MLHR - Earnings call transcript Q1 2020

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Operator

Good morning, and welcome to the Herman Miller's First Quarter Earnings Conference Call.

As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Kevin Veltman, Vice President of Investor Relations and Treasurer.

Kevin Veltman

Good morning, everyone.

Joining me today on our first quarter earnings call are Andi Owen, our President and Chief Executive Officer; Jeff Stutz, our Chief Financial Officer; and John McPhee, President of our Retail business.

press our yesterday's at Relations posted hermanmiller.com. have release Investor on website We

figures today non-GAAP we'll a of also that Some the the on cover supplemental that We've website. the be accessed a non-GAAP reconciled are GAAP in to amounts file can basis. on presented

that begin our everyone I include will will remarks, we call forward-looking Before remind prepared this statements.

last could please night differ materially release forward-looking statements, refer For annual the SEC to we well and information from filings. as results issued on as our cause actual factors press to that earnings quarterly these

we At is the participate. conclusion time will and limit of have XX more for to Q&A our we call allow prepared than Today's questions all that to callers remarks, their for session. to minutes ask a scheduled no three

call now over Andi. I'll that, turn to With the

Andi Owen

morning, our that Good highlights made strategic with today. thanks sharing us progress by joining and the our we've I'll call begin for quarterly in followed results, of priorities.

the we momentum global to North broader America growth were businesses. the X% orders, our in were by built strong of In sales grew led Consolidated on sales pleased with quarter quarter, from We by while results and continue the environment. face geopolitical year our trade first and ongoing in organically generating orders up the tension especially and positive a over year, fiscal last starting last X%. Retail tackling

the in discussions been the needs. often to high and their highlight we Looking ahead, design Group of those discussions with assist how brands We've performing we're These about and and entire attracting talent Miller healthy retaining also customers flexible, can pipeline. seeing around opportunities them to Herman project efforts their the have of power of encouraged levels meet more workplaces. more help in

basis combination margins operating were continued manage another helped these year, the same quarter and reported year. very with posted operating basis higher operating our XXX we team well. of same over that of were quarter, points operating this last XX which sales gross to factors up by time, growth above of last The At the improved the points. margins margins points in adjusted XX quarter the drive basis Complementing and margin orders, quarter expansion expenses same

reported GAAP during We XX% on per quarter. share share $X.XX basis, last of reflected an a an $X.XX earnings earnings adjusted over the quarter basis the of of year. increase same On per

focused at Investor on On we remain strategic shared May the priorities the our strategy front, that we four Event.

Let me for briefly summarize you. them

unlocking of Miller about of our to global amazing Herman their capabilities leverage fullest. intentional very power the being one we're help portfolio First, brands and to

model Second, oriented and at a business enabled the aspirations customer retail and we're in aimed spaces. our digitally both building reaching contracts

we time than Third, our segments. to planet, our finally, integrated more right we have reinforce way in opportunities accelerate of ever And a each now profitable our the and business our to before. and commitment to is in clear growth deliberate to believe our people, communities

last I'd our like a few over of to quarter. highlights progress the share

curve. offerings excellent across North platform of brands, dealers to an all help in digital American our product new Our contract our our adoption to remains visualize

their Our tool was that's and dealer quarter network over than projects over X,XXX XX% projects to users since last with the created launched created more support new efforts. it selling

with do the As ways of region partners. fiscal EMEA we'll to entire we a one are that ensure the design to across our dealers our customers, the This in rollout, our by and next easy business step the just and in operation capabilities we're these that is expand our for this looking year. of architect end

our of the traction aim to drivers profitable key gain continues accelerate Our growth. profitability improvement to one in initiative as

seeing are increasing As our we're savings for potential we to-date, target. greater evaluate our savings and progress

a of million target million $XX to million to million. $XX revised $XX for to aim of savings $XX been original Our growth has

We rate finish run million. and an of the expect run quarter annual $XX first to the this with XXXX by savings fiscal rate of end achieve

a fund as in As to initiatives reminder, are inflationary savings helping growth at addition such tariff. pressures offsetting and supporting these also aimed bottom-line improvement,

to long a people, the for same a positive while serve, have that our history create and We of and impact our customers at for seeking value communities and shareholders. sizable the creating time we planet our

encouraged their on statement business As corporations companies a of lead for all by roundtable result, we the to purpose of stakeholders. were recent the benefit the

initiatives of priorities. number a those have around on and We working

plastics we've organization. and the been around eliminating for potential our of broader exploring example, reducing across use a plan For use single entire ultimately our

largely we across step, trajectory bottles John mention, us growth more initial our joined for the about has offices. an I've business. use single share corporate today our water limited Retail As McPhee got to to

me to some So call provide background. additional over let John the turn to

John McPhee

Thank been business has Herman With continues XX% Andi. over of this growth Retail you, and and be year XX% quarter, sales last a growth for the engine Miller. to

of help momentum. number a that believe will we that Importantly, initiatives continue there are

distribution operational in state-of-the-art Ohio, was at new our the center quarter. fully first the of First, end Batavia,

North residential While to and fit this the designs license After to an establishing site in been contributor its the we e-commerce opening Reach growing brand HAY their last for rights first positions quarter, floor contract year the customers couple be acquired the are product Chicago. to provide America line Design transition Lincoln of our last are business the two bring it is to of Within North better located gaining HAY great studios the the area HAY quarters, for HAY be more plans. a that year over important opening America, including our furniture has enhanced to design At in traction. offices the the our which long-term. studio but styles will investments as HAY's has Park this in business, time, required service early past will same our short-term and reliability third we

fourth in last to addition studios we HAY brand, efforts early year. Within the In quarter our Design new three Reach the for opened

are good start. the a represent these in still for brand studios and to our early While days, off locations promising

area past this, we've gain piloting pricing comes expectations consumer over on knowledge pressure help coming delivery with we've about this over gross we are increasing that related providers. of costs they delivery. A space. better months to fact shipping the several our our is products net to months experienced important to from come range address growing where costs. margins is that from currently the free shipping freight One purchase expect this issue To Compounding should product major of a position for experienced source where and the models, we the pressure how

optimizing store footprint front, related are outlet returns. and of cost midst the strategies shipping costs evaluating minimize the we in On and to strategic sourcing our

our platforms, knowledge been capabilities Finally, are sales of we leadership with team with around Digital Officer market, our customer initial closely while our our we've perspectives finding as possible customers. including e-commerce goal digital our across and to seamless mapping the existing the and building journeys, work marketing optimizing fresh ways new with as for Chief build of our to to make recent bringing a partnering new compared capabilities with team, additions buying process

and earnings operating be these initial an HAY after this it focused side, been center, less investments, the the and have our during on ramping investments up and the On our are driving were improvement our a is new quarter. studios business. where opened related from margin laser that year on than we performance in operating short-term drives we distribution costs not considering pre-opening Even estimated in million to $X.X want profitability

who same At As scaling for the and accessible modern operating each high-single-digit we our continue into that over business. are team margins design the lean to opportunity day customers. Retail by we passion energized making to see time, our business, the the time Retail every for our authentic I'm

call Jeff a of With our financial discussion in Retail the further that over I'll results turn overview, now quarter. for to the

Jeff Stutz

Good above year of million Consolidated the morning, up net in rates. sales John. a on you, impact foreign for and year-over-year basis, first last in X% the the organically Thank GAAP adjusting X% same changes currency everyone. were after $XXX of quarter quarter

North first New an million X% quarter, Within were Contract of year. million last of segment, representing period last sales increase X% $XXX orders year. above $XXX the the in in were our from America

year. New orders and quarter, over $XXX million up last XX% were a

size standpoint, services, technology, lower Federal demand sector information America growth in all by in offset project sectors. healthcare and from partially Order and North U.S. Government, was led business a by categories, the and was across broad-based financial

$XXX the a Our in to reported quarter, reported of sales a million year and of X% organically. compared International last slightly above basis Contract segment decrease year on last

reporting were New same orders basis and quarter year of below organically. a on lower X% $XXX million last X% the

respectively. sales I think of the first business for quarter. posted faced that last of important the and put perspective, it's the growth challenging business in quarter International growth organic International XX% in To and comparisons XX% order this the to year note

contributor quarter. context has driving performance aside, in important to continued our evaluate our And future. of this be To is both business recent comparisons it a top clear, this business International believe We our strategy you in a and growth heavily for perspective. you growth factors to as tough this the bottom-line consider into key on the for years, been

Pacific, demand the the see of EMEA while growth we’ve Brazil. Mexico to lower background, With as in continued were Asia region, levels that year-over-year experienced rest well India, in as and

Our $XX of an quarter a Retail million, business last same from XX% quarter year. the the in segment reported sales increase

Reach and for primarily the quarter driven growth the of for year XX% Design sales Within brand, $XX by was and contract, studios the HAY new outlet of were orders from last million New ahead quarter growth stores.

that sales John new as investments are all growth, initiatives and the continued warehouse studio HAY a growth we forward. of quarter improved the new in earlier, As will operating move expect support brand, margins mentioned launching we reflected first which and

to gross gross expansion These our and This in ongoing level last sales freight relative currency with business helped translation We was the increase headwind on costs, the XX% currency the costs center. this Retail margin the improvement quarter From production the which distribution of XX.X%, by strengthening in leverage consolidated rates an year profit in net net volumes, and same dollar had related year. initiatives. million were our higher was a tariffs on sales at to margin and quarter. mitigate year-over-year driven of favorable from ago impact general lower new realization the Consolidated translation from reflect steel manufacturing from expenses perspective, the period. within pressures benefits an consolidated quarter approximately along growth to margins transition a gross from in estimate increased price impact unfavorable levels changes the the $X U.S. first

million in with expenses we first our recorded $XXX associated were brand operating charges to CEO special the costs in quarter employee the key last included mainly special year. of expenses of The directly of Retail incentive related $XX new quarter Retail year. selling expenses of $XXX,XXX these Operating items, charges the vesting comparison, stacking last the increase $XXX business expenses in million the first totaling marketing of and to in launch in By variable the occupancy, and million to the in quarter HAY compared quarter studios, and higher transition. America. million current Exclusive North same $X our resulted year-over-year for from related

Restructuring million UK period. the North America and with $XX charges actions of first year operating GAAP quarter retirement and million ago we to of an $XX reported including a in profit last the initiatives, early related operating in quarter facility China. in recorded compared million projects our basis, to consolidation earnings $X.X in On earnings the within program of initiated improvement associated the quarter

$XX or sales. sales adjusted X.X% rate were other operating quarter of by quarter reported restructuring in X.X% the the of last XX%. we was this or for effective $XX first income Excluding and the year. charges, of And million million, tax special quarter And operating adjusted comparison, earnings

$XX million same diluted the totaled net quarter year finally, on to ago. share a a or in $X.XX share earnings $X.XX quarter compared in And million $XX then per first per or basis, the

adjusted and share charges, restructuring earnings year. totaled diluted adjusted per share of impact quarter first in the quarter to this the $X.XX Excluding $X.XX other compared per earnings of last special of

on over sheet. to update our flow us to that, Kevin give turn With and an the I'll balance cash call

Kevin Veltman

Thanks, Jeff.

of start XXth, with we and Before existing our on brief flow August revolving highlights, refinanced overview cash me a a Effective recent I sheet our refinancing credit transaction. facility. balance let review

quarter. After to of transaction, the end our $XXX transaction, million part facility August of extended $XXX XXXX. upsized and the our stood available of As we revolver at years on the $XXX maturity to million $XXX capacity this by by at million, X facility this the of the million from

quarter. reflecting the operating cash With million, quarter. last of flows $XXX that last background, let the the in me quarter were on with Increased ended move cash first from the than earnings the equivalents higher $XX hand the quarter first quarter commentary total driver million, increase We was to slightly were cash Cash of and cash flows an the same on which primary higher of operations of in XX% over year. quarter.

Cash $XX Capital $XX the million in were expenditures million. in were quarter dividends the quarter. paid

As reminder, an be will last This a that rate payout X% expected in announced approximately of in increase October. dividend to increase brings quarter, we our million. paid quarterly our annual $XX beginning level

our the million quarter. repurchase share of $X during also continued We with program repurchases

compliance in of as remain gross EBITDA all end, We with covenants. And ratio to was to debt our X.X debt approximately quarter X.

operations our current we balance, meet forward. business moving remain needs and to cash our the capacity, from total well Given borrowing cash of ongoing flow financing positioned

XXXX. cover With our earnings the Jeff that, guidance over sales to I'll fiscal for and turn call second to the of quarter back

Jeff Stutz

Thank Okay. Kevin. you,

$XXX $XXX midpoint X% compared revenue quarter quarter last the in to same year. fiscal between implies million the sales this of expect of fiscal an range and range organic XXXX The to million. increase We second

the XX.X% prices leverage, lower range consolidated gross ongoing steel points improved quarter improvement XXX benefits initiatives. quarter net expect We margin higher the and XX.X%. production midpoint second and margin profit of second fiscal forecast our This from reflecting basis XXXX gross in than to between is

between expenses and to per XX% share in $XXX quarter tax in the between range to be expected per are XX%. be Operating period second rate effective $X.XX anticipate We and between million. and $X.XX to and $XXX expected earnings assumed our is the million share

the the your we'll operator, With call take questions. that, I'll to turn over and

Operator

comes with James. Bugatch Raymond [Operator from Instructions] first Budd our question you. And Thank

Your line is open.

Budd Bugatch

morning, Good morning, I Kevin. could. questions Jeff. of if Good morning, Good couple Andi. A

And qualitatively talk bit some Retail maybe we But margin, it's perhaps the Let's notable and most little can on a gross little terms clarity it directionally. segments. a get you of about In in addressed new segment, more the next that be data distribution like would of couple looks called commodities, of what forward and quarters? next transition costs what's on for? for and the the going impact the tariffs center out quarter

Jeff Stutz

this is color so is Budd, any John with Jeff. here, I'll in have. start. Hey, John chime you

to for just pressures group? for Budd, to So clarify get Retail and want you and cost the or sense to -- consolidated price you -- want a just benefits

Budd Bugatch

and we with this forward Both company consolidated like model I if carry -- could. I -- mean segment with that within obviously for we to results. the

Jeff Stutz

Yes.

can the on then kind dig we let can numbers, -- So few consolidated me into start talk with a the Budd, of comments we Retail segment.

this talk walkthrough I'll gross of I'll -- a you tariffs XX XX the year-on-year. actions taken, I'll be major before on a quarter on about of pressures gross Tariffs, pressure basis of of basis, of up in course, any just the for give So margins. points some the of categories drivers -- basis some year-over-year, points. is kind which of we the the other All-in-all, here, cover will we that we've were

center level. XX of gross about Retail and also profit prepared this probably net a commodity combination basis the on John benefit now color offsetting this course, the pressure that we along year-on-year that The then can for on pricing of provide that had In the impact to of specifically, XX basis accounted we year-on-year. distribution and points have lot margins, initiatives improvement help the been negative. further at that's prices, specific -- XX talked benefit. of the business consolidated gross XXX on we by points taken another steel about a about, then business basis And move in referenced our that points of margin, the remarks, points actions And with of a basis the freight pressures itself, about

close. I get right, should you my math So did that

Budd Bugatch

I of I of did of the That’s of me heard guys. good What other XXX remind … I’ve Tariffs XXX this of XXX XXX. consolidated, taken got bad is We and XX one the miss? guys, -- negative

Jeff Stutz

another business, of here just we're quick, walk you the about and pricing basis collectively, so basis the the all DC page. related steel XX points through of in improvement XX me Let benefit about pressure moves it freight XX, Retail points; XXX; Tariffs of same time about account Retail year-on-year more one and profit XX initiatives for that of expenses basis just the and commodities about business on points; pressure; year-on-year benefit. within

Budd Bugatch

you. Got

separate I as the Okay, XX missed that's item. right.

That's What as forward, Okay. you how And think play forward? you helpful. very going they do out? Jeff, look happens

Jeff Stutz

Yes, sure.

for it The So the within kind freight basis quarter are we magnitude probably think the following think year-on-year, basis to of year-on-year, implies as prices, bit of we be little our are year-on-year, and see order basis XX a second business assumptions. pressure. Retail the of call guide Steel we a Tariffs, can maybe and we from similar benefit Pricing estimate. mainly -- pressure continue would well XX profit of assumed. XXX points XXX XX points the same steel headline commodity on somewhere start I’d pressures steel-driven. are commodities, about benefit, to and to points to more initiatives

Just -- it's you look the the drifting index, actually if down. the steel been direction of at directional

XX then, And by should other benefit points probably so -- of puts another points way, basis about basis see the we it’s quarter. XX mix of including pressure. takes, we and next And

So year-over-year basis of guide implies think XXX about all-in, I improvement. our points

Andi Owen

the And goes then move, DC that quarterly, away.

Jeff Stutz

done largely anything add is all? Any don't move to if that at on DC I know the at then point. color additional you’d John, that? this And Correct,

John McPhee

old I in was receipts positive going undertaking besides merchandise, It quarter. quarter. about will up it facility in the there while a during into was But new coming a down drain week. last a It's state-of-the-art forward, was the the Batavia, really in be facility Ohio. and the new goods XXX the moved ongoing regular containers huge of we of worth from running

Budd Bugatch

the the goods, right? delta costs? the from the And one don't so That's was of of other the that’s that the were repeat, moving for -- costs nature that the -- the primarily freight transition

John McPhee

be would the one of elements. That

We GAAP paying on also were of double rent. course, basis, a

So put the of and facility. locations. on everything the into facility just we're cost paying rent away and And new the the new old getting with

So you are at see at all But completely point operational. the subs have mold facility. some move. to We'd old fully of and we with facility this point new out of that the out the love

Budd Bugatch

a operational? up new now that How And the that does is in and there is work? facility delta depreciation

Jeff Stutz

be higher in is head. be that don't incremental, would It's depreciation There as top have included you a guide. of the going bit number I Budd. drag. my going Yes, old some additional to to the imagine. off than the It's

Budd Bugatch

Okay.

e-commerce know, going think. some limit efforts three to Can color a digital to other of How couple that the some business, I seeing those obviously retail as working? you a mix us the of working questions. give is I'm of can what are some DWR on a many interest and Because that flavor myself are issue. both which investors. Retail since give Just is side? profitability you in the I profitability you The to ultimately, of And contracts, and obviously, major is us to is maybe mix? revenues business how

Andi Owen

me And don't We transformation it off efforts. over bit little the I'll with out John. then on And turn break to hey, segments. Budd, let a start Yes. business digital in this

So to experience. we've e-commerce upgrade I'll scale that large say effort really a off kicked our

e-commerce brands improved geographies. expanding capabilities, that’s starting functionalities customer and and with the new visualization, our So configuration journeys, whether presence across also

also as analyst adoption So contract in at our positions separate this continue, looking launching major we'll data two of side analytics and undertaking remarks, We're We're also underway. expand that I said, data internationally. is continued at pretty looking prepared on capabilities. is and senior and [MRL] the

larger up. more then with and to also are back stage, along at testing presentation we'll that looking team much capable right the analytics improved have data e-commerce A/B And we a our and things next to retail revenue. models, now and shipping shipping a freight of be our We're what shipping for evaluate with there. going steps are to variety determine but we testing help So

at looking new also products platform. platform then and And pricing

and so loading easily all our across we So looking that quickly. at of that one ways can all access products can then brands our database, into price more them of we

also e-commerce understanding the how is additional presence And to we're making side dealers that experience, that So the contract the IT customer backbone there better. speed, on customer, interact our that our of the around effort customer products, our our improving investment far-reaching, around improving with improving we're is there's business. then around making our we

at the side as As that side, other and very, bricks-and-mortar a we far in very, the rate versus e-commerce to very obviously business large growing as e-commerce a the important presence. of continue HAY in is will e-commerce retail every think be retailer

of So I those that. expect to John, we don't areas. to if know continue to see in both And add you’d growth

John McPhee

for would Yes, say long-term quick and looking I wins just we're both that wins.

across our the changes we'll of and based upon implementing of a end first. month will that mentioned, Herman out little the be then we're one a so, hay.com. going able going being this a take bit seamlessly advantage a there, projects longer. will to And success that other forward. And dwr.com to other Miller at and rolling platforms And be information site series then Andi And to businesses product our hermanmiller.com there's as across share huge

Budd Bugatch

more -- others on specifics e-com the more I'm into side. get Okay. will trying to sure get

Just last Any rate structure talk about that the revolver. differential? rate debt you interest differential, of commitment did me, any to structure fee the new on changes Kevin, -- interest from

Kevin Veltman

million deal liquidity. Yes, it provide -- the upsized by we new to $XXX more so

bit improved the going a grid. It'll We're from of spot, a same interest the couple at spots. be an the grid Our at forward interest expense perspective. in on roughly we're

Budd Bugatch

since expense on fee anything And that? Do more commitment it? from upsized interest you've the have you

Kevin Veltman

what a time to last we paid The amounts similar somewhat deal. were larger on

basis the points So a bit. came down

rate. a that run through at So flow will pretty similar

Operator

Thank our Research. with comes from Steven question you. Ramsay next And Thompson

Your is open. line

Steven Ramsey

mean, clearly, specialty segment with those in. from segment start whole how is strong you when turnaround going. a to specialty, the the to the good include see the America, wanted inclusion old segment in result the in units I North I old

get the segments if color benefit those and on headwind So was the improvement? just there of trying to

Jeff Stutz

will Jeff. join certainly is I'll in. Steven. This with then Hey, a Andi and start few comments

the reporting the combined careful. want the basis So real business of on segment I you Hopefully to understand, now. we're be

going the individual contract total. What to businesses. detail growth to the is, the on a talking these are generally collectively businesses kinds about focused. not of are are give I those businesses see say of will of side, And contract that ton rates we largely on speaking, in I'm all continuing So

in those of good the So majority uplift businesses.

a know, about past we -- to we what As our bit were closed good last actually that's have last but that on made year, -- whole that and fiscal you one this struggling work getting there. the with calls, of kind bit talked seriously, process growth making pretty that prior we've of -- we translated some we've that a healthcare change, in as taking we is top-line seen focused little subsidiaries is we to bottom-line are the Those profitability. and actually very ongoing improvements

I'm But tell speaking, the businesses. going contract give growth you those can detailed each of to I businesses in on that reflect not we're a total. you color generally kind So of the reporting

Andi Owen

and to built that, we group. Yes, as brands, Steven, how seen we're all customer, up nice bring about these and think it’s I of some But we've leader community. I to how contract force, for A&B made access part really many the it that to showing awareness easier simplified under them showing segments. and we think Herman our We've one also growth to we're add of are partners approach all up Miller the we've to and cases one in one sales across what would see we the all we one say, these of

showing across piece of operation the board. definitely is I think up and of efficiency ease So, that

Steven Ramsey

some sensitive as further And companies not pricing I high pricing Excellent. from seems getting but can -- are then this peers implemented? any channels, talk in to months? a and -- level, topic, It but and tariffs you to know necessarily to pricing resistance being various maybe is different resistance recent

AndiOwen

we've that it this time. seen None

Steven Ramsey

function on And is Great. with is then about slowing then just that comps in a flowing pricing the through? or slight demand was -- a top-line, that any purely in there the or mix function gross that just the a of sales, the issue put improvement, International, there? is in fundamental margin pullback it thinking of through of you've on And past

Andi Owen

I would Steven. primarily comps, say

uncertainty. International the EMEA two-year last projects If you we in on year. XXs, at which in one slowdown, and which year, been last overall pretty QX the performance region a Brexit growth of with our look But have we're confidence we APAC had are large some that's still of in surprise, no the But is see the international seen have lot and strong happy We LatAm still a our with. we is businesses. in and place happening very while where comps the UK in

done gross some operating that, to an lot international that's efficiency in challenges. as quarter team a in some of face we've just add color our helped capture we've and we've profitability a of managing region expense excellent in really please international perspective margin facilities of the Jeff the in us From from And and to to the manufacturing had job Dongguan increased our that profitability teams of well. And I general, combination would say interesting really to this seen our Asia. out and across shout

that So performance profit their turn declining sales. to some with think team deserves the credit ability for I

Jeff Stutz

is this Steven, Yes. Jeff.

I have basis leverage we're story get ops benefiting and teams American now. job leverage amazing to add as on spot the margin side think on. running that's One manufacturing that is, that's bit We're run through a seeing we operations. a more historically operations have North we seeing similar have thinks Their well. through I now our tell business way I'd to various the didn't long that volume little -- gross in business where the the time a just factory done in for that would we're volume a as historically

Operator

Seaport comes question next our And you. Thank Matt from Global. with McCall

Your line is open.

Matt McCall

up I Steven's questions. on actually follow want to

effort? from Jeff, So, points where price gave puts and buckets any impact, positive the if about just different you or there and down improvement XXX Did about you -- inflation enough without What broke of price price? offset when to have Budd takes, price the cost basis improvement. tariffs you cost the wasn't you profit to profit said you your

Jeff Stutz

Yes. Yes.

Matt McCall

have I much? so should with, followed Okay, if how that up

Jeff Stutz

no. That’s

Matt McCall

That's why I it. asked

-- Sorry, the was steel, the turn And benefit? just about into, side? so cost you think pricing given does yes you that cost when what just the price price but said about outlook, then what what

Jeff Stutz

Probably Yes. the XXX tariff net the also of I basis points gave number of you, impact.

Matt McCall

that that guide? about -- that in the so is -- the And What was QX. the

Jeff Stutz

same the Matt. Of magnitude, order

Matt McCall

So you roundtable. a maybe, on the comment Andi, business mentioned

encouraging of think impact is of we're and the the actual the as some But things -- good. sounds pipeline clearly, of talk of like guys are it the and about some macro written metric not watching. that. actually I you yesterday seeing wasn't you factors Can we've

So -- not -- doesn't -- is a from strength, is the It that. can what in driving like your macro? Why is what dealers, little any concern bit be more about the the like moderation you you to why despite appears indications do of think you're is talk why sound of the concerning? calling out a anything that

Andi Owen

think people community workplaces, we're is We're hearing people work looking contributing understanding work. that A/B they that all their there, really I talent provide still the at how still to for places what the the to now the customers people and in can time. hearing want

slowdown a We aren't there. seeing

down even basis been and Some A&B are a looks architectural in short-term a slightly. have long-term partners, of it there basis, good billings

aren't If you months long-term months, in now. six the we the right to concerning indicators out are there XX us last at look that seeing to

we American companies Jeff, But add? everyone to right really Now, work something to doing, really We for feel talent. now, you consumers is and as strong. have are we're watching obviously, feel else carefully.

Jeff Stutz

It's exactly that's No, right. I think right.

Matt McCall

our implied, anything The guess deleveraging SG&A it or And math two out -- there, our to want did if call or did the a explain right? on then looks do quick outlook, we a like I there's ones. year-over-year math Is wrong? little you basis more we

Jeff Stutz

No, I Matt. right, you're think

couple a there's off things. to Number start good we're one, fiscal think on of year. the I a

won't So expect this That the earn some year-over-year, -- It assuming That's bonus your right? of the is on. the to of right part earn be don't implies. answer. from instead keep But earned guide paid we don't be if that's won't going is based be what drag can it. it. we now, we if and There's pace, again, assume accruals, math I

mission that of company, think some on Andi digital of seeing as going investment that's represent -- what to direction to and the would fronts, the some actions strategic some I some we the we're of all what to is, balance require fairness you're think of is in various to the this investment largely. making that alluded think critical incremental I of are

Andi Owen

Yes, for sure.

Matt McCall

then last drove that Okay. What with took And your outlook? savings -- What one. you change? your savings or changed The up. take your target targeted

Jeff Stutz

Jeff Matt. to again. of is pricing. It Yes, alludes This kind

of that, really has we And accounts a for majority had lot I our difference. a better than realization think has -- the earlier that result bit pricing of the anticipated. as been

Matt McCall

Okay.

the pricing is So with profit efforts? improvement down lumped

Jeff Stutz

pricing But been that initiatives specific initiatives of outside been of associated with have the directly that There that are why -- this is act actions. the walk, talking where at we've actions certain are of there -- lumped would in of kind my we've profit about. taken the together some I day, very because that's Matt, them our improvement end classify price I profit

a in we’ve somewhat it's between bright line and We've internally. the in so internal little And collectively two. draw how our the business them operated considered to hard the

are together. there lumped I them why that's yes, in both buckets. some But So

Operator

Thank you. comes from And Burns Greg next Company. our question & Sidoti with

line open. Your is

Greg Burns

trends. the the Just We've there the a looks comparable about little seen question -- the slowed a demand comp down brand like -- the retail bit. -- sales of had growth it has

comparable can wanted the on the growth outlook view current So the your I a have get to maintain Thanks. if brand been for the reported of just lower than And kind that pace, sales growth? segment. you think Retail in bit you revenue given

John McPhee

McPhee. John is this hi, Greg,

So due our the DC during to publish forward, deliveries slowed to delivery move times which the would be historically going future longer a one right? We that have sales the our was, had impacts been. with would quarter, transition, it of little things than the they

so, is believe having selling. and overall, trend certainly I of on us And pressure team behind XXX% But had back the allow will we our focus put positive some to there. the move their

So should that going positive be forward.

Greg Burns

costs you. your profitability that Do that a know earnings is this what of Thank operating some your back for the segment, off. I from so remainder you, then perspective But view And what's for year? of behind sometime move getting the are the that to DC business on, outlook you for year? of Okay. positive profit duplicate segment that foresee rolling the maybe the

Jeff Stutz

Greg, Hey, this is Jeff. Yeah.

they that about near-term and having effect in and some store ramp to prepared well the ongoing remarks them of we the a mature. talked year Among across takes There's as would time we brand of as outlined The that I data costs in period we an profitability in HAY we that, suggest feel a temporary behind of is are, as will to this additional in documented today weren't that number our that that our portfolio things place -- fairly the example. be to items them. that pressures we related improved are the DC into ago will -- time leverage stores So kind would us for investment of business. of the that stores six I move. think, characterize begin We are a those at launch the

we you factor of would operating for those something out, breakeven all first of all forward if guide the so, imply to think And going QX quarter. for closer margin our

So let's that. just clear on be

closer beyond of But will of against half we to bit back the and the X% ramp start We're that as It profitability of investments. back we it into of then the kind as of time. in believe half that's we get margins to our possible. X% toward do ramp to those QX that, up see is a take that business. op And some believe continue like get for we little the to job to year, we

Greg Burns

dealers are have do products then, your to yet? they HAY, access selling sell currently And those

Andi Owen

in couple the several they access ramping a localize products, sales of we as outsource products first well those that We year products throughout we're of to Yes. as and in quarters and have in in very been And so continue we America. towards world. as has strong. work same network expanding, But far, that that HAY HAY to dealer other countries our the will presence North have families can manufacture, up and

Greg Burns

you the you the new if can side. what about And talked adopted a side, give us tools? of then percent But on the just those digital dealers And maybe efforts digital on your have Retail lastly, effect little on share, digital seen Like orders? your -- have had that bit the your have Thank dealers, has the ones wallet the you on of it new have your you color tools? increase at adopted been in you. contract

Andi Owen

from share again, majority increase wallet to. will and our to work specify of point. a dealers It's to time anywhere can't I dealers the heard our saving them we've can to What visualize say XX% time. products. and an speak that I continue from what to hearing rollout with also dealer. dealer from and at very it that gradual dealers that time is they're is and have we're we're over to a in is it's complicated takes lot -- of it have that adopted this our But What XX%

So, customers. that actually to them. with it's the helping that's have taking spend products, a] designers much the time and design more so they them specify designers, effectively, and time less [Hire more use

an increase we will in wallet share. see So, anticipate we

and to them. Kevin, would just at we'll anything see with the from And better add savings anticipate more also that? want our We to you interactions dealers time,

Kevin Veltman

hit is, dealer in think the dealer cross-section network, definitely that the type point a certified good I America of of pretty North base of No, thing. we've

X,XXX -- still new I quarter, starts of was from we're last products been show up that the nicely had quarters only sequentially using in. projects visualized this that couple It tool a to think adoption. but

people our spend sales point, So for the focus customer freeing the on and key time them. to with Andi's designers and time to is up

Operator

like you. back Owens showing this at time. And further Thank call any I'd closing I'm remarks. Andi the turn to no questions for to

Andi Owen

today's Great. Thanks, Thank you all Catherine. for joining call.

I all great that and you soon. you to December with a you back course, We will, in have Talk of to day. be a hope progress update

Operator

this Thank for you concludes today’s call. conference gentlemen, and participating. Ladies

You may all now disconnect.

MillerKnoll (MLKN) 19 Sep 192020 Q1 Earnings call transcript