MillerKnoll(US:MLKN)2025-06-25 22:00Financial Data and Key Metrics Changes - In Q4 2025, the company generated adjusted earnings of $0.60 per share, significantly outperforming guidance, with consolidated net sales of $962 million, up 8.2% year over year [22][23] - Consolidated backlog increased by $78 million to $761 million, driven by improved demand [23] - Consolidated gross margin was 39.2%, slightly down from last year but up 130 basis points sequentially [23][24] Business Line Data and Key Metrics Changes - 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% [25] - International contract segment net sales improved to $186 million, up 6.9% year over year, with new orders at $190 million, a 3.6% increase [26] - Global retail segment net sales were $280 million, up 2.2% on a reported basis, with new orders improving to $280 million, up 7.5% [27][28] Market Data and Key Metrics Changes - The company noted a return to order growth in the North American contract segment in Q4 after a dip due to tariffs [15][16] - Strength was observed in European and UK markets, with significant customer engagement during design events [17] - Office leasing activity is rising, with a 68% increase in days in the office among Fortune 100 companies since 2022 [18] 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 [12][13] - Investment in product assortment expansion and e-commerce penetration is a priority to drive revenue growth [13][14] - The company aims to balance long-term growth with prudent cost management and innovation [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the macroeconomic environment, noting a dynamic landscape with potential for growth in contract markets [15][19] - The company anticipates that pricing actions will offset tariff-related cost impacts in the latter half of fiscal 2026 [30][31] - Management highlighted strong internal indicators for growth, including increased customer activity and order trends [19][57] Other Important Information - The company paid approximately $52 million in dividends and returned about $85 million to shareholders through share repurchases in fiscal 2025 [29] - Capital expenditures for fiscal 2025 were $107.6 million, with expectations to increase to between $120 million and $130 million in fiscal 2026 [29] 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 early Q1, aligning with expectations due to pull forward [35][37] 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 [38][39] Question: Clarification on North American pull forward estimates - Management confirmed an estimated pull forward of $55 million to $60 million, with significant orders expected in Q1 and Q2 [51][59] Question: Profitability impact from pull forward and tariffs - Management indicated that the impact from pull forward would be most significant in Q1, with a gradual decrease in Q2 [58][59] Question: Balance sheet and cash flow considerations - Management highlighted a focus on managing debt levels while increasing capital expenditures for store openings [61]