MillerKnoll Inc Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Gordon - Water Tower Research - Analyst : I guess my first question is about the impairment charges, especially in global retail, and how we can square that with the rather impressive performance, especially in North America.

Question: Brian Gordon - Water Tower Research - Analyst : Okay. That definitely makes sense. And just like a follow-up on the new stores and new locations that you guys are thinking about in that segment. For that 10 to 15 new locations number, how even will that be across the '26 timeframe?

Question: Greg Burns - Sidoti and Co - Analyst : Just in regards to tariffs, I know it's a fluid situation and the net impact is going to be that $5 million to $7 million in the fourth quarter, but do you think you're -- based on what you see now, we'll be able to fully offset that in future quarters?

Question: Greg Burns - Sidoti and Co - Analyst : Okay, great. And then in terms of the revenue guidance, you're coming in with a higher backlog, I think you said plus 7%, and the order growth seems to be accelerating at least in the first part. So maybe there's -- you're not fully sure how the quarter is going to shake out, but it seems like things are building a little bit of momentum from the softness you saw this quarter. I'm just trying to like square away that higher backlog plus the improved order growth versus the revenue guidance for like 4% to 5% growth?

Question: Greg Burns - Sidoti and Co - Analyst : Okay. So just maybe digging into like what you saw this quarter in the North American contract segment. In the last couple of quarters, you talked more positively, I think, about some of the pipeline metrics, the pipeline activity that seemed to be a little bit more mixed this quarter. So can you just talk about maybe what you saw there, how it maybe changed this quarter, and if you're seeing any improvement in those pipeline activity metrics that you've talked about in the past, like mock ups, or anything like that?

Question: Alex Fuhrman - Craig-Hallum - Analyst : Wanted to ask what you're seeing in terms of demand from consumers on their direct-to-consumer side of the business. I think you mentioned that orders to date in March have been up really nicely year over year. Is that indicative of demand remaining strong from your high-end consumer for your consumer brands, or is there maybe something about the timing of promotions that maybe would have influenced that March result?

Question: Reuben Garner - The Benchmark Company - Analyst : So I guess to start on the changes in the outlook for the full year, so I understand the tariffs piece, I have a question on that in a second. But the bulk of the cut seems to be outside of that. I'm trying to figure out what exactly has changed from three months ago when you gave that to make that level of adjustment on the earnings side. And I understand you didn't necessarily give specific top-line guidance before, at least I don't think you did. So maybe the outlook was much higher, but maybe walk me through the components or the pieces that have changed since you last updated us. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 26, 2025 / 9:00PM, MLKN.OQ - Q3 2025 MillerKnoll Inc Earnings Call

Question: Reuben Garner - The Benchmark Company - Analyst : Okay. And so I guess that's -- so it's not actually anything you're seeing in your business that's leading to this level of reduction, because, I mean, the bulk of the tariff uncertainty has been in the last 60 days, and it sounds like your orders have accelerated over the last 60 days.

Question: Reuben Garner - The Benchmark Company - Analyst : Okay. And then on the tariff side, just given how uncertain it is, why take the approach of putting through -- I think you said a price increase, a list price increase in June, just given some of these tariffs could come and go or already coming and going, why not use a surcharge tactic? I know you referenced you could use that, but why not lead with that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 26, 2025 / 9:00PM, MLKN.OQ - Q3 2025 MillerKnoll Inc Earnings Call

Question: Reuben Garner - The Benchmark Company - Analyst : Okay. And then, one more clarification for me. I don't think you give backlog specific to North America, maybe you will with the new segmenting, but what -- you're not seeing any cancellations to date in orders. Is that correct?

Question: Reuben Garner - The Benchmark Company - Analyst : Okay. And I said last one, I'm going to sneak one more in actually, sorry. On the restructuring side, I feel like we didn't really hit necessarily what the goals are or the purpose of that. I understand there's some charges in workforce realignment, but it sounds like you're also adding in retail. You talked about investments last quarter in North America. Where are these cost reductions aimed? And I guess, what are the ultimate savings that come from the one-time expenses?

Question: Reuben Garner - The Benchmark Company - Analyst : Got it. Thank you guys and good luck.