MillerKnoll(US:MLKN)2025-06-25 22:02Financial 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]