MillerKnoll, Inc.

Good evening, and welcome to Miller Knowles' Quarterly Earnings Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Vice President of Investor Relations, Kerala Mangalini.

Good evening, and welcome to Miller Knowles' Third Quarter Fiscal 2024 Conference Call. I am joined by Andy Owen, Chief Executive Officer, and Jeff Stutz, Chief Financial Officer. Also available during the Q&A session is John Michael, President of America's Contract, and Debbie Prost, President of Global Retail. Before I turn the call over to Andy, please remember our safe harbor regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors. which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release. The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements. We may also refer to certain non-GAAP financial metrics, which are reconciled and described in our press release posted on our investor relations website at millernol.com. With that, I will turn the call over to Andy.

Andy? Thanks, Carola, and good evening, everyone. While this past quarter presented its challenges, we're proud to highlight our resilience and strategic focus. Despite facing a lower volume of orders and sales, we maintained a steadfast commitment to enhancing our business operations. Our efforts yielded significant results as we successfully improved gross margins across all business segments, showcasing our ability to adapt and thrive in dynamic market conditions. Miller Knoll is an agile company. We have implemented several programs across our contract and retail business to boost demand, while also putting in place restructuring measures to better align our operating costs with the evolving economic landscape. With our Miller Knoll dealer network firmly established in the U.S., we've turned our focus now to showrooms, studios, and tools that make it easier to create design solutions for customers. Our showroom strategy is anchored in having fewer and more robust Millernol design centers in targeted cities around the world. We're bringing our brands together so that customers and design partners can experience the full breadth of our offering in one location. To this end, we will combine our showrooms in most markets, and we will also invest more heavily in dealer showrooms and dealer programs, especially in markets without a corporate showroom presence. This work is already underway in several major U.S. markets, namely Chicago, Washington, D.C., and the greater Los Angeles area. This follows showroom co-location enhancements that we previously announced in New York City, Toronto, and London. Simultaneously, in North America alone, more than 40 dealer showroom refreshments are in progress, with many more in plans. At DWR, we recently opened a new concept studio in the San Francisco Design District. The space introduces our products in a new way, showcasing rotating galleries and interactive exhibits. We understand that enhancing our environment yields great results, and we've been encouraged by the increased customer interest and foot traffic in this store. Across our retail experience, we know that most orders include a customer touchpoint in one of our stores. By enhancing these spaces and strategic locations, we believe that we'll continue to build market share, especially as macroeconomic conditions become more favorable. We are also making significant progress across our technology platform. This past January, we launched our Program Portal Experience. These are digital hubs which serve as a singular place for clients, dealers, and our architecture and design partners to access projects and product information in one place, providing a forum for collaboration and streamlined processes. Similarly, we've launched augmented reality capabilities on retail and contract websites a supplement to our highly functional 3D configurators. We've seen that customers who use these tools have a higher conversion rate and are faster to add products to the cart. These programs reflect the confidence we have in Miller & Noll's long-term value and the opportunities ahead. However, we are readless, and we understand that while encouraging, these initiatives and organizational enhancements are stepping stones to achieving our goals. Existing demand pressures, including the elevated cost of capital here in North America, are affecting the housing and office space market and slowing the decisions related to capital expenditures. This is taking a toll on the short-term results of our business. To match the current demand environment this quarter, we implemented targeted workforce reductions and realigned our leadership team against our different business segments and geographic areas. These moves will have a meaningful impact on our SG&A cost structure. Jeff will share more details on this later. For America's business, while the third quarter is usually a softer period, The step-up in activity that customarily comes through the end of the quarter did not materialize as expected. Our team was fast to act, however, focusing on price optimization and launching a series of initiatives to help our clients make decisions and therefore coax demand. We continue to see leading indicators trending positively. Client requests for mock-ups are up over 20% year-over-year, and contract activations and pricing requests are up over 30% in Q3. This quarter, we are very pleased to report growth across our international contract business as we continue to transition legacy Herman Miller dealers to full Miller Knoll dealers. This transition not only enhances the product portfolio of our existing dealerships, but also involves legacy dealers opening newly branded and furnished Miller Knoll showrooms, thereby enhancing our market presence. Furthermore, we also have aggressive plans underway to bring Knoll to new markets throughout Europe. Our network around the globe is unmatched in reach, and we are in a place to deliver designs for these regions as demand starts growing. Similarly, as macroeconomic pressures ease, we anticipate a release in pent-up retail demand and are preparing ourselves to meet this interest. Throughout our retail organization, we maintain a strong focus on inventory management and optimizing our product assortment. We've accelerated the introduction of more than 100 new styles to design within reach, adding hay, Muto, and Geiger products, introducing new DWR collections, and expanding the assortment from our strategic third-party vendors, as well as building out the normal offering through additional finish and materials options. Furthermore, we've expanded our design services, which has resulted in an increase in the penetration of orders from design services, as well as fewer returns. But right now, we are at an 11-year low in the luxury housing market, and our retail and specialty businesses track closely with that market, New home movers spend significantly more than the average. We'll continue to watch Fed rates as they have the potential to move in our favor this year, and when they do, we are prepared to capture the wins. Over the next few months, we will have exciting and significant opportunities to connect with our key clients around the globe and share the best of our collective with our core audiences at Salone and Milan and Design Days in Chicago. These are moments for us to visually demonstrate the forward-thinking, innovative spirit that will carry us to the future while establishing meaningful connections. Ahead of these events, our research and insights team is conducting seminars in over 40 cities across three continents, sharing actionable insights with organizations on navigating changes in the way we work and adapting their spaces to our evolving world. We're highlighting several successful project profiles in the upcoming launch of Season 4 of our About Place podcast. As companies navigate change and invest in their space, they continue to turn to us as a leader for our experienced, data-based perspectives on Designing for Tomorrow. Our industry has a once-in-a-lifetime opportunity to redefine how we think about spaces for decades to come. We have a chance right now to push the spaces where we live and work to better support individual wellness, productivity, and a sense of belonging. And when I look across our collective, there is no team more capable of rising to this occasion. We are focused and confident in the hard work we're doing right now. As always, I thank you for your continued support and the learning, and I will pass it on to Jeff for a deeper dive into this quarter's numbers. Jeff?

Thanks, Andy. Good evening, everyone. This afternoon, we shared our third quarter results, and I'm pleased to announce that we have achieved adjusted earnings per share of 45 cents, in line with our guidance, despite softer than expected revenue. The robust profitability we demonstrated this quarter showcases the resilience of our gross margin profile and underscores the efforts of our teams in protecting it. We delivered consolidated gross margin of 38.6%, which improved more than 450 basis points over the prior year. This is our fifth consecutive quarter of year-over-year improvement in adjusted gross margin. Improved operational efficiency, moderating input and delivery costs, and incremental pricing benefits were the primary drivers, all of which align with the themes we have consistently communicated as our focus over the past several quarters. Furthermore, these actions were complemented by disciplined operating expense management and the ongoing benefit of our acquisition synergy program. As Andy mentioned, we took further steps this quarter aimed at improving the efficiency of our selling general and administrative functions. This resulted in a targeted reduction of our management workforce. Additionally, we reviewed our real estate footprint and announced showroom consolidation plans in key markets, which we believe will not only reduce our ongoing cost structure, but also create a more cohesive and compelling expression of our brand and collectives. Once fully implemented later this spring, these actions are expected to deliver annualized cost reductions of between $14 and $16 million. At the consolidated level, net sales in the third quarter of $872 million decreased 11.4% on a reported basis and 10.1% organically compared with the same quarter last year. New orders totaled $830 million in the third reflecting an organic decrease of 4.7% from the same quarter a year ago. While we saw declines in both the America's contract and retail segments, demand levels in the international and specialty segment were more encouraging, particularly in the contract component of our business. Although consolidated order levels for the full quarter did not meet our near-term expectations, the trend improved across all segments as we moved through the period. And for the month of February, our consolidated orders were up 2.8% over last year. Within the America's contract segment, net sales for the quarter were 441 million, representing an organic decrease of 9.2% from the same quarter a year ago. New orders in the period reflected a similar pattern, coming in 9.4% lower than last year on an organic basis. Here again, demand trends improved as we moved through the period and into the early part of Q4. In fact, over the last two weeks, orders have trended up over 5% to last year. Despite lower sales versus last year, we again delivered much improved gross margins in the Americas segment this quarter. Net pricing benefit, moderating input costs, the realization of synergy benefits and tightly managed operating expenses contributed to achieving a gross margin of 33.1% and adjusted operating margin of 8.1%. Although we're not yet seeing their consistent impact on order rates, we remain highly optimistic that improvement is on the horizon given a range of forward-looking data points. Indicators such as customer inquiries, project mock-up requests, and contract activations continue to grow year over year, and the overall funnel of project opportunities remains encouraging. Within the funnel of projects, we are tracking the value of opportunities that we have won but for which the actual order has not yet been received. We're encouraged to share that this number is double the value it was this time last year. All of this adds to our confidence that we are at or near a demand inflection point in the business. The question remains, however, one of timing. By historical comparison, we continue to experience delays in the time it takes customers to make final order decisions, and this is added to the complexity and challenge of forecasting the business. Considering the current macroeconomic climate with elevated interest rates, lagging ABI readings, and sentiment measures edging higher but still below pre-pandemic levels, none of this is surprising to us. Still, the data we are tracking inside our business and what we hear from customers and our dealers gives us confidence that there is pent-up demand awaiting further improvements in the macro backdrop. Turning to our international contract and specialty segment, Net sales for the quarter totaled 217 million, which is down 10.6% organically year over year, while new orders came to 228 million, reflecting a year-over-year organic increase of 7.9%. Demand patterns month to month continue to be inconsistent. However, orders grew in both December and February, primarily driven by portions of mainland Europe, South Korea, India, China, Australia, and in the Middle East. One of our key strategic initiatives aimed at enhancing the scope and reach of our international network, is completing the transition from Herman Miller to full-line Miller & Old dealers. This effort is steadily gaining momentum, with currently over 40% of this network offering the Miller & Old product portfolio. We have a consistent schedule of additional transitions planned in the upcoming quarter. We were also pleased with the margin profile of this segment. The adjusted operating margin was 10.4% in the third quarter, albeit down 110 basis points year-over-year due to lower sales volume. Despite this, we continue to expand gross margins. In this past quarter, we achieved a record level of 44.5%. Favorable product mix, improved freight and distribution management, and proactive restructuring initiatives taken earlier in the year all contribute to this improved profit picture. As it relates to our global retail segment, in the third quarter, net sales totaled $214 million, reflecting an organic decrease of 11.3%. While new orders totaled $183 million, marking a 7.1% organic decline, primarily due to subdued housing-related demand. Regarding adjusted operating margins for the retail segment this quarter, we achieved 5.6%, 10 basis points higher than last year, despite the decrease in net sales. The main drivers of the margin expansion were improved operational and delivery efficiency and favorable product mix. Despite the challenging retail environment, our retail team remains dedicated to improving in-store experiences, broadening our product offer, enhancing digital capabilities, and elevating brand awareness. And we're confident that this strategic approach will nurture brand loyalty, promote deeper engagement, and position our business to take advantage of pent-up demand as market conditions improve. And we're beginning to see signs of improvement in the economic data. As Andy mentioned, home sales in the U.S. are at 11-year lows, and demographic trends point to robust future construction growth. This is evidenced by last month's Home Builders Sentiment Readings, which posted its third consecutive monthly gain in February, reaching its highest level since August of 2023. Moreover, renovation activity should also benefit from an aging housing stock and eventual turnover. As we mentioned to you last quarter, we believe that the demand fundamentals for this segment are pointing stronger and expect the retail segment to be a major contributor to both top and bottom line growth in our business for years to come. Regarding cash flow in the balance sheet this quarter, we saw cash generation of $61 million in cash from operations. This enabled us to repurchase approximately 1.5 million shares for a total cash outlay of approximately $40 million. And at quarter end, our net debt to EBITDA ratio was approximately 2.65 turns.

Now let's turn our near-term view to guidance and outlook.

Given the macroeconomic conditions currently impacting our demand picture, we expect net sales in the fourth quarter of fiscal 2024 to range between $880 million and $920 million. Adjusted diluted earnings per share for the period are expected to be between 49 and 57 cents. The midpoint of this earnings range implies year-over-year growth of approximately 29%, which is notable given the decline in year-over-year revenue. And based on this forecast, we expect full-year adjusted diluted earnings per share of between $1.90 and $1.98. While economic uncertainty certainly persists in parts of our business, we're growing in our confidence that a favorable shift in demand patterns is on the horizon. And we believe this will translate into broad-based sales and earnings growth as we move through the upcoming fiscal year. So with that overview of the numbers, I'll now turn the call over to the operator to take your questions.

The floor is now open for your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up question.

We'll now take a moment to compile our roster. Our first question comes from the line of Greg Burns with Sidoti. Please go ahead.

Good afternoon. Can you just talk about your win rates in the Americas and maybe why you think maybe it's taking longer for some of this to move through your funnel? And do you feel like there's been any changes in share in the market? And do you feel like you maybe need to get more aggressive with maybe some of your incentives to to start converting maybe some of what you're seeing in your pipeline. Thank you.

Hey, Greg. It's Andy. That's a lot of questions, so I'll start with a couple of points. First off, I think demand patterns in the early part of your recovery are always choppy, and they often really vary significantly based on customer size and industry sector. So I think that's really kind of where we find ourselves currently, and I don't think we're either surprised or disheartened to see some relative differences. across the competitive landscape, and I think, in fact, every cycle in the last 25 years has played out this way. I think from a quarter-to-quarter fluctuation demand over the long term, we believe in the right position to protect our market share. From a timing perspective, I think it is still taking customers longer to make decisions on what's in the funnel and what's been won. I think our win rate is actually 3% higher than last year, which is really encouraging. We are not seeing... pricing activity that is frightening to us or feels like we need to discount more. It feels very stable out there. We're addressing pricing on a job-by-job basis, but we're not feeling like it is incredibly competitive. John, I'd let you add a little bit more to that if you want.

Yeah, I would add, Andy, if we look at what's in the funnel, in addition to significant increase in new opportunities added to the funnel, as you mentioned, the win rate is up slightly and And Jeff mentioned in his opening comments that, you know, as we track an opportunity through the sales process, the second to last step is it's either marked closed or one. And then the final step is it's booked. And the amount of projects and opportunities in that final step closed one for us has increased significantly versus prior year. So it is really just a matter of timing in terms of that converting into an order. We're still seeing construction delays and supply chain things in other industries that are impacting project timing.

But again, looking at all the leading indicators, they're all pointing in the right direction right now.

Okay. And then when you look at the balance sheet, obviously generating cash, looks like you bought back some stock this quarter. Are you comfortable with the leverage here? Like why not, you know, What's your decision factor between buying back shares versus maybe paying down the debt? Thank you.

Yeah, Greg, this is Jeff. We've been buying some shares all fiscal year at different levels, and we've just been opportunistic. We think the shares are undervalued. We think it's a good deal and a good investment. Now, having said that, we have been balanced. If you look at the course of the first nine months of the fiscal year, we've taken a balanced approach in both bought shares and and paid down some debt. This quarter, just due to some timing of accessing some of our international cash, we did see our debt level tick up a little bit at the end of the quarter. But the intent has been in our plan going forward will continue to be balanced on that front. No, we're not concerned with the leverage ratio. Again, as we look ahead and we look at the internal measures that we've noted on the call, What we see are clouds clearing from a macroeconomic perspective, and the trends we've even seen within each of the three business segments from an order entry standpoint, we're confident we're going to see demand improvements on the horizon. Our margins are strong, well above last year's levels, and so we're quite comfortable at the level that we're at.

All right. Thank you.

Our next question comes from the line of Bud Bugach with Water Tower Research. Please go ahead.

Good morning, Andy. Good morning, Jeff. Good morning, Corolla. Good afternoon, Corolla and John. Sorry. It is the afternoon. And congratulations on the profitability in the quarter. I know that's a difficult thing and you're managing that well. But I am concerned about what I see in the implied backlogs, particularly in America's contract, looks to me to be somewhere, I think, probably in the $355 to $360 million range, Jeff, if I did the math right.

That's right, bud.

And that's the lowest backlog in America's contracts since before the acquisition, since the acquisition, time of the acquisition. And it makes it, I think you told me, it makes it very difficult to leverage your manufacturing at that same time, so irrespective of the pricing. What's going on there? When will we see that backlog start to rise?

Well, Bud, I won't disagree with you. Everyone in this room is nodding. We have every interest to see order rates pick up, and we're spending our full efforts as an organization to support the sales organization, to support the operations organization, to drive order growth. And that's what it's going to take. And I think we are, as we said in the prepared comments, we're on the cusp of seeing order demand pick up. We saw some positive trends as we moved through the quarter. I made the comment that America's orders in the last couple of weeks have increased over last year, same week's prior year. So the trends are pointing in the right direction. I think the macro indicators, as we've covered, are pointing in the right direction. We fully expect to see that backlog begin to grow. But we have been through 18 months or so of what I would call a contract economic recession. And we're finding our way to the, to the bottom of it. And, and, uh, and we will find our way through the other side of it.

Okay. I have more on that, but I know I've got one more follow-up and let me just go to the, uh, the global retail, because again, that, that looks like that's a significant drawdown in, in backlog, not quite as, as severe as, um, as, uh, AC, but, um, Can you talk a little bit, Andy, on the global retail, what you're seeing in terms of e-commerce versus in-store? How do we look on same store, same location, or same brand kind of basis, however you wanted to give us a flavor on that, and the future of that particular segment as well?

Yeah, but it's a great question, and Debbie's here, so I'm going to let her answer specifics, but I think it's actually very promising, and some of the backlog that you're referring to you from last year, reflected some of the supply chain issues that we were having along with many other retailers as we worked through that. So I think the reduction in backlog is actually a really good thing and a point to how we're managing our inventory much more efficiently. And the cycle time from when you were ordering furniture for us now to when it's showing up in your home is much shorter. So that processing is actually really beneficial because it drives the more conversion. And I would say that business is really healthy outperforming competition. So Debbie, do you want to answer some of the specifics?

Hi there. As it pertains to some of the channel questions you had, we're seeing fairly consistent patterns across our three channels, stores, web, and wholesale, with one exception that given the design service implementation that we've been doing in our stores, we're really seeing an acceleration of average order value in that channel as the contribution of design service sales picks up. Those orders are about over 2X the size. in dollar volume of a non-design service sale. So we're very focused on optimizing the store traffic and the activity around design services. We're in the process of densifying our store floor sets to showcase more of the expanded offering in stores, as well as making sure that we're being much louder and more aggressive about driving traffic towards these design services now that our sales force is fully trained in that capability.

So the average ticket in retail, are you in the $2,000 to $3,000 range? Yes, that's correct. Okay.

All right. Thank you. Good luck on the next quarters and the balance of the year.

Thanks, bud.

Our next question comes from a line of Alex Furman with Craig Hallam Capital. Please go ahead.

Hey, guys. Thanks very much for taking my question. Andy, you talked a little bit about consolidating some showrooms in an effort to align the cost structure. What about on the global retail side of the business? Do you think there are opportunities there to maybe consolidate some of your retail stores, or are there still opportunities to continue to open more stores there?

It's a great question, Alex. And just to touch on the showroom consolidation, I think the The major driver behind why we've decided to do this is really driven from our customers in the AD community and making sure that we have everything in an easy and convenient place for them to actually see all of our brands. So we're very excited about that. It's not really driven by cost. Cost is a great side benefit, but really driven by the customer and what they're telling us. From a retail store standpoint, we are very understored compared to our competition. And I would say we have opportunity to increase our store footprint, We find that our customer that shops online as well as in bricks and mortar is increasingly a better customer. So we think we have a huge opportunity in the next two to three years to increase that footprint. We're also seeing really, really successful trends in our stores. Debbie mentioned design services. The work that our AEs are doing to personalize and really move the sale forward is very helpful. So we're very bullish on store growth.

And, Andy, are there any brands in particular you think are understored or perhaps opportunities for multi-branded stores?

You know, I think primarily our initial growth will be around the DWR brand and Herman Miller. We definitely think there's possibility for Knoll as well, but we carry Knoll within Design Within Reach as well. So all of our brands have potential, but those three other ones we'll focus on first.

Okay, that's great. Thank you very much.

Our next question comes from the line of Ruben Garner with The Benchmark Company. Please go ahead.

Thanks. Good evening, everybody. Hey, Ruben. Just wanted to kind of clarify slash square something up, Jeff. You talked about kind of maybe nearing or being at an inflection point. I don't know if that was in America's specific comment or just kind of in general. but you're also announcing a restructuring, you know, implementing cost savings, I would guess, because we've had kind of consistent order pressure over the last year or 18 months, as you put it. Can you kind of walk us through the decision or the thought process there, why restructuring now if we're going to start coming out of this? And then I've got to follow up.

Let me start with that one. Reuben, and then I'll pass it on to Jeff. Listen, we're always looking at our structure and how efficient we're being. And remember, we're still finishing up integration between these two companies. And as we finish some of our synergy work, as we move toward into the future, we're becoming more and more efficient in certain functions. So as we've done that, we've taken the opportunity to sort of close the circle on many of the integration activities. We think we're mostly at the end, but this is really kind of the final parts of that. Jeff, what would you add?

No, Andy, I think that's right. Ruben, to your question, I would caution you to read really anything into that. I mean, one of the things we have always prided ourselves on at Miller Knoll is trying to be on our front foot and making sure that we are responding to the current market conditions that we see, but also protecting the strategic investment parts of the business that we are confident are going to help grow the business top line and profitability going forward. And I think you can look at this as an ongoing practice of that kind of housekeeping. I mean, this was targeted, as I mentioned in my prepared comments, around... the management ranks, and it was not just a cost takeout, but it was also a simplification set of decisions. I mean, Andy said it in her prepared comments, but I'll just emphasize it, that the decisions around real estate, it would be wrong to think of that as purely focused on cost takeout. This is about creating a much more compelling expression of the combined millennial brands in these major markets that we serve. So, it certainly is not all about cost.

And I guess I'd leave it at that.

Sorry, I was on mute. Yeah, that's helpful. And then I guess this pricing sounds like it's stable. Can you just talk about, you know, I know you're coming into the end of your fiscal year, but maybe talk about it on a go-forward basis the next kind of year. What's left in the pricing actions that you've already announced? When was the last pricing action you announced? Do you need another one this year to keep up with inflation? Are you seeing your competitors announce them? I guess just kind of an update on price cost in this environment.

Yeah, Ruben, this is Jeff and John. Please jump in. I would characterize where we feel we are as an organization is we're kind of back to what I would say are more traditional more ongoing annual price increases as a cadence. There are still inflationary pressures. They are nowhere near the level that we were seeing when we were having to do multiple price increases per year. Our last increase was last June. It'll probably on roughly that same type of calendar schedule as we move forward and much more in line with kind of pre-COVID annualized price increase percentages.

Okay.

And then I guess last question, you kind of answered the shared question. I think that was directed at the America's side. My question actually internationally, the business seems to be holding up a little better. And in fact, it looks like the last quarter showing growth again. How much of that would you attribute to kind of maybe the benefits that there were between Nolan Miller versus, you know, have you seen a stabilization in macro over there kind of

I know it's been a volatile situation, but just kind of thoughts on how things have transpired over the last six to nine months.

I think it's a combination of all of those things, really. The great news about our international business is that it is very diverse. So if you still struggle in Europe, then you have China that's beginning to wake up to offset that. So I think we have markets, as we've mentioned over the last several calls, the Middle East, India, Asia, and China starting to wake up that are really kicking in. And that stability has driven the business forward. And the one thing to remember too, Ruben, with China, The differences in our business in international and the Americas is that international is much more nascent, and we are much more lightly penetrated. So we have a lot of opportunity to grow market share and to expand markets, to grow dealers. And also, Knoll is supplementing part of our product offer that we never had in Europe before. So as we continue to transition Herman Miller dealers to Miller Knoll dealers, there's momentum behind that. And as dealers begin to learn the products, there's momentum behind that. So I would just say it's really just a difference in the maturity of the markets and how we penetrate in the markets. Jeff, what would you add to that?

I think that covers it. I think it's spot on.

And guys, I think I said last one, but I'm going to take one more in if that's all right. Jeff, maybe you said this, but just to restate it, if you could, the order patterns that you throughout the quarter. Can you walk through those again? What kind of December, January, February look like? And then were those specific to, were those consolidated or did you break out Americas? And if you didn't, could you talk about what you're seeing in Americas on a month-by-month basis?

Yeah. Yeah, let me start, Ruben, with just kind of the consolidated picture. We were down from an organic order perspective, down 4.7% on the full quarter, Q3, and But we came into the quarter down closer to 10%, 11%, and we exited at a consolidated level in February up almost 3%. So we saw a fairly steady improvement in the year-over-year organic order calcs as we moved through. That was consolidated. The Americas, not a wildly different story there. I mean, we came into the quarter in December with larger year-on-year declines. We saw improvement as we moved into January. We were kind of mid-single-digit declines. February, on around that same level. So we ended the full quarter down 9.4%. So we saw that improvement as we moved through February. And then what's been most encouraging is quarter-to-date through kind of the latest data, the America segment is down 10%. It certainly has improved down 3% and the last couple weeks up 5%.

So it's been a fairly consistent walk toward an improving trend line. Okay, thanks for the detail, guys. I'll pass it on. There are no further questions.

I'll now turn the floor back to President and CEO Andy Owen for closing remarks.

Thank you so much. I want to thank everyone again for joining us on today's call, and we look forward to connecting with you all again soon. Take care.

This concludes today's call. You may now disconnect. Thank you. you you Thank you. Thank you. Good evening, and welcome to Miller Knowles' Quarterly Earnings Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Vice President of Investor Relations, Kerala Mangalini.

Good evening, and welcome to Miller Knowles' Third Quarter Fiscal 2024 Conference Call. I am joined by Andy Owen, Chief Executive Officer, and Jeff Stutz, Chief Financial Officer. Also available during the Q&A session is John Michael, President of America's Contract, and Debbie Prost, President of Global Retail. Before I turn the call over to Andy, please remember our safe harbor regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors. which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release. The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements. We may also refer to certain non-GAAP financial metrics, which are reconciled and described in our press release posted on our investor relations website at millernol.com. With that, I will turn the call over to Andy.

Andy? Thanks, Carola, and good evening, everyone. While this past quarter presented its challenges, we're proud to highlight our resilience and strategic focus. Despite facing a lower volume of orders and sales, we maintained a steadfast commitment to enhancing our business operations. Our efforts yielded significant results as we successfully improved gross margins across all business segments, showcasing our ability to adapt and thrive in dynamic market conditions. Miller Knoll is an agile company. We have implemented several programs across our contract and retail business to boost demand, while also putting in place restructuring measures to better align our operating costs with the evolving economic landscape. With our Miller Knoll dealer network firmly established in the U.S., we've turned our focus now to showrooms, studios, and tools that make it easier to create design solutions for customers. Our showroom strategy is anchored in having fewer and more robust Millernol design centers in targeted cities around the world. We're bringing our brands together so that customers and design partners can experience the full breadth of our offering in one location. To this end, we will combine our showrooms in most markets, and we will also invest more heavily in dealer showrooms and deal with programs, especially in markets without a corporate showroom presence. This work is already underway in several major U.S. markets, namely Chicago, Washington, D.C., and the greater Los Angeles area. This follows showroom co-location enhancements that we previously announced in New York City, Toronto, and London. Simultaneously, in North America alone, more than 40 dealer showroom refreshments are in progress, with many more in plans. At DWR, we recently opened a new concept studio in the San Francisco Design District. The space introduces our products in a new way, showcasing rotating galleries and interactive exhibits. We understand that enhancing our environment yields great results, and we've been encouraged by the increased customer interest and foot traffic in this store. Across our retail experience, we know that most orders include a customer touchpoint in one of our stores. By enhancing these spaces and strategic locations, we believe that we'll continue to build market share, especially as macroeconomic conditions become more favorable. We are also making significant progress across our technology platform. This past January, we launched our Program Portal Experience. These are digital hubs which serve as a singular place for clients, dealers, and our architecture and design partners to access projects and product information in one place, providing a forum for collaboration and streamlined processes. Similarly, we've launched augmented reality capabilities on retail and contract websites a supplement to our highly functional 3D configurators. We've seen that customers who use these tools have a higher conversion rate and are faster to add products to the cart. These programs reflect the confidence we have in Miller-Knowles' long-term value and the opportunities ahead. However, we are readless, and we understand that while encouraging, these initiatives and organizational enhancements are stepping stones to achieving our goals. Existing demand pressures, including the elevated cost of capital here in North America, are affecting the housing and office space market and slowing the decisions related to capital expenditures. This is taking a toll on the short-term results of our business. To match the current demand environment this quarter, we implemented targeted workforce reductions and realigned our leadership team against our different business segments and geographic areas. These events will have a meaningful impact on our SG&A cost structure. Jeff will share more details on this later. For America's business, while the third quarter is usually a softer period, The step-up in activity that customarily comes through the end of a quarter did not materialize as expected. Our team was fast to act, however, focusing on price optimization and launching a series of initiatives to help our clients make decisions and therefore coax demand. We continue to see leading indicators trending positively. Client requests for mock-ups are up over 20% year-over-year, and contract activations and pricing requests are up over 30% in Q3. This quarter, we are very pleased to report growth across our international contract business as we continue to transition legacy Herman Miller dealers to full Miller Knoll dealers. This transition not only enhances the product portfolio of our existing dealerships, but also involves legacy dealers opening newly branded and furnished Miller Knoll showrooms, thereby enhancing our market presence. Furthermore, we also have aggressive plans underway to bring Knoll to new markets throughout Europe Our network around the globe is unmatched in reach, and we are in a place to deliver designs for these regions as demand starts growing. Similarly, as macroeconomic pressures ease, we anticipate a release in pent-up retail demand and are preparing ourselves to meet this interest. Throughout our retail organization, we maintain a strong focus on inventory management and optimizing our product assortment. We've accelerated the introduction of more than 100 new styles to design within reach, adding hay, Muto, and Geiger products, introducing new DWR collections, and expanding the assortment from our strategic third-party vendors, as well as building out the normal offering through additional finish and materials options. Furthermore, we've expanded our design services, which has resulted in an increase in the penetration of orders from design services, as well as fewer returns. But right now, we are at an 11-year low in the luxury housing market, and our retail and specialty businesses track closely with that market, New home movers spend significantly more than the average. We'll continue to watch Fed rates as they have the potential to move in our favor this year, and when they do, we are prepared to capture the wins. Over the next few months, we will have exciting and significant opportunities to connect with our key clients around the globe and share the best of our collective with our core audiences at Salone and Milan and Design Days in Chicago. These are moments for us to visually demonstrate the forward-thinking, innovative spirit that will carry us to the future while establishing meaningful connections. Ahead of these events, our research and insights team is conducting seminars in over 40 cities across three continents, sharing actionable insights with organizations on navigating changes in the way we work and adapting their spaces to our evolving world. We're highlighting several successful project profiles in the upcoming launch of Season 4 of our About Place podcast. As companies navigate change and invest in their space, they continue to turn to us as a leader for our experienced, data-based perspectives on Designing for Tomorrow. Our industry has a once-in-a-lifetime opportunity to redefine how we think about spaces for decades to come. We have a chance right now to push the spaces where we live and work to better support individual wellness, productivity, and a sense of belonging. And when I look across our collective, there is no team more capable of rising to this occasion. We are focused and confident in the hard work we're doing right now. As always, I thank you for your continued support and the learning, and I will pass it on to Jeff for a deeper dive into this quarter's numbers. Jeff?

Thanks, Andy. Good evening, everyone. This afternoon, we shared our third quarter results, and I'm pleased to announce that we have achieved adjusted earnings per share of 45 cents, in line with our guidance, despite softer than expected revenue. The robust profitability we demonstrated this quarter showcases the resilience of our gross margin profile and underscores the efforts of our teams in protecting it. We delivered consolidated gross margin of 38.6%, which improved more than 450 basis points over the prior year. This is our fifth consecutive quarter of year-over-year improvement in adjusted gross margin. Improved operational efficiency, moderating input and delivery costs, and incremental pricing benefits were the primary drivers, all of which align with the themes we have consistently communicated as our focus over the past several quarters. Furthermore, these actions were complemented by disciplined operating expense management and the ongoing benefit of our acquisition synergy program. As Andy mentioned, we took further steps this quarter aimed at improving the efficiency of our selling general and administrative functions. This resulted in a targeted reduction of our management workforce. Additionally, we reviewed our real estate footprint and announced showroom consolidation plans in key markets, which we believe will not only reduce our ongoing cost structure, but also create a more cohesive and compelling expression of our brand and collectives. Once fully implemented later this spring, these actions are expected to deliver annualized cost reductions of between $14 and $16 million. At the consolidated level, net sales in the third quarter of $872 million decreased 11.4% on a reported basis and 10.1% organically compared with the same quarter last year. New orders totaled $830 million in the third reflecting an organic decrease of 4.7% from the same quarter a year ago. While we saw declines in both the America's contract and retail segments, demand levels in the international and specialty segment were more encouraging, particularly in the contract component of our business. Although consolidated order levels for the full quarter did not meet our near-term expectations, the trend improved across all segments as we moved through the period. And for the month of February, our consolidated orders were up 2.8% over last year. Within the America's contract segment, net sales for the quarter were 441 million, representing an organic decrease of 9.2% from the same quarter a year ago. New orders in the period reflected a similar pattern, coming in 9.4% lower than last year on an organic basis. Here again, demand trends improved as we moved through the period and into the early part of Q4. In fact, over the last two weeks, orders have trended up over 5% to last year. Despite lower sales versus last year, we again delivered much improved gross margins in the Americas segment this quarter. Net pricing benefit, moderating input costs, the realization of synergy benefits, and tightly managed operating expenses contributed to achieving a gross margin of 33.1% and adjusted operating margin of 8.1%. Although we're not yet seeing their consistent impact on order rates, we remain highly optimistic that improvement is on the horizon given a range of forward-looking data points. Indicators such as customer inquiries, project mock-up requests, and contract activations continue to grow year over year, and the overall funnel of project opportunities remains encouraging. Within the funnel of projects, we are tracking the value of opportunities that we have won but for which the actual order has not yet been received. We're encouraged to share that this number is double the value it was this time last year. All of this adds to our confidence that we are at or near a demand inflection point in the business. The question remains, however, one of timing. By historical comparison, we continue to experience delays in the time it takes customers to make final order decisions, and this is added to the complexity and challenge of forecasting the business. Considering the current macroeconomic climate with elevated interest rates, lagging ABI readings, and sentiment measures edging higher but still below pre-pandemic levels, none of this is surprising to us. Still, the data we are tracking inside our business and what we hear from customers and our dealers gives us confidence that there is pent-up demand awaiting further improvements in the macro backdrop. Turning to our international contract and specialty segment, Net sales for the quarter totaled 217 million, which is down 10.6% organically year over year, while new orders came to 228 million, reflecting a year-over-year organic increase of 7.9%. Demand patterns month to month continue to be inconsistent. However, orders grew in both December and February, primarily driven by portions of mainland Europe, South Korea, India, China, Australia, and in the Middle East. One of our key strategic initiatives aimed at enhancing the scope and reach of our international network, is completing the transition from Herman Miller to full-line Miller & Old dealers. This effort is steadily gaining momentum, with currently over 40% of this network offering the Miller & Old product portfolio. We have a consistent schedule of additional transitions planned in the upcoming quarter. We were also pleased with the margin profile of this segment. The adjusted operating margin was 10.4% in the third quarter, albeit down 110 basis points year-over-year due to lower sales volume. Despite this, we continue to expand gross margins. In this past quarter, we achieved a record level of 44.5%. Favorable product mix, improved freight and distribution management, and proactive restructuring initiatives taken earlier in the year all contribute to this improved profit picture. As it relates to our global retail segment, in the third quarter, net sales totaled $214 million, reflecting an organic decrease of 11.3%. While new orders totaled $183 million, marking a 7.1% organic decline, primarily due to subdued housing-related demand. Regarding adjusted operating margins for the retail segment this quarter, we achieved 5.6%, 10 basis points higher than last year, despite the decrease in net sales. The main drivers of the margin expansion were improved operational and delivery efficiency and favorable product mix. Despite the challenging retail environment, our retail team remains dedicated to improving in-store experiences, broadening our product offer, enhancing digital capabilities, and elevating brand awareness. And we're confident that this strategic approach will nurture brand loyalty, promote deeper engagement, and position our business to take advantage of pent-up demand as market conditions improve. And we're beginning to see signs of improvement in the economic data. As Andy mentioned, home sales in the U.S. are at 11-year lows, and demographic trends point to robust future construction growth. This is evidenced by last month's Home Builders Sentiment Readings, which posted its third consecutive monthly gain in February, reaching its highest level since August of 2023. Moreover, renovation activity should also benefit from an aging housing stock and eventual turnover. As we mentioned to you last quarter, we believe that the demand fundamentals for this segment are pointing stronger and expect the retail segment to be a major contributor to both top and bottom line growth in our business for years to come. Regarding cash flow on the balance sheet this quarter, we saw cash generation of $61 million in cash from operations. This enabled us to repurchase approximately 1.5 million shares for a total cash outlay of approximately $40 million. And at quarter end, our net debt to EBITDA ratio was approximately 2.65 turns. Now let's turn our near-term view to guidance and outlooks. Given the macroeconomic conditions currently impacting our demand picture, we expect net sales in the fourth quarter of fiscal 2024 to range between $880 million and $920 million. Adjusted diluted earnings per share for the period are expected to be between 49 and 57 cents. The midpoint of this earnings range implies year-over-year growth of approximately 29%, which is notable given the decline in year-over-year revenue. And based on this forecast, we expect full-year adjusted diluted earnings per share of between $1.90 and $1.98. While economic uncertainty certainly persists in parts of our business, we're growing in our confidence that a favorable shift in demand patterns is on the horizon. And we believe this will translate into broad-based sales and earnings growth as we move through the upcoming fiscal year. So with that overview of the numbers, I'll now turn the call over to the operator to take your questions.

The floor is now open for your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up question.

We'll now take a moment to compile our roster. Our first question comes from the line of Greg Burns with Sidoti. Please go ahead.

Good afternoon. Can you just talk about your win rates in the Americas and maybe why you think maybe it's taking longer for some of this to move through your funnel? And do you feel like there's been any changes in share in the market? And do you feel like you maybe need to get more aggressive with maybe some of your incentives to to start converting maybe some of what you're seeing in your pipeline. Thank you.

Hey, Greg. It's Andy. That's a lot of questions, so I'll start with a couple of points. First off, I think demand patterns in the early part of your recovery are always choppy, and they often really vary significantly based on customer size and industry sector. So I think that's really kind of where we find ourselves currently, and I don't think we're either surprised or just starting to see some relative differences. across the competitive landscape, and I think, in fact, every cycle in the last 25 years has played out this way. I think from a quarter-to-quarter fluctuation demand over the long term, we believe in the right position to protect our market share. From a timing perspective, I think it is still taking customers longer to make decisions on what's in the funnel and what's been won. I think our win rate is actually 3% higher than last year, which is really encouraging. We are not seeing... pricing activity that is frightening to us or feels like we need to discount more. It feels very stable out there. We're addressing pricing on a job-by-job basis, but we're not feeling like it is incredibly competitive. John, I'd let you add a little bit more to that if you want.

Yeah, I would add, Andy, if we look at what's in the funnel, in addition to significant increase in new opportunities added to the funnel, as you mentioned, the win rate is up slightly and And Jeff mentioned in his opening comments that, you know, as we track an opportunity through the sales process, the second to last step is it's either marked closed or one. And then the final step is it's booked. And the amount of projects and opportunities in that final step closed one for us has increased significantly versus prior year. So it is really just a matter of timing in terms of that converting into an order. We're still seeing construction delays and supply chain things in other industries that are impacting project timing.

But again, looking at all the leading indicators, they're all pointing in the right direction right now.

Okay. And then when you look at the balance sheet, obviously generating cash, looks like you bought back some stock this quarter. Are you comfortable with the leverage here? Like why not, you know, What's your decision factor between buying back shares versus maybe paying down the debt? Thank you.

Yeah, Greg, this is Jeff. We've been buying some shares all fiscal year at different levels, and we've just been opportunistic. We think the shares are undervalued. We think it's a good deal and a good investment. Now, having said that, we have been balanced. If you look at the course of the first nine months of the fiscal year, we've taken a balanced approach and both bought shares and paid down some debt. This quarter, just due to some timing of accessing some of our international cash, we did see our debt level tick up a little bit at the end of the quarter. But the intent has been in our plan going forward will continue to be balanced on that front. No, we're not concerned with the leverage ratio. Again, as we look ahead and we look at the internal measures that we've noted on the call, what we see our clouds clearing from a macroeconomic perspective, and the trends we've even seen within each of the three business segments from an order entry standpoint, we're confident we're going to see demand improvements on the horizon. Our margins are strong, well above last year's levels, and so we're quite comfortable at the level that we're at.

All right. Thank you.

Our next question comes from the line of Bud Bugach with Water Tower Research. Please go ahead.

Good morning, Andy. Good morning, Jeff. Good morning. Oh, good afternoon, Carola and John. Sorry. It is the afternoon. And congratulations on the profitability in the quarter. I know that's a difficult thing and you're managing that well. But I am concerned about what I see in the implied backlogs, particularly in America's contract, which looks to me to be somewhere, I think, probably in the $355 to $360 million range, Jeff, if I did the math right.

That's right, bud.

And that's the lowest backlog in America's contracts since before the acquisition, since the acquisition, time of the acquisition. And it makes it, I think you told me, it makes it very difficult to leverage your manufacturing at that same time, so irrespective of the pricing. What's going on there? When will we see that backlog start to rise?

Well, Bud, I won't disagree with you. Everyone in this room is nodding. We have every interest to see order rates pick up, and we're spending our full efforts as an organization to support the sales organization, to support the operations organization, to drive order growth. And that's what it's going to take. And I think we are, as we said in the prepared comments, we're on the cusp of seeing order demand pick up. We saw some positive trends as we moved through the quarter. I made the comment that America's orders in the last couple of weeks have increased over last year, same week's prior year. So the trends are pointing in the right direction. I think the macro indicators, as we've covered, are pointing in the right direction. We fully expect to see that backlog begin to grow. But we have been through 18 months or so of what I would call a contract economic recession. And we're finding our way to the bottom of it, and we will find our way through the other side of it.

Okay. I have more on that, but I know I've got one more follow-up. And let me just go to the global retail, because, again, that looks like that's a significant drawdown in backlog, not quite as severe as AC, but... Can you talk a little bit, Andy, on the global retail, what you're seeing in terms of e-commerce versus in-store? How do we look on same store, same location, or same brand kind of basis, however you wanted to give us a flavor on that, and the future of that particular segment as well?

Yeah, but it's a great question, and Debbie's here, so I'm going to let her answer specifics, but I think it's actually very promising, and some of the backlog that you're referring to from last year, reflected some of the supply chain issues that we were having along with many other retailers as we worked through that. So I think the reduction of backlog is actually a really good thing and a point to how we're managing our inventory much more efficiently. And the cycle time from when you were ordering furniture for us now to when it's showing up in your home is much shorter. So that processing is actually really beneficial because it drives the more conversion. And I would say that business is really healthy outperforming competition. So Debbie, do you want to answer some of the specifics?

Hi there. As it pertains to some of the channel questions you had, we're seeing fairly consistent patterns across our three channels, stores, web, and wholesale, with one exception that given the design service implementation that we've been doing in our stores, we're really seeing an acceleration of average order value in that channel as the contribution of design service sales picks up. Those orders are about over 2X the size. in dollar volume of a non-design service sale. So we're very focused on optimizing the store traffic and the activity around design services. We're in the process of densifying our store floor sets to showcase more of the expanded offering in stores, as well as making sure that we're being much louder and more aggressive about driving traffic towards these design services now that our sales force is fully trained in that capability.

So the average ticket in retail, are you in the $2,000 to $3,000 range? Yes, that's correct.

Okay. All right. Thank you. Good luck on the next quarters and the balance of the year.

Thanks, bud.

Our next question comes from a line of Alex Furman with Craig Hallam Capital. Please go ahead.

Hey, guys. Thanks very much for taking my question. Andy, you talked a little bit about consolidating some showrooms in an effort to align the cost structure. What about on the global retail side of the business? Do you think there are opportunities there to maybe consolidate some of your retail stores, or are there still opportunities to continue to open more stores there?

It's a great question, Alex. And just to touch on the showroom consolidation, I think the The major driver behind why we've decided to do this is really driven from our customers in the AD community and making sure that we have everything in an easy and convenient place for them to actually see all of our brands. So we're very excited about that. It's not really driven by cost. Cost is a great side benefit, but really driven by the customer and what they're telling us. From a retail store standpoint, we are very understored compared to our competition. And I would say we have opportunity to increase our store footprint, We find that our customer that shops online as well as in bricks and mortar is increasingly a better customer. So we think we have a huge opportunity in the next two to three years to increase that footprint. We're also seeing really, really successful trends in our stores. Debbie mentioned design services. The work that our AEs are doing to personalize and really move the sale forward is very helpful. So we're very bullish on store growth.

And, Andy, are there any brands in particular you think are understored or perhaps opportunities for multi-branded stores?

You know, I think primarily our initial growth will be around the DWR brand and Herman Miller. We definitely think there's possibility for Knoll as well, but we carry Knoll within Design Within Reach as well. So all of our brands have potential, but those three are the ones we'll focus on first.

Okay, that's great. Thank you very much.

Our next question comes from the line of Ruben Garner with The Benchmark Company. Please go ahead.

Thanks. Good evening, everybody. Hey, Ruben. Just wanted to kind of clarify slash square something up, Jeff. You talked about kind of maybe nearing or being at an inflection point. I don't know if that was in America's specific comment or just kind of in general. but you're also announcing a restructuring, you know, implementing cost savings, I would guess, because we've had kind of consistent order pressure over the last year or 18 months as you put it. Can you kind of walk us through the decision or the thought process there, why restructuring now if we're going to start coming out of this? And then I've got to follow up.

Let me start with that one, Reuben, and then I'll pass it on to Jeff. Listen, we're always looking at our structure and how efficient we're being. And remember, we're still, you know, finishing up integration between these two companies. And as we finish some of our synergy work, as we move toward into the future, we're becoming more and more efficient in certain functions. So as we've done that, we've taken the opportunity to sort of close the circle on many of the integration activities. We think we're mostly at the end of But this is really kind of the final parts of that. Jeff, what would you add?

Andy, I think that's right. Ruben, to your question, I would caution you to read really anything into that. I mean, one of the things we have always prided ourselves on at Miller & Noll is trying to be on our front foot and making sure that we are responding to the current market conditions that we see, but also protecting the strategic investment parts of the business that we are confident are going to are going to help grow the business top line and profitability going forward. And, you know, I think you can look at this as an ongoing practice of that kind of housekeeping. I mean, this was targeted, as I mentioned in my prepared comments, around the management ranks. And it was not just a cost takeout, but it was also a simplification set of decisions. I mean, Andy said it in her prepared comments, but I'll just emphasize it. the decisions around real estate, it would be wrong to think of that as purely focused on cost takeout. This is about creating a much more compelling expression of the combined millennial brands in these major markets that we serve. So it certainly is not all about cost.

And I guess I'd leave it at that. Sorry, I was on mute.

Yeah, that's helpful. And then I guess This pricing sounds like it's stable. Can you just talk about, you know, I know you're coming into the end of your fiscal year, but maybe talk about it on a go-forward basis the next kind of year. What's left in the pricing actions that you've already announced? When was the last pricing action you announced? Do you need another one this year to keep up with inflation? Are you seeing your competitors announce them? I guess just kind of an update on price cost in this environment.

Yeah, Ruben, this is Jeff, and John, please jump in. I would characterize where we feel we are as an organization is we're kind of back to what I would say are more traditional, more ongoing annual price increases as a cadence. There are still inflationary pressures. They are nowhere near the level that we were seeing when we were having to do multiple price increases per year. Our last increase was last June. It'll probably be on roughly that same type of calendar schedule as we move forward and much more in line with kind of pre-COVID annualized price increase percentages.

Okay, and then I guess last question.

You kind of answered the shared question. I think that was directed at America's side. My question, actually, internationally, the business seems to be holding up a little better. And in fact, it looks like the last quarter showing growth again. How much of that would you attribute to kind of maybe the benefits that there were between Nolan Miller versus, you know, have you seen a stabilization in macro over there kind of quicker? I know it's been a volatile situation, but just kind of thoughts on how things have transpired over the last six to nine months.

I think it's a combination of all of those things, really. I think The great news about our international business is that it is very diverse. So if you still struggle in Europe, then you have China that's beginning to wake up to offset that. So I think we have markets, as we've mentioned over the last several calls, the Middle East, India, Asia, and China starting to wake up that are really kicking in. And that stability has driven the business forward. And the one thing to remember too, Ruben, with markets, The differences in our business in international and the Americas is that international is much more nascent, and we are much more lightly penetrated. So we have a lot of opportunity to grow market share and to expand markets, to grow dealers. And also, Knoll is supplementing part of our product offer that we never had in Europe before. So as we continue to transition Herman Miller dealers to Miller Knoll dealers, there's momentum behind that. And as dealers begin to learn the products, there's momentum behind that. So I would just say it's really just a difference in the maturity of the markets and how we penetrate in the markets. Jeff, what would you add to that?

I think that covers it. I think it's spot on.

And guys, I think I said last one, but I'm going to speak one more, and if that's all right. Jeff, maybe you said this, but just to restate it, if you could, the order patterns that you all throughout the quarter. Can you walk through those again? What kind of December, January, February look like? And then were those specific to, were those consolidated or did you break out Americas? And if you didn't, could you talk about what you're seeing in Americas on a month-by-month basis?

Yeah. Yeah, let me start, Ruben, with just kind of the consolidated picture. We were down from an organic order perspective down at 4.7% on the full quarter Q3. But we came into the quarter down closer to 10%, 11%, and we exited at a consolidated level in February up almost 3%. So we saw a fairly steady improvement in the year-over-year organic order calcs as we moved through. That was consolidated. The Americas, not a wildly different story there. I mean, we came into the quarter in December with larger year-on-year declines. We saw improvement as we moved into January. We were kind of mid-single-digit declines. February, on around that same level. So we ended the full quarter down 9.4%. So we saw that improvement as we moved through February. And then what's been most encouraging is quarter-to-date through kind of the latest data, the America segment is down 10%. It certainly has improved down 3% and the last couple weeks up 5%.

So it's been a fairly consistent walk toward an improving trend line. Okay, thanks for the detail, guys. I'll pass it on. There are no further questions.

I'll now turn the floor back to President and CEO Andy Owen for closing remarks.

Thank you so much. I want to thank everyone again for joining us on today's call, and we look forward to connecting with you all again soon.

Take care. This concludes today's call. You may now disconnect.