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MillerKnoll(MLKN) - 2025 Q3 - Earnings Call Transcript
MillerKnollMillerKnoll(US:MLKN)2025-03-26 22:10

Financial Data and Key Metrics Changes - Consolidated net sales for the third quarter were $876 million, an increase from the previous year, with a slight organic growth of 1.8% [34] - Consolidated orders were $853 million, up 2.7% as reported and 4.1% organically [34] - Consolidated gross margin was 37.9%, down 70 basis points from the previous year [35] - The company reported a loss per share of $0.19 for the quarter, compared to diluted earnings per share of $0.30 in the prior year [35][36] - Adjusted earnings per share were $0.44, consistent with the midpoint of guidance [33][37] Business Line Data and Key Metrics Changes - North America Contract Segment: Net sales were $468 million, up 1.4% reported and 1.7% organically; new orders were $434 million, reflecting a 1.8% reported decrease [42] - International Contract Segment: Net sales were $146 million, down 5% reported and 1.5% organically; new orders were $159 million, a 1.6% decline reported but a 1.4% increase organically [44] - Global Retail Segment: Net sales were $263 million, up 1.9% reported and 3.9% organically; new orders were $260 million, up 14.7% reported and almost 17% organically [46] Market Data and Key Metrics Changes - Retail demand in North America saw a significant increase, with cyber-adjusted orders up 14% [17] - Orders in the first three weeks of March were up 10% year-over-year in the retail segment [47] - International contract orders in the first three weeks of March trended up 2% compared to last year [45] Company Strategy and Development Direction - The company has re-segmented its operations into North America Contract, International Contract, and Global Retail to better align with long-term strategies [12][15] - The focus remains on expanding the product assortment and store footprint, with plans to open 10 to 15 new locations in fiscal 2026 [23][24] - The company is navigating tariff-related uncertainties by implementing a 4.5% list price increase effective June 2nd [28] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the demand in the retail segment despite macroeconomic uncertainties [10][30] - The company remains focused on long-term strategies and growth levers while managing costs [30] - The outlook for the fourth quarter includes expected net sales between $910 million and $950 million, reflecting a 4.6% increase at the midpoint [50] Other Important Information - The company generated $62 million in cash flow from operations and reduced long-term debt by $61 million [39] - The consolidated backlog was $686 million, up 7.4% from a year ago [34] Q&A Session Summary Question: About the impairment charges in global retail - Management explained that impairment charges were due to lagging profitability relative to internal expectations and a re-segmentation of the business [59] Question: On new store locations - The company plans to open new locations evenly throughout the fiscal year, with two additional locations planned for the current quarter [62] Question: Regarding tariffs and future quarters - Management indicated that while the tariff situation is fluid, they believe they can offset costs through pricing and other mitigation efforts [66] Question: On revenue guidance and backlog - Management acknowledged the cautious outlook due to macroeconomic uncertainties, despite a positive start to Q4 and improved order growth [72][98] Question: On restructuring and cost reductions - The restructuring aimed at aligning the cost structure with current demand, with expected annualized savings of approximately $4 million [115]