MillerKnoll, Inc. (MLKN) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Herman Miller, Inc. 2021 Annual Shareholders Meeting. Today's meeting is scheduled until 11:30 a.m. Eastern Time. This annual meeting is being recorded and will be available for replay on Herman Miller's website. The presentation and any remarks made today may include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include those risk factors discussed in the company's report on Form 10-K and 10-Q and other reports filed with the Securities and Exchange Commission. Hosting today's meeting is Mr. Mike Volkema, Chairman of the Board of Directors; and Ms. Andi Owen, Chief Executive Officer. Mr. Volkema and Ms. Owen are joined by Mr. Jeff Stutz, Chief Financial Officer; Mr. Kevin Veltman, Senior Vice President; and Ms. Jackie Rice, General Counsel. Mr. Volkema will open the meeting and conduct the formal business agenda, followed by a brief business overview presentation by Ms. Owen. Following Ms. Owen's remarks, there will also be opportunity for questions submitted by shareholders. [Operator Instructions] As noted in the proxy statement, only questions that would be appropriate to raise in person and related to the purpose of this meeting will be accepted. Questions will be answered in the time available. Unanswered questions will receive a response using your shareholder registration information. If you have already submitted your proxy, then your votes have been tallied. If you wish to vote during the meeting or change a proxy previously submitted, you may do so online now. We'll begin today's meeting with Mr. Michael Volkema. Please go ahead, sir.

Good morning, everyone. On behalf of our Board of Directors, I'd like to welcome you to Herman Miller's 2021 Annual Shareholders Meeting. We hope this meeting will offer you some valuable insights into our company. As already mentioned, I'm Mike Volkema, and it has been my privilege to serve as Chairman of the Board during this past year. In that capacity, I will now formally call this 2021 Herman Miller Annual Shareholders Meeting to order. I would also like to welcome the Herman Miller Board members attending in person or by conference call, including Mary Andringa, Dave Brandon, Doug French, John Hoke, Lisa Kro, Heidi Manheimer, Candace Matthews; Andi Owen, Mike C. Smith and Mike R. Smith. With that, I'll now return to the formal matters of business today. First, as Chairperson, I will waive the reading of last year's minutes in the interest of time. Next, I have received an affidavit of distribution, which certifies all shareholders of record as of August 13, 2021, were provided access to a notice of the annual meeting along with access to the proxy statement, proxy card and annual report. At this time, I will declare the proxy polls now closed. In addition, I also wish to confirm that Jeff Stutz, our Chief Financial Officer; and Kevin Veltman, our Senior Vice President and Integration Lead, have been appointed Inspectors of Election for the proxy vote. Having received the quorum report from Jeff and Kevin, I am assured that we have a quorum. We are pleased to report that approximately 90% or 68,100,000 shares are represented at the meeting in person or by proxy. And now for the results of the proxy vote. I am pleased to announce that all of the proposals recommended by the Board of Directors have been approved. Michael R. Smith has been elected as a Director for a 2-year term, serving until the 2023 Annual Shareholders Meeting. Dave Brandon, Doug French, John Hoke and Heidi Manheimer have been elected as Directors for a 3-year term, serving until the 2024 Annual Shareholders Meeting. The proposal to amend our Articles of Incorporation to change our name from Herman Miller, Inc. to MillerKnoll, Inc. has been approved. Shareholders have also ratified the appointment of KPMG LLP as the company's independent registered public accounting firm for our fiscal year ending June 4, 2022. Lastly, the compensation of our named executive officers has been approved on an advisory basis. The final voting tally on each of these proposals will be filed with the SEC on a Form 8-K. With those matters concluded, that completes our required business agenda, and I'll declare this the end of our formal meeting. Andi Owen, MillerKnoll's CEO, would now like to present a brief overview of the business. Following Andi's presentation, we will have an opportunity to take questions in the scheduled time remaining. If you have a question, please begin submitting those now using the directions on your computer screen. With that, Andi, I'll turn the meeting over to you.

Thank you, Mike, and good morning, everyone. Thanks for joining us today. Fiscal 2021 was a defining year for us. From the early days of the pandemic, we recognized it would be a transformative event for Herman Miller and for our industry. In the face of deep uncertainty, our people around the world rallied to deliver extraordinary results, ensuring that we would emerge as an industry leader, poised to define the transformation ahead of us. We reported sales of $2.47 billion for fiscal 2021, a 0.9% decrease from the prior year on a reported basis and an organic decrease of 5.7%. Reported operating margin for the year was 9.4%, while adjusted operating margin of 10.9%, reflected a 260 basis point improvement over the prior year. We reported diluted earnings per share on a GAAP basis of $2.92. On an adjusted basis, we delivered earnings per share of $3.05, which reflected a 17% increase over fiscal 2020. It was a breakout year for our Retail business with the segment's highest ever sales of $602 million. Our new Herman Miller concept seating stores, entry into the gaming market and solidified position as the premium home furnishings market leader, all played create key roles in our success last year and continue to give us momentum as we unlock the full potential of our Retail business. We also continued our investments to become a more digitally enabled business. E-commerce sales in fiscal 2021 were up 220% over the prior year. We improved the online shopping experience for our customers with redesigned DWR and Herman Miller e-commerce stores and disrupted the contracts business through digital innovation, such as our proprietary design tool Compass, and Herman Miller Professional, an online purchasing tool for small and medium businesses. While our Contract business felt the most significant impact from the pandemic, we capitalized on opportunities where they existed. We leveraged our global reach to deliver year-over-year sales growth in our international Contracts business. We introduced a flexible and adaptable product selection, OE1, that empowers individuals to design the environment they need based on the work they're doing. We leveraged decades of research to position ourselves at the forefront of the workplace transformation and help our customers rethink their own workplaces. We joined the future forums to build relationships and generate new insights while working alongside other founding partners to help executives transform their workplaces for the post-pandemic world. Our thought leadership position has never been a more valuable differentiator than it is today. Fiscal year 2021 also marked turning point in our commitment to improving the lives of people everywhere. We began to seek out more publicly and use our voice to influence [Technical Difficulty] action to create change internally and externally. And we joined forces with other organizations who share our commitment to creating our sustainable and equitable world. We spearheaded the development of the Diversity In Design Collaborative, a group of companies committed to increasing representation of black creatives in design in the United States. DID has a full year of action plans for 2022, and we expect to grow to 100 core members by the end of fiscal year 2022. And of course, the most transformational moment to fiscal 2021 came when we acquired Knoll. The transaction closed on July 19, and that same week we introduced MillerKnoll, a collective of dynamic brands that come together to design the world we live in. MillerKnoll is now one of the largest and most influential modern design companies in the world. Together, we benefit from increased reach and the ability to better serve our customers across the contract furnishing sector, residential trade segments and our retail audiences. We are thoughtfully building a powerful organization for the future, and we are on track to capture the synergies and financial benefits associated with the acquisition. Today, we see more clearly than ever before who we will be and what we will stand for as we move into this new era together. With a broader portfolio of complementary brands, enhanced scale and capabilities, and the financial strength of our diversified businesses, MillerKnoll is uniquely positioned to imagine and create beautiful design solutions that both endure and inspire. We're glad you're on this journey with us, and we look forward to shaping the future filled with exciting opportunities for all our stakeholders. Thank you for your continued support.

Thank you, Andy. At this time, seeing no questions, I'd like to close our meeting as we began. Thank you for joining us. We hope you found this presentation useful and interesting, and look forward to connecting with you again in the future.

Thank you for attending today's 2021 Herman Miller Annual Shareholders Meeting. Enjoy your day.