods. those of at

activity much of at You than more kind look which new renewals leasing is the space-oriented.

So get I could to easily Again, down down. the a stabilization see another this tracking market you and And maybe stops then next BIFMA year, that's year. start XX% improvement. some XX%

one. view are opportunities seeing at our think is kind don't incoming the as are of what we our is I mean as number in the consistent no, not number that badly of decline changed all. I data, pipeline has the But are BIFMA opportunities -- with incoming BIFMA. down So,

from people think and to on to not longer I piece the home, advantage positioned and piece. just to the people only the the of work-from-home bodes that that it So that's well that and is really staying really us at of e-commerce for the work-from-home for the take reality, are benefit the well the key piece we are but on pivot more living-at-home

the this I again, we So, down is think what But XX% through be or to XX% think differentiates two over years. next cycle. that's BIFMA pure-play going us

Greg Burns

Great. Okay.

last marketing very I about, that it e-commerce the maybe been your And demand. bit. supply about inventory strong that I quarter didn't some or you know there then Let's you around was quarter. Has -- restricting I affect guess, growth The talked little constraints. quarter? this cleaned all through at to this support talk a up? some of investment all know the because inventory dollars that you have Did

step to there, caught all are up we that really on bit little ready the and are business? on of you gas a So the side

Andrew Cogan

which there November side, Cyber and holidays up up like, and December. great. particularly you caught the on is all all Monday stepping be head in We're Yes. Friday We'll Black as into, the and marketing

into actually forward but So and really and a otherwise, really both offering, we're the of work-from-home to that. in looking the also side Fully we're one globally. We position nice Europe. on positioned, expanded have they’re fast-growing well We've things, expanding

gaining the just it's Muuto momentum And we North really on whole plus with phenomenon. launched July, side, that's that’s we’re Knoll and going. middle So in the which the work-from-home, a really how second of pleased not then American

and would the with. So it's just it's in as fully that channel of that twice more we're on -- global traditional office really not I out about kind multifaceted increasingly it's as profitable point front, that is pleased And just general not a effort channel.

good you some need dollar-for-dollar capture margin So transition stuff. to don't a

So still from next. that going year you into our profitability this that will again, headwinds Ultimately, we’re be think helpful. through But encouraged standpoint. be more mixed I

Greg Burns

from expecting maybe this Can bit patterns order obviously quarter. percent us maybe a kind give the you're two? quarter -- of what supply still can sense maybe catch-up you a give next channel quarter, the Okay. some constraints. little us of or that sense And But of there of or last a from the was of over your growth the growth you maybe that a XXX then, plus

Andrew Cogan

I the Yeah. think mean, a Well, sales. living ago. year from again, is today of is includes about was home, residential, which important XX% It at home XX% work and I our thing

see third. think maybe one to I continue So two-thirds, you'll move mix our more

see you'll think I XX/XX.

You'll over We're forward the in an fourth I number rates over to with conversion effort business all it into trend. continue will seeing have growth to kind XXX%. Then XXX% I'd we’ll year. quarter, rates. lot and And move that happy would then in imagine We're XXX%, data. see that encouraging coming continue see expect a I carry and in as certainly terms more one, more seeing the and the growth space we grow of that traffic, next couple double evolution next marketing to again, of products, the into we But in quarters. of the be of there. that

Greg Burns

the just had a question I restructuring. about

be a some You you that we that business? couple is plan over on number of announced savings. of How back realized net into kind expect million reinvesting quarters, of and the should that of to next the or $XX the do

Andrew Cogan

Thanks. Greg. Hey, Yeah.

about of $XX So savings. announced, annualized as we've million we got

the expect to spread it of generally over we the year So evenly. course fairly be

incentives, actions There closures, that. few it's a around etcetera. to marketing a generally We and generally some you've spend And terms things. actions with ranging facility might got that, some of be things of things number. of net then future couple speaking, a couple But count that's a number. back like have additional year head But a coming in next reduction dollars from against some net

some the got of we've on. that, this programs year some to from government's going benefit onetime that addition were In

about return of the will XXXX. speaking, we've out year. those next million into going generally taken But So out business $XX

adjusted coming The EBITDA us year back up to maybe there's -- it's bit that nicely and achieve OpEx. so about total from coming margins it's basically %XX setting and But COGS level split of double-digit. single as savings little bottom between I next of higher lower mentioned. line about into And XX/XX next a year actions, going million restructuring results EBITDA

Greg Burns

Okay.

with So stand you the to of kind that’s how still? that model restructuring decremental margin line guess to I with in range keeps XX% it XX% still XX% and about

Andrew Cogan

that's think I right. Yeah,

XX% finished year hoping get XX% as But expecting we're think we So deleveraging to still this where to upper next we next go of into single expecting we're digits EBITDA. expansion get double-digits. it as some right, year, of But you're year. still to I we’re EBITDA

Operator

Research comes next from the Steven Thompson Group. question of Your line Ramsey from

is now Your line open.

Steven Ramsey

for I start quarter from there $XXX in longer And you in you evening. versus of more good for that then frame or being as workplace envision And can and that that the the to other I that guess factors the residential sales is dig get mean, workplace this on to that sales. hitting QX digging share, on million segment you the term content do a that resi to on move Hey, $XXX maybe you better in number, versus time having workplace? e-commerce more you drive towards with thinking million that. make e-commerce. driver -- maybe sure I Can than mark? any margins resi guess the e-commerce as on I understand

Andrew Cogan

Sure.

and me start that. Let at try

again residential of About of was the our e-commerce that of sales which -- So said quarter. was third in the I third of our XX% related. business, a about a surge

two-thirds growth. so more a of also North things terms had of have which you traveling Muuto to so our and little kind you retailers and to I as, saw a out e-tailors HOLLY So And cooped HUNT multiple their to that bricks-and-mortar on quarter. HOLLY our growth. back then through is that’s clearly goes people business It residential And maybe dealers, moved see going as in spending in a through as Europe. back much, Studio KnollStudio, KnollStudio see Muuto bit had the residential so up I'm spending aren’t the of you much up of nice dealers. kind -- Everyone's goes of kind through more you channels. kind HUNT to quarter mean, pleased growth goes moved through need It discretionary America of the and that in is improve. have furnishings aren't we homes. growth. money aren't people really on the believe are We entertainment. a ladder quarter

they're spending in homes. so And more their

of growth really path it's that And through on encouraging KnollStudio enter now get we or whether fourth even we business Muuto, to HOLLY whether at trends the HOLLY it's was a as beneficiary So whether we're as it to that a move it's see the HUNT the quarter again. HUNT. back

I So think encouraging. that's

So the that's two-thirds of business.

the of work from more home business. e-commerce really is one-third other The

you annually the residential e-commerce. And of then and $XXX is on $XXX next year again say we you a those is can two of over if revenue ratios I believe So a grow that in thinking something take third And our years. at and million XXX% can third next do XX% basis. that million, take you're the

I from be be market home a think of we of will but at -- double as market of, it’s from permanent kind look benefiting we’re our more working. when going about, And size. just the it’s projections we're talking believe ecosystem trend will not believe a to we it’s a the how people work in feature both

at folks And stuff. the I flexibility reading. some that going some It like spend the people home. you're all the XX%, XX% stuff XX%, time read to working have it to sure of You think enjoyed looks we're all reading them. offers extent I'm are

kind that's And growth -- a think and market. native home, sustainable we were learning a up that then from in part of so ground the whether we from a home, from have it's the business will working that digitally And drive of building. both

we're from move home. can really those Omni-channel I'll positioned repurpose with channels, particularly think a and can of range you multiple then and well I office, So market one work broad channels we multiple work the in that we products to And example. through give

it It side. we the residential our home. of share residential-oriented some regenerations office, introducing got things our those from now it's range and best-selling well-priced One the in be on shares products. We those a can but colors more does and work now, do great of in And -- offer does in We've that it's is broad great share. of we'll on workplace tops side. work

ultimately I So benefit think positioned Did plays nicely you… we’re to out. really give kind of however this that

Steven Ramsey

that caused color ready is yeah, other the I that margin content improvement? improvement -- or being or more that Well, through being to more that because e-com helpful, traditional is certainly. there that better get of drivers guess the margins workplace, than that are on margin And in that there

Andrew Cogan

that a project. is one Well, you’re I million discounting of it you’re or you’re of that think selling crops not like it this of $X one and selling

the pricing overall things transportation in business more about little primarily it's some just double-digit there's our the the on well EBITDA think line EBITDA is advantage. higher where and expensive mean, and a single but margins as Charles I it's So, like disadvantages or in that talking I that of the low above because you adjusted it's piece targeted the upper business. margin was get

Steven Ramsey

Great.

these offices. for share Are Can discussions and conversations? in worse on Okay. better meaningful from second for tone with getting any more of the those delays the is you your on That conversations? spending there change On makes or customers sense. maybe quarter they

Andrew Cogan

now Chicago a work. some the various we return XX% vaccine, I track. I think return I areas. like some it at where at see of most look access you'll data to you Chicago, people easier delaying look and the people geography of with then you mean, cities right are to look at and it's of things mean There's pretty mean, think going Francisco testing obvious the XX%, I that work. have and the top work And think when that raging but those see by take ultimately areas I more and to we at to in And returned their worst people to kind return Yeah. it's pandemic to you I are folks San XX if of that work the good barometers the terms

below York the XX% New is average.

I You've see And the in got, hold think got meaningful return $XX are a industry general Texas run few kind to million $XX on that's pending areas now that know, maybe -- but won’t I of I of mean to kind rate. I hearing that's in of work. people million, mass, we're we above business think in -- until it awarded in returning don't work improvement people right start we've

our going all work. that. back is And to year, It's going to is action folks just home work more for see the we're next we're best to in on next to I see start months. residential And think an going spending be and I driving XX of be from a be you'll And should half But from leaning acceleration the be money until our sometime so the guess of now then, homes. at to bump nice because home. that going it's that's business into to think returning where the be we going

Steven Ramsey

performance Great. from space? for that’s since for the vertical last general in talk market more office commercial diverging this And you stronger then guys. Can focusing the you, one on a is me vertical specifically government about

Andrew Cogan

but been been state Yeah. and has I mean I think local the has federal weaker. the government stronger

we the than side, corporate return So work the I government general. a quickly on to piece. little enhancement. been each clearly, out I But, of maybe expecting they've washed in other corporate stronger think focus on also kind were a more thing’s combined think the

products clients on really and we're of of can things area even get bring laying people conversations active that well, a work attitude we we're that got But more not lot even to we where that back out. in we've having when confidence is, and So space some with screens area, those to going think new done do to we've I till race in their position work. all ways about and

that's think I quarters out. few again, so, And a probably

Operator

I [Operator back We Andrew more Mr. on the have turn any Instructions] to call remarks. queue. the question Cogan for don't closing will

Andrew Cogan

interest in for Goodbye. go thank continued care you your and safe Well, all Knoll’s. Stay vote. everybody. again Take

Operator

call. Ladies for concludes Thank that participating. and today's gentlemen, you conference

disconnect. You may now

Andrew Cogan	Chairman & CEO
Charles Rayfield	SVP & CFO
Greg Burns	Sidoti & Company
Steven Ramsey	Thompson Research Group

Knoll (KNL) 26 Oct 202020 Q3 Earnings call transcript