MLKN - Earnings call transcript Q1 2025

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Operator

Ladies and gentlemen, good evening, and welcome to MillerKnoll's Quarterly Earnings Conference Call.

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Chief Financial Officer, Jeff Stutz.

Jeff Stutz

Good evening, and welcome to our first quarter fiscal 2025 conference call. I'm joined today by Andi Owen, our Chief Executive Officer. Q&A segment; John of and Retail the the President our during segment. Contract Americas Debbie available session Michael, are of Global Also Propst, President

safe to turn please call I forward-looking over Before remember the our harbor regarding information. Andi,

detailed information results may known risks, than implied. expressed to other be assume are today's context as supplement of to During and these release. the forward-looking forward-looking may earnings update forward-looking which Please information The unknown is or which discuss press different call, and in the that evaluate the of cause factors, today, uncertainties no or in factors, statements are management statements. and these involves and we the actual those obligation

certain and Andi. are to pleasure is that metrics, may to website Investor release press it the also described to our posted millerknoll.com. call non-GAAP reconciled on is our my turn at Relations refer which financial that, in With We over

Andrea Owen

evening, so Thanks, and much Thank tonight. us good Jeff, joining for everyone. you

also to he miss the and energy great and he a get will we many, moment he I served man. to wanted insight Budd we did. will the Bugatch. analyst everything QX deep that that miss brought contract into knowledge while a brought results, a the research Budd remember industry, And we years. enthusiasm our as company to many covering to Budd for take our Before was

to would his out say, condolences deepest And that back said, to go earnings." probably Our with being "Let's get family. Budd

year-over-year to are with year that, fiscal happy and again, is up XXXX entered demand MillerKnoll improving. say I'm orders momentum.

Contract momentum the was growth quarter. largely Americas segment, orders where gained order throughout quarter driven by First the

activations we quarter, demand large underscore to funnel the continue an which indicators as discussed contract improving be requests mockup customers are project orders and year-over-year, up of and new Importantly, all last placing additions, customer picture. such that

both where Specialty orders we Orders largely global technology companies. Asia, by and driven from saw global also grew accounts in large segment, our and International

requested encouraging, This to time also pushed we into this and revenue levels. align increased times. shipment expenses customers entry managing and sales order with While has the operating carefully quarters, is have are between their subsequent

Across are growth. we the focused on company,

our launched needs clients' our several and for initiatives set up quarter, meet to demand success trends support we contract us business, This evolving accelerate. as

the insights research Our team relationship-based launched new of behind work. importance

platform part Impact that their helps that redefine and well-being, As create workspace our Design community and of customers support environments productivity. with

bring our our life also space. own We research within to

MillerKnoll Kingdom Europe. New the of offer the Maharam our is an floors with across square Knoll, and largest the customers to United that step well District, and and flagship Design enhanced space is York Miller, introduced the associates. MillerKnoll of locations contract both X showrooms stores we're marks and quarter, outside to include New taking Geiger/DatesWeiser, just This X for features Located Herman new retail dedicated as XX flagship as in destination heart it space first MillerKnoll York MillerKnoll Gramercy we XX,XXX Muuto. London States our and working the London in experience and feet. United our for

design all customers the across solutions a a new of sustainable leather materials, collective also and foam, to launched new we through world. our for including unique Eelgrass reinforcing deliver quarter, commitment selection. dozens better our alternative, We first the products Bio-Pur product and continue introduced In our bamboo-based to

Center Jefferson House in health for recently Honickman design care Company's our Awards recognized [ Sensory by Seating Philadelphia. Fast ] was addition, work Design with partnership in in on In our Innovation

as At travel. our of for the built, has operational to Retail the expansion, delivered the we foundation their on capturing their design softer on targeted environment. flat focused segment. industry sales to capitalizing more engagement journey. held our that consumers continue initiatives, and product execute spend purchase against to is faster we more demand, orders same Turning last We customer strong summer and growth team typically assortment By a time, difficult as services shift to throughout in including year the

America, outperformed year-on-year points approximately quarter. that business retail North X our estimate industry we Retail by In the comparisons during

fuel We assortment a potential Within in in made This well brands our strategy market North for as the as are traction. America and near Muuto. optimistic the our and rebounds Design strong future, to Retail confident shop destination the is Reach by larger offering growth segment Knoll that and housing HAY estate real We've in will demand. gaining

North higher for brands sales During these America. drove the quarter, in we

The of store online, and associates that key. our and services. design then with work start experience interplay utilizing is online We many know between and our customers stores

store plans is stores stores in within fiscal underway fiscal growth year begin new opening now second Work more half America. with to include retail of XXXX, Our expansion the in North plans year several for XXXX.

growth the the provided business positioning Across have footprint company, ourselves global will trends collectivist start us invested believe quarter as and placing and We've attention paused. Now slightly, upcoming capture future. they and demonstrate orders first customers our and and results that have positioned the by advantage We seize that interest improve. support to marketing season. rates the partners holiday channels financial we diverse for we dropped focused our as their and opportunities brands, trade to have the anticipate on to cyber

team, and asset our Our we important continue most our to strengthen experience. is associate

XXXX Great share to Work. has to certified a U.S. that pleased Place I'm MillerKnoll as been

added we've Directors. In to of talent our Board new addition,

who and and success. Board our architecture, technology, benefit team management perspectives Tina X recently Board our recruited partner Jeanne of John hospitality. last to will announced together and we Gang, we retirement X as year, and Their excited in dynamic long-term We're design the new expertise directors. Maeda, Following welcome bring drive members Edmundson to

year I by close ahead. I'll optimistic the that, With about saying am

Our are our work and momentum in hard focus business. building

I'll closer at look Jeff a financials. back it to now turn our for

Jeff Stutz

the followed full fiscal by the a few second by quarter, both Thank our first will start and you, outlook and performance our Andi. I an insights quarter of overview year. into targets for providing in

we $XXX first which to same of XXXX. decrease ago a $XXX first ended year. business. on a increase period an of X.X% the were start for XX.X% period reported at an the million Andi fiscal trends up net $XXX improvement elements million, reported see basis year-over-year last positive were a consolidated from are the up from to of fueled and sales This As reflecting mentioned, a quarter orders contract organic the basis. and X.X% of organically compared demand demand of backlog, picture year-over-year on basis and our in improved million, up Consolidated in the in decrease encouraged continued X.X% a X.X% X.X% across on our quarter a year the Consolidated

higher ability the and while remain It's of Consequently, important the trends, into average out within improved, to were the that expecting customer of has time than a point percentage to entry from to ship build the as entry order increased. Relative normalized date Andi our product levels in backlog as mentioned, requested have period. to historic order coming quarter. ship limited this orders quarter end we more

production contributed year, product pricing to year. was improved to offset and manufacturing net and Our by the consolidated were but prior Incremental margin leverage XX%, compared was sales and efficiencies essentially last channel shipping to of and mix levels. a all favorable logistic which benefit, from flat expansion lower loss margin gross

balance the Turning flows sheet. cash and to

agreement quarter, from lending a defined We million $XX of as we shares approximately debt-to-EBITDA we with total of generated ratio turns. first quarter outlay ended cash This operations. million, our flow by cash in repurchased approximately million and X.X $XX net the for a X.XX

by performance same X% for that, an ago. quarter a first a the Within Contract the With Americas net moment decrease of $XXX now year I'll summarize quarter segment, take were million, segment. representing our our quarter from to sales organic

the from New organically sequentially which million, orders $XXX last period totaled in up prior over X.X% the was X.X% under and up just year quarter.

additions, the in and peaked pricing we the confidence through ahead of requests orders all month giving activity second special year, funnel quarter. quarter, as prior first move increased the of well August mockup remained the customer us and During

prior to a quarter X.X% as is of segment result loss operating On operating in compared volume of the fixed to X.X% on was adjusted operating leverage year an the points The the XXX quarter in same margin costs. Contract which margin quarter, the the X.X% Americas basis for year. in last down compared the was basis,

million operating the $XXX basis, up on the X% X.X% East benefits International and down Continental costs. quarter during with for Within Europe and an basis the a points totaled million, Contract operating reported Segment X.X% basis terms a organically, prior basis and reported X.X% year-over-year, which of year. first Middle on adjusted were But is in Specialty Pacific, of X.X% segment, actions of down leading sales quarter $XXX in growth. year-over-year reduce X.X%, and resulting net the year-over-year. increase organically margins quarter quarter the Orders Asia the the in in by a to up totaled to segment of driven on the in compared parts was past XXX of operating margin X.X%

was an segment. year, million. period essentially reported on sales net and performance last organic the quarter We Retail decrease our Relative to flat X.X% to reported the Turning $XXX in of basis. of this same a represents

were compared reported New a of year. last to and orders organically in down the last down million X.X% X.X% $XXX period on basis year

which team a that is real impact outlined improved in improvements the margins we and for as As near-term having set us levels improve. up release, Retail demand on the and growth profitability earnings driving are operational

the first in right quarter team Still, interest investments have of rates of making anchored demand we a market by housing right forward results and in for tepid retail place, sluggish reflect environment enthusiastic data. improved elevated However, the the set conditions. we that are space, anticipation our furnishing

against more margin trends which The the to X.X% about operational And by to basis, retail operating than in what in segment driven quarter margin our industry the totaled ability was America suggest share on by prior year relative first meantime, operating we're our adjusted compared the for X.X%, the in gain And overperformance ago. basis an the broader year, X.X% in higher was the efficiencies. points a XXX North encouraged quarter future.

the let's and in $X.XX upcoming the Now fiscal outlook by maintaining expected This supported guidance midpoint we're in improvements of our positive the per of our period. our position which the demand, for backlog We're back adjusted increased we range guidance year of contract and macroeconomic earnings to to equates year. half in is full this the trends global provided share, June. turn seeing

sales takes This the relates quarter into holiday between million the expected consideration quarter cyber and net $XXX are we diluted Adjusted $X.XX to to range fiscal range between XXXX, business. per share. and million. promotional in in second our Retail guidance period of shift earnings $X.XX second it As expect the a to $XXX for

while quarter, year, be split third second year, the quarters. it the this full period Last second promotional and fell in between the will

relative the quarterly of this to fiscal we earnings when quarter between $XX fiscal last $XX This million year's sales quarter will revenue move year. year. to performance comparing factor estimates this third pacing, important timing second to into is from of the So in revenue estimate shift and our an million consider in last and

that the overview I'll operator, With the take and we'll now to numbers, the over of Okay. call turn questions. your

Operator

begin question-and-answer we'll comes And Thank the your with [Operator now the from you. Burns first Greg question line Instructions] Sidoti. session. of And

Gregory Burns

in couple of a terms the Just guidance.

ahead at looking from to I are of guiding here implied going think, XQ like you're to is looks the margins the bit revenue, ago, year a operating consensus. but it that So a down be little guidance,

what the terms lag looking some driving what's think on for for a some But the want out. color pacing, the Street revenue the to second margins I get your was half, bit of just with I on the the quarter? for more margins maybe little shifting here in I order than was in it's second maybe or softer of view looking

Jeff Stutz

A is start. Yes, to of for you. couple thoughts tonight. with Greg, This be good you Jeff. I'll

all, of and to in efficiency labor perspective, we overhead order from gross in business, First expecting in the guidance see expect, the our leverage. and a margin improvements activity we're given contract ramp-up certainly of elements

by and lid offset on shift product margin that's a keeping move side, a QX performance our is our QX. mix flip guide. The and into from really So in though, being gross factored as that's we into business that's

as some result the of that's rotating specialty brands. really gross move retail bit QX a sales higher higher we -- margin -- as margin out well the as So X into that's we're factor. of And just the of

timing, cyber And that from perspective, OpEx then cyber in look when you shift an I timing promotional that mentioned.

it get strange kind in associated marketing the deal We all have we're we're is this this to revenue with the front-end of going support quarter to loading spend where of not the that, quarter. that but going some

So pointing for the accounts I combination of those think, is X you're what factors, out. what

Andrea Owen

bulk shifts the of sits really I cyber that than more in else. the anything think

Gregory Burns

RH guess, quarters, on maybe commentary seeing give in outlook you some retail color. any incrementally demand coming positive anything Are the had, momentum. side, Then that Great would terms retail kind positive the demand of Okay. market in up? of maybe picking you I of terms in

Debbie Propst

the to point going question, Greg. We're retail our that demand think stimulate is little cut the yesterday bit We in fact evident consumer confidence to will help that trend in outlook economics We we that that it pertains believe is as more optimistic our for a Thanks X.X about marketing Debbie. really saw order feeling This for a on QX basis. that approach improve. the the and we are trend. daily the

were organic an from our down X.X. in So QX orders perspective,

Our marketing XX. was spend down

relationship the between X. we like And those so

seasonally move reintroducing awareness we more spending advantage advertising, we'll to us cyber time take be QX suitable more campaigns As traditional of timing. for a be and in that to into

pleased really we where trend. in we're outlook terms this our So business think with of will

Now that there interest the that the to should rebound. loosen up market consumer and will housing confidence start the

Operator

the from Capital comes of Fuhrman Craig-Hallum Group. question Alex line next your And with

Alex Fuhrman

impacting you're thing lag quarters delivery for see revenue more as why order or something away the that could from further to cause asking over really starting onetime that years? customers ongoing curious growth Is a the that order was year? is of potentially I next an to you Or couple of that's trend this date. see

Andrea Owen

to want John, do that? take you

John Michael

take This is Alex. that. to Thanks, John. Sure. happy I'd be

think there's we've larger or in couple more a I significant seen lot -- increase quarter. last projects factors. of one, Number a in a the

up complex have by cycles. their nature, the quarter. just and I and times those XX% projects, was longer think very if of over had we more you because look $X little it at And typically for are over projects million, their size lead a

of think I it. So that's part

just The becoming to accustomed other are to say taking I our get thing projects done. clients their construction it is, would I think, longer

to moving met. they're earlier trying get faster. their bit So make orders a little sure to are times that They're in a delivery

Jeff Stutz

Alex, this give time. on over might just Jeff. just little on I a perspective trends tag to is

And XX-week we But settled since X somewhere our been to for just kind the new. I And have driving more seeing. certainly part and down for quarter isn't Americas. necessarily in XX- All hovering. sizes, if you go the described same of -- extended just back after John pre-COVID, being the spiked is time, is And typically kind think to X to say, International there, way what just of And pre-COVID of Contract -- then, it little seen it's the than true it's weeks But revenue. would larger I COVID, also in business, backlog project COVID up. ongoing. phenomena. And then into during between account of this a this our It's the of been range. it's we tended since it's

suspect here. not So we'll John goes as changing just it's behavior, described, see a it's from it where certainly new customer and trend. just I

Andrea Owen

just that, more I on point, our X And think orders in to and this weighted add August. data more quarter, With we Alex. July to heavily saw

you so the trend quarter, quarter. just produced saw And that throughout as less we in spike the

of So it a conglomeration all was of things. of sort those

Alex Fuhrman

this and you're week of We're kind large driving days Amazon in their going groups you for more more see there's really a order seeing have down that? nice It employees that to office North that next year. particular nice about headline contract a projects? helpful. And America any leading route driving this curious That's growth the Okay. if Curious order was see the back growth if having then week for been X quarter. to industry companies

John Michael

looking of the I understand space. of the get goes having think all They well-being, certainly, clients, to we're most and majority conversations in people with back ways the are in together for the being office. and culture that connection continue to and with power the

a in doing seen we've really you financial expect banking, I public sector, to good well care, those do been think would and segments health pharma, well. lot services, have activity of

the technology seen We've uptick sector. in actually some

of Northern our California region was in quarter. fact, strongest performing this past regions In one the

widespread the is terms of business coming pretty where So in from.

Jeff Stutz

are to we projects we're is Americas. pick We're say also really this order in break which I building we're Specialty Jeff. growth for that and I'd up client see on super Alex, point that had that encouraged International what's is and And to larger activity the might encouraging. But And see to loose, tag out, in encouraging about the These relationships as the brand, large project beginning headquartered the segment. is We're APMEA regional wins business some that great. East. loose and as opportunities with growing well And which sector in region health are sector some Knoll is the and there. accounts. seeing India, in Middle in accounts in care technology particularly the legal also key break services our Europe,

sectors number a momentum. positive seeing of some there's that So real internationally we're

Alex Fuhrman

That's Okay. helpful. really

Operator

question your with from The Benchmark And of Garner next Reuben Company. line the comes

Reuben Garner

everybody, Good excuse things of longer kind leveled on side, to at me. of as business Good you morning, things I the you. Thank margin think evening, I kind here guess term your can is to everybody. off seems that look go. kind of have wanted stabilizing. where it start

the that or volume much have for how -- now. you volume I range how the X is can maybe of on term to XX.X% and you your think X been or is you've of last within versus kind think control XX.X% that go Curious things that quarters kind much in longer dependent still? where

Jeff Stutz

to gross volume, economic margins business. as a I costs given be Jeff. last stabilized. opportunity with point a as I level for that at well as across next across as the across overhead have is But cost of did going we're the to somewhat right SG&A conditions in think you're is. we globally the up think leverage we where group leg next what business seeing comment similar is our this a share our quarter, that I which see the manufacturing improve, Reuben, real for a footprint That's in us we're retail opportunity I'll

mean, what of there's to price I incremental some annual returned kind benefit, increases. -- normalized pricing our more price but we're

we in half, into see the I we estimate for be back next half that margin we that back current leg will of year. expectations do the gross the is expect won't it quantify from a And the up levels. leverage. move as you but up So for to have

Andrea Owen

would term to well. Reuben, long as say Jeff I just And everything too, add said

As -- obviously, we margins, see future. in, plans is that will come bit tend through little larger at long-term at And growth be and our retail lower these to in that the kick that higher are that flow balance start helpful business for margin, think so stabilize. start in continue to a a be a to I to projects offset we'll that

Reuben Garner

that it. more the backdrop geared Just color you that Is on it the said And full wondering towards then would maybe I year. an any businesses? helpful. rates kind you that? improving of Got contemplated Jeff, of elaborate can that was the could in think across your I second year that there? all the of if like half mentioned Is retail impact guidance, have you be macro and

Andrea Owen

geared the U.S. our Fed with with businesses, I yesterday all what level towards happened of in certainty certainly the Reuben. I think there's think a of it's

business indicators the the in we've I that think to coming are seen fruition.

indicators above or X about I X now, to orders and these see been to consistent quarters year. you guys talking for we're last we've starting think

open buoy market rates comes the certainly business. as U.S., will in it retail to to that think resale mortgage the up I starting the and

come the I will that think move. on play think start sidelines sitting to we've and and we had some people

to a us entire But I it So indicators in for benefit the business. will consistent the very be think forward. fashion moving continue

Reuben Garner

you, and through Thank good year. Great. the of on luck the end

Andrea Owen

Thank you, Reuben.

Operator

And Tower question with comes line next from Water the Brian your of Gordon Research.

Brian Gordon

is was the international where in this with network the us brands an Knoll to left Last process I could dealer into other the maybe what you just are noted that some give guys to and quarter, do you continuing. there? of you update particular on and integrate And was hoping work

Jeff Stutz

talk on quick to Jeff. to This you. good a Yes, Brian, is update that.

by network. about of network. we year, QX, As of dealer end the combined to And goal of be through network integrated across the have the MillerKnoll -- is the fiscal end of and international intent XX% this -- entire the

earlier progress my strides. They're with making good in brand mentioned, see that starting real we're continues. some good the opportunities through network. combined as And to So Knoll comment

Brian Gordon

That's great. That's good to hear.

maybe a of picture bigger bit question, of Second a of question. kind kind

your your would then hybrid of is those kind going back what guys on have hearing maybe and Just that settle kinds the the where is portfolio the been hybrid how expectation and are trends? you And work this? product you of to and collaboration things? customers to about for dealers from follow-up in wondering your And market guys feeling to be about

Andrea Owen

great a That's question.

hearing I apart office making together a think lot about and decisions to be limited hybrid to people and in occasions. lot to a quandary less support many we're return versus the more about

the but I what from I news far to issue in push us, customers add U.S. a was think more great And John, that become less has frequently. of hearing being more an sure you're to the from as would of you together from something as I'm U.S. it the announcement think and Amazon

John Michael

the of and It environment think really the changing And evolve. second all post-COVID was being this feel being together workplace, terms needs about in question, I we the product the portfolio in as work the realizing good continues and of the really meet the ability everyone right, back, in our similar, of to collective the brands whole very Andi, to part benefit the office. of

Andrea Owen

to been to we've those of our assortment some think and has feel complex we insights few our I innovation use that. and I think develop very strongly product problems. insights the able study And been and really able things really the was help X of to rich about last research about years team many

Brian Gordon

for much the Great. Thank detail. additional very you

Operator

questions. there And further are no

for back any Andi remarks. Owen So closing to I turn now floor President and CEO, the will

Andrea Owen

we continued updating of the support us to looking for your forward Thanks quarterly lovely next and call. again, MillerKnoll, we're joining you our and evening. a call, Have everyone, appreciate on on

Operator

And concludes for thank this gentlemen, participation. you and ladies your today's We call.

disconnect. now may You

MillerKnoll (MLKN) 19 Sep 242025 Q1 Earnings call transcript