MLKN - Earnings call transcript Q2 2022

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Operator

Good evening and welcome to MillerKnoll's Second Quarter Earnings Conference Call.

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Antonella Pilo, Vice President of Investor Relations and FP&A.

Antonella Pilo

Good morning. Thank you for joining our call.

press our the at Relations posted hermanmiller.com. have release Investor on website We are non-GAAP press on reconciled any presented Wherever figures a and amounts the non-GAAP basis, within the release. GAAP have we remind everyone I would like that call forward-looking will this statements. include to

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

Andrea Owen

Thanks, Antonella. Hi, everyone year. and happy new

are our CFO, Debbie Propst, today Stutz, Kevin our organization. of Retail; Global integration President me our President Vice President Contract lead. Michael, Baldwin, MillerKnoll; Senior Chris and our of Veltman, and Americas our Jeff and Joining Group President the our John

and businesses to bringing to initiatives were again store with Throughout quarter. MillerKnoll Our and four our segments like we're strong and ecommerce and more demand quarter this Contract new the studio performance we've and quarter, stronger up Order a best organization built MillerKnoll, and our around continue the created together Retail in our demonstrates we brands and presence. in see openings, continue of the an both resilient all the and and for customers the growth our power levels expanding the of bringing to of strength globe. gaming, positive fundamentals, success. long-term second strategy business grow, momentum Herman Both built reporting and our

presence select of and production, confident ecommerce that the of sites $XX Herman online order journey [indiscernible we into website from continue relates organization, for and to we're deliver of progress At and closing. forward. target that Germany, and run we're of we'll of same labor to we in within challenges of exist chain demand growing million and synergies $XXX divisions field consumers pressures. brands activity. we experience in and brands. to early on benefit and the leveraging years cost industry, to across of quarter, many will both as we pressures, of global capacity, of those this integration of in X:XX:XX] the rate collective remain our digital launched benefit past remain the increased making increase leaned countries, our build our move our our supply combat France second exceptional have and Miller the capabilities inventory expertise our all focused point, shipping of our last size we and close have all these and collective unleashing challenges distribution, two from quarter, partnerships design the savings our implemented the facing products this sales to our million while That We've we an exceeded high sure power shopping previous and create world learning from the it around As our as including new said, rest of large shortages. We for in to inflationary and reach launches expectations the

and are MillerKnoll to work organizational the teams inflationary as planned unique operating and of our us stock integration several increase to strengthening every selecting integrating organization, robust with under involves gives create structure, run operating that completed new We're achieved meaningful In opportunities new supply trading three. progress, contending chain we're $XXX confidence new cost talents fact, now symbolic completed year into our important our milestones pressures our name the MillerKnoll. of that We model as the synergy by the We of we savings the in quarter. ticker, while along capture efficiencies also each brands. and planning, achieve designed million our company integration and to to will MLKN. we also they've change the officially individual synergies, This which teams identified finalized with the a day. end across the position and important additional roadmap, rate expect with even We've our

One of the the network. our most dealer MillerKnoll world. largest and distribution the and in capable portfolio combined compelling most have is reasons for network creating MillerKnoll will

will dealer terms MillerKnoll needs and choice Creating of have suite customer. our product top well industry, services and the every dealers them better way. and partners, priority MillerKnoll's will in in our the access customers of network Our have of and and our the to we sell more both more meet comprehensive is are products to on enabling

in in inform pilots the operationalizing the plan, XXXX. both we'll pilots Arizona use phone network these by mid calendar MillerKnoll year and track Texas what is occur to in process and have to which We dealer on we're learning

to new the the feels us. variant, the new of world see variants to Omicron While normal the continues [indiscernible X:XX:XX] full wait impact and like

Our create that need recognize not desire Employers most this meet pandemic together to more, a workforce. XXXX. the changed in post and flexibility us the to strong the and to option in of year, customer environments to productive leader feedback and bring teams MillerKnoll workplaces still the clients. be to is providing of adaptable innovative, across variety back the employees left office well, want the executives the our solutions industries they what's their homes expectations return research to a tells the just their reimagined the redesigned and of workplaces have for office same in as

tools unique for help the services products, have our and customers spaces solve performance the high to We needs. the their create the that insights,

from And own our our collaborate experts world workplace and firsthand to working the continuing global returning experiences with insight from with the make using to work. more healthier to workplaces partnerships and we're and hybrid around home of to inform future the we're So, both productive.

is growth. business for built We're and powered we we're are and all confident portfolio that our MillerKnoll And ahead for brands industry the strong. is the opportunity preeminent of by stakeholders. in Our there of tremendous

about that, I'll your we So, up more over results will who questions. before it cover bit with for turn to Jeff it a open our

Jeffrey Stutz

Good Andi. you, evening, everyone. Thank

on combat we macroeconomic in pressures quarter, breadth organization we segment the Even in growth with able organically of confident we strong to every every business, and up those XX% on of During year. drove the XX% a and some the a our quarter. had and the the we're second faced the we Knoll of sales cost quarter the the synergies and the to Consolidated ability with associated basis of just billion net were to leverage across reported future, region deliver over acquisition. challenges, including under depth were about $X.XX last

prior improvement organic an reflected $X.XX the quarter of to year. to million were sequential ship sales our the quarter. of first up industry $XX X:XX:XX] billion XX% chain orders X% year. by In were orders quarter ability net estimate $XXX impacted approximately which by quarter was this and of is over in we compared the Our impacted basis, Orders supply last than higher [indiscernible the facing, million adversely disruptions that XX%

of brands, was up strong saw to up over strong in XX% was demand the and segment we growth to to sales XX% transportation. of May. this compared The in earlier, and last orders US. orders orders Demand gross another to Similar rates, with pressures, was a you year. Knoll XX%. the commodity list last mentioned regions same costs, basis. increasing with including quarter. implemented year. across sales with last had orders and pressures orders The International this especially quarter, reporting strong approximately similar up impact steel, and last having multiple pricing, and in contract the to XX% growth rising in the regions up labor Europe saw margin across southern particularly sectors, orders what sales this quarter category XX% Global in strong in As the in notable respectively. Net since of residential area and XX.X% Europe, over almost the the momentum Contract these Adjusted been prior while XX% on by Americas we've segment seen all year. regions other reported inflationary year-over-year Retail segment UK, all or and year-over-year and and margin aggressive and Knoll reported the was year-on-year growth year sales increased strong improved segment X% with quarter, in of segments. XX% The decline with over the all new Contract also of driven middle prices workplace categories In sales announced Both the X% margin XX% demand and contributed response

of we been layer for has take been outlook will results. contemplated quarter. time have to our benefit and date, our limited to some far impact realized While the thus has the This this into in third

business mitigate macroeconomic pressures consolidated year. ultimately said, X.X% to across in of facing. global the carefully business the to geared business that was the pressures. prior managing meantime, increases in the And continued to it's has XX.X% margin control these seeing cost solid across with year-over-year you what tough know for segment work and offset retail the as that compared Now highlighting the cost the business. profitability despite we And that to the underlying quarter is operating challenges impact these can in are should that comparisons worth that our we're Adjusted second we're we the deliver

adjusted share special XX.X% in an associated a second Knoll, XX%, of quarter $X.XX. share loss adjusted the $X.XX. basis, consolidated earnings were per of operating charges net with We reported of the segment order excluding the growth Retail to integration addition per In reported margins this And quarter. of on

we'll those questions. with over and call opening now the we'll brief So, to operator turn your comments, take the

Operator

Instructions]. [Operator

Ramsey come Our Thompson with first question Research Group. from will Steven

Steven Ramsey

flows how pricing do pricing that you it share organic Jeff, out of reported getting is, how little expect you with the through start several that the in And to if, this driven much bit could of and to next what much a at volume? Maybe on is how results. I on I'm orders. commentary more play guess How is quarters? and

Jeffrey Stutz

of just if I pacing of seen quarter, months have consistent. increases. I'll the the activity us, of meaningful maybe advance in three you was because really your remarkably order question for start in each across encouraging And ahead think looked order trends in these pull the was of order the crux with the of is what some we quarter actually

that like to from XX%. Debbie increase in close perspective, impact the this the the off in last example, to the in from with had was the increase there more even the more a Americas, The timing increase. in And events close mid timeframe, quarter of orders, – for we months for year XX% you'd for further, was promotional to go International, but Knoll my the Intra-quarter kind quarter. XX%. pull up speak XX% were do to the of that, had almost of consistent and November that the meaningful can had movement October so in October some it we the not versus to of were on this, of up growth XX year. in November if some started quarter. similar. a in than total XX% business each We Retail in of – to ahead high high nose

that, If was activity you here too, retail quite consistent. for order adjust

would to again summer then seem and have October, increases Steven, the November in didn't what impact. is the in price you, So, tell months I much that timeframe

couple But also will pull did we line February for the I mention it's out levels. last have we in start the to some weeks. that what ahead of of not Now, increase timeframe, with planned historical see that is January, that of

Let me trends? pause the on there. helpful that order Is

Steven Ramsey

for, And increases have in Yes, is of dollar how price get and pricing you then of sense to that number, trying kind successfully to impact that in results? implemented the yes, driven if the a next that was to quarters, of couple for, try orders much is. start sense get a

Jeffrey Stutz

different much The challenge. than business right, as positive is the pieces. again, retail we've from price this two actions we've of a got talked contract retail This the to with will And is you the benefit in about business. in And talk fully the side expect we sooner business. the it's past, this in animal

the of of by side, the On our and challenge in Demand the victim it little consistent it. think, that such would and the that the it's in the has, solid wide a it. backlog ship through this to the going that exists this margin to into none increases has from February. have, is, a gap have, somewhat a Obviously, increase And such we're last backlog I today to we a the mix by that work contract we're that of take what us industry demand, – in is time hearing outpaced go news we say, effect pretty will two currently, as month and terms of good across ability produce the I price right?

particularly some So, Steven, good amount the work half punchline tremendous And that part that. second move but where is we next to our see that part of through. just the the we different. way up a and really of to to fiscal through not Retail of a as benefits this kind benefit the QX, start pricing it'll is backlog. it year take year will really There's later of be frankly, this, into through early QX QX, and going bit of it's in a of think, fiscal ramp flow us, to we there's

the of we fiscal as business, margin half side to move through the the steadily Retail we're our see back expectations is increase think the gross I going of year. improvement that

FY and from I six if under over as spread it Expectations just we for think this into gross is maybe there improve XX% business points couple next that much hundred over quarter. the numbers that XXXX. a move basis in the as can rough the of months were then margins

Steven Ramsey

to is add it orders shipments my shipments bit and to on the this. have – than in gap, at on assume is can a Well, still the And pace that shipments? little growth business – a and increase of this. I And Debbie, shipments the to Retail that faster thoughts Chris a rate that, different. little quarter, in orders please going even free rate bit that chime that QX? of is it you pace and to if reduce John, beyond exceeding On you beyond I'll on then backlog? this Or accelerate give feel the again, views orders is is of

a my first meaningful in Steven, in all, end the perspective, I from think, the seen change of demand of quarter. we've not since

some ahead mentioned, December that ahead what a positive, we of as In some, activity increase. fact, price that's believe So, to right? be January order we that saw in I be of pull would

it's seems been some has the be the based. pretty And strong when remarkable consider continues. it's momentum Yet, broad of really world. effect the been the So, to socially you COVID of and disruption demand really, that around that and creating

– about don't revenue We course. question and that, orders know will Your converge? of

of office companies design mid on plans from our kind expectation even think into A customers, we're return based are still firms, with just are calendar we folks hearing move conversations I lot of what formulating XXXX. busy. to their for as

challenge more. do improve a really us But take our leadership business now. to team a much would to of order things for Debbie, of labor ability free we're And momentum The It's front. to chief doing driven. going a think focuses I whole now is that. you expectations to as right ship as raft that's add. the John little try it us are So, among hope feel continued to Chris, and our for to our right on time throughput, and

John Michael

said you think I it well, Jeff.

out Jeff terms we our a to cetera. matched. factors perspective. number from order of pace. our I et think chain the production impacting an I closely I more we the revenue capacity based from as order and But of leading a on ability pretty of that's expect expectation now, then the order some a And as is et continue think match right production a to revenue your orders have said, production smooth from pacing to whether COVID, there's expect in be perspective that of we time, those point, indicators But supply impact a and issues, cetera, over pacing think, perspective, see on robust to and we'd hopefully

Chris Baldwin

that to our I'm The – This to – the is is business going increasing. is output production Steven, add, only Chris. international cover thing

And also the faster the at more And increase we are good than continuing even is did shipping out to and so, challenge that the orders we sequentially. rate. are news

slightly in the may here, growing. that production that same be challenges it's future will we'll we'll near the So, supply keep output these be orders. the chain it while But be And are at in clear as the the constrained. rate term,

Debbie Propst

the product. expected the [indiscernible than longer on side largely then, And Retail third-party business, high, is to times X:XX:XX] backlog on of our lead due historically

QX percent was a demand as XX%. of sales at in so, And

QX We there expect in ratio and some in that that improvement in improve already. December have seen to

Steven Ramsey

one there. that residential or in there quick are relation the with residential to Can quantify Herman results Miller any two? add if cause factors you maybe and to residential may trends more between One ballpark gap strong to and the good of the if Knoll kind on the as

Chris Baldwin

Chris. I'll take is that one. This

are as trends the So, good. just

Knoll's expect, for DWR residential now trends the could and the fact, e-commerce. MillerKnoll quite and as business of are you In strong, power with

the dramatically. business the the Knoll on side former Miller is but residential the Herman Knoll larger business clearly, So, than business, increasing is residential former

Operator

Garner Our The next will Company. with come Reuben Benchmark question from

Reuben Garner

with Maybe guidance. let's start the

is go correctly, Can it looks you what from this if sequential costs you before takes? kind the similar I through and mix puts earnings I'm like pressure. line getting better? so gets of just guidance through to price number, the a margin bridge the worse in So, some at there reported the QX? Is just there us can top or and looking walk in think situation It just you for

Jeffrey Stutz

think, this the of and this is and a on I time backlog strong buy perhaps worth are our highlighting. for some does full it potential stand if I commentary, might expenses half the kind here And that come in that this production that both in way, all issues of outlook throughput – back year, costs of line having while by and one some is guiding some out operating commentary favor. bit true, can of think are the a having There's mention, of of in we're little not we're of back benefits the start. the benefit me of margin see I Let input strange gross we

steel all we able our that way benefit be actually are minute, of Now, in for we quarter, move that, a there that of front, into particularly the standpoint, expect We margin QX. midpoint to the we we're pressures set a other that But third a aside facing. from at may as but don't on meaningful to XX.X% from for cost guidance the a guided to of that. gross XX.X% kinds range

at XX.X%. You're really

The steel are a that's we're – same not or work tell working to just elevated the that, on That's the QX, they commodities of in the XX our full prices market kind we're without expecting I of would now, making pressure, it steel estimate points QX, of impacting as you steel. into freight baked into way we basis and where the We prices. fully continued steel. decrease, obviously, what they're front. through believe The predictions, principally price saw We're major stabilize we that So if still – were And price market commodities drivers from about couple sequential we that large same reported. labor. factors from really commodities. are is particularly and

us benefit move for forward be QX. beyond we would that as So a

commodities points, business. will a transportation are really our adverse, from that mix the think and basis of product pressure. There account that freight We labor we pricing offset And some parts. tells we story. across then, recent points moving another basis So, XX about estimate, for, bit the just think are increases But help other pure and price might that. benefit be mix XX

in range of And midpoint There's at So that at operating those four the for one those of that at that just gross but $XXX major guiding. parts about expenses, here there. of another, neutralize the kind That million. really then, of around the us we're moving parts again assumption moving we're guiding are kind purposes. see the margin midpoint you'll an narrative puts uptick of categories main range our

first QX front-end of a a The accounting issue some with programs often related to tends of part really an those early programs. timing calendar one for and is the of more our of The to year It's phenomenon a load. QX. bit benefit really

tends things Some calendar those based and more are year accruals with the front it Account like to some of and end vacation associated Health be Savings costs programs, programs, of to load benefit specific. those

The maybe the of there even to sequential million that is out of So move the $X that through for year. the accounts benefit tends increase. as course calendar to upwards we

expect well. be see should of toward as Incentive as the mention an to our that might manage we of can we but last move items, estimate. the $XX I And third higher tick do this including we opposite that, we say quarter move program are plans, calendar that drive half So, we've half we in just effect a I'll everything XXXX. expenses, selling expect to toward call that back what said, ourselves bonus against the related established. one And million Investments we're dollars, as incremental there's guide, factor to going activity. in marketing bit one, some continue you, momentum a it's to in digital, you in back help offsetting to T&E, order measuring as targets all which retail, if all a of increase of then, that to this those we were in to

synergies to doing. that to work layer in expect related We we're incremental integration the

million. So, the is about net $XX change the at there midpoint

Reuben Garner

different the synergies, as a out being on How clarification are there, laid all the recognized Or spread quick "segment?" Knoll – out you recognize those they are that showing is them? businesses? in Just up over the

Kevin Veltman

the the across as hitting of together? Kevin. the we at MillerKnoll bring across we've businesses The how all the some do from really of is benefits see looked of This coming And each so, segments. synergies paths, synergies are you

Reuben Garner

profitability. for is, International similar of you the I are What is can facing the you you're as you differences models? add? lot in Americas assume business? example, International the that the about a question the guys Anything that talk that your on the you're the Can pressures able you How facing difference I they're inflationary Next me margins or to for steel can well. there? an inputs. Europe assume, business in in elevated that maintain are over as else Or in

Jeffrey Stutz

we're been Reuben, true And proud actually for [indiscernible of probably our North in business. super International unpack good a for as the mix high international are in to which pressures a And tends in something has with it's our more now. shining America. vis-à-vis feeling Chris fact favorable the thing a showing then, little I a last There it's international will several up some always cost margin this the And we're is but and differences. is of. same inflationary we're are commodity many, the add that magnitude some international nearly years really of production have years then, North of significant not – facilities couple that business feeling fact, that thing seeing and fairly business. you internationally our America that our The business chain say bit Chris, in for we been a is, tend further, And star these in terms contract to in aren't labor supply the last to operations. North overall a in North we, a America, of And I'll outside our in the in really towards product. It constraints way business. as in big product seating, think tilt of we're X:XX:XX] feeling many the is pressures pressures pressures America, quarters.

For those base costs. so volume real change. The to the we've pushing many factories in be recent have able through kind to years, And of overhead really the seen a have years, we leverage grown. those didn't volumes level of

and teams profitability. like. translating have ahead done to better more operations efficient go that's now. much They're brilliant you'd And add whatever Chris, Our work.

Chris Baldwin

might that It's Difficulty] hard comprehensive. [Technical the that in That's to The only quarter to that, much I note percent. the add Jeff. thing sales pretty add,

able we get better get were were increased to a the able throughput factory. So, to internationally, we because position labor through

So, also able protect [Technical costs and able things steel [Technical were that, are that there, to Difficulty] Difficulty]. Steel there. grow we is like but increase to we're

Reuben Garner

as in, profitability Is the the backlog I'm mentioned as if positive to going more in because to able term anything to not the that? do you're orders pricing, normal? as a sneak being I think there situation, the the that constrained. you at and you keep it as where backlog you many profitability point longer Back to a take up isn't weigh you don't can. I somewhat can Or one view this do attractive How guys just take you Americas, maybe point?

Jeffrey Stutz

increases you is recent with than But what I I'll tell mentioned my let I that, super closer John add things of most does as you down. remarks, prepared back page going important that assume our I any to that insights he likely least come with us has. we've stabilize, elevated, He's the price at they price on labor while that are are that not I will it they it's to in the but input costs, commodity with increase, same all the these side they customer idea remain costs, think that geared am.

But And we what that. such happen currently Now a could here benefit elevated is cost in price in they're environment. offset ultimately from set these think that that to that case, very we we've some increases cases.

series forward else And put you increases add price of feel here be this we've reflective largely whatever from take we business. please that we that John, orders will in actually quite place. have. taking of So that good about

John Michael

said. It's Jeff to John would Michael. I just what add

run, matches address our regulate short our discounting in looking to into sure begin increase smart to price projects, making time to just is layer in begin obviously, as ability I from accounts making day methodology. impact cetera, we such discounting and a produce. to day in about And the perspective, a new challenges et that that will, those the other methodology way sure way it demand orders, and to methodology the waiting think discounting over we're for discounting at that, that we're being our through

it's try think those I So, two. just pulled that to lever one and we balance out more

Operator

Budd question Tower Water Bugatch Research. next from come Our will with

Budd Bugatch

margin. Folks, forgive to me for America, say think I which had, the was XXX to just going in was walk down issue. profile from on how the let's cost trying understand we margin points, I things? XX%, that think, how I or other so XX.X% cost you and get much of from gross much the basis it is walk to how the are in of What's

Jeffrey Stutz

This is Jeff.

caveat consolidated would freight my level. manufacturing me of North commodities, are in at the And Let most and talk be categories here American our the first operations. acute labor

at the ago would labor retail the QX, to close basis XX mix, points benefited we consolidated in of And of transportation we of pressure. points. on side and And from in pressure. points had and are XX basis particularly that XXX seating roughly commodity QX year-on-year. of had basis reporting, the for another overhead on task the Mix tremendous you business. I remind basis that particular, points We We freight accounted point, year we with last just till pressure level, a had so, XX year

of If not guess just of the about amount to offset that consolidated segment. labor. that I level than would can Americas got tune some, I I is answer points way it's what more and terms segment the that quantify basis freight emphasize a that a and less helped talk Americas tied same But consolidated. a meaningful price one XX be true for And level, XXX but to benefit, basis the the at So, is the it's at we've is the commodities. question in would to then, best little points. about the terribly

Budd Bugatch

I'm trying just for minutes freight, XX transportation a heard basis was to think to XX, labor the I points. reconcile few XX it And XX, totally I that. and I that understand that ago.

Jeffrey Stutz

But that my comments we comment each that so Just And for that's our other to we're get commodities into we guidance consolidated other, in My the walk to not giving from talking pressure basis we're the I So year-over-year. QX into of QX, was and were forward respect to as right? XX going you, still… level. another makes you from at with think move QX. past just points words, QX earlier sense going

Budd Bugatch

to XXX or incremental the XXX?

Jeffrey Stutz

basis XX felt in above another we over and Yeah, incremental. what It's points QX.

Budd Bugatch

understand That's to Americas orders you track basis more about the that know talk looks in XXX quarter. meaningfully XXX or was trying what up, sales is just I the hard how me to elsewhere. so the get like do that my And to dollars. by follow outstripped backlog. to would pressure revenue, through. I million I make I it that. to And is From to sure, want points third than want to walk the That

So that's backlog, That to the added right? just into goes backlog? the

Jeffrey Stutz

correct. That's

quarter the that right. at ended million. beginning change backlog $XXX Our quarter $XXX million. of And about was absolutely The you're from

Budd Bugatch

$XXX beginning backlog the was million? so Okay,

Jeffrey Stutz

Ending $XXX was million. backlog

Budd Bugatch

million $XXX that's And where higher than began. it

Okay. All right.

Operator

Greg & question with from next Sidoti Company. will come Burns Our

Greg Burns

and to offset? over I could to I guess, be next just it the wanted price that to follow-up, what this quarter timeframe you in, what you way you're like you'd seeing. completely price cost be you're again, any the when increases what it Is layering expect quantify, gap that expect on given there quarter, was

Jeffrey Stutz

that a think take question. couple numbers of I a the just And of Let what is your this And you're kind me. mentioned. at recap to stab asking I I'm just me going

to about basis saw improvement gross we due margin, Yet, In year meaningful terms from point points margin impact a we benefit. price on basis decline net gross overall pretty ago of levels, XX in performance. of had

– so points labor, those And helpful? enough was mentioned forth. to so, that other commodities, offset I and that XX basis all that not freight, pressures Is

Greg Burns

guess. Do see stays when so get sequential kind in gross the quarter the price the else kind constant, increases, to of just like? third margins the the I to if a low, everything do margins Yeah, increase given be the neutral? what's you quarters, wondering, gross steady and then back we we I'm few like path of next expect over in

Jeffrey Stutz

we of say, then would assume don't a I think elevated you the minute that environment, further degradation more expect believe reason we and to as work there's question. your are just we great product And moving level, it would benefit fairly And even us that's think to pricing in that at pretty to QX, one. feel expect flow QX through improving the It's cost already in I a more second see it which backlog, for if margin beyond. of this ship part I improve through. we be a allow fair no to that should profile retail. should ability our out into Certainly, to we

it's Now, should a be improvement, going rapid see improvement. not to we expect, don't you but

versus fact, we're We a we've we QX our more the forma probably into today, going retail, FY frankly, back can that back synergy done, arguably year, margin pricing XX%. than there. pre-pandemic the be That's way of the in FY are of should be terms with would work argue around work for be basis cost where in XXXX the into but I part think on somewhere that, the margin to think if XXXX. of consolidated there we you'd gross accurate think And of late pro expect given business, of a likely, to that it we to that, you want performance level able doing. kind and early fully won't and levels of performance and better get QX, the it we next underlying pre-pandemic

Greg Burns

do six has just So, just how about how what because can or months come through, steel you hedge might Like, you talk about it I'm out? from purchase least you it off that Can tracking? buy does flow peak, the meaningfully you talk work? steel from pretty you benefit potential how at like that how

Jeffrey Stutz

the because the price of we steel really of we of prices, steel, hedging, don't we with lag Greg, amount published buy what a speaking, hedge market. steel. a but And we of formally get do Generally a market decent buy is type discount to a derivative bit off on we

so, Steel the come down And right. off you're highs. has

on latest number It steel. quote as plus. Kevin, the $X,XXX a – was me as think exactly – just this, might for is, of have high you $X,XXX $X,XXX don't north the I or but something tonne it's

what lag. buy a do on we has bit. is But down a come So, we it little

So, us start it tends over of to to be And – we steel inflation, about into then a takes longer realize to benefits many down, little three course start period of months, the to of about of XX as to days. the the work months. And It while then, back opposite a market. as happens. and lag kind a a that in result, prices declining stabilize come we

that's of steel QX. at think then, start I from you earlier, see relief kind some we for stays assume peak prices. if out from why there, I where it's So, should level we in mentioned or, will, today, if a And to steel minute you roughly that should

Greg Burns

Is in allowing just of the what's what lastly, network you Like, across about in are Arizona? you sell have And those? to programs full products you early the is them Just pilot terms dealer, Texas going brands? all involved from can the benefits and integration, talk just those? that in seeing the in the on involved any

John Michael

Michael. This John is

think I seen we've number a benefits. of

dealers sellers what that, are and we lot to Before have the market for readiness terms sure really We've for in though, products and the right a and now. conversely, ready. that really speed get Herman as project that and to we to the get the what's cetera, for support proposition the works both et so the what's how go influencers, staff of products this terms sales et in organization working and need legacy organization, market, dealers the of products through what up managers, them and, that to Miller how involved, Knoll value go compelling training interior trained well. Miller of And I really market instances terms how customers, the Knoll to upon supports to and on designers, in of sales also, dealer as up it's well up are and of to both are the making portfolio legacy training cetera, them, amazing to in the trained MillerKnoll on Herman the collective learned as position the improve

it's the I and informed to it. rollout really I we're months our the ready And it. over looking we're lot for forward broader a think several to the that and readiness know doing So, dealers of work are next

Operator

Craig-Hallum will question come from next Alex Capital. with Our Fuhrman

Alex Fuhrman

bit more you It looks to show long little your beyond? what's growth growth. do in been and growth e-commerce and continues a talk And think that of XXXX like stores? continue can driving about Can really into how you that Retail strong terms

Debbie Propst

brick a service. in our lever, of like some like And our opportunity coupled making improved ongoing Debbie. the growth how investments continued that some investments assortment retail customer feel this be overall segments. scalable infrastructure We're POS, our the channels seeing of and and data to really in us, predominant mortar with investments expansion, in and seeing to optimizing across we're with This is using and CRM, brands. we're improve we're continued other continue growth all marketing will we're and for drive pleased we're assortment is to making customer business, performance the marketing the on being the growth the and expansion our The growth with that predominant the e-commerce both we driver across of of

we So, about confident outlook continue and that. double-digit to with excited retail at we're and comps, growing

Alex Fuhrman

of years? presumably over to stores growth, quick mortar brick more ecommerce and next you if follow-up, forward, you double-digit the that few and versus And expect growth opening could. How from as come much as a I look continued

Debbie Propst

stores. open stores we open And them stores. opened additional to opening performance we And with stores, us a the a as we for Herman that audience have new confidence continue of very QX. that with pacing strong. customer to some more We'll from these been have proving stores at are an the engage as have in Miller strong the two through allowing of we these acquisition store brand, in the result three We'll remains the about We predominantly a open point of QX. to really adjacencies be us,

we performance. to believe and in physical we're overall And continue trends. engaging about those physical So, their customers care that customers can pandemic their we with are the well-being engage who beyond

well new remains continue as business We comp total but had in will base we invest to growth very our strong. double-digit double-digit So, stores, growth. as

business driving So, in the well. improvements optimization, experience, our our that our in site base marketing the in assortment making we're as are

Operator

with come Yang question from next Berenberg. Rudy Our will

Rudy Yang

quarter? million $XXX more than now greater of you're on three. recognizing just initially synergies, there help expecting $XX Is success those synergies year to could rate after now expected that on guess because color in more the provide run that's drive opportunities that if you I this case, were million? And separate Or guess additional I expected uncovered? you what is some you

Kevin Veltman

Kevin. is This

the structure been $XXX the teams million planning, were lot a through And of of the the targets org talked coming those original types and working two past, savings from savings. were after as as have the in end procurement integration for close. years we've So, our of by

to procurement maybe the have longer manufacturing little categories a started deeper look that or other As teams logistics, time. lead in, other opportunities like some dug into they

kind as as more office on are more on patterns, seeing a curious essential trigger color as you after get home the little by get - but guess, not time teams at were review they of have in bit a within customers and of Q two is products, home ancillary looking we manufacturing is to now higher seating, a or little But more, Are guess And of to, reality changed now actually the just it, for of year? years, that Rudy mix identified Yang million opportunity. working I so, hybrid you pulling more retail of starting work chain other I'm just obviously popular? we up grounds time areas. see over looked $XXX opportunities well. the how Secondly, has that which a the from what result, such product the it some order as could they're or a But areas if given product of in we and terms opportunities alternative was to products the margin supply become longer incremental accept we do patterns as there those just at $XX could more I emerged types of million last lead kind guys, as

Debbie Propst

as seen our we in of business have decline total year-over-year. In percent a business, performance the overall retail seating our a

more a different that the obviously, is business, just targeting is seating our gaming However, category, which than offset audience. by within

therefore, outdoor great we of of the pleased in localize predominantly some dining to capabilities. seeing and of we label categories private really core within as some those and However, in products our growth other to with upholstery, penetrations have our within categories, we're those where continue opportunities terms we're seating that margin categories enhancement sourcing high and, very

we slight across we're that exception double-digit the true decline in a growth despite growth. very with the numbers all fact seating, X% categories, our confident rugs have the in that are categories, of seeing rest those in performance are growth we So, which of at

Operator

would I further Thank closing showing remarks. time. any for the queue like management no now in questions at back you. I'm to the over this turn call to

Andrea Owen

for updating us really joining Year. New you And And forward you. look to next Happy we your today. thanks, Thank everybody, again MillerKnoll. We in quarter. appreciate continued everyone. Bye, interest

Operator

today's concludes this call. gentlemen, for and Ladies conference you Thank participation. your

You may now disconnect.

MillerKnoll (MLKN) 5 Jan 222022 Q2 Earnings call transcript