MillerKnoll(US:MLKN)2021-06-29 18:52Financial Data and Key Metrics Changes - Consolidated sales for Q4 2021 increased by 31% compared to the previous year, with orders up 29% year-over-year [9] - Diluted earnings per share (EPS) on a GAAP basis for the quarter were $0.12, while adjusted EPS was $0.56, reflecting an increase of over 400% from the same quarter last year [13] - Adjusted operating margins improved to 7%, a rise of 370 basis points compared to the same quarter last year [14] Business Line Data and Key Metrics Changes - The Retail segment achieved record-breaking performance with sales up 106% year-over-year and orders up 81%, with a segment operating margin of 19.2% [10] - The North American contract segment saw order rates increase sequentially by 21% from Q3, remaining flat compared to the prior year [12] - The International Contract segment experienced a 55% increase in orders compared to the previous year [12] Market Data and Key Metrics Changes - Order trends showed a sequential growth of 23% across all business segments from Q3 to Q4, with North American Contract at 21% and Retail at 26% [50] - In the first three weeks of June, orders maintained at approximately $60 million per week, indicating continued momentum [51] Company Strategy and Development Direction - The company is focused on integrating the planned acquisition of Knoll, with expectations for a seamless integration process [19][20] - A digital-first approach is emphasized, aiming to serve both contract and consumer audiences effectively [17] - The company anticipates re-establishing quarterly sales and earnings guidance as the pandemic subsides, with projected sales for Q1 between $640 million and $670 million [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow and create value, citing a strong position in the industry [16] - The management acknowledged inflationary pressures impacting gross margins, with expectations for continued cost increases in Q1 [24][25] - There is optimism regarding the recovery of the North American market, particularly as larger metropolitan areas begin to open up [32] Other Important Information - The company is actively monitoring commodity trends and is prepared to implement additional price increases if necessary [28] - Supply chain challenges are being managed, with some impacts on product lead times and conversion rates noted [39][40] Q&A Session Summary Question: Can you walk us through your outlook for margins for the first quarter? - Management explained that the lower-than-normal effective tax rate in Q4 impacted EPS, and they expect sequential improvement in Q1 due to higher revenue guidance [23] Question: What are the drivers of gross margin? - Management highlighted inflationary pressures from commodity costs and direct labor, estimating $4 million and $1 million increases respectively [24][25] Question: How have order patterns trended in the North American Contract business? - Management noted significant strengthening in order patterns, with year-over-year comps up nearly 30% in Q1 [31] Question: Can you comment on recent order trends? - Management confirmed that order trends improved throughout the quarter, with a 23% sequential growth across all segments [50] Question: What is the impact of supply chain challenges on sales? - Management acknowledged some impacts from container shortages and labor availability but stated they are managing these challenges effectively [36] Question: How is the retail margin expected to evolve? - Management indicated that investments in infrastructure and digital capabilities are expected to support margin growth in the long term [62] Question: What are the spending patterns in retail? - Management reported an increase in average order value, particularly in studio channels, and noted strong customer acquisition from new stores [75][76]