KBAL - Earnings call transcript Q3 2022 | Kimball International, Inc.

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Operator

Good afternoon, ladies and gentlemen. My name is Didi, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Kimball International Third Quarter Fiscal 2022 Earnings Conference Call.

As with prior conference calls, today's call, May 3, 2022, will be recorded and may contain forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from the forward-looking statements. influence the of Kimball may be statements that in seen International factors the forward-looking outcome can Risk Form XX-K.

to the would deck and Executive Chief available Juster, Chief call, to an T.J. website. On section Wolfe, today's presenters Officer now over are making International's Officer. turn be Kristie Financial During Kristie call references of earnings today's Kimball slide and the of presentation Vice Ms. on is Executive like President today's that call I Investor Relations will to Juster. Kimball International;

may you begin. Juster,

Kristine Juster

Good carrying outlook I our a in afternoon, everyone, the into accelerated and significant International's thank that for marked you supporting fiscal in growth change momentum for step financial joining fourth quarter, performance, am XXXX. today's to fiscal call. positive results and pleased third we our quarter Kimball this report see

Sales of demand expectations Kimball the returning continues that aligned were education to our delayed commercial, second shipments indicates year which each demonstrated allow the and sales actively market physically of This increase in sales our levels, tomorrow. and workforces forming vertical increase by we underlines needed ever-evolving Hospitality Health to our It and trends where particularly positioning prior from markets spaces to learning of in to XX% of the product the believe gain and International were share, that these led across end were and commercial workplaces. quarter's the Workplace support both and flexibility including hybrid for the for portfolio strong markets, present and quarter. with similar in our in today strength relevance XX% the digitally return eBusiness our

and chain, fiscal fully it of Price consecutive we inflationary and growth in the mitigated quarter fourth profitability. we into October convert growth meaningful been is is March of year, strong increased this increases benefits supply and to of able this in rates, double-digit While the into first revenue XXXX. will implemented demand quarter see the significant year labor we've order our part the pressures, and in of last quarter and fourth

the and succeeded shipments across performance. smaller important representing towards times quarters. were XX% reflect in verticals, chain forming up our which recent footprint, have International look and prior product Workplace us Taking and disruptions These closer all through portfolio today's with growth constraint in third employment strategic differences, resulted lead population margins future the and alignment key markets, quarter, namely end to revenue orders confidence allowing reporting that in have we a reduce in in and Additionally, actions increased geared results labor gross experienced in managing our significant the growth is industry-leading underpin of These our years. strong at XX%. our areas supply company's Workplace Kimball geographic and metropolitan new issues,

respectively. At and is Ancillary of corporate We workplace XX%, to XX% offer bounced another EverySpace rates particularly talents. inventory fully their and and position best reliability. for year-on-year BXB the back This increased continues it return to improved million recruit an product to model employers in-person International's Poppin day-to-day our with Kimball levels or representing climbed to grow, as footprints XX% category. Workplace collection configuration appealing satellite Eklund is XX% and their The trailing end positioning that are flexibility amenity-rich business XX-month new the in-stock of customers fresh our with inventory manage vast hybrid end to create rate. ways and custom that simplified furnish lead award-winning and largest footprint. designs is total provide with and our sales increased settings their the products products engage, and Poppin's quarter, have due that continue looking XX%, of helps resonate evaluate ordering broad-based most products sales to mix, the collaboration, effective overall business to acquisition process and sales. effective and XX% new of $XX Poppin's flexibility. such point up to as Innovative with of and their design retain accounted up hand, as looking education of and for markets proof run XX%, a realized design orders Workplace efficiently now a year in also consistency they to led business clever recovery order quickly an third expand our on Poppin, the generation customer office continued residential significantly up our Pod by and us XX% companies and speed have current second ready-to-ship workplace the a in or market. Poppin's over and model supports our

we in XXXX. well Atlanta of as Austin additional strategy open open expansion fiscal total are more showroom underway and X and in a to Our is planning for X showrooms

expertise Additionally, our XX% sales. total over KII both Poppin of the and at leverages of Poppin expectations Pro, which exceed continues to

our to Health ahead fiscal X% X% Moving and of third were XXXX market, orders increased revenues quarter up levels.

due a COVID pause detected we recent quarter, last shared the in variants. market slight to we As this

confident nature. we short-term that continue be these very issues in However, to are

the in Midwest, many significantly up and volumes and quarter markets. of by Northwest our Pacific sales in territories led are year-to-date, Southwest fact, the In

workplace healthcare an are exam trends that patient areas and emerging while treatment better, We for experiences and are community, more addressing areas spaces, caregivers. patients to rooms, create tranquil for designed maintaining for efficient in families,

this our achieving adopting of strategy. go-to-market are portfolio, fully brand multi-branded territories fastest-growing by with our combined our We power the leveraging

international Hospitality travel stated, remains soft with below levels. the remaining and As business have market we previously well pre-pandemic

customized is in the in very begin positioned where slated continuing part Show returned products. that recovery We upstream. Design are its in to this energy higher-margin focus XXXX, managing are benefit Vegas, We of and we our towards just point on to well business industry from activity to Hospitality Las prioritize the closely, and

We with front. on also strides pleased are the our ESG

Building You a through and program, rating the announcement been furniture, shareowners International well and named our fixtures International health also read green portal of for that our safety standards our may change. most Trustworthy Institute. redistribution Newsweek. Companies of data WELL have launched have times We've sustainability the of platform during Kimball one XXXX Most America's has equipment workplace also of sustainable in by earned

in to on and our achieve quarter for our clearly which strong pleased be Kimball are guidance. the difference these a represented performance accomplishments to of dedicated in to XXXX We very future communities. a very sustainable In more International, fiscal third with summary, period building a making track puts us continue

guidance. the financial to our I'd review, turn to discussion operating and Wolfe, like of T.J. Now over CFO, fourth call quarter for progress a T.J.? a our

Timothy Wolfe

and we forward point. XXXX Kristie, of Net markets were XXXX of Workplace business I'm reached quarter, growth XX% afternoon, you, $XXX.X our as sales and the prior reflecting approximately to pleased quarter accounted Thank in has Health share revenue. and in details to expectations XX% financial strong on compared fiscal fiscal up more strong year's end third of for million total demand financial that our good the believe everyone. third quarter to the a performance in our inflection our

Hospitality very basis growth to our we X% The our point by an Taking across experienced was a Health XX%, soft, XX In the and net were quarter. commercial, our verticals in portfolio business year-over-year. gross have market also third X% million labor in over year-over-year from Poppin sales end of year-over-year decline look benefited generating with sales. to leading into our lack to sales end growth increases addition, a expansion months. education increases in past revenue sales Workplace driven the volume with and XXX and activity to double-digit Poppin implemented We $XX.X deeper inflation in both pricing and chain revenue growth industry-wide markets, XX% relatively despite supply contributed due the actions ongoing pleased margin increased XX.X% remains government sales and the in travel challenges. achieving

availability, improvement I network. these offset that To implemented we enable and seen pressures materials and and just have increases, supply chain across mitigate pricing, we availability cost logistics the the timely inflationary mentioned. Although, pressures will chain that measures persist in us in labor some supply cost-saving material pricing inflationary have to

to Adjusted the as net a compared to year-over-year. increased verticals $X.X driven revenue grew disciplined $X.X and a Our end mentioned growth introductions. orders new helped earlier Poppin activity compared the quarter. or earnings substantial over year expanded XXXX. contribution strong orders $X.XX time, Kristie $XX.X will adjusted in Net versus expect showroom further X% as per and commercial expenses the share to international business ago third conviction new quarter. quarter to until improve diluted where orders depressed and which We or million development administrative robust of Strong experienced strategic $X.X Adjusted revenue drove loss sales continue Workplace million year double-digit diluted loss selling in sales the pre-pandemic million and growth the efficiency of third percentage the future in year and return year were begin million with At that to growth. share the same and XX.X% $X.XX XXXX. Poppin the improved Kristie XX% and a loss a net opening in XX% increase last operational fiscal per controls we EBITDA the was orders Hospitality XX.X% XX% cost of was the to we the a another to in to growth margins net as in per share, $X.X diluted quarter. or market Kimball one investments travel, declining and to a continue of diluted million of International's ago million sales market significantly education $X.XX Health from year quarter the in income product of underperform make loss prior S&A or per order that levels and in mentioned, such a compared supporting of adjusted represented growth, our income $X.X quarter, of higher up full-scale ago expand and in $X.XX from quarter. by year-over-year, share

price surcharge, Our in in price announced the of XXXX. increases. permanent fiscal of Approximately quarter total quarter with increase November remainder, turned March, was the reflects into the million $XXX.X $XXX.X compared including X/X third backlog our at a previously the to backlog end which million

margins. orders improving revenue sequentially, price as to Our backlog our which underlines faster, gross ability realization well declined ship as and

which Now cash moving facility. and to of amount liquidity, the $XX with credit we cash our unused flow, sheet in cash short-term the includes equivalents quarter plus million balance and ended the

and the form in $X shareholders capital capital million dividends. returned Our were we of to million of expenditures $X

disposals to are $X.X approximately one a track of million achieved prior realized putting also slight warehouses. We from a to cost expenditures, savings the of total on is from firmly of achieve which of decrease on guidance. sale we million track million net million, us $X.X $XX our Year-to-date, our Capital $XX our and guidance. gain

We force. we are XXXX. Having continue sales high-growth reinvest the and on planning savings this trends opening building showrooms a further Miami opened promotion Austin additional similar in year, additional and in demand into of number for our Atlanta, fiscal in and the to and such these as fiscal showrooms given brand, out initiatives Poppin marketing Poppin Poppin

approximately Looking to $XXX to increase of XX.X% sequential year-over-year XXX with at of the forecast XX.X%. million a basis we points XX% of now quarter, improvement representing at at to XXX the margin $XXX midpoint, gross fourth revenue million,

back will expenses for S&A I that, quarter strive closing as million, in $XX marketing investments we to realized reflecting as revenues. fourth well to With spend expect and from to S&A turn with as investments will promotional $XX range people million call Kristie We remarks. the match

Kristine Juster

Thank you, T.J.

gain the have quarter, As inflection third today growth. report believe point we us the and our to outlined, market discussion significant share enabling end at of we profit reached an

good double-digit quarter visibility expect last trends results our X fourth the driven quarters to the that order and growth positive have We continue. demand of have to

and Poppin the end a ancillary in fiscal for the to continued secondary confidence XXXX. focused employees the like in and call products our to gives want accomplished and that appreciation and pathway call and customers, commitment markets, have our belief all to And proven suppliers growth we respect and in to geographies profit approach for Health Workplace acquisition and scaling Our with revenue I Operator, us end to our questions. I'd robust my and together. open our leveraging and our

Operator

Greg Burns from [Operator question Instructions] comes Company. First Sidoti & with

Greg Burns

a think healthcare COVID stronger market. not we'll focus inflection anymore past wanted that there there. Just not news -- is just as the still seeing you're I kind I reason a start in to you first with on vertical, any healthcare think, of in countries. the Is it guess And move demand

Kristine Juster

answer I'll that. Sure, It's Kristie. Greg,

the growing, at see is we that where look the success did especially our actually and one as levels, significant we not say success the markets, still the business pre-pandemic crossover we where back growth healthcare that of secondary we will in our decline is market Workplace is business business to did, see the the So as of in base things business. with Health healthcare the in when so business much

So we're markets. very see markets pleased lagging. metropolitan with We the the secondary do

the And piece will to market again look to When market. going VA, long-term that has you come We've at -- very see the of market, increase so actually that investment with that of you that, we just year-over-year and back the look over back. when said of that are in in at the say, that order expect indicators that's the amount I that's the growth into business over that the we in come future. confident will

last we in seeing so kind the we're repopulating the building our funnel we pause after quarter. of confident And and there our very expertise, are how feel and capabilities

Greg Burns

Okay.

improved of in might and Poppin, forward. that product other things itself lock but like we're seeing for an now the then terms quarter, issue maybe that And in China looks again going and significantly Okay. down it congestion business cause poor availability

to there? So can talk you Poppin? what just availability Any you're for about seeing risk product

Timothy Wolfe

Greg. It's Sure, Yes. T.J.

to that the last think Poppins the inventory we of was low tied I quarter things revenue levels. one directly talked So in slowdown the was about

we were at end the quarter, significantly million to I million able around those increase this so would the $XX $XX quarter. up end from, of And to last say, around at of

occur lockdowns than And on-hand Poppin. sourcing and we what of more doubled look But the seen the in south sourcing with so Taiwan region. of sourcing China, fluid, to is where it we've far in region occurs more in situation you been with the So China Poppins our when again, from does as inventory does change yet, impacted is haven't and kind at of we've well. of as the

haven't so certainly are disruptions. make anticipation on keep eye That we the more was sure we ship something levels. ahead, maintaining that need been to And to ahead trying and we're an impacted of we on inventory and today. keep buy in But hand

Greg Burns

the in Poppin I rate where I said might run a of missed repeat you think year kind have but terms in And Okay. revenue. Can of you of it, just number terms would exit that?

Timothy Wolfe

Greg. Sure,

were the run quarter, by quarter. we the we above we're next million So run for rates next million XX.X% north the $XX quarter. rate, would QX $XX And of then for back say, so

Greg Burns

terms improve fiscal into looking might realization help how what's gross further Okay. the on gross What's forward-looking go but expect -- that you right. seeing, we have could improvements see And price you quarter we going 'XX, view Perfect. All your to and should fourth other in sequential that initiatives any the on know, gains? margin? your expectations of your you're the margin I past don't be, then as

Timothy Wolfe

Sure.

said working quarter, really of we pricing decreased X mentioned, the the see So time we And next actions, way this backlog. in first for quarters. through our reflection and would their our our quarter I the guidance, as that's happening finally as backlog expansion in

getting door we're out have the in that getting do that on pricing. and So that top of shipments

then in bottom fiscal we've margin do really able expansion quarter. additional now. So to called year the we we be expand next 'XX. believe into And We'll see

fiscal point expansion and be kind throughout have each It for beyond going probably expansion year Now be we of will further won't fourth year. see it to different But give when we I magnitudes straight perfectly linear won't fiscal think guided is and in to we've that finish margin of the 'XX do make what the gross we'd year, quarter, a the guidance it we're line. maybe quarter. the

Operator

Your comes with next Rudy Berenberg. from question Yang

Rudy Yang

again, a could an little the I of changes on some you've So mentioned of some just this previous biggest reached set demand about of congrats more guess an quarters? better end the momentum of to backlog quarter just inflection talk and over so firstly, being the of if biggest quarter. this? changes this kind are was And you move curious as able than kind in or And improvements just of some point drove there that know I But in strong you ones. what the the bit of of your more previous results. increase

Timothy Wolfe

then Sure, demand. bit about Rudy, I'll maybe it's saw operational T.J. then and I'll talk market improvements start forming little and Kristie let the kind about we maybe talk of the a off the

able that production is were the our I improve we things think of operationally, levels. we to did one that see

And so increasing where we at workforce that add approximately improvements were saw with to the supply prior the to were manufacturing that are our able tangible X% constrained, we workforce, still chain from we quarter. is some our at

also safety see on a and extracting shortages materials of but able freight. outages, to hand. level have by we're We those higher mitigate stock, some We still

And And look And a on net of we last safety times time standard, to that what our the lead to were lead time. at products to We've product customer. of at improved the is, of a end on products standard effect approximately the versus if you increased of deliver XX% our lead standard hope XX% our stocks. a so standard we've our lead time. is so that quarter,

to to of products So is saw. X-point our a improvements still quarter, being a of go we that over to at the improvement one long back but get all way standard, the

Kristie formation. let convert that can of and that's and more And deal drove talk demand about sequential year-over-year what backlog really revenue of and shipments of a allowed into the good to all improvement. you us the So orders our

Kristine Juster

Sure.

quarter, T.J. that very seen, with said, time the Poppin that about of the new But which you the is consistent Poppin position. inventory is quickly you the very we last to even showrooms. we're which with XX% of and taken with to look One of the of that to the things Poppin we've very told the our pleased of of business. been business, success that at Austin we've of We're about now as talked you total actions is category XX% the Pro, started we and strategic responded pleased the mix. kind about in if We the opening see we've was increased changes up XX% very how mix Pods,

coming So the we're business much pieces new that and business of of rate. have core the Poppin that we incremental into a that kind seeing seeing very nice we're rebound enjoyed, on are business

So price we're both getting in certainly, very a in Poppin. confident role certainly the work and will gross around then the that into just has margin line QX. and QX our giving feeling And I us market the revenue price, confidence with add played in

Rudy Yang

that And pricing. still in Great. a mentioned think so orders then the backlog represents you terms portion of under composition, I still old

given reflecting Just I increases of in full when been there effect the the your issued? what price lead be guess, any you've improvements with times, backlog of entire seeing should is expectation

Timothy Wolfe

Rudy. sure, Yes,

So you've that is got backlog the some that price placed increases one in orders X before I occurred. factors think there, the obviously were

they a have given one number element that an also a accept so maybe element. magnitude certain our of where in only would contracts period. our it's of contracts, increase And certain and XX% price or There's of requirements that's certain

would say I those we've full all through is, have work would realization the actions those anomalies, what the quarter, of be end pricing well. And next as But taken. so the at in we we backlog absent of by to

Rudy Yang

end I the sales end And me, you think your slightly so just full sales from was XX%. think I below previous puts your guidance guidance, plus more QX one the for Great. year which higher of high of then

QX strong full your reaching sales guess, be QX Just for were, results your guidance reason that end any is given, higher of range? higher the kind there how I wouldn't expectations of year

Timothy Wolfe

is, Sure, between if segment. Rudy. the The one mix to thing at I'd you business look point we

was QX QX. delayed of result some into had in and the So really we Hospitality, that QX strong that shipments rather a got

the of in resulted being a being our QX. in that range. so Hospitality And in mix smaller QX, XX% of percentage normalizing our Hospitality see closer mix to XX% We

belief see Health going And market, deliver Poppin so to in the normalized markets, improvement expect in a we've And Hospitality Workplace our more strong run. and we level to got return to but can Hospitality. that's in what by tremendous end be and in that the offset again, longer

XXXX. that into we do we However, delayed ramp, as being said, see

Operator

And questions the further queue. turn I'm the for in not will showing Kristie call Juster any remarks. final back her I to

Kristine Juster

evening. Well, XXXX to you on We when in mentioned, thank you, And call. our we forward T.J. on forward we'll sharing be our to certainly everyone, for certainly with speak joining QX. progress coming perspective as this look the next us

nice So thank you, evening. and have a

Operator

may you that, for ladies participating and you program, in with and today's And thank gentlemen, disconnect. now

Kimball International (KBAL) 7 May 222022 Q3 Earnings call transcript