MillerKnoll, Inc. (MLKN) on Q1 2022 Results - Earnings Call Transcript
Operator: Good evening and welcome to Herman Miller's First Quarter Earnings Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Antonella Pilo, Vice President of Investor Relations and FP&A. You may begin. Antonella Pilo: Good morning. Joining me today on our first quarter earnings call are Andi Owen, Chief Executive Officer; Jeff Stutz, Chief Financial Officer; John Michael, President America Contract; Debbie Propst, President Global Retail; Chris Baldwin, Group President MillerKnoll; and Kevin Veltman, Senior Vice President, Integration Lead. We have posted the press release on our Investor Relations website at hermanmiller.com. Wherever any figures are presented on a non-GAAP basis, we have reconciled the GAAP and non-GAAP amounts within the press release. Before I turn it over to Andi for a brief overview of the quarter, I would like to remind everyone that this call will include forward-looking statements. For information on factors that could cause actual results to differ materially from these forward-looking statements, please refer to the earnings press release as well as our annual and quarterly SEC filings. Any forward-looking statements that we make today are based on assumptions as of this date, and we undertake no obligation to update these statements as a result of new information or future events. At the conclusion of our prepared remarks, we will have a Q&A session. Today's call is scheduled for 60 minutes. With that, I'll turn the call over to Andi. Andrea Owen: Thanks, Antonella. And you guys clearly know that I am at home today with my son and my family. So welcome to my world. Good evening and thank you for joining us. This is an exciting day. We finalized our acquisition of Knoll in the first quarter and today we are discussing our results as MillerKnoll for the very first time. Herman Miller is doing business with MillerKnoll and we're seeking shareholder approval at this year's annual meeting to change our name officially to MillerKnoll, Inc. So before I turn the call over to Jeff, I wanted to share a few remarks about our business overall, and the progress we're making behind the integration. Jeff will then take you through our financial results in greater detail, including changes to our reporting segments. We started the year with positive momentum and really strong demand around the globe. Q1 orders grew across every segment of our business. This positive order demand is an indicator of the strength of our business fundamentals, as well as our strategy and it underscores our confidence in the future. Our teams are executing and driving progress against our strategic priorities. Both our retail and contract businesses continue to grow. And we're bringing new customers to our brands with growth initiatives like gaming, store and studio openings, and growing digital presence around the world and across all of our segments. As MillerKnoll, we're now one of the largest and most influential design companies in the world, positioned to redefine modern design and transform our industry. With a broader portfolio of complementary brands, enhanced scale and capabilities and the financial strength of our diversified businesses, MillerKnoll is uniquely positioned to imagine and create beautiful design solutions that both endure and inspire. Since the early days of the integration, our global teams have demonstrated extraordinary operational discipline. They're executing well against our plans, and they're on track to achieve our timeline for delivering $100 million in cost synergies within two years after the close of the deal. One of the key areas of focus for the integration is bringing our two leading contracts dealer networks together in the Americas. And while there's still a lot of work to do, we've made considerable progress and I wanted to share a brief update with you. In order to grow our contract business, we’ll have to enable our dealers to bring the sole capabilities of MillerKnoll and our industry leading product portfolio to our customers. So we'll create a network of MillerKnoll dealer to represent the full collective of all of our brands. This strategy benefits our dealers by giving them access to the full power of our portfolio, which was a key driver of the deal and have the opportunity to sell more and also be better positioned to meet the specific needs of each customer. So while this work is focused on the MillerKnoll dealer network in the Americas, the strategy also presents new opportunities for our international dealers. Bringing Knoll’s amazing portfolio to these markets in many cases, for the first time, unleashes incredible opportunities for growth. This strategy benefits our customers as well by creating the highest performing dealer network with access to the broadest product portfolio in the industry. The MillerKnoll network will have more dealers than either network had on its own, giving our customers more choice both in terms of products and partners. Clearly, MillerKnoll dealer network is not a one size fits all approach and instead requires we work market by market to determine the optimal footprint based on the unique dynamics of each one. We've established the principles we’ll use to determine the right distribution model for each market and we’re finalizing the optimal footprint for each of our key markets now. At the same time, we're developing the pilots and processes that will enable us to bring the combined MillerKnoll product portfolio to all of our dealers as soon as possible. [Indiscernible] based on our integration timeline, and will continue to be a top priority for us for the remainder of the fiscal year. At we said all along, bringing these two incredible organizations together felt like our destiny. And now that we're on our way, we feel even more strongly that this was meant to be. Watching our teams from around the world come together to identify and capture the best in each organization while designing the path to our shared future is truly inspiring. And we know there's so much tremendous opportunity ahead of us. So with that, I'll turn it over to Jeff, to give a bit more commentary about the results before we open it up for questions. Jeffrey Stutz : Great, thanks, Andi. I'll start by seconding your comments about the integration. It has been really inspiring to watch this work unfold and our teams are exceeding our expectations. Given their efforts, we're confident in our ability to deliver on our synergy targets. As we discuss results today, a quick reminder that our reporting segments have changed now that the acquisition is complete. As MillerKnoll we will be reporting results under four business segments; Global Retail, which reflects the legacy North America Retail segment, and now includes our International Retail business; Americas Contract, which reflects the legacy North America Contract segments combined with Latin America and the Design Within Reach Contract business; International Contract, which reflects contract business outside the Americas; and Knoll, as the acquired Knoll business will initially be reflected as a standalone segment. Earlier today, we issued a Form 8-K that provides historical information based on these revised segment definitions to assist you in your modeling and your analysis. So on to the numbers, consolidated net sales of $789.7 million were up 26% from the same quarter last year, which is an increase of approximately 0.4% organically. Now keep in mind that we're facing a challenging year-over-year comparison due to the elevated backlog from COVID related manufacturing and retail studio shutdowns last year. Additionally, our ability to ship orders this quarter was impacted by the supply chain disruptions that our industry is facing. While we do expect this to moderate in time, our outlook for Q2 considers the near-term impact of these pressures. Orders were up 65% over last year or 35% organically. And as Andi mentioned, the strong demand was seen across all segments. Global Retail had another strong quarter with orders up 22% over the prior year period. The Americas Contract segment saw orders increase by 43% over last year and International orders were up 35%. Knoll's Workplace business also saw positive order momentum and leading indicators in this business are consistent with what we saw in the Americas business, with the funnel of new projects up 18% and 14% respectively from last year. Knoll's Residential business also saw a strong order growth in both North America and in Europe. Adjusted gross margin in the quarter was 35.9%, compared to 40% in the prior year period and was impacted by higher commodity costs and other inflationary pressures. The prior year also reflected favorable channel mix associated with retail activity, operating leverage from working through elevated backlog and temporary cost reductions, as we addressed the challenges of COVID-19. To be sure, we are actively managing what we can control to address inflationary pressures going forward. We implemented a price increase this quarter and have additional increases planned for the second quarter to help offset these pressures. Adjusted operating margin was 6.2%, compared to 15.3% in the prior year. Similar to net sales, operating margin last year was higher due to shipments of elevated backlog at the beginning of the quarter, favorable channel mix and the spending reductions we put in place to navigate the pandemic. We've reported a net loss per share of $0.93, compared to diluted earnings per share of $1.24 for the same period a year ago. This includes the impact of additional shares issued in the first quarter, as well as a $1.42 per share related to non-comparable items. Adjusted earnings per share was $0.49 in the first quarter compared to a $1.24 last year. Looking ahead to the second quarter, our guidance includes the full impact of Knoll for the quarter. We expect sales in the second quarter to range between $1.025 billion and $1.065 billion and adjusted earnings per share to be between $0.55 and $0.61. This guidance considers a near-term inflationary and supply chain environment that we are currently experiencing and the actions we're taking to help mitigate these pressures. The strong demand environment and traction from our strategic initiatives positions us well as we look forward. So with those opening comments, I'll turn it back over to the operator and we'll take your questions. Operator: Thank you. [Operator Instructions] Our first question comes from the line of Greg Burns with Sidoti & Company. Operator: Our next question comes from the line of Rudy Yang with Berenberg. Operator: Our next question comes from the line of Steven Ramsey with Thompson Research. Operator: Our next question comes from the line of Reuben Garner with Benchmark. Operator: Our next question comes from the line of Alex Fuhrman with Craig-Hallum Capital. Operator: We have a follow-up from the line of Greg Burns. Operator: I'm showing no further questions in the queue. I would now like to turn the call back over to Andi for closing remarks. Andrea Owen: Great. Thank you so much, everyone, for joining us today. We really appreciate your continued interest in MillerKnoll and we look forward to updating you again next quarter. Hope you have a good night. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
MillerKnoll Gains 8% Despite Q3 Revenue Miss and Soft Forward Guidance
MillerKnoll (NASDAQ:MLKN) shares surged more than 8% intra-day today despite mixed fiscal third-quarter report and a weaker-than-expected outlook for both the fourth quarter and full year.
The company posted adjusted earnings per share of $0.44, in line with analyst forecasts. However, revenue came in at $876.2 million, falling short of the $918.88 million consensus, despite growing 0.4% year-over-year.
Looking ahead, MillerKnoll offered Q4 guidance below expectations, projecting earnings per share of $0.46 to $0.52 on revenue of $910 million to $950 million. Analysts had anticipated stronger figures. Full-year expectations were also trimmed, with the company now forecasting EPS of $1.81 to $1.87 and revenue between $3.618 billion and $3.658 billion, both underwhelming compared to market estimates.
The company saw mixed performance across its portfolio. While Global Retail orders jumped nearly 15% year-over-year, much of its contract business faced demand softness, largely due to broader economic uncertainty impacting office spending.
MillerKnoll Delivers Solid Q2 Results but Signals a Softer Outlook, Stock Drops 9%
MillerKnoll (NASDAQ:MLKN) reported stronger-than-expected earnings for its second quarter. Despite the upbeat performance, the furniture maker offered a cautious outlook for the coming months, causing its shares to drop by over 9% pre-market today.
For the quarter, the company reported adjusted earnings of $0.55 per share, edging past analyst expectations of $0.53. Revenue climbed 2.2% year-over-year to $970.4 million, exceeding the consensus estimate of $959.6 million. The results highlighted MillerKnoll’s ability to leverage its diverse portfolio of brands and global reach, even amid varying market challenges.
Segment performance painted a mixed picture. The Americas Contract division led the charge with a 5.9% increase in sales to $504.2 million, accompanied by a 4.4% uptick in orders. The International Contract & Specialty segment recorded modest growth of 2.1% in revenue, reaching $246.3 million, but orders declined by 6.5%. Meanwhile, Global Retail sales dropped 5.3% to $219.9 million, reflecting ongoing consumer headwinds. Despite revenue growth, gross margins narrowed slightly to 38.8%, down from 39.2% the prior year, largely due to shifts in product mix.
Looking ahead, MillerKnoll expects adjusted earnings of $0.41 to $0.47 per share for its fiscal third quarter, falling below the Street consensus estimate of $0.56. Revenue is forecasted between $903 million and $943 million, aligning closely with Wall Street projections of $927.2 million. The company also tightened its full-year adjusted EPS guidance to a range of $2.11 to $2.17, hovering near the $2.16 analyst forecast.
MillerKnoll, Inc. (NASDAQ: MLKN) Q1 Fiscal 2025 Financial Performance Review
- Earnings per Share (EPS) of $0.36, missing the Zacks Consensus Estimate of $0.42.
- Revenue reported at $861.5 million, below the expected $889.3 million.
- Challenges attributed to the uncertain housing market and increased operating expenses, yet optimistic about future improvements.
MillerKnoll, Inc. (NASDAQ:MLKN), a prominent player in the furniture industry, recently disclosed its financial outcomes for the first quarter of fiscal year 2025, which concluded on August 31, 2024. The company reported earnings per share (EPS) of $0.36, missing the Zacks Consensus Estimate of $0.42. Additionally, MLKN's revenue for the period was $861.5 million, falling short of the anticipated $889.3 million. This performance indicates a challenging start to the fiscal year, with both key financial metrics not meeting analyst expectations.
The reported downturn in MillerKnoll's financial results is attributed to several factors impacting its operations. The ongoing uncertain housing market has notably affected the company's growth prospects across its segments, leading to a decline in adjusted earnings and net sales from the previous year. This situation is further exacerbated by an increase in operating expenses, which has negatively impacted the company's bottom line. Despite these challenges, MillerKnoll remains optimistic about the latter half of fiscal 2025, expecting improvements in the housing market and overall macroeconomic stability.
MillerKnoll's strategy to navigate through these turbulent times includes diversification, international expansion, technological investments, streamlined processes, and innovation. These initiatives are aimed at bolstering the company's near-term prospects and positioning it for future growth. The company's efforts to manage operating expenses in line with sales levels and its focus on enhancing platform operational capabilities are critical components of this strategy. Despite the sluggish housing market affecting the Retail segment, there is a noticeable improvement in demand, especially in the Contract business, indicating a potential turnaround in the company's fortunes.
The financial metrics further illustrate the company's current market position and investor sentiment. With a Price to Earnings (PE) ratio of approximately 26.23, investors seem to have a moderate expectation of the company's future earnings growth. The Price to Sales ratio of about 0.47 and an Enterprise Value (EV) to Sales ratio of approximately 0.92 reflect the market's valuation of the company's sales. Additionally, the EV to Operating Cash Flow ratio of around 14.81 indicates the company's valuation in comparison to its operating cash flow, providing insights into its financial health and operational efficiency.
In conclusion, MillerKnoll's first-quarter fiscal 2025 results highlight the challenges faced by the company in a difficult market environment. However, the company's strategic initiatives and the observed improvement in demand within certain business segments suggest potential for recovery. As MillerKnoll continues to adapt to market conditions and execute its growth strategies, investors and stakeholders will be closely monitoring its progress in the coming months.
MillerKnoll Shares Up 7% Following Q3 Results
MillerKnoll, Inc. (NASDAQ:MLKN) shares were trading more than 7% higher pre-market following the company’s reported Q3 results, with EPS of $0.28 coming in slightly better than the consensus estimate of $0.27. Revenue was $1.03 billion, in-line with the consensus estimate.
Demand trends remained robust with orders growing organically by 20.3% year-over-year, driven by growth across all segments. To little surprise, inflation and supply chain headwinds persisted throughout the quarter, which drove a 640bp year-over-year decline in gross margin. However, management noted that supply chain constraints began to ease during the second half of Q3, and expects pricing actions to continue benefiting margins in the coming quarters.
The company provided its Q4/22 outlook, expecting EPS in the range of $0.46-$0.52, compared to the consensus of $0.49, and revenue in the range of $1.075-1.115 billion, compared to the consensus of $1.03 billion.
Analysts at Berenberg Bank said they continue to take a positive view on the company, as they expect demand to remain strong and macro headwinds to ease.
