Investment Rating - The report indicates a positive outlook on consumer confidence, with the consumer confidence index rising significantly above expectations [2]. Core Insights - The Conference Board index of consumer confidence increased by 12.3 points to 98.0 in May, surpassing consensus expectations, with a prior revised level of 85.7 [2]. - The expectations component of the index rose by 17.4 points to 72.8, recovering from its lowest level since October 2011 [2]. - The present situation component also saw an increase of 4.8 points to 135.9 [2]. - The labor differential decreased slightly to 13.2, with 31.8% of respondents indicating jobs are plentiful and 18.6% stating jobs are hard to get [2]. - The survey's measure of 12-month ahead inflation expectations decreased by 0.5 percentage points to 6.5% [2]. - The rebound in consumer confidence was noted to have gained momentum following the announcement of a 90-day pause in US-China retaliatory tariffs [2]. Summary by Sections Consumer Confidence Index - The consumer confidence index rose to 98.0 in May, a significant increase from the revised April level of 85.7 [2]. - The expectations component increased to 72.8, while the present situation component rose to 135.9 [2]. Labor Market Insights - The labor differential decreased to 13.2, with a slight increase in the percentage of respondents indicating jobs are plentiful [2]. Inflation Expectations - The 12-month ahead inflation expectations decreased to 6.5%, indicating a decline in inflation concerns among consumers [2].

Market Overview - International gold prices surged significantly on May 20, opening at $3,231.61 per ounce, reaching a high of $3,285.73, a low of $3,204.61, and closing at $3,277.22 [1] Economic Indicators - Federal Reserve's Harker stated that inflation expectations remain stable, and any changes could signal the need for action. The Fed is prepared to remain patient and needs more time to understand how trade policies affect business decisions [2] - Fed's Bostic does not expect a recession but is uncertain when households and businesses will feel secure enough to make long-term spending decisions. Current tariff levels are high, complicating the economic outlook [2] - Fed's Musalem emphasized that if inflation expectations become unstable, prioritizing price stability is crucial. The current monetary policy remains appropriate if trade tensions ease and the labor market remains resilient [3] Geopolitical Situation - Reports indicate that Israel is preparing to strike Iran's nuclear facilities, which could escalate regional tensions and conflict. U.S. officials are divided on the likelihood of such an action [5] - Iran's leadership has expressed skepticism about reaching a conclusion in negotiations with the U.S. regarding its nuclear program, asserting its right to uranium enrichment under the Non-Proliferation Treaty [5] Investment Insights - The largest gold ETF, SPDR Gold Trust, increased its holdings by 0.57 tons, bringing the total to 921.6 tons [6] - The probability of the Fed maintaining interest rates in June is 94.7%, with a 5.3% chance of a 25 basis point cut. For July, the probability of maintaining rates is 70.3% [6] Technical Analysis - Gold prices have shown a strong upward trend, breaking key resistance levels and indicating a potential for continued bullish momentum. Short-term adjustments may be necessary due to overbought conditions [6] - The market sentiment remains cautiously optimistic, with a focus on maintaining a bullish trading strategy [8]

Investment Rating - The report does not explicitly provide an investment rating for the industry or companies discussed Core Insights - The University of Michigan Sentiment index fell to 50.8 from 52.2, indicating a weaker consumer sentiment than expected [1][3][4] - Inflation expectations have risen, with 1-year expectations increasing to 7.3% from 6.5% and 5-10 year expectations rising to 4.6% from 4.4% [3][5] - The decline in consumer sentiment may not yet fully reflect recent tariff pullbacks, suggesting potential for improvement in future releases [4][5] Summary by Sections Consumer Sentiment - The University of Michigan Sentiment index has decreased for five consecutive months, indicating persistent weakness in consumer sentiment [4] - The current conditions and expectations indices both fell, contributing to the overall decline in sentiment [3] Inflation Expectations - 1-year inflation expectations are at their highest level since 1981, reflecting significant concerns about rising prices [5] - There is a notable divergence in inflation expectations based on political party affiliation, which may influence consumer behavior [5] - Recent tariff pullbacks are likely not fully accounted for in inflation expectations, indicating potential volatility in future readings [5] Economic Outlook - The report suggests that while consumer sentiment is weak, it remains uncertain whether this will lead to a reduction in consumer spending in the coming months [4]

Financial Data and Key Metrics Changes - Non-GAAP EPS increased nearly 20% year over year, reaching $0.44 per share [5][8] - Revenue growth returned in both segments, with Workplace Furnishings revenue slightly increasing and Residential Building Products revenue growing 7% year over year [8][10] - Consolidated non-GAAP gross and operating margins expanded year over year, with non-GAAP operating margin at the highest first quarter level since 2007 [8][9] Business Line Data and Key Metrics Changes - Workplace Furnishings segment saw a slight revenue increase, but non-GAAP EBIT margin compressed by 20 basis points year over year due to a different mix of business [9][10] - Residential Building Products revenue increased 7% year over year, with remodel retrofit business growing 13% and operating profit growing 16% [11][12] Market Data and Key Metrics Changes - Contract customer revenue increased 4% year over year, while shipments to small and medium-sized businesses (SMB) declined approximately 5% [9][10] - Orders in the Residential Building Products segment increased 8% year over year, with remodel retrofit orders up double digits [15][16] Company Strategy and Development Direction - The company remains focused on investing to drive revenue growth and expanding margins, with a cautious yet confident outlook for 2025 [6][32] - Continued investment in new product development and strengthening relationships with builders is emphasized to enhance market position [22][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledges heightened macroeconomic uncertainty but expresses confidence in strategies and customer commitment to long-term investments [13][38] - The company expects continued earnings improvement driven by margin expansion and revenue growth, despite potential demand volatility [12][23] Other Important Information - The company maintains a strong balance sheet and cash flow generation, with a gross debt leverage ratio of 1.3 times [30][31] - Ongoing initiatives in Mexico and KII synergies are expected to contribute an additional $0.70 to $0.80 of EPS through 2026 [23][24] Q&A Session Summary Question: What was the SMB order number this last quarter? - SMB orders were slightly down 5% for Q1 [36] Question: Are there any changes in order patterns or buying activity due to increased uncertainty? - There is a lot of uncertainty, but the backlog looks encouraging, and customers are committed to long-term investments [38] Question: Was the hospitality business affected by tough comparisons this quarter? - Yes, it was a tough comp, and there is some volatility in demand, particularly in custom business [40] Question: Did you see any improvement in the transactional part of the SMB business in April? - Orders started to pick back up over the last five weeks, indicating resilience [47] Question: What are the end market assumptions for the second half? - Limited market help is expected, but strategic initiatives are anticipated to drive low single-digit growth [55] Question: How do you expect earnings visibility to translate into free cash flow? - Expected free cash flow from transformational efforts is projected to be $45 million to $50 million, enhancing financial flexibility [64]