Financial Data and Key Metrics Changes - Adjusted earnings per share for the second quarter were $0.43, exceeding expectations, reflecting stronger-than-expected sales and gross margin performance [13] - Consolidated net sales for the quarter were $955 million, down 1.6% year over year on a reported basis and 2.5% lower organically [13] - Consolidated gross margin was 39%, including approximately $1 million in net tariff-related costs [14] - Operating cash flow generated was $65 million, with liquidity at $548 million [14] Business Line Data and Key Metrics Changes - North America contract segment net sales were $509 million, down 3.1% year over year, with orders increasing to $507 million, up 4.8% from the prior year [16] - International contract segment net sales were $171 million, down 6.3% on a reported basis, with orders rising to $162 million, up 6.6% [17] - Global retail segment net sales were $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year over year [18] Market Data and Key Metrics Changes - Orders in North America retail increased 8%, with comparable sales growth also up 8% [6] - During the holiday cyber promotional period, orders rose 12% compared to the same period last year [7] - Total healthcare orders were up 5% year to date, indicating strong demand in resilient sectors [10] Company Strategy and Development Direction - The company is focused on expanding its retail footprint, delivering innovative products, and deepening customer engagement globally [5] - Plans to open 14-16 new stores in the US for the full fiscal year, aiming to double the DWR and Herman Miller store footprint over the next several years [8] - The strategy includes leveraging supply chain strength, with approximately 70% of North America retail's cost of goods sourced from the U.S. [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism based on solid order growth across all segments and encouraging signals in the market [11] - The return-to-office trend is positively impacting demand for commercial real estate and contract furniture [10] - Management highlighted the importance of innovation and partnerships in driving future growth [11] Other Important Information - The company announced the consolidation of its Muskegon, Michigan facility, expected to deliver $10 million in annual run rate savings by fiscal 2028 [15] - The company is focused on maintaining a strong balance sheet while balancing investments and growth [15] Q&A Session Summary Question: Insights on second quarter performance and expectations - Management noted that gross margin exceeded expectations due to channel and product mix, along with effective pricing realization [22][23] Question: Order trends and pipeline insights - Orders were consistent across all businesses, with mid-single-digit growth observed in the first weeks of the new quarter [24][25] Question: Geographic and industry strength - Strong demand was noted in the Bay Area, Southern California, and the Northeast Coast, with energy and professional services industries being particularly active [27] Question: Impact of AI on demand - Management indicated that while the impact of AI on workspaces is still minimal, future productivity gains are anticipated [29] Question: Expectations for the contract business in Q3 - Orders in North America contract were up about 5% on an organic basis, with expectations of continued mid-single-digit growth [34] Question: Retail growth drivers - Brand awareness and store openings were highlighted as key factors driving retail growth, with marketing spend remaining consistent year over year [39][40] Question: Roadmap for doubling store count - Plans to open 14-16 stores annually were confirmed, with expectations of improved operating income from new store investments in the upcoming fiscal year [49][50]

Financial Data and Key Metrics Changes - Adjusted earnings per share for the second quarter were $0.43, exceeding expectations, reflecting stronger-than-expected sales and gross margin performance [13] - Consolidated net sales for the quarter were $955 million, down 1.6% year-over-year on a reported basis and 2.5% lower organically [13] - Consolidated net sales for the first half of the fiscal year reached $1.9 billion, up 4% year-over-year [13] - Second quarter consolidated gross margin was 39%, including approximately $1 million in net tariff-related costs [14] - Operating cash flow generated was $65 million, with liquidity at $548 million and a net debt-to-EBITDA ratio of 2.87x [15] Business Line Data and Key Metrics Changes - North America contract segment net sales were $509 million, down 3.1% year-over-year, while orders increased to $507 million, up 4.8% from the prior year [16] - International contract segment net sales were $171 million, down 6.3% on a reported basis, with orders rising to $162 million, up 6.6% [17] - Global retail segment net sales were $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year-over-year [17][18] Market Data and Key Metrics Changes - Orders in North America retail increased 8%, with comparable sales growth also up 8% [6] - During the holiday cyber promotional period, orders rose 12% compared to the same period last year [7] - Total healthcare orders were up 5% year-to-date, indicating strong demand in resilient sectors [10] Company Strategy and Development Direction - The company is focused on expanding its retail footprint, delivering innovative products, and deepening customer engagement globally [5] - Plans to open 14-16 new stores in the U.S. for the full fiscal year, aiming to double the DWR and Herman Miller store footprint over the next several years [8] - The strategy includes leveraging a strong supply chain, with approximately 70% of North America retail's cost of goods sourced from the U.S. [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism based on execution and accomplishments in the first half of the fiscal year, with encouraging signals for continued growth [11] - The return-to-office trend is positively impacting demand for commercial real estate and contract furniture [10] - Management noted that the impact of AI on workspace design is still minimal but is being considered for future planning [30] Other Important Information - The company announced the consolidation of its Muskegon, Michigan facility, expected to deliver $10 million in annual run rate savings by fiscal 2028 [15] - Management emphasized the importance of operational excellence and scaling innovation as part of their strategic priorities [66] Q&A Session Summary Question: Insights on second quarter performance and expectations - The gross margin exceeded expectations due to channel and product mix, along with effective tariff mitigation strategies [23] Question: Order trends during the quarter - Orders were consistent across all businesses, with organic growth of 4.5% [25] Question: Geographic and industry strength - Strong performance noted in the Bay Area, Southern California, and the Northeast Coast, with healthcare as a growth driver [27] Question: Expectations for the contract business in Q3 - Orders in North America contract were up about 5% on an organic basis, with a positive outlook for the second half of the year [35] Question: Retail growth dynamics - Brand awareness and assortment expansion contributed to strong retail performance, with average order value increasing year-on-year [47] Question: Capital allocation and leverage targets - The company aims to reduce its leverage ratio to the 2 to 2.5 range while maintaining dividends and share repurchases [62]

Financial Data and Key Metrics Changes - Adjusted earnings per share for Q2 2026 were $0.43, exceeding expectations, reflecting stronger-than-expected sales and gross margin performance [10] - Consolidated net sales for the quarter were $955 million, down 1.6% year over year, with a 2.5% organic decline [10] - Consolidated net sales for the first half of the fiscal year reached $1.9 billion, up 4% year over year [10] - Orders for the quarter grew to $973 million, up 5.5% as reported and 4.5% higher on an organic basis [10] - Second quarter consolidated gross margin was 39%, including approximately $1 million in net tariff-related costs [11] Business Line Data and Key Metrics Changes - North America contract segment net sales were $509 million, down 3.1% year over year, while orders increased to $507 million, up 4.8% [12] - International contract segment net sales were $171 million, down 6.3% on a reported basis, with orders rising to $162 million, up 6.6% [13] - Global retail segment net sales were $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year over year [13] Market Data and Key Metrics Changes - North America retail orders increased 8%, with comparable sales growth also up 8% [4] - During the holiday cyber promotional period, orders rose 12% compared to the same period last year [5] - Total healthcare orders were up 5% year to date, indicating strong demand in resilient sectors [7] Company Strategy and Development Direction - The company aims to double its DWR and Herman Miller store footprint over the next several years, anticipating the opening of 14-16 new stores in the US for the full fiscal year [5] - The strategy focuses on expanding retail footprint, delivering innovative products, and deepening customer engagement globally [4] - The company is optimistic about growth through enhanced innovation initiatives and expanding dealer networks [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in an improving demand environment and the ability to execute growth strategies [10] - The return-to-office trend is positively impacting demand for commercial real estate and contract furniture [6] - Management remains optimistic based on execution and accomplishments in the first half of the fiscal year, with encouraging signals for continued growth [8] Other Important Information - The company generated $65 million in operating cash flow and ended the quarter with $548 million in liquidity [11] - The net debt-to-EBITDA ratio was 2.87 times, reflecting a disciplined approach to capital allocation [11] - The company announced the consolidation of its Muskegon facility, expected to deliver $10 million in annual run rate savings by fiscal 2028 [11] Q&A Session Summary Question: Can you discuss the drivers behind the better-than-expected gross margin and operating expenses? - Management indicated that the better gross margin was due to channel and product mix, along with effective pricing realization and tariff mitigation efforts [18] Question: How did order rates fluctuate during the quarter, particularly in the Americas contract segment? - Orders were consistent across all three months of the quarter, with mid-single-digit growth observed [20] Question: What specific geographies or industries are showing strength in the contract business? - Strength was noted in the Bay Area, Southern California, and the Northeast Coast, with active demand in energy, professional services, and legal sectors [22] Question: What are the expectations for the contract business in the third quarter? - Orders in North America contract were up about 5% on an organic basis, with expectations for continued mid-single-digit growth [30] Question: How is the retail growth being driven, and what are the dynamics within customer segments? - The growth is attributed to increased brand awareness, new store openings, and a 22% year-on-year increase in product assortment [42][43] Question: What is the roadmap for doubling the store count, and what is the expected margin profile? - The company plans to open 14-16 stores annually, with expectations for improved operating income as new stores begin to contribute revenue [45][47] Question: What macro trends are contributing to the improved order momentum? - The return to office trend is driving demand, with organizations becoming more serious about workspace decisions [54]

Financial Data and Key Metrics Changes - The company reported adjusted earnings of $0.60 per share for Q4, significantly outperforming guidance, with consolidated net sales of $962 million, up 8.2% year-over-year [20][21] - Consolidated backlog increased by $78 million to $761 million, driven by improved demand [21] - Consolidated gross margin was 39.2%, slightly down from last year but up 130 basis points sequentially [21][22] Business Line Data and Key Metrics Changes - In the North America contract segment, net sales were $496 million, up nearly 13% year-over-year, with new orders at $568 million, reflecting growth of almost 16% [23] - The international contract segment saw net sales of $186 million, up 6.9% year-over-year, with new orders increasing by 3.6% [24] - The global retail segment reported net sales of $280 million, up 2.2% year-over-year, with new orders improving to $280 million, up 7.5% [25][26] Market Data and Key Metrics Changes - The North American contract market experienced a return to order growth in Q4 after a previous decline due to tariffs [14] - Strength was noted in European and UK markets, with significant customer engagement during design events [15] - Office leasing activity is rising, with a 68% increase in days in the office among Fortune 100 companies since 2022 [16] Company Strategy and Development Direction - The company is focused on expanding its retail footprint, planning to open 10 to 15 new stores in fiscal 2026 [10][11] - Investment in product assortment expansion and e-commerce penetration is a key growth lever [11][12] - The company aims to balance long-term growth with prudent cost management and innovation [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment, noting a dynamic landscape [14][17] - The company anticipates a return to growth in contract business as the industry recovers [17] - Future guidance for Q1 fiscal 2026 includes expected net sales between $899 million and $939 million, reflecting a 6.7% increase year-over-year [29] Other Important Information - The company paid approximately $52 million in dividends and returned about $85 million to shareholders through share repurchases in fiscal 2025 [27] - Capital expenditures for fiscal 2025 were $107.6 million, with expectations to increase to between $120 million and $130 million in fiscal 2026 [27] Q&A Session Summary Question: Insights on pull forward effect from pricing actions - Management noted a mid-single-digit decline in order entry year-over-year in the early part of the current quarter, aligning with expectations due to pull forward [34][35] Question: Confidence in retail store openings amid softer demand - Management expressed confidence in retail expansion, citing a need in the market and a strategy to open stores prudently [36][37] Question: Clarification on North American pull forward estimates - Management confirmed the estimated pull forward of $55 million to $60 million for the consolidated enterprise, with no significant pull ahead in international markets [48][49] Question: Profitability outlook amid tariffs and pull forward - Management indicated that the impact from pull forward and tariffs would likely affect Q1 and Q2, with expectations for recovery in Q3 and Q4 [55][56] Question: Balance sheet and cash flow considerations - Management highlighted a focus on managing debt levels and capital expenditures for store build-outs while maintaining a strong balance sheet [58]