MillerKnoll(US:MLKN)2020-09-17 19:59Financial Data and Key Metrics Changes - The company implemented aggressive cost reduction measures, resulting in annual savings of approximately $85 million to $90 million, including workforce reductions and temporary benefit program cuts [11][12][20] - The company reported strong margin performance in the retail segment, which benefited from favorable mix factors, although some moderation is expected moving forward [15][17][59] Business Line Data and Key Metrics Changes - The retail segment saw a significant increase in orders, with June orders up 17% year-over-year and July and August showing increases close to 50% [28][29] - The North American contract business experienced order pressure, with a notable decline in order entry levels, but trends improved towards the end of Q1 and into Q2 [27][52] Market Data and Key Metrics Changes - International markets, particularly in the APAC region and parts of Europe, showed recovery, with strong performance noted in China and Japan [22][24] - The backlog for the North American contract business was down about 20%, while international backlog increased by approximately 13% [47][48] Company Strategy and Development Direction - The company is focusing on digital investments and enhancing its e-commerce capabilities, which have shown significant improvement in conversion rates [14][71] - There is an emphasis on adapting to a more distributed workforce model, with the company positioned to support both residential and office needs [41][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory as COVID-19 conditions improve, particularly in international markets [23][48] - The company anticipates that the changes in work models will create opportunities for growth, especially in the residential segment [43][44] Other Important Information - The company has shifted to a shareholder letter format for quarterly press releases to provide more timely information [4] - Management highlighted the importance of maintaining cost reductions while also investing in digital initiatives to drive future growth [59][71] Q&A Session Summary Question: Sustainability of Margins - Management acknowledged that while margins were strong, they expect some pressure moving forward due to the return of certain costs and investments in digital initiatives [10][15][59] Question: Order Trends - Management reported that order trends improved throughout the quarter, with a notable recovery in the retail segment and a gradual improvement in the North American contract business [25][52] Question: Future of the Office - Discussions with clients indicated a shift towards more distributed work models, with companies exploring new office layouts and designs to support collaboration and community [41][42] Question: Backlog and Confidence in Recovery - Management noted that while the North American contract backlog is down, the international backlog is up, providing some confidence in a quicker recovery compared to previous recessions [47][48] Question: E-commerce Impact on Margins - The company highlighted that the shift to e-commerce has positively impacted margins due to lower commission structures and a favorable category mix [63][66]