MillerKnoll, Inc.

Good evening, and welcome to Miller & Noll's quarterly earnings conference call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Wendy Watson, Vice President of Investor Relations. Please go ahead.

Good evening, and welcome to our second quarter fiscal 2025 conference call. On with me are Andy Owen, Chief Executive Officer, and Jeff Stetz, Chief Financial Officer. Joining them for the Q&A session are John Michael, President of America's Contract, and Debbie Probst, Vice President of Global Retail. We issued our earnings press release for the quarter ended November 30th, 2024, after market closed today, and it is available on our investor relations website at millernull.com. A replay of the call will be available on our website within 24 hours. 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 made as of today's date and accept as may be required by law. We assume no obligation to update or supplement these statements. We will also refer to certain non-GAAP financial metrics, and our press release includes the relevant non-GAAP reconciliations. With that, I'll turn the call over to Andy.

Thanks, Wendy. Good evening, everyone. Thank you so much for joining us tonight. As you may hear from my voice, I'm recovering from a little bit of a respiratory infection, so please bear with me. I'm very pleased to report Miller & Noll delivered strong performance in the second quarter of fiscal year 2025. we continue to be optimistic for the year ahead. Based on momentum we're seeing in several of our businesses, along with leading indicators, which vary by segment, strengthening our overall demand picture. While orders are trending nicely ahead of last year, they've recovered at a slower pace than we expected at this point in the year. This is reflected in our guidance for the balance of the year that Jeff will discuss later in the call. Moving on to some highlights and trends by segment. America's contract continues to be a key growth driver from Renault, with sales and orders up year over year in the second quarter, our third consecutive period of order growth. And looking forward, leading indicators in this segment, such as project funnel additions, customer mock-up requests, and pricing activity are all up year over year. Within the international and specialty segment, we continue to see strong order growth in the Middle East and parts of Asia. We're thrilled to see the excitement that is building for our One of our key competitive advantages is the power of our collective of brands alongside our global scale and reach. As I mentioned last quarter, in September, we opened our Miller Mill flagship in London, and to date, we have more than doubled client appointments compared to the same period last year. We have some great initiatives that are building momentum in this segment as well. For example, with the opening of a new fulfillment center in Belgium, we now have the ability to offer our full complement of textiles in Europe, making it more efficient to utilize them across our portfolio of European brands. Turning to our retail segment, we saw a mid-single-digit year-over-year increase in orders during a very important 12-day Black Friday holiday cyber promotional period. This period runs from the Friday before Thanksgiving through Giving Tuesday, and fell in both our second and third fiscal quarters this year. Additionally, we're pleased with several positive trends in the business, including strength of the complimentary concierge design services we offer our customers, new product launches performing above expectations, and a very positive response to our promotions, with all product categories performing better than prior year in the holiday cyber promotional period. This gives us confidence to continue to invest in new stores and our product assortment. In early 2025, we plan to open design within Reach Studios in Palm Springs, California, and Las Vegas, Nevada, as well as the Herman Miller store in Fairfax, Virginia. We're also very excited to introduce an expanded product assortment in spring 2025, with new product launches up over 100% compared to spring 2024. Moving to supply chain and the topic of tariffs We're paying very close attention to the tariff proposal. We've managed through similar tariff policy changes in the past and are looking to a number of options to mitigate if needed. These could include identifying alternative sources of supply, options for advanced purchasing of imported goods and materials, and possible future price adjustments in response to tariff-driven cost increases. We know from experience that our global manufacturing footprint and supply chain agility is an advantage and we will determine which combination of these responses is appropriate as more details and tariff actions become available. We're also closely watching other proposals from the new administration that could have a positive impact on our business and that of our customers. The extension of the 2017 tax cuts and, in particular, the reinstatement of bonus depreciation could result in higher free cash flow for us and for many of our customers. We made impressive strides in sustainability this quarter. We announced the elimination of added PFAS from our North American product portfolio by May of 2025 and globally by May of 2027. Our products currently meet or exceed global PFAS regulations, but we aim to go beyond minimum safety standards. We also continue to roll out more sustainable product options. Herman Miller launched a refreshed version of the popular Mirror 2 chair, made with more recycled content and a lower carbon footprint. As a design and innovation leader, we support our customers through global research and insights teams. With more and more industries recognizing the need to return to and personally connect within workspaces, this team is constantly evaluating ways to create spaces that support relationship-based work. Through our Design with Impact programs, we have the tools to help customers do that. To close, while macroeconomic improvement is progressing more slowly than we had expected at the start of our fiscal year, we're encouraged by many of the trends we're seeing across our businesses and the building momentum we continue to expect in the second half of the year. Our diverse business channels and global collective of brands continue to be a strong competitive advantage, and we have cash flow and balance sheet strength that will allow us to capitalize on opportunities and drive continued momentum. And finally, December always brings a chance to reflect on the year and where we're headed next. I want to thank our associates at Cross Miller Knoll for all that we've accomplished in calendar year 2024. This past year has been about coming together to inspire our customers and clients, collaborating with our colleagues and partners, and supporting one another. I appreciate every moment we've worked together, and I'm proud of the milestones we've achieved. I'll now turn it over to Jeff to discuss our results in more detail. and share our outlook for the remainder of fiscal 2025.