MLHR - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone, and welcome to this Herman Miller, Inc.

Second Quarter Fiscal Year 2018 Earning Results Conference Call. This call is being recorded. This presentation will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include those risk factors discussed in the company's reports on Form 10-K and 10-Q and other reports filed with the Securities and Exchange Commission. hosted be will presentation by Mr. Today's President Walker, and CEO; Mr. Brian Vice Jeff and President Mr. Executive CFO; and Stutz, Kevin Treasurer. Vice Veltman, President, Investor Relations and Mr. open brief with detailed financials the by Mr. will by more the presentation remarks, a of Walker followed call Stutz and Mr. Veltman.

to Mr. We questions. At ahead. Walker. to the Please [Operator like the turning your presentation will go I'd the by time, call Instructions]. open begin then call this over to

Brian Walker

today. by demand I'll our Good of Jeff start current a last perspective morning, XX% joining the everyone. the turning We of straight organically. followed reported Thanks on saw on over to brief the more close better-than-expected orders for second and a quarterly progress us up results, for financial with business. X% up and highlights for our overview the priorities patterns with backdrop with before year basis consolidated over strategic economic results. on I'll information and a it of Kevin quarter the

expectations our the in from $XXX growth for Herman In segments. helping the our time level fiscal by the our ELA by second position this start were XXXX. see million pleased driven a last the were particularly segments half America, from of quarter, from Sales putting reflects at We fiscal this as and year, digits of ending record us million with consistent of to quarter starting the good we enter North of Consumer $XXX boost all actually fact, double company, growth all-time Miller. this come an in to order order backlog past

earnings job quarter managing again, share quarter the adjusted To of in $X.XX, same last gross per and did share increase year. over operating pressures expenses $X.XX Although we an business. level, margin at adjusted the X% did the of feel up delivered an of per sum earnings the during my negative organization, of excellent some

multi-channel muted by growth the order profitability spanned are by line margins. this in maturity. locations which Consumer recently results Operating delivered a of in segment that segment its this still The quarter, posted in Our once phase growth, top impressive footprint. the international impact several solid both segments of studio American early again double-digit opened of North was, highlighted operating quarter strong again,

pieces meeting demand we two operating in has doing stories, implemented very and segment the the improving their to place and confident performing move this who on of through clear will operational are order year. This the we well pipeline to we team We this the and To of Our as changes sales fiscal growth it Nemschoff, top Geiger patterns improving are Herman time falling the we including be improve two growth encouraging, to plan new and our groups have the depth The important year. short year while business contributor is first to market for as that the place, the improvement, second of we a half within coming goals. believe its the confidence although put around groups will profit the not launches, expectations Maharam right months are of and quality drive new and In energizing had take these our reliability. as expected. to well growing leadership fully group, has team have of continue will the Specialty we be with product begin we Miller performance delivered first realized. response, in some Collection in the fiscal half and Specialty an range be mobilized really the line of and profitability multiple business strong initiatives and has for the a for team. team goals product growth are coverage months fourth is the for X targets frank, not Maharam growth profitability. the to segment, of two set

overview progress we are the update on quarter, that to Herman key I'd priorities X our Now like the across Miller. of focused with on

a remain, our profit cost the next our As delivering Consumer the our innovation. and Office generation business; continued priorities goals; realizing service reminder, of product on these X and to our Living ecosystem; leveraging commitment proposition; and scaling dealer improvement

me on let we progress this each While these make continue highlights quarter. of to across provide priorities, some

our are footprint growing higher-margin, estate and product of and scaling of increasing the channels. Design mix Reach designs catalog, by contract real Consumer the We exclusive digital the expanding Within business studios,

Consumer by encouraged growth quarter are accelerate of business this as We our off. straight for growth X to business the efforts brand paying our a progress revenue delivered are as comparable

overall proposition In value excellence addition, optimize is we both and areas. last our to continuing with we aimed effort driving outside operational across work discussed our customer business This in at experience the are an quarter ultimately in will ways partner. improve key that Consumer

currently developing work plans to detailed fourth begin the realize and are We expect of quarter. implementation in this benefits

price and product we studio initiatives, assortment, improved optimization strategy sourcing across effectiveness. are our targeting strategic Specifically, logistics enhancements

an example front, we and lower are costs. in improved operating customer on logistics enhancing competitive more specific our market, repeat the to increasing be a overall buying business shipping As program through experience

margins of changes this our quarter. these past Consumer Some pressured

for in this XX XXX around the Consumer their campaign. drive costs nearly savings Going from we helped year renegotiate move realizing meaningful increased consolidation, at last our from from have towards results net return ambitious begin work scores logistics promoter the Drive shipping forward, customer lower has and improvement Early our to in to a this targets that expect XX today, time however, team established levels.

business, to Consumer to fiscal play segment strategy the X% goal our excellence operational addition will an these for margins increasing to improve by core our actions XXXX. the In Consumer part reaching important above in operating scale to

quantify generation of OS excellence real-time research provides organizations of using help have new this to applying and impact the data next solutions work early the development, of towards Living workplace benefits individuals concepts. we goal. launching insights Office million wellness technology expect from for ultimately Still to architecture our Office the In Living in digital $XX improve contribute the million framework, our in We performance operational and achieve organizations will realizing days $XX that of achieving positive been to goals. Live

have fiscal our companies million tiles continuing gross full and progress customers We're We for place sales annual and the are X installations we're with of savings initiative strong key XXXX of a ready make 'XX. targeting million by to launch. currently to on cost-savings $XX building Fortune $XX in pipeline as

teams work on sits designed for to meet a million rate run $XX and of our initiatives the number savings annual Our at the target. to second overall quarter continue

initiatives; this As three, to Despite a in target well of are year. business second due felt that consolidated help headroom in support that still increasing inflation; two, fiscal we're confident Consumer margin margins goal of the to little that implemented earlier. progress to last offset was backed year or as free our up rationale our reminder, 'XX. operating as the this is making remain operating consolidated fund cost-savings at above achieving pressures margin by past margin the one, operating growth mainly up we area, to operating gross the threefold, XX% compared our and in potential opportunity a initiatives our quarter by I this This With that margin range said, expansion aided be discussed the quarter. we

also ecosystem. fully are we leverage Finally, to working our dealer

team in trends. continuing elements. have planning tools Taper increase great of of ancillary all to We on are of wallet our the workplace category in its efforts category. a across remastered share drive to Aeron, Miller to offering. based with And brands product our chairs. aimed growth current that providing visualizing across through group of aid market working Miller the in strategy dealer the the great we've launches of under recent building leadership our on team dealers forward brands The We a of products the of past initial a to including potential had in our is moving and leadership ordering, our broadly, we've the our seating specifying digital Herman quarters. name and and our category concentrating umbrella the brands this product service Herman fall breadth under products range our and our number entire of awareness the of in experienced category in elements to More developed the task at partnership contributed the Verus in Products meaningfully is we we've year, protecting group area

in In number exciting this space, pipeline includes of next introduction scheduled additions which X years. are over product the for addition, our development a

backdrop. for financial current let Before results Business the context our Jeff some me in provide reviews economic segments, the

positive and term, architectural provide near While and tax trends around be own it expected a and employment generation bill, order economic GDP Congress sector growth, has White Within in potential through bounced service rates. through and tailwind the supportive the sales offers and confidence have billings North environment. strong House measures our moving industry reform a toward America better potential than With in access to activity a spending. repatriation and and an the levels employment improved operations, higher investment levels cash for lower industry new in

Consumer America. equity provide to backdrop consumer for generally unemployment, low historically a furnishings in markets confidence, low American strong front, high North combined On interest consumer the rates North positive and

are focused Brexit; areas. pockets of is encouraged the faces score the political for and in on inspires financial that past more laser current measures XX our to economic quarter. ongoing of but Equality U.K. and call innovation over growth design, X pressures of to our Middle energies The level perfect and the demand some results oil in They're Miller, we international we are help quarters. regions, remain stable to the continues, is have inspiring home a the the in evidence North While overview, With provide progress, turn producing overall earned strong #X to picture including not business Korea are things. I'll great years, global are threat. global Corporate on to and Such only strong. designs they culture do the once Jeff in tied inclusiveness that awards contributed economic to Contract Magazine. key of Index. and missioned East obvious and people an multi-channel deliver detail the persist problem to the still by in uncertainty disruption again named And Herman there; for Closer brand geopolitical straight by uncertainty represents

Jeffrey Stutz

divestitures, consolidated last year quarter net and and X% period the year's Okay. X% foreign Thank the year. holidays, last million X% of happy of in organic same Good an impact net sales basis, everyone. you, above excludes were in million than $XXX XX% the the the sales were second up of Brian. movement On same Orders were currency quarter $XXX last of and ahead level. Consolidated quarter -- dealer morning, higher which last organically.

last backlog included been have Our in subsequently dealers that related million divested. $X to year approximately orders

Excluding nice an divestitures, gives the the X% quarter, impact Within level backlog was ending million our XX% increase us enter last from the $XXX quarter representing from in those as tailwind American the and sales a North segment, the QX. last higher than were of same we year's second quarter year. for

broad-based across a sector. by $XXX were nearly led X% showed and activity X%, while increase from basis, year saw were period. communications manufacturing X% financials, quarter, large same fairly results organic increases orders of the revenue we an posted orders led an were the year than categories. ago. project although million of Sector all order New levels Higher during On higher by the year-over-year quarter reflecting ago we the growth growth

Our to ELA last up X% million increase year basis of the of segment in and a an compared X% GAAP on reported quarter, sales organically. $XXX

second our New growth million, organic The higher which organically. orders on is ago all year's Europe, $XX a Specialty were level XX% regions segment last from period. was particular $XXX and basis XX% with reported the in strength East. up decrease the Sales X% broad in China, the across Mexico based a year-over-year of Middle year and million, than totaled with quarter

Collection, partially The last New demand strong driven orders in orders in the year. Herman by the for X% was offset Geiger Maharam. than and activity by and higher project lower million increase for Nemschoff Miller levels quarter were of $XX

impacted our business an carryover in related was strong quality warranty X% supplier also lines. studio, some activity and is was from impact which to higher-than-normal at there profitability driven certain Nemschoff we by the the across of reported discussed last contract closeout While Maharam quarter, for textile Consumer issue $XX at Nemschoff the levels from quarter segment that during e-commerce sales year and million, increase channels. last by of The catalog, growth discontinued quarter

same quarter million of the for New orders were last period the XX% year. of ahead $XX

in the with that longer-term path constrained mature we While double near along to to potential, long support other over segment term our new this time term. that operating business necessary this investments digits near of locations by margins for to see we studio earnings believe a remain are fully growth the operating the rollout take for

impact quarter, earnings year. have that the estimate was points the studios same the XX.X%, related margin new basis operating Consolidated full During we to was maturity below from quarter which to approximately $X the million. unfavorable not drag the XXX quarter last gross second is reached in

than note levels. and the In Operating lower the mix was addition levels minimal quarter the year. steel $XXX same and million third cost higher unfavorable tied to capacity be selling products, that expenses to cost were expected mentioned to $XXX by of larger variable somewhat tied primarily we labor that the in of higher to past last -- during impact higher second lesser product we and increase for experienced in certain the partially large was million costs projects, compensation we to challenges quarter. is compared in would discounting incentive mix outsourcing last year-over-year to degree, quarter. quarters driven in quarter in expenses a the a quarter of steel also high-demand and The I experienced

I these progress portion we noted, our help will initiatives. stated be ultimate new of costs earmarked toward plans. Brian growth DWR made staffing related investments as occupancy linear savings the necessarily an for one and growth development and not walk our to investment on profitability even the A As and new with for required such product increased good goals also studios are not as our And marketing. cost-reduction were to fund cost-savings before,

good resulted expenses. severance in very of quarter feel related announced were recognition and reductions Restructuring in do second outplacement our certain making workforce progress actions we priority. that to However, involving about we're that the the this

with our GAAP basis, We also recognized reported profit $X Combined, second the quarter. million initiative totaled our amounts to earnings charges this improvement other related a for of fees business. approximately consulting the in On these associated million Consumer we $XX quarter. operating

in $XX other adjusted of rate was effective and reported the or in last net the and basis. finally, rate we million X.X% and of operating on in favorable $X.XX year. the $XX And The in sales. quarter or low of quarter or restructuring range million the our totaled were XX% rate By to was an earnings charges, operating the X.X% the comparison, end $XX mix a at quarter reported share earnings of of of Excluding quarter our this second tax tax XX.X% of last second expected adjusted second per quarter quarter income The of sales earnings. year. in diluted due compares effective million to

turn I'll update earnings call balance this the expenses and With restructuring diluted last of cash adjusted give $X.XX adjusted of an other share quarter per impact $X.XX on the Kevin, who now sheet. year. us flow the compared that, will to quarter our to second Excluding and charges, in earnings in were over

Kevin Veltman

debt-to-EBITDA all ended anticipate We total was in million of end includes cash Thanks, And $X bank $XX quarter capacity morning, $XX were comparable quarter-end, that in which We with stood million the the million, in paid reflected in quarter The year. facility operations debt the we shares quarter. the Capital as notes $XX flows X.X:X. quarter. dividends the quarter, everyone. for $XX the million at compliant repurchased and of ratio of the Cash from $XX generated million covenants. the the million at We our repay equivalents approximately an million of in capital on of and $XXX to year-to-date. last million Cash credit to with Jeff. the the of million were available of aside $XX cash our $XXX last are and which $XXX XXXX. during year. Good million January set due from placement private gross were remain to million fiscal quarter in increase same expenditures $XX period full $XX quarter expenditures million,

ongoing business cover to to meet over capacity, now current fiscal our positioned sales Given and total well the turn be needs operations from of moving the With forward. call earnings to balance, cash our borrowing continue the I'll and Jeff that, we the flows our financing of XXXX. cash for back quarter guidance to third

Jeffrey Stutz

impact $XXX exchange in All the million. the right, implies foreign quarter million estimate On the $XXX area We and to favorable third a range the and the million. of range. compared between impact quarter year-over-year midpoint to anticipate divestitures Kevin. of last basis, be this for sales adjusted X% increase foreign in on the of at exchange sales an the for to of dealer translation, forecast revenue year $X organic of We

margin gross and to in XX.X% quarter the consolidated third expect We range between XX.X%.

Given less our third the in January. million the we range the that of $XXX period million. factory seasonal anticipate Operating normally and in we around quarter $XXX production QX, month expenses holiday to strong order pacing and relative of slowdown expected experience in the between are in

As in third an press period. estimate assumed based be outlined the basis, XX.X%. XX.X% On last effective regulations and this and existing $X.XX between earnings share share the to U.S. quarter we tax for our per release earnings and between we of our rate anticipate is on tax night, $X.XX per for

tax Congress in rate to future and bill law, with said, upcoming by the earlier the tax would quarter effective However, into periods. our impact is be signed week meaningful this that passed assuming ultimately the for

in businesses full estimate impact on rate year Accordingly, have a have XXXX still XX%. loss proposed change United effective these the and fact than We earnings. will international changes tax currently the reduce our more a fiscal for drive will is, from we between revenue While of rate and business, we the to our significant profitable the XX% growing States. XX%

rates foreign old the to law. clear, with taxes the factors be the impact liabilities new of adoption be recorded such to revaluation tax of a and tax and both the of excludes include of this associated represents and in would unrepatriated onetime deferred third new Now would recognition the of that This related quarter blend adjustments earnings. as net

still, needed of the of turn the rate now I'll our while estimates. more your With the take over and currently Given the longer-term And overview, process details. time through effective our be is call we the complexity back in tax these the through team is lower we'll items, working that believe to operator questions. work will to

Operator

[Operator Instructions].

Our Matt first from Seaport McCall with question Global. comes

Matthew McCall

So about top the little maybe talk line bit. a

Specifically, we've of had indicate non-core products coming more some into the your new Clearly of top trends dealer an some and of line pressure there. doesn't much kind space the maybe some or opportunity. concerns about having and competitors the

those curious seeing new the Just some in with dealers, categories. about those there's seeing at product new trends And of trends you're have you fully Are the change? specifically -- competitors you been new a reasons may addressed of and of have products, a fully outgrowth? kind one but be seeing the that's lot NeoCon, that this lot the saw you're you of at of those gaps

Brian Walker

year and of of Matt, talk hadn't more question the the we over thought was last That we I'd it, efforts make going I of to development this was frank, to in more we as our and dealer the change sense us it customer X, had with of year Brian. recognition portfolio products really that to we only products believe about of was right the strategy and the the It year, was change made have not help as new the acquisition a made Office of we we it's of is it to Last talk as the to going priorities dealer that sum maybe not started mean, simply dealers wasn't impetus ecosystem overall favorable a that because it enough a one in say, Office, going predicted X foreplay to a about framework of about Herman the the total to but your overall into dealer easier was helped that had it. for our at on mix Living Miller good years that the that product to to group to number Living ties -- wasn't the capabilities to change. started talk our us portfolio, to give for last our working strategy. -- way the them. interact key we our to of I Look increasingly to ecosystem. and we be And been be our in think also driver it a objective customers

through So I I'd that look think progress. declare towards the say where our is numbers, market made transition if you underneath wouldn't any I XXX% we're we've well, going. good

things area the look call you aligned new the those as areas the products, elements, faster-growing that tables. the with at will people i.e., area I that of growing look the in we outside think our that ancillary traditional you at workstations talk categories, fastest, some is business well as height-adjustable certainly are the workstation of is new if elements that of this are like about the of

rate categories faster look areas than are which minority like we investment still naughtone, include seating, those our growing overall in would growing have You nicely. growth those significantly that is in Certainly, and at rate. categories, I growth our performance the

of you a you a talked I -- on. do have some think like have going guess, of I do tale people about, a, in ways, So lot tapes X

growing faster more areas have at those growing You traditional rate. a you -- new a that is workstation and business the rate the slower in have in

we done of reasonable to puck would have where a call the going. job portfolio our think resetting a, is I we think it, I

still there to change. products foreplay us add that us add believe products is remain help for room that At same that time, additional to the in However, significant includes we DWR. continues

areas. still next looking of get look coming those us things that so new we as enable some to see we are or well as You'll as that development out for to those year the in at targets, future of M&A

job think There more We is think I set do. done. projects. And we are. of good that by I you that don't go work we're to think a encouraged combine with So pretty is where

we've win good squails, you -- it's if you much as the win have you don't portfolio, And have as a but of set seeing, think I don't you you those. will, in the on job projects, you to what not So need. of both decent think, being of if done the where I America. the you're projects, is way, today right North that's By but if get just

Lock done as I his a an job incredible and done internationally ago. Asia outside as think Andy abrupt of team as well while positioning we that much of we're the have job and years Latin so in of U.S., better than the were that in portfolio really mix been the markets X, hasn't change a X America Europe, positioned good he's

Matthew McCall

and specifically see we evidence where dealers, think areas a very them this Was the organic share you pickup Brian. right. see that able maybe That's in, address and growth All regained? obviously, those in are loss this looking with the so did at it's seeing some just way about it. you're did you to some quarter. you're back helpful, loss to growth is there Maybe faster-growing period Okay. I'm that share the invested now some seeing of share in rates

Brian Walker

so back to where some And to doubt of if think think, are dealers dealer. a Well, there. aligned the make. share to -- I started we process more where that to there trying as a really we're to and choices way really the think, I've we I have and dealers looked with and you activate of more ground that Matt, like foreplay of diverse I categories designers with some will, wallet, some sales deal in teams their harder. products lost on -- no is in we or dealers I how would those is trying happening to the much would regain say, be. wouldn't portfolio. tell understand complex, the and some is right at combination I their salespeople we as are And it's It's the But is well the What's efforts. additional in the set were through having thing, focus you choice help the becoming the

really focused make we're to them So that on help choice. trying

we where, become the product of into product. the phenomenal frank, us. want Miller important their a then, for you Steve say, think the By concrete see you even ago; fairly years I significant three those dealers we has products, if our Geiger the revenue number ago; a that job celebrating very, things didn't that When at times we the not has of looked done are example think, launched growing of classic DWR If That's By a going are business and was products ancillary a today the business. both with is landscape actually Gane traditional started can probably Herman started some the I'd private a office ago, credible so to of has Collection it, sold exercise. That were in something be products like also job, we this. in at side, very that on products people or has but way, done, growing growing. Crosshatch the some that the more and repositioning that fact that's substantially and thought business the margin. marketing part SAYL and it of of grown launched [indiscernible] the it's Striad Tuxedo in other what's Consumer way, we that two a years that also being product; Geiger

$XXX product product if line million hard isn't old about by thing areas, it $XX line, one product. these million can the you you like So days the look see that to launch you

stream comes do to Does $XX what those big have color categories. chunks. bulk is products, in trying right? It help? number doesn't been come There's build some launch million we've to You years, that's the for it. it innovation in last a of and to So of in steady that to

Matthew McCall

idea does. said, Can to guess, far the a us back? to you back. lose you fell did any maybe to share able been far and and how an put I you it's you numbers you've of how gained little, a that It you've come little about talked of wallet give

Brian Walker

a by if number way, head my know it top got and, at at the I would I Don't of round XX%-ish. look the might this a I We'd number. if height, a guess, you mean, an I've run Matt. would would that today, in more look typically when systems at dealer probably their today average dealer. XX% say, that said like number have we is were

of happened that the way to is some Now the less selling what's not just dealer. by we're

They've in say, like amounts. similar and In like fact, carpeting, They've probably also the are It's into right? things other around grown things things selling that, added that we're fact they've I flooring. they've categories. grown would space,

Some of we that gone into in. walls them like play don't movable areas

also for they've got to solve their great part because more of some need the we into -- complete are, also way, be new by the they are to a want customer's more which provider, full us that So needs. they ecosystem the categories, that

look Now future our we look can that growth of for are us. creates the investment we also and those like areas look as that them also for at and at as fit us for growing that some opportunity areas capabilities that they potential

Matthew McCall

better, QX one margin very I'm looks in. more That's Okay. sequentially. looks a gross The bit All year-over-year outlook little helpful. sneak to better little right. for going And

called in the we following of would the specific Is pressures to as call -- And start pressures Jeff, else out think, expansion some year, some there they talked But anything expect year, seasonable some next else margin anything years And you've out a of we look to -- pressure, couple should segments. gross margin you about of I gross out? call you return? given is out? just of that some would I think less some orders. slowdown strength there

Jeffrey Stutz

this Matt, is QX the your further couldn't for commentary were guide. I from Yes. question asking I if Jeff. on you tell guess,

there. So let me start

backlog big As that in I talked that less see won't, going and I little seen little some be it'd say the see less in normally we're seasonal if that -- remarks, order in strong we QX, third quarter. not a won't my bit that about in that talked just see that a will have to But the so entry factories fact Michigan into a production of prepared that it because our of the levels of we we've Western seasonality. we here in I about dip

sequential helps So that a you outlined. and helps just the trend trend speak bit it little and that a year-over-year that to little

in ago, the to this, on that step you gross fact the quarter when but with know sizes, performance, were maybe you I of this talked discount. all it second they mentioned out, margin higher general, come look back naturally, you a just about project generally year think these a points those were but in highlight. point and We a Matt, than more level higher we quarter just call, broadly the

And expect so you pressure your of as bit to percentage. that margin to on the roll a

Brian that. in seeing lower effect the some into gross So did gate, mature, newer feel other coming we're kind come margin. of think, that therefore, the mix at out definitely product I -- Matt, of are these of less that of we some the rotation about talked and products of categories, that

the in that of effect the felt definitely quarter. we So

it's if alluded ton The other take of maybe And is about, across business. and like, it prepared an comes margin one we think in look the the example, segments as business. I some is thing talk mix one And a I that -- contract digits elements you is a things the remarks, the of faster-growing on just is that -- channel -- they're with our the our to meaningfully double of didn't larger Consumer arm growing different and structure. facing of business their a their DWR gross of that that

into factoring major any steel the some business shifts. an about going of pricing market borrowing forward, -- us are less big that blend of the performance. I talked issue for is that factors is of So overall Those

Brian Walker

areas I'd the a add today you I'd the actually in in thing of one this term, say, is if maybe longer hard today is Matt. one we are at raise the look business. the invested where from other working gross Consumer that margins we've Jeff, are they to way way,

white more terms shipping be be needed versus the decision more white we glove. of to comparable We a past to that glove aid we a did -- By rate did that made percentage competitive. order was invested flat So to this an is marketplace. our what went upcharge what to plus that a we for charge quarter

they satisfaction the to we But customers We more of the white drive know the saw also did when glove. down. them delivery customer to often white that we choose glove it because greater much choosing in is

And result. freight a be drive revenue by cost. partially offset drop will fewer doing we're a a as actually so shipments, lower that we took less think shipments, We where logistics model new more which consolidated much

our my mentioned back. also X pull terms think, the some we that. We renegotiating drop some Those revenue of around I things will of in hard, freight comments opening working in have combined, around been as

we're drive returns of well impacts. those of those more that things. gross ultimately Of hoping is course, revenue as as see We fewer some it won't what will kind and

in into are from be consolidation. probably maybe a to the we faster. year. fourth go we some some would quarter We until the decision of -- fact, those of won't we along or we improvements next see made the We further In thought things first get quarter of

mentioned, around call we I supply and there. that drive price benefits will work chain additional think also As optimization we're also some optimization business within some other that doing what we

only that think we play by us that spectrum. points is a that enables curve product make think continue so broader to but that that we that use has portfolio will business very of We pressure one to where, have contract is not can marketplace, can have that we segment bell-shaped segments. to a, secondarily, price fully margin percentage full type, get been; competitive a that I a core sure of make we across are always more sure we feel price more a probably trying know in customer it's categories we a the

this get trading but But Some for off we quarter, more saw lower you we're might think of that a drive will lower percentages. dollars. that I bit percentages, as

Operator

comes Kathryn question Research from next Our Thompson with Thompson Group.

Steven Ramsey

This of on are factors the the is either or for some for for high-end Kathryn. guidance, sales of Steven hitting guidance? sales what Ramsey low-end key the guess, I

Jeffrey Stutz

is Jeff. this Steve,

I opening you tell color. would getting you would really to I Brian if I on business comes good good any that that mind has that tell really group surprised you mentioned of overall most international the of the seen good look the start, one just traction. there in cuff, as I add was me thing performance if and/or that Kevin was Brian to about quarter in the that across, just traction things, probably to Let if execution one just question the the earlier off that first And becomes, has does serve. this the level -- of Their they want at point. by most me that how that long remarks, will mean, to it operational fill well, his of regions things Unknowable you, on call, remarkable. one our talked And to the at continue? business. been really half The continue the we of see momentum?

they've guide strategic we make positive expectations was quarter. investments that great good again, us is for as various the the benefits across an But obviously, for their one they've us continued the bit in backlog, traction, hard to a They that factor for made that really we it's to and see I but That's ex business, seeing call. all made of as Consumer So going the reason. a to channels. the moves second The arrange that got have we're a of forward. think move they're element

[indiscernible] anything. continues it will will you that That expectations accelerate? be another Can add that, be So see again. to factor. Brian,

Brian Walker

when this in go many just have get -- XX% and got have cases to core the to is other thing those the think you quarter projects. was you you projects, I contract a business XX% recognize

got win. You to

you got and And You list short and included lot to be it -- to then we to got it. build get. a to business go still ship down the that's have of

the would of are that mean, mean, good can think, at specifically. win that those But nothing a I is and in obviously, about projects. project within win the things. there looking heard quarter regard. the matters a timing kind we But your on what's how might you're think a of the this of significantly large around rates ship I half I well. as I in lot as first in you We, depending an So progressing. a morning, your But funnel, had what movement fourth and about things move will example, buildings quarter. timing good-size talk project we

there's a particular. to we tricky couple is some Consumer lot events lot times where years So And saw on you of to weather not in this a simply quarter because because at down the shut be lot the that Northeast, got yet. even based weather. was range in the business, a get weather with Northeast of of forecast, the always And business booked be cannot in a of ago, the

factors a I'd we're think the try as forecast, So be you about as not you're those to counting say, to are of-- trying weather. But on you the build range within have to

Jeffrey Stutz

See, guide, I potential one about reform. would thing the impact I our -- Jeff. other tax add in is this talked of

that that, a effect probably a headline Our potential there to a boost out least, think that's these talk thing factors guide a one -- the of think for potentials, well incremental another term, any net-net, in about does contemplate obviously this of ton at proposed additional from getting we or of but stimulative days tax that's as not our as and another -- of change. medium it's that's kind I good those that's And overall look near factor At business. that law very positive. the

Steven Ramsey

trajectory a X- time as and of right. talked you kind cost long-term, there. build philosophically it double-digit then as even Can the All are segment Consumer the how margin out reduction frame seeing for on over X-year you segment, on in operating the guys plan, about you executing frame? margins the to on containment operating And operating or you growth you do cost-reduction Consumer balance just

Brian Walker

haven't cost reduction. not it's What -- talked first, about we we've is about Well, optimization. profit about talked

would somewhat from structural do say, out effect they're very do. taking considerably business trying what of is cost lean with this to I little So runs, that to

in as the is important areas of way the cost that kind operate sure doing. around the most It's a So do we're about looking taking looking we about out. those logistics. we It business, sophisticated way base, price can that at we it making doing work are things, supply optimization, like job at isn't we're the optimizing

DWR. how at both DWR all This that we digital. looking store and the and Miller. do as launched some a world, more same spend physical the and new expansion is our you know, seen moving which past dollars of quarter, expansion. platform e-commerce more Herman is towards on the techniques as well we've -- now within are same we team. digital We and using Certainly, same And as between Miller We're that Herman hermanmiller.com, for using

much that expansion So, I to enable promotion reduction or as of drive like forward things about pulling better it us as the think, it's levers profitability. We're not other is.

get then, from we'll better start quarter the exact of in As And that this once a benefits the some we timing. of the through year. think, we think to to have I see that, fourth we ability tell you said, we'll

beyond team with to Beyond we good developed, ramp quarter X% end detailed get broad about has the towards actually sort The we I We plans. where how get pretty would of that, of we're that operating say, at. the about as is got feel They've the implementations. third goal. just

every fact, X or and the the In doing weeks X of weeks. their at team steering last are I steps Jeff and the to implementation look progress. started with we've the X over team already some reviews

and growing he both say, have we to fair a go think amount confidence. There is I work I would do. of

a at end of going have kind the a the detailed where timing to we to I from that's think more to better a perspective. go give quarter, get third ability of when we'll look

Operator

Burns Greg from comes Sidoti. question next with Our

Gregory Burns

maybe What business characterize seeing that in from, percentage I systems? portion guess, growing because declines slower other And as of competitors your rate that in some space you business? is I the business know currently are the comes legacy just will of still

Brian Walker

also categories think keep these trying hard bring and are people to -- blurring. it's Greg, the the which up business, I because themselves categories systems

a of kind business growing, business It's traditional for our a us. what ergonomic systems because include depends significant traditional been So in and you would I argue, seating on okay. has products. its traditional

wood I growing overall metal at to is little metal filing bit to morphing continuing today, where from a an is If a flat would where grow. argue you filing business, look It's very, rapidly. wood. filing, as probably that to is slower-growth category, storage and very

look traditional a are the workstations, at still you very part workstations significant business. If of

systems frame- to declining. flat tile-based or For and sure, handle-based systems are

applications and less benching what So though we're in applications. integrated is towards more and like the we -- What spine that world less and rotation you're are tables selling seeing height-adjustable panels. things

it's that the So declining itself part as of not the is necessarily category it footprint. is --

XX So of a some project foreplay. in a we've workstation saying XX% I That's But the that the new of joined time, more progressive company been there that probably was you as if on the workstation of business part that's at when ago, years look today be probably XX%, foreplay back may are it's call would not are them, if work traditional outside or okay. same workstation. points the the as we a

in a of grouped on are yes, people around say, sitting that, of So kind things, as came temporary an Miller, to a table that more are or there'll example, counter-type areas people to be lot that more of also Herman workstation, basis. a, something be kind there'll working if a you

a Is it's So of the seeing application products in sense? about. make that thought difference you're way the the just in that takes

Gregory Burns

assessing of alternatives that? business? to strategic relative a potential importance and the business size Okay. strategic of on how how other view for would maybe that may upside And terms longer-term turning that do its characterize Nemschoff, then, time you maybe the And in you from it be around, and frame

Brian Walker

an to you, we've its goods. patient us probably had I'd Herman fast And plus the and if say it you've It's from exactly soft like is of Well, all first, in -- some on today we the an that's these the wouldn't our be Miller That business our Nemschoff to in of Well very is room, other spends commentary product what listened important ancillary care ways upholstered products. growing the an upholstered overall portfolio. offering. also areas lobby, health are Nemschoff the enables area that's that, to in competitors, and XX% a that in have part business.

of that continue we is other have chunk it our as a is good struggling into ability parts and it's design smart products think seen player produce because to of think we wise capacity Nemschoff areas is still got enough to it's therefore, in turn or expand education. business with So and/or And other big heritage. to categories. those a a the around to like industry capacity. The quality either

of there could in probably it top-end. bring is if consolidated a million improve the improvement maybe, good around got $X million, it So we sport, $X business. in of, by a the that to at we a think to basis good EBITDA put that amount magnitude can I'd you

was it's it's this was significantly, a down, a it's upside not better. overwhelming. Last little And So quarter, quarter it down. little like

him, want when to think, joined take XX us who to I Steve he going news a to he years. XX months built that Gane The we business around great the be. it's took reporting that to is very to Geiger included that plan get needed, with number to us, has needed, culture to do he needed, products that the detailed he people it that what he the us a where of

I let of phase, is confident we enough him I side, think of capable will He going is the he he We're building one I'm get right very just there which Nemschoff. Steve think, there. stars, bus. is in do Now work to product starting have to through the as to and our patient to Geiger is what the doing. the on And getting people on be and see a first the plan he got for has collection similar

Operator

like to further And call turn this back the questions I'm over not time. host. our showing at to any I'd

Brian Walker

thank Herman your of family in next holiday interest the on appreciate and quarter. season. to wish you great I us you joining quarter. next continued We forward Miller day. at updating see you Have want all all you Miller, a and And On your for to today. call Well, us wonderful look we'll of the Herman behalf

Operator

this and presentation. Well, ladies gentlemen, does conclude today's

may have now a day. wonderful and disconnect, You

MillerKnoll (MLKN) 21 Dec 172018 Q2 Earnings call transcript