MLHR - Earnings call transcript Q4 2020

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Operator

Good morning and welcome to the Herman Miller fourth quarter earnings conference call.

As a reminder, this 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 fourth quarter earnings call are Andi Owen, our President and Chief Executive Officer, and Jeff Stutz, our Chief Financial Officer.

press our today’s at Relations posted hermanmiller.com. have release Investor on website We

figures today we’ll a of that Some the cover non-GAAP are basis. on presented

a also We file website. reconciled the and amounts have GAAP that accessed be in can on the non-GAAP supplemental

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

well we these information and information Today’s factors session. have is undertake that Andi. the differ SEC obligation forward-looking these At the from a scheduled of refer forward-looking on we could to events. to statements annual call we With minutes. to as For for over make based turn a remarks, result statements, press conclusion this earnings as filings. Any now statements or as to today release materially that, and date will quarterly future on cause call actual our of of I’ll new please update that Q&A the results assumptions no XX prepared as our are

Andi Owen

as and challenge thanks a This global quarter for today. past for business for of us as joining clearly but all us everyone not community. a many was us fronts, on morning just a Good

COVID-XX all just of of to and dear. professionals for to end support the pandemic necessary and At tremendous show economic and medical health up the we of we regions and I’ve outside beginning third the As them colleagues with equipment wrestle injustice hold quarter, was our China. and impact impacts confront of inclusion see communities upholding equality for workers and that in our so values to provide the and Herman see step of Miller COVID-XX proud racial frontline been society, our the people

or we quarter, our shutdowns of retail full manufacturing partial experienced most fourth including studios. the locations significant and our major to business, of disruptions During

economy. fiscal the year, distribution of studios online Except all cautiously of and restarting a into optimistic, our two back global and distribution on facilities of in be capacity. we manufacturing the path in are we some are capacity houses appear in our retail outlets As to we open are for our move new Mexico, but and limited

forward, we on by our first outlining employees I’ll perspective and as reopening. then the outlook. we a With adopt our protocols state as safe on Jeff are then health foremost it keeping our and results Kevin our the move new on over turn As facilities our and today begin for backdrop, additional focused share of business and information we to with quarterly future. that I’ll

Clearly So from reflect by and fourth where we the magnified of much pandemic results the and quarter. are now? for our facility quarter the the retail challenges manufacturing closures were unprecedented COVID-XX

result, organic the we HAY sales and of currency impact year. and a excluding below experienced acquiring the of last in net translation As basis On naughtone, consolidated were sales year-on-year a an interests XX%. decline consolidating foreign in both XX%

business model us XXX% in where to and diverse will received orders virus to to caused has rich of and included envision help mapping, disruption tools detailed by future. spaces. and our platforms. their to the of digital customers how economic marketing year. results ecommerce retail transformation over the segments highlighted ecommerce internationals our prior the compared broad-based down our meet choose to customers diverse just containment retail demand the Customer our particular, work in in last this the the and success model Despite bright fourth they power year. spot quarter. with on to the segment said, orders X% confidently in of has XX% down new basis year were journey development and were organically. a of up reported of we the strategies and These the our say the content, that transformation new enable can ongoing That expansion customer orders the compared were In down a our demonstrate New efforts, prior platforms XX% in quarter our continue The

chat program the as power as generation that platform a well customers We hard-earned pay-by-the-month expand financing our also launched helps of next dollars. a video their

Given our year HAY over up on this Within quarter support retail home. focused working category and in a home HermanMiller.com part is of Design with offices, assortment orders for was the strong particularly from of XXX% Reach, during last

leverage our X% also global dealer than share delivered last compared below company year and performance orders prior better the market grow see we We opportunities international HAY order to deliver network. were coming segment expand as average results relative encouraged strong Our to with year. to continue our only to very in

Here again the period. brand performance feel HAY retail in activity strong relative helped the

an restructuring, forward, On the consolidated of quarter. basis, excluded impairment level, share we we modern and other a items, on during share $X.XX for in family the quarter. with be certain addition $X.XX of focus earnings charges our per HAY At and great to its design the these we included office Moving for to reported This brands expect a quarter. fourth residential which adjusted the both per loss accessible of environments. loss reported

fiscal an For sales year, On a we while earnings last organic basis, net reported per decline share of fiscal from totaled totaled full per loss year on in reported $X.XX $X.XX adjusted decrease a $X.XX. the XXXX basis GAAP share of of a billion, X% a and X.X%.

as a We the suspended private during our instituted down liquidity debt As capacity but of precautionary well. navigating our our revolving time, corporate freezes. temporarily our and issuance, is available completed wage ’XX on range our retirement structure. experience line We year hiring we adjustments and we $XX bonus us our programs of also periods and dividend the and a term initiated and suspended At actions serving disruptions, proactive quarter, past and share repurchase million implementing same decisively help lead credit number and temporarily placement measure. difficult our the acted very programs, difficult drew organization a economic to contributions We the strong of cost a to made near crisis position. full through maintain

by salaried Overall combination for substantially bonus salary of the associates suspension also the leadership of program. We of the compensation reduced the was XX%. for through reductions team reduced and pay our cash majority the

We cost the lower structure to by also further workforce made difficult of our a approximately voluntary of reducing the through combination our size involuntary decision associates terminations. by XXX and

contribute to we in income suspend we’re levels, earnings to remaining continuing the operating actions the de-leverage range to uncertainty XX%. demand of While sales that guidance given and expect will these XX% surrounding

near investments fully believe As part of momentum this this the de-leverage term in are area. our we do plan in [indiscernible] to digital capitalizing that expectation, on we critical

from next continue customers pandemic. listen that engage in Simply to must we So new us? with for put, the them what’s home and know realities arising aid to to We to this can responding an and offices redefinition more we we that believe role direct-to-consumer lies we’ve Within with play will channel in important the increasingly globe. that built. opportunity, of the the lives across capitalize workers our

with work launching experience through list of an functionality, customers’ an conversion playing. and a help July standard major filtering re-envision to homes will working in experience wish the the redesign customers As their them enhanced improved site use DWR our reach living, and rates of that and through right This our experience. will new online content, integrated more be we’re ecommerce visual enable initial tools. products and the and us significantly to for will our richer The ecommerce improve step, re-launch our search create

built we team also the expertise. we’ve launch this ergonomics positive space The our traction we XX into and is of digital support teams technology as gaining We’re our Logitech’s are moving talented in and past with developing months towards over influencers e-sports websites, with opportunity. gaming game knowledge combine dedicated new to partnership the

summer. product release later category this to in We this expect our first

performance and research By conversations customers reconfigure We’ll can in-house optimal our designers product term our priorities on speed on business, the returning not and spaces but showcasing customers This can agility leverage we help be work enabled includes than to about customer-centric our and safety and both work. We’re also as with spaces. highlighting better entire they for backdrop, becoming content our adding numerous contract just network digitally how move spaces across up to capabilities enterprise, enabled set having in a of to distancing offerings improve some deliver to sectors and we’ll physical their design ever. we Against long by external ready this are strategic our separation customers. in confident to new leading that help their solutions. office begin how focusing and to them our with serve more

to both variety their a support our winners the that global first, have customers and broad research future, of distribution third, and product will As business customers. multi-channel capable look assortment to second, re-imagining capability knowledge we three we customer spaces a serving and believe shared characteristics: applications; skill set to the of across the in needs reach residential and a workplace workspaces; in

positions of pandemic strategy serve. we on we us leadership from and a Our we well this believe markets in that fronts, emerge in these position can the all stronger

same and office are to driving At develop the and as about time, spaces we’re to how for possibilities the innovation in models run, envision the term office. team believe greater think will Our our corporate research them with future. needs include discussions for location their customer and the the in solutions we in of of long use exploring teams the sales work-from-home expanded helping back our component hub-and-spoke potential helping their our the a and drive deeply involved critical remain customers helping short can they These collaboration. customers, teams performance bring office

expansive price for range brands and broad product both assortment office have a and residential of leading and Our audiences. categories points

always miss I’ll and his results. better. back champion challenging our passed diversity He to of where our heal, information a unexpectedly capabilities, work, incredibly our great we my so it. I’d our some contributions model, for and and colleague business month. a this helped With joined was He us and in on pushing the I turn multi-channel Griswell, of tremendous global comments, and more great where earlier how XXXX to to we to me Jeff like our business live, sell to years and Barry ago. helpful board. sell, learn, was inclusion what meet opportunity and for us Finally, and comes was joined us and will conclude who lifelong friend To digital situations, role it as board our now many of we He customers’ a to us be sell, in gave our supportive navigate and Barry needs explore for helps ways. over play. away me we remember for exciting change industry-leading others, most model they financial many including couple

Jeff Stutz

disruption the basis the in a orders Andi, fourth North our business Reported prior than period you to the $XXX of XX% COVID-XX, Thank quarter, by America and year organically. reported in of everyone. picture decrease of the a below same near the segment, our were term were were quarter $XXX With on this morning quarter Within year year and sales XX% on XX% below basis quarter million and below contract net a last fourth $XXX year good sales operations from in last XX% demand million organically. reported million the from XX% impacted last last representing lower consolidated year.

of orders project the down levels compared XX% for year-over-year. million were to quarter down Order $XXX were and categories sized year. sectors the last New of majority in

in segment recorded international a the sales Our $XXX million decrease fourth quarter. contract in to XX%

sales million the $XXX in and impact the quarter our respectively the above year. basis, which were excludes and of XX% of organic decreased orders an quarter segment Reported of and naughtone. orders the step HAY New and the last these sales acquisitions of impact recent of reflect On XX% net from orders year. last acquisitions, international fourth same XX%

$XX XX% segment million last the down to same quarter compared Our sales in retail the business of quarter year. were reported which

the highlighted basis. New built a down to support that the orders of ecommerce $XXX of The we’ve our they only well retail on relative as as on period where the importance translation are X% both Reach, time our Design from segment channels across period. to positive million in and were Consolidated ability HAY. year-over-year performance the perspective, general Herman the XX.X% the From a a sales currency focused of to included approximately million We home HAY Within $X the the dollar in investment net changes environments. and brands, year customers the their currency this in during a growth Miller impact of favorable margin fourth the impact in year-over-year translation headwind gross strengthening a initial an unfavorable accounting totaling adjustment was on for $XXX,XXX had ago U.S. rates relative quarter. to from was estimate consolidated purchase levels sales our quarter in related

same XXX reported gross favorable primary was facilities year. leverage the margin and on was in manufacturing gross pressure lower shift of quarter. XX% margins This The was in our included partially than production mix fourth with in COVID quarter demand the costs distribution $X the in product a last to million Operating and of given item, the $XXX loss related of segments. our in basis $XXX points leverage in seating, this Excluding offset the retail the driver year by a this international primarily both channel expenses of The charges the during quarter ago. for increase million quarter same million in associated the task the current quarter pandemic. quarter and compared to of loss discrete

we $XX million mainly across organization well consolidating the as and from operations by of that during charges, to decreases of this partially manage the offset special moves decrease the lower costs resulted Excluding These impact year-over-year fiscal quarter. these proactive costs HAY in variable year. as operating were initiated expenses the naughtone

During the HAY, annual and of quarter recognized during assets, identified name trade and impact asset impairment fourth consider. right-of-use brands. Within to for to We our COVID we we to Maharam, indicators $XXX million the on with due business related of intangibles impairment associated naughtone quarter, charges Design typically goodwill, Reach, results, the pre-tax and additional totaling assets perform impairment test fourth

as for sales these future result non-cash longer and needs the and fair a Restructuring to million. adjust adjustments customers in in their future. $XX are the this Despite assets value. the the totaled charges and of impairment to values determined fourth analysis, to forward each supported recorded these As carrying of of recorded on our assets they brands delivering the remain of broader these meet going to core spaces value, leaders no important capabilities our provide that accounting profitability we strategy charges in quarter forecasts fair to

associated Andi costs voluntary we million mentioned, reductions demand On primarily quarter cost These better structure $XXX ago the a this reported quarter. the was our related and out to the necessary basis, of involuntary GAAP an program severance, quarter period. operating workforce of As align of environment. current the other in $XX million with reductions compared during and year workforce to to during costs placement, earnings loss to operating the reflect

effective quarter million. other special withholding and earnings rate adjusted tax year. Excluding of was adjusted impact this and included effective quarter comparison, tax operating the restructuring, for of adjusted jurisdictions. the in full foreign By provision of the rate $XX XX%, impairment fourth $XX accrual we adjustments return cash repatriation and both fourth quarter approximately to income the items, The XX% the tax the to taxes last reported planned certain XX.X% and related in year. operating quarter quarter were million from rate for in charges, of was of The the the excluding fourth

or this $XX per $X.XX adjusted cash totaled compared balance share reported year. sheet. last to share of give earnings our share to With to on per per to in quarter earnings same $X.XX per I’ll update quarter the Kevin the million over now flow compared earnings us or loss million adjusted share turn Finally, $X.XX basis, totaled quarter fourth an the that, and call last $XXX of $X.XX On year. the an net in

Kevin Veltman

proceeds primarily private ended revolving interest of notes of increase placement Thanks quarter. drawing $XXX bear XXXX. which facility related higher $XXX the million the This of on issuance notes abundance of out a and cash on Jeff. rate cash $XX last We our quarter quarter. the These cash cash of than credit in equivalents hand to million caution, total of million, was from $XXX fixed and quarter with during million the X.XX% during at and an mature May was

aside those due environment is private quarter, to these million. in make-whole generated the $XX would mature million in repay the $XX the avoiding of Despite the million of were required our notes placement year from operating notes. of notes for positive demand the XXXX, to when year. full come existing to next Given March Capital cash we flows that set $XX purpose prepay while and they expenditures challenging during operations notes provisions order quarter those that the in be funds

As had on our a dividend paid deferral will paid managing previously by $XX XXXX. record maintain ahead payment dividend agreements. liquidity on draw XXXX. as with facility X.X quarterly below Due part of payments given million. our dividend company forma temporary $XX we our the XXXX share the We flow required in X, pro ongoing gross will, capital and the well XX, EBITDA balance, look which of strong now the was XX, expect however, credit million cash we is our EBITDA was expenditures XXXX, be as on a X.X of be to approximately gross as times to lending The to in $XXX which of our July compliance the precautionary bank future would to of covenants excluded X.X fiscal of from that COVID-XX. April to to ratio end, debt ratio million February times. by our shareholders ratio of debt announced scheduled originally position, be XX, suspension repurchases excess range our caused quarter uncertainty to of If to is debt all remain debt and We

the Jeff. turn flow current that, financing the near the from With the volatility call to back of business market positioned term moving cash well weather operations, and balances to needs meet cash our forward. I’ll and over Given remain we

Jeff Stutz

Okay, Kevin. thank you,

couple surrounding our make impact near business, not practice too typical our to with we earnings such, it of think quarter. COVID-XX we developing business are your being the are to and emphasize quarter. the that changing upcoming around the of first data guidance important situation said, and own term mentioned, efforts global are on sales a Andi as difficult rapidly estimates our estimate points offering for for But As in consider revenue there the following mitigation you as

As a few retail perspective, back quarter just allow highlighted, exceptions, we to past mind, This as with manufacturing, have with the with estimate important we point online. in in more distribution it should entered from we to us time and our a term lead first manner is this become respond believe Bearing revenue a relevant to customer the patterns recent demand most data opportunities. consistent time and periods. near demand we operations

As orders closer quarter in the the and earlier, to down noted last at through orders are level fourth quarter, same weeks of XX% down year, the the first three consolidated new first period XX%. the from were

combination As are of guidance operating as natural business, earlier, result that actions as we’ve XX% picture de-leverage. approximately cost as that in expect a commodity taken, time, also consider while stable at the in and business profitability fairly providing our XX% will not model we for to variability discussed the sales income how you our this to well we

commentary, from necessarily call to walk will recessionary to of an outcome quarter, not we past take With Operator this be over additional duration quarter period While over expect time and even questions. the experience depth recessions. the we two turn a we’ll your to now would the back that and similar I’ll this if

Operator

Group. Thompson comes question first with Our Steven instructions] Research Ramsey [Operator from

Steven Ramsey

maybe composition with, I to placed tell does interpret the how about start about morning. companies to offices orders, their spending? and of on you term weeks maybe you that shift to the of kind the just it to, of the you Jeff. you how Good does adapt three in that orders, need demand, how quarter, but recently and spend What to what that maybe evolution you and will talked last guess medium guys tell

Andi Owen

Hey Steven, morning. good

and to trends, they going offices crisis of As think sort to pause we it saw how were out very what with going the their do also, at to look I and at people of last. figure the what the taking COVID long quite we trying order a frankly, was beginning was

our of term crisis the a their short start customers watched had spaces how large to outreach think bit back as As for to starts we actually lot we’ve unfold, our in from they can around they sort so bring had orders of We’ve safety had I more their little we’ve employees reopen, economy some also bag. a mixed shift. a transition waves and

of call to specific Jeff want timing had her. some but We joined to you to know cancellations, you had that people Propst, this, their if President also would retail onto out I to plates. they too you for have wait Debbie haven’t any what want do floor going as all I’m well for answer have we figure many get our us with but add as has Retail, who the let is that? questions Jeff, to

Jeff Stutz

Hey Andi. Steven. Yes, thanks

absolutely might that’s but encouraged. look The and the think The everybody, we’re won at I and that is not think anecdotal, to again to just this that that fairly only we well, tracking, is—and project worth thing up but really I we highlighting held that add opportunities funnel sign. right. a opportunities, necessarily I it’s that that funnel we’re project these as remind good is has are have quite of

I which were edge of because of one of I lot look when that’s year. lot of why or, reschedule closed for year more the The a backlog, reschedule point occurred cancellations, factories the of of some a an you encouraging. course, think customers seen has not around dates the think a has facing order of trend, Andi’s types at up disruptions. been activity—I are either reasons same nicely mean, our portion condition, have our our it’s we been It’s quarter a of ship over

cautious we little that business, the calls at little backlog manner color actually that a and composition of the we’ve you be well of activity of worth I going orders. to our on to would feel for schedule in from that ship you that it the But traditional maybe a customers. it’s a necessarily look reschedule all inbound opportunities and assuming need Maybe a in really about type as more when think of more because lot it’s seen. out, when just mentioning that continued you good net be

has As responded the in demand prepared really been of and well. you real work-from-home some in the seen sense the a business that remarks, in us a heard sunshine of categories, those retail we’ve has ray from spike for business the

the Debbie can As have she you Andi specific and is answer any there. line on said, questions might

In shutdown entry terms of the period, we through not remarks, about the orders. pacing what the as of consistent month the prepared really I of May, first order the of just with the dealing like as quarter, and orders XX%, In declined were weeks first our more surprisingly we in we the trends through as customers, fourth said of moved quarter. with perhaps in down that’s we were, three kind the of saw

Steven Ramsey

may trends would changes that looking of accommodate or that projects expand over intending and even distancing, already Any medium in companies to go will there after, booked, open you’re they the Great. and does at you’re trends office funnel or seeing of need that that cubes? any hoping the are offices The orders seeing the and term? play stay space out on the social you tell are you’re layout you’ve that to space you that to that that

Andi Owen

a Yes I say is range. would broad it Steven, that

home as space of and sort also our the people, continuing, in that most do home customers customers I home. build so away. work hey, working We I had to going is going most moments help miss potential research from our existing because that are know the what that projects situations those that we’ve our opportunity we home our and in actually collaboration, dealers. now relationships and are people of we we from to need with build working we not up are identities, through in couple said, offices office really and think work customers a other up from we’ve digitally things too. think build doing are forever, that are about that the culture together, uniquely is where missing people that set between in see office from What definitely see like things of also people and office and and is to general, creatively have an learned working well, people from set people

I’m that between go some some have said, people, I we had right what get it’s use up to can combination kind space to different temporary, clean. put on - barriers, back have to vaccine this pre-COVID, that easy said, content, materiality I is think we’re at create of let’s customers we with listen, had sticking put a We’ve were. floor a we where who plate the things finishes going let’s let’s are look and let’s once we

really For the open it’s are it the people, office that gamut. set-up, we very, runs safety it, in interested still very between so about in have people just really

people perhaps we’ll more we space we’ll harder real regional long when need think that will in to We so are your the people. can people our you be that time, space environment, for have workforce also have very a fewer hubs, people finding amount But restrict much headquarters. working what your is and fewer people bring people estate the are that back saying, the office hey, reduce of as continue, it’s has in been the now, for distributing so to we

dramatic in We Kevin? aren’t Jeff estate and seeing a you trend Would lease that, to size real anything add in or reductions.

Jeff Stutz

internal research, unique some needs. be and reiteration is losers, are with that’s on what three are and are are and I and describes, we forward, of think big the think to of we and winners some - The is there got that your we’ve remarks, consulting comments Herman only that of occurred, knowledge elements dedicated given is we’re I a Andi, going magnitude change positioned to and and customers add, Andi maybe believers that of of the key change that the business their prepared creating because our thing spaces that would the Miller to well have really serve skill going unique sets and

We products to serve. the also have

settings, wide said, going and companies most traditional of going serve array both to a a that hybrid looking likely is be of for, perhaps customers, have offices, what be As different very we to model potential setting we needs places. market going to the and channels lots to alternatives we in-home where are of of Then importantly, in there’s you’re Andi forward, see those think products. it more those have

Steven Ramsey

the for thanks color. Great,

Andi Owen

Thanks Steven.

Operator

comes Garner from Reuben The next Benchmark Our with Company. question

Reuben Garner

does? from shift the like that to what you bit. segment? Thank back backlog near of softened surprising maybe in at through Maybe on Can then just seeing quarter. are maybe everybody. walk the you morning it’s it first but Is walk you line period, that is, June, That’s backlog, you’re look your I just a seeing the there little the it concerned that normal, think it cancellation that wouldn’t your American shifts so won’t said like it I the recently and sounds next what for mostly it three are business or lead commentary in assumed top like to sounds the about where Jeff, you, in kind weeks you normally bit rescheduling order you me so standpoint has necessarily you just, past, the of a through--? North way a that normal think contract of in good guess, a the now, weakness term, and like times me. right What’s that we’ve could the to more that by backlog little XX

Jeff Stutz

backlog me interpret ship, want believe that the let so I be comment—we that and are orders to crystal wouldn’t Reuben, problem, that going that. just don’t hear to represents really you clear. No

we norm. saying, that throughout one but the need would those don’t think either think has and that and of is are in fair this would mass we getting, as orders, to close quarter. your But exactly of We our going reschedule I what much imply it a calling because a it we erode you my current we my there just year, cancellations for but we of just as been timing close normally of cautious good own the actually, to have and quarter it only to point with was through we’ve because have of have pushed order would dealing because caution, amount fourth closure we’re to seen not mean environment, hey, the just ship, so orders up That’s situations, none, is been not believe kind is why backlog seen What we entry been to fourth I fiscal seen and some. those because customers our is it backlog. to only I’ve the this we’re entire down these get so that quarter. as move be—and they’re that going were lot in of unshipped the orders calls experienced the that think is us, of

for are order the lots your regions seen still think where I early that entry that haven’t want delays to quarter. of of of the fourth see order world, matter, question the and phase, emerging erosion I the this emerging, we begin first to you’re do of in timing we from your of To going to timing. clarify, states We’re on to closed seeing the part QX some and and in kind in continue some pacing,

America, you North if most from in The weakest at entire we’ve the seen fairly contract perspective, declines business the the North the we’re fact, month a been so look segment May, In significant American of has in area for business. consistent.

quite strong. has actually been segment retail Our

is in I is the were sign than international think in weeks the seen the we’ve we It’s seen of in for terms only May X% it’s and last it’s mentioned early. so the relative fairly QX call, fourth a don’t - we’ve as well, Then kind period. pretty consistent quarter, to begin with down first the positive to with trending on the characterize close I quarter the of the consistent quarter. of erosion as five three more weeks I what would As

Andi Owen

starting are well, of add to you them and as continue and virus increase inch Yes, see I pretty Reuben, levels you along China retail, the so along, our is bit the the if and since that, trends countries really little at to and on in trends. to recovery at weekly orders seen many as but curve, trends, international year weeks move of been we orders Scandinavian we’ve look order and along in international, the a China in regions improvement we’re order their trailing prior of are showing across look what trend we’re process is there, would even not optimistic week last those XX-week ahead four so in those and ahead still trends latest only actually further eight as four an well have forward further

Reuben Garner

you ways about—I’d corporate brought that to see with term, an you seen going in assume to from in term benefiting term of about retail the their that on home office, North Maybe—you for we have a the would Have then like Can that? home think employees any most the setting trend it you talk that more the invest guys was likely side that your business. a the from looking doing in near opportunity Is investing American in retail helpful. to or we’re to been impact How contract participate up of Okay, customers come signs longer from well. in and up there’s near standpoint very offices? trend?

Debbie Propst

Hi Nice this little Propst. to bit. I’ll is Debbie with Reuben, to this you speak be a this morning.

that our that of to is contract in we’ve saw we work-from-home our their to last was inclusive make last office for clients quarter, task that their and an fourth support terms the lift year, with employees. to what we The directly sure which up office product, more our home the meaningful we work-from-home through effort needs seating, In XXX% optimized in products peripheral digitization and in so of rapid other could weeks, designed desks, access we specifically a that organic huge for way. engage residential business a saw that’s consumer program a launched insight

distribution the for developed carpet fulfillment we utilizing channel have needs. are and these new network against We the retail client residential

Andi Owen

it and but all program access not to to retail benefit clients for quite are but that we’re the insight work-from-home that’s and today. channel fulfillment Reuben, we’ll reimbursements able use offering our only be their the of employees corporate capitalize think, capability our for there, we also able expertise will stipends on So easy in digital

Debbie Propst

our a vaccine. longevity year, several We looking not the the likely meaningful contract in in really work-from-home if the organic of into from shift supporting we through end clients, end have months, through of we’re calendar certainly And through the at we’re time what just period terms and of more believe year we of hearing which a the have to optimize lift. this trends,

Reuben Garner

business saw that’s relatively sustained in been here, XXX%, Great, office home that’s recently that June? over you trend The helpful. very up even of

Debbie Propst

absolutely. Yes,

Reuben Garner

one from me— Okay. Last

Andi Owen

our employees to are of A of many customers Just one contract going their through to going to to they are work thing they lot a beginning will so reimburse second add in policy actually more So ready to we have be work-from-home ahead anticipate to this, who wave bit were get for people of starting people little that. what to are corporations reimburse, for or is, so our customers term a start to situations. as work-from-home now contract just longer stipend? there their we

to way. you, the by interrupt Sorry

Reuben Garner

the the puts few there quarter to that the additional and there’s cost Is can target, just you the that efforts fourth the in and operating implemented Can same that towards quarter. The in end in or think upside move margin takes in there were how conservatism of fourth the you’ve the you a missed already two-part you got next there kind where line, No, we range, what Jeff, very Last that items. great. XX% though and you how XX%, of there? quarter one performance of that as That’s said no, kind there, through and through you’ve question. explained might gross the me, of kind was to the savings that Can just repeat you why got other even de-leverage, about you Then to strong. no. walk just—I income quarters? and stay maybe part, you from in saving

Jeff Stutz

yes. Certainly,

attributed Let first I’ll year-over-year big sequentially easiest to figure year-over-year, this for that can was for number I to to the know takes, was De-leverage, a and but XXX think just Reuben, production, ways, said naturally, in year-over-year the much puts of—I the might had me you I little of margin. terms, decline any prepared the we be We to of in frame gross We bit speak and do as way the points or you think kind basis factor. in it. the year-on-year in of about quarter. comments, fourth lower this

for have there favour in to much improvement. still principally worked - anniversaried well, for and XX our bit Commodities but we’ve Now, our Obviously the a to year, be and were that was we steel, of there that other favourable I’m has of environment the but couple of about what referring as are tailwind continued has were been positives. to year-over-year a encouraged. margins a business gross points basis stabilized categories last

benefit I bit seen been a would retail, that may mix for margin talked quarter, that’s mix with bit the but then is say fourth least most of there expectations. bit have of pricing, would is spot international near amount and task that those mean, the ahead change, shift say I pricing takes so in think XXX it had We about the of them of called points the call commodities script, a combined basis look we I some of noise, some business, we anything, inventories seating on saw way, negative, of basis in mix, leverage on some a a improvement, the combination and but we a our business year-over-year at here, just further things The the XX me paid puts stability purchase in in something favourable reduction XXX takes. from and shift difference fair book We of of didn’t in actions in took points if flipping high the out at down fact the And course, overhead that was inventory there, net year-end it did We and I their little that balance it so up, on then in necessarily, I were—Kevin, other had the we and think basis kind for kind positive, that right? a were deleverage fourth that’s gross reserves accounting That recently quarter, flowed of points around the some of helpful. As factors and we could commodities, product little a increase in right in that then I’d or as puts a balanced about the was spending the January of stable. well, a couple activity than mix walk just channel quarter. did for but de-leverage, that as I actions business that here. steel price number like we we I as benefit the now cost of the be XX% average quarter bit favourable keep - just term a some upside initiate our from We price honest the and year-over-year rate and margins. so full feels us, is get category for think little pricing through

Kevin Veltman

Yes.

Jeff Stutz

conservative. those I of sit short—you this, range here we’re that never in tell well and short for the depends what same revenue right time the costs to in much as of critical pull and revenue think important we you know, not boost that on right? away the line that we’ve know, investment while kind get the it’s straight I’m much in areas as as overhead business at the deliberate to walk, long say so down that going relation quickly it’s you not—and goes so the you Reuben, really your Yes, we can, of fixed protecting it’s So necessarily some a talking. would run run. those how try far costs, or in and been are to

we that with in range do and we up move can upside towards certainly reasonable. upper that don’t get and end if that some range of better, we’re stick a around quickly, to bit if little going we we of the to the is the and think end going that, lower bounce revenue It’s So down, revenue, as we the gave. still a see

Reuben Garner

you Good Thank luck. guys.

Jeff Stutz

thanks Okay, Reuben.

Operator

comes with Company. Burns & question next Our Sidoti from Greg

Greg Burns

morning. Good

a want going this this on aspect work-from-home and Miller’s had way to to a approaching Herman Herman with just work-from-home multi-prong with is the find there BXC the products? couple of DWR, I be Miller, going follow-ups strategy consumer platforms across how brands. a a HAY, consumer will or strategy. to market you’re understand a the Is Just how interact would be centralized

Debbie Propst

robust portfolio morning. good by Debbie. start brand work-from-home retail would HAY, work-from-home. - is help then a each and and brand is What each This saying audience assortment Hi managing - we’re really I will a three strategy, DWR, and Herman offer has unique banners so as our and supporting but there, consumer Miller a overall customer services

offering so of are needs support price across Miller desks However, product of regardless offering a they proprietor website, we will well, will effectively as be and that that comprehensive Herman we range customer DWR on our offer from point of can credits targeting. HAY which good-better-best task We pricing a and seating. believe

Greg Burns

market meet any work-from-home Do you product feel from the price feel the like to you there or necessary road serve points like to invest? that map any have to you product the What’s where new look areas need you trend? so you holes Okay, a is perspective, demand. have—like,

Debbie Propst

across the We’ve opening task been in point assortments Herman offering Miller consolidating of the fill what would terms price product into having call desk opening the able a by seating. brand price BXC holes lot to I more or more point of a

specifically Our HAY product has helped that fill gap.

to assortment spending that to home, our are really on more to gaming we new summer, upcoming There for and specific more is forward also assortment evaluating always as business Logitech, I’d a seating. overall as people our people are tasks, launching so product compelling offering, products, looking impacts be first how work-from-home us course opportunities more in for to This outside developing time out we’re into gaming launched of We’re at specifically, us develop into time like this well. more new demands call our and we’ll of product. really and working whereas with partnership seat have our be seeing

Greg Burns

see market be per see I neutral, to work-from-home do an negative? contract a the in would workstation typical we when office. about overall additive and assume going work-from-home or playing to dollar Okay, workstation, the you home out? that Do for the office opportunity, you opportunity, is employee think spend a lower than How being

Jeff Stutz

Greg, Hey is Jeff. this

would need I to say unfold know, You we how things bit. a here see

we out large spoke of I companies office going do—is fully into that office we for center really move city A a potential companies the type what days, that, going see reconfigured in hub need I outside early and lot is fair to level and this to and evidence the some space to what level If Class be and and metropolitan satellite models. there they around more maybe of do that’s see amount to to be be hypothesis a to so refresh our otherwise expect conversation to reality going of hypothesis home likely help would offset to we’re of lower users. a and we want the is, and offices, the be but there’s what think any has its cautious, to need that do in been question support will are what for spend business, per areas to believe

to assessment this going fair a other, I is be have the a have only be the also various a believe—I serve strong both. knowledge but we to product think—that’s that not to it’s do in market belief only is going and that’s our think probably consult we to to not I of the hybrid, one think have the or general, and why customers, emphasized know-how not but that industry our importance players with in and the channels

we So who’s on a fronts. those like opportunity well Herman Miller, particular it’s positioned a all for company think

Greg Burns

thank Okay, you.

Operator

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

Andi Owen

for want I everyone well to thank Great, today. coming

updating foundation forward. at next we everyone. quarter. your center look Thanks interest do move to everything exception. We at side, and Miller Thanks I not as the of strategy provides future a we this other built we us. in appreciate the the A of weather only will for customers our believe to Miller, put emerge economic really be to We employees time again an no hopefully forward ability for and strong have but our you continued joining dedication demonstrated disruption Herman the stronger on and Herman

Operator

presentation. this does today’s conclude Ladies and gentlemen,

now may wonderful and day. You disconnect, have a

MillerKnoll (MLKN) 30 Jun 202020 Q4 Earnings call transcript