MillerKnoll Inc

NASDAQ:MLKN

Earnings Call Analysis

Fiscal Momentum and Future Expectations

MillerKnoll reported strong order growth in Q1, led by the Americas Contract segment, and improved demand internationally. Despite a 6.1% decrease in net sales year-over-year to $862 million, the company saw a 2.4% rise in consolidated orders and a 9.2% increase in backlog. The operating margins varied, with the Americas Contract segment at 3.8% and International at 4.4%. Full-year adjusted earnings are projected at $2.20 per share. For Q2, net sales are expected to be between $950 million and $990 million, with adjusted earnings per share ranging from $0.51 to $0.57【4:1†source】 .

Starting Strong in Fiscal 2025

MillerKnoll commenced fiscal year 2025 with notable momentum, reporting an increase in orders year-over-year. The first quarter saw total consolidated orders reaching $936 million, up 2.4% as compared to the previous year, with organic growth of 3.5%. This surge in order activity was particularly driven by the Americas Contract segment, indicating a steadily improving demand landscape as evidenced by significant indicators such as customer mockup requests and new contract activations. This positive trend suggests that the company is well-positioned to capture further market opportunities as demand accelerates.

Segment Performance Insights

The company’s financials showcased varied performance across its segments. The Americas Contract segment reported net sales of $455 million, representing a 7% organic decline, yet new orders climbed 5.7%. The International Contract and Specialty segment saw net sales of $214 million, down 6.5% but with steady order growth of 2.7%. In contrast, the Retail segment experienced a slight decline in net sales to $193 million. Overall, the adjusted operating margins demonstrated a more favorable trajectory for the International segment, increasing by 140 basis points year-over-year to 7.9% by effectively managing operating costs.

Challenges Amidst Growth

Despite the overall positive demand indicators, MillerKnoll faced challenges in the form of supply chain delays, which pushed revenue recognition into future quarters. The company noted that while orders were being placed at a higher volume, the time taken from order to shipping had increased, resulting in higher backlogs. This situation required careful management of operating expenses to align with the slower revenue growth, creating tactical demands on the management team as they navigated these operational hurdles.

Future Guidance and Expectations

MillerKnoll has maintained its full-year adjusted earnings guidance at $2.20 per share, which reflects confidence in improved market conditions and order activity throughout the fiscal year. For the second quarter of fiscal 2025, the company anticipates net sales to range between $950 million and $990 million, while adjusted diluted earnings are expected to be between $0.51 and $0.57 per share. This outlook accounts for changes in the timing of promotional marketing expenses arising from a shift in the holiday calendar, potentially affecting revenue recognition.

Retail Sector Outlook

The Retail segment's performance reflected a tough consumer environment, with elevated interest rates stifling demand. Nevertheless, management expressed optimism regarding future retail growth, spurred by structural changes in consumer behavior and expectations of improved housing market conditions. The company is initiating strategic marketing investments and expanding store openings, looking to capitalize on a favorable consumer landscape in the latter half of the fiscal year.

Sustainability Initiatives and Innovation

MillerKnoll remains committed to sustainable practices. The launch of environmentally-friendly materials like a bamboo-based leather alternative and recognition in innovation awards highlight the company's dedication to sustainability. Additionally, the expansion of flagship stores aims to enhance customer experience and brand visibility, giving MillerKnoll a competitive edge in a congested market.

Key Takeaways for Investors

Investors should note the mixed performance across MillerKnoll’s segments, alongside management’s cautious optimism for continued growth in the second half of the fiscal year. With improved operational strategies, a solid order backlog, and a renewed focus on market expansion, MillerKnoll is positioning itself to navigate current challenges effectively. The anticipated improvements in margins and earnings guidance provide a constructive outlook for potential long-term investments.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good evening, and welcome to MillerKnoll'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, Chief Financial Officer, Jeff Stutz.

[Jeff Stutz, executive]

Good evening, and welcome to our first quarter fiscal 2025 conference call. I'm joined today by Andi Owen, our Chief Executive Officer. Also available during the Q&A session are John Michael, President of the Americas Contract segment; and Debbie Propst, President of our Global Retail segment.

Before I turn the call over to Andi, 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 earnings 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 that is posted on our Investor Relations website at millerknoll.com. With that, it is my pleasure to turn the call over to Andi.

[Andrea Owen, executive]

Thanks, Jeff, and good evening, everyone. Thank you so much for joining us tonight. Before we get into our Q1 results, I wanted to take a moment to remember Budd Bugatch. Budd served as a research analyst covering our company for many, many years. And while we will miss the deep knowledge and insight that he brought to the contract industry, we will also miss the energy and enthusiasm that he brought to everything he did. Budd was a great man. Our deepest condolences go out to his family. And with that being said, Budd would probably say, "Let's get back to earnings."

MillerKnoll entered fiscal year 2025 with momentum. I'm happy to say that, again, orders are up year-over-year and demand is improving. First quarter order growth was largely driven by the Americas Contract segment, where orders gained momentum throughout the quarter. Importantly, customers are placing large orders and the indicators that we discussed last quarter, such as project funnel additions, customer mockup requests and new contract activations continue to be up year-over-year, all of which underscore an improving demand picture.

Orders also grew in our International and Specialty segment, largely driven by Asia, where we saw large orders from both global accounts and global technology companies. While this is encouraging, customers have also increased the time between their order entry and requested shipment times. This has pushed revenue into subsequent quarters, and we are carefully managing operating expenses to align with sales levels.

Across the company, we are focused on growth. This quarter, we launched several initiatives to support our contract business, meet our clients' evolving needs and set us up for success as demand trends accelerate. Our insights team launched new research behind the importance of relationship-based work. As part of our Design with Impact platform that helps customers redefine their workspace and create environments that support well-being, community and productivity.

We also bring our research to life within our own space. This quarter, we introduced 2 new MillerKnoll flagship locations in London and New York that include both contract showrooms and retail stores as well as working space for our associates. MillerKnoll London is the first MillerKnoll destination outside of the United States and marks just 1 step we're taking to offer an enhanced experience to our customers across the United Kingdom and Europe. MillerKnoll New York is our largest flagship with 11 floors and 77,000 square feet. Located in the heart of the Gramercy Design District, it features dedicated space for Knoll, Herman Miller, Geiger/DatesWeiser, Maharam and Muuto.

We also continue to deliver unique solutions for our customers through our product selection. In the first quarter, we launched dozens of new products across the collective and introduced new sustainable materials, including a bamboo-based leather alternative, Eelgrass and Bio-Pur foam, all reinforcing our commitment to design a better world. In addition, our work in health care design was recently recognized in Fast Company's Innovation by Design Awards for our partnership on [ Sensory Seating ] with Jefferson House Honickman Center in Philadelphia.

Turning to our Retail segment. We focused on capturing demand, as summer is typically softer for the industry as consumers shift more of their spend to travel. By capitalizing on the strong operational foundation that the team has built, we delivered orders faster and held sales flat to last year in a difficult environment. At the same time, we continue to execute against our growth initiatives, including product assortment expansion, design services and more targeted customer engagement throughout their purchase journey.

In North America, we estimate that our Retail business outperformed year-on-year retail industry comparisons by approximately 6 points during the quarter. We are confident in the strong growth potential for our Retail segment and optimistic that in the near future, real estate and housing market rebounds will fuel demand. We've made Design Within Reach the destination to shop our brands in North America by offering a larger Knoll assortment as well as HAY and Muuto. This strategy is gaining traction. During the quarter, we drove higher sales for these brands in North America.

The interplay between online and store experience is key. We know that many of our customers start online, and then work with associates and stores utilizing our design services. Our retail growth plans include store expansion within North America. Work is underway now to begin opening several new stores in the second half of fiscal year 2025, with plans for more stores in fiscal year 2026.

Now that interest rates have dropped slightly, we anticipate that customers and trade partners will start placing the orders they have paused. We've invested marketing to capture their attention and to support the upcoming cyber and holiday season. We believe our first quarter financial results demonstrate the advantage provided by our collectivist as brands, diverse business channels and global footprint and have positioned us to seize opportunities as trends improve. Across the company, we focused on growth and positioning ourselves for the future. Our most important asset is our team, and we continue to strengthen our associate experience.

I'm pleased to share that MillerKnoll has been certified as a 2024 U.S. Great Place to Work. In addition, we've added new talent to our Board of Directors. Following the retirement of 2 Board members last year, we recruited and recently announced 3 new directors. We're excited to welcome John Maeda, Tina Edmundson and Jeanne Gang, who bring expertise in technology, architecture, design and hospitality. Their dynamic perspectives will benefit our Board and our management team as we partner together to drive long-term success.

With that, I'll close by saying I am optimistic about the year ahead. Our hard work and focus are building momentum in our business.

I'll now turn it back to Jeff for a closer look at our financials.

[Jeff Stutz, executive]

Thank you, Andi. I will start by providing an overview of our performance in the first quarter, followed by a few insights into our outlook and targets for both the second quarter and full fiscal year.

As Andi mentioned, we are encouraged to see a continued improvement in demand trends across the contract elements of our business. Consolidated orders of $936 million in the first quarter were up 2.4% year-over-year on a reported basis and up 3.5% on an organic basis. This improved demand picture fueled an increase in our consolidated backlog, which ended the period at $758 million, up 9.2% from a year ago and positive 10.9% from the start of fiscal 2025. Consolidated net sales for the first quarter were $862 million, reflecting a decrease of 6.1% year-over-year on a reported basis and a decrease of 5.3% organically compared to the same period last year.

It's important to point out that while order entry levels have improved, as Andi mentioned, the average time from order entry to customer requested ship date has increased. Relative to more normalized historic trends, this limited our ability to build and ship product within the quarter. Consequently, a higher percentage of orders remain in the backlog as of quarter end than we were expecting coming into the period. Our consolidated gross margin was 39%, which was essentially flat to the prior year. Incremental net pricing benefit, favorable product and channel mix and improved shipping and logistic efficiencies all contributed to margin expansion compared to last year, but were offset by a loss of manufacturing leverage from lower production and sales levels.

Turning to cash flows and the balance sheet. This quarter, we generated $21 million in cash flow from operations. We repurchased approximately 1.5 million shares for a total cash outlay of approximately $44 million, and we ended the first quarter with a net debt-to-EBITDA ratio as defined by our lending agreement of 2.84 turns.

With that, I'll now take a moment to summarize our first quarter performance by segment. Within our Americas Contract segment, net sales for the quarter were $455 million, representing an organic decrease of 7% from the same quarter a year ago. New orders in the period totaled just under $513 million, which was up 5.7% over last year organically and sequentially up 6.8% from the prior quarter. During the first quarter, orders peaked in the month of August and funnel additions, special pricing requests and customer mockup activity all remained well ahead of the prior year, giving us increased confidence as we move through the second quarter.

The operating margin for the Americas Contract segment in the quarter was 3.8% compared to 8.4% in the prior year. On an adjusted basis, operating margin was 9.5% in the quarter, which is down 110 basis points compared to the same quarter last year as a result of the loss of volume leverage on fixed operating costs.

Within the International Contract and Specialty segment, net sales in the first quarter of $214 million were down 6.5% on a reported basis and down 6.3% organically year-over-year. Orders during the quarter totaled $234 million, resulting in a year-over-year increase of 2.7% on a reported basis and up 3.1% organically, with Asia Pacific, the Middle East and parts of Continental Europe leading the segment in terms of growth. Segment operating margins in the quarter totaled 4.4% compared to 5% in the prior year. But on an adjusted basis, operating margin for the quarter was 7.9%, which is up 140 basis points year-over-year, driven by benefits of past actions to reduce operating costs.

Turning to our Retail segment. We reported net sales in the quarter of $193 million. Relative to the same period last year, this represents a reported decrease of 2.8% and was essentially flat performance on an organic basis. New orders in the period of $189 million were down 4.7% last year on a reported basis and down 1.6% organically compared to last year. As we outlined in the earnings release, the Retail team is driving operational improvements that are having a real near-term impact on margins and which set us up for growth and improved profitability as demand levels improve. However, our first quarter results reflect a tepid demand environment for the retail furnishing space, anchored by elevated interest rates and sluggish housing data. Still, we are enthusiastic that we have the right team in place, making the right set of forward investments in anticipation of improved market conditions.

And in the meantime, we're encouraged by what our relative overperformance against the broader industry trends in North America suggest about our ability to gain more share in the future. The retail segment operating margin totaled 2.3% in the first quarter compared to 1.1% a year ago. And on an adjusted basis, operating margin for the quarter was 2.8%, which was 120 basis points higher than the prior year, driven by operational efficiencies.

Now let's turn to our outlook and guidance for the upcoming period. We're maintaining our full year adjusted earnings guidance of $2.20 per share, which equates to the midpoint of the range we provided in June. This is supported by the positive trends we're seeing in global contract demand, our increased backlog position and expected macroeconomic improvements in the back half of this fiscal year. As it relates to the second quarter of fiscal 2025, we expect net sales to range between $950 million and $990 million. Adjusted diluted earnings in the second quarter are expected to range between $0.51 and $0.57 per share. This guidance takes into consideration a shift in the holiday cyber promotional period for our Retail business.

Last year, the full promotional period fell in the second quarter, while this year, it will be split between the second and third quarters. So relative to last year's revenue pacing, we estimate this shift in timing will move between $17 million and $23 million of revenue from the second quarter into the third quarter of this fiscal year. This is an important factor to consider when comparing quarterly sales and earnings estimates to our performance in last fiscal year.

Okay. With that overview of the numbers, I'll now turn the call over to the operator, and we'll take your questions.

[Operator]

Thank you. And we'll now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Greg Burns with Sidoti.

[Gregory Burns, analyst]

Just a couple in terms of the guidance. So looking at the 2Q guidance, it looks like the implied here is that operating margins are going to be down from a year ago, but revenue, I think, you're guiding to a little bit ahead of consensus. I think it's some of the lag here with the order pacing, shifting some revenue out. But I just want to get a little bit more color on your view on margins for the second half, what's driving maybe the softer than what I was looking for or maybe the Street was looking for in terms of margins in the second quarter?

[Jeff Stutz, executive]

Yes, Greg, good to be with you tonight. This is Jeff. I'll start. A couple of thoughts for you. First of all, from a gross margin guidance perspective, we certainly expect, given the ramp-up in order activity in the contract elements of our business, we're expecting to see improvements in labor and overhead efficiency and leverage. So that's factored into our guide.

The flip side, though, is that's being offset by a shift in business and product mix and that's really keeping a lid on our gross margin performance as we move from Q1 into Q2. So that's 1 factor. And that's just really the result of -- we're rotating a bit out of the higher margin -- higher gross margin retail sales as we move into Q2 as well as some of the specialty brands.

And then when you look from an OpEx perspective, that shift in cyber timing, cyber promotional timing that I mentioned. We have this kind of strange deal this quarter where we're front-end loading some of the marketing spend that is going to support that, but we're not going to get all the revenue associated with it in the quarter. So the combination of those 2 factors, I think, is what accounts for what you're pointing out.

[Andrea Owen, executive]

I think the bulk of that really sits in the cyber shifts more than anything else.

[Gregory Burns, analyst]

Okay. Great color. Then on the retail side, RH had, I guess, some incrementally maybe positive commentary in terms of demand momentum. Are you seeing anything in the retail market that would give you any kind of positive outlook in terms of coming quarters, maybe demand picking up?

[Debbie Propst, executive]

Thanks for the question, Greg. This is Debbie. We're feeling optimistic about the outlook for retail as it pertains to our demand trend. We think that 0.5 point cut yesterday is really going to help stimulate a little bit more confidence in the consumer that we approach on a daily basis. We believe that the marketing economics that we saw in Q1 are evident and the fact that our order trend will improve. So our orders in Q1 from an organic perspective, were down 1.6. Our marketing spend was down 11.

And so we like the relationship between those 2. As we move into Q2 and a more seasonally suitable time for us to be spending in advertising, we'll be reintroducing more traditional awareness campaigns to take advantage of that cyber timing. So we're really pleased with our outlook in terms of where we think this business will trend. Now that the interest there that the housing market will loosen up and the consumer confidence should start to rebound.

[Operator]

And your next question comes from the line of Alex Fuhrman with Craig-Hallum Capital Group.

[Alex Fuhrman, analyst]

I was curious why you're starting to see customers asking for delivery further away from the order date. Is that something you see as an ongoing trend that could potentially cause revenue to lag order growth over the next couple of quarters or years? Or is that really more of a onetime thing that's impacting this year?

[Andrea Owen, executive]

John, do you want to take that?

[John Michael, executive]

Sure. I'd be happy to take that. Thanks, Alex. This is John. I think there's a couple of factors. Number one, we've seen a lot more -- or a significant increase in larger projects in the last quarter. I think if you look at projects, we had over $5 million, it was up over 40% for the quarter. And those projects typically are a little more complex because of their size and just by their very nature, have longer lead times and cycles. So I think that's part of it.

The other thing I would say is, I think, our clients are becoming accustomed to it just taking longer to get their construction projects done. So they're moving a little faster. They're trying to get orders in a bit earlier to make sure that their delivery times are met.

[Jeff Stutz, executive]

Alex, this is Jeff. I might just tag on just to give a little perspective on trends over time. All of what John just described is certainly true for the Americas. But the larger project sizes, I would say, is also being seen in the International Contract part of our business, and it's driving the same phenomena. And this isn't necessarily new. It's just kind of ongoing. And I think it's a little more extended this quarter than we have been seeing. But if you go back in time, we typically pre-COVID, our backlog tended to account for somewhere between 7 to 8 weeks of revenue. And since COVID -- during pre-COVID -- just after COVID, it spiked way up. And then since then, it's kind of settled down into the 10- to 12-week range. And there, it's been hovering. So it's certainly not a new trend. I suspect it's just changing customer behavior, as John just described, and we'll see where it goes from here.

[Andrea Owen, executive]

And I think just to add on to that, 1 more data point, Alex. With this quarter, we saw our orders weighted heavily more in July and August. And so as you saw that trend spike throughout the quarter, we just produced less in the quarter. So it was sort of a conglomeration of all of those things.

[Alex Fuhrman, analyst]

Okay. That's really helpful. And then nice to see order growth for North America contract leading the order growth for you this quarter. Curious if there's any particular industry groups that have been driving that? It was nice to see a headline this week about Amazon having their employees back in the office 5 days a week next year. We're curious if you're seeing more companies kind of going down that route and driving more large projects?

[John Michael, executive]

I think certainly, most of the conversations we're having with clients, the majority are looking for ways to continue to get people back in the office. They understand the power of connection and culture and well-being, and all that goes with being together in the space. I think we've seen a lot of really good activity in financial services, banking, pharma, public sector, health care, those segments you would expect to do well and have been doing well.

We've actually seen some uptick in the technology sector. In fact, our Northern California region was one of the strongest performing regions in this past quarter. So pretty widespread in terms of where the business is coming from.

[Jeff Stutz, executive]

And Alex, this is Jeff. I might tag on to that and say we're super encouraged to see that activity pick up in the Americas. But I'd also point out, we had order growth for the International and Specialty segment. And what's really encouraging about that is we're beginning to see larger projects break loose, which is encouraging. We're building client relationships with the Knoll brand, particularly in the legal and business services sector in Europe, which is great. We're growing our regional accounts. These are accounts that are headquartered in the APMEA region and seeing some large project opportunities break loose there. And also some key technology sector wins in India, as well as health care in the Middle East. So there's a number of sectors internationally that we're seeing some real positive momentum.

[Alex Fuhrman, analyst]

Okay. That's really helpful.

[Operator]

And your next question comes from the line of Reuben Garner with The Benchmark Company.

[Reuben Garner, analyst]

Thank you. Good morning, everybody. Good evening, everybody, excuse me. I guess to start on the margin side, it seems that things have kind of leveled off here as your business is kind of stabilizing. I wanted to kind of look longer term at where you think things can go. I think you've been kind of in the 38.5% to 39.5% range for the last 5 or 6 quarters now. Curious where you think that can go longer term and how much volume is kind of -- or how much that is dependent on volume versus maybe things that you have within your control still?

[Jeff Stutz, executive]

Reuben, this is Jeff. I'll share with a similar comment as I did last quarter, which is I think you're right that we're at a point where we're seeing gross margins across the group somewhat stabilized. But for a given level of volume, I think the next leg up for us as we see economic conditions improve, we have a real opportunity to leverage overhead costs across our manufacturing footprint globally as well as in the retail business across the SG&A cost in that business. That's going to be what our next opportunity is.

I mean, there's some price -- incremental pricing benefit, but we're kind of returned to what our more normalized annual price increases. So the next leg up is in leverage. And we expect to see that as we move into the back half of the year. I won't quantify for you a gross margin estimate for the back half, but we do have expectations that it will be up from current levels.

[Andrea Owen, executive]

And I would say long term too, Reuben, just to add everything Jeff said as well. As we are -- our long-term growth plans for retail start to kick in, obviously, that business is at a higher margin, so we'll see that start to flow through and continue to stabilize. And offset these larger projects that come in that tend to be at a little bit lower margins, I think that will be a helpful balance in the future.

[Reuben Garner, analyst]

Got it. And then Jeff, you mentioned that the full year guidance, I think you said it contemplated like an improving macro backdrop in the second half of the year. I was wondering if you could elaborate on that? Is that across all of your businesses? Is that kind of geared more towards maybe retail and the impact that rates can have there? Just any color would be helpful.

[Andrea Owen, executive]

I think it's geared towards all of our businesses, Reuben. I certainly think there's a level of certainty with what happened yesterday with the Fed in the U.S. I think the indicators that we've seen in the business are coming to fruition. I think we've been talking to you guys about these indicators for 2 or 3 quarters now, and we're starting to see consistent orders above last year.

I certainly think as it comes to mortgage rates and the resale market starting to open up in the U.S., that will buoy the retail business. I think we've had some people sitting on the sidelines that we think will start to come and play and move. So I think it will benefit the entire business. But the indicators for us continue to be moving in a very consistent fashion forward.

[Reuben Garner, analyst]

Great. Thank you, and good luck on through the end of the year.

[Andrea Owen, executive]

Thank you, Reuben.

[Operator]

And your next question comes from the line of Brian Gordon with Water Tower Research.

[Brian Gordon, analyst]

Last quarter, you guys noted that the work to integrate Knoll and some of the other brands into the international dealer network in particular was continuing. And I was just hoping you could give us an update on where you are with this process and maybe what is left to do there?

[Jeff Stutz, executive]

Brian, good to talk to you. This is Jeff. Yes, a quick update on that. As of the end of Q1, we have integrated the MillerKnoll combined dealer network across -- about 60% of the international network. And the intent and goal is to -- by end of this fiscal year, be through the entire network. So good progress continues. They're making good strides. And as in my earlier comment mentioned, we're starting to see some real opportunities with the Knoll brand through that combined network.

[Brian Gordon, analyst]

That's great. That's good to hear. Second question, kind of maybe a bit of a bigger picture kind of question. Just kind of wondering what you guys have been hearing from your customers and your dealers about back to work in hybrid trends? And maybe where the expectation is the market is going to settle on this? And then the follow-up to that would be how you guys are feeling about your product portfolio for hybrid and collaboration and those kinds of things?

[Andrea Owen, executive]

That's a great question. I think we're hearing a lot less about the return to office quandary and a lot more about people making decisions to be together versus apart and to support limited hybrid in many occasions. I think the Amazon announcement was great news to us, but I think it has become less of an issue and more of a push to being together more frequently. And John, I'm sure you would add something from that from the U.S. as far as what you're hearing from customers in the U.S.

[John Michael, executive]

It was very similar, Andi, in terms of everyone really realizing the benefit of being back, being together in the office. And I think the second part of the question, we feel really good about the product portfolio and all the brands in the collective and our ability to meet the changing needs of the workplace, right, as this whole post-COVID work environment continues to evolve.

[Andrea Owen, executive]

I think 1 of the rich things about the last few years was our research and insights team has been able to study some very complex problems. And I think we've been able to use many of those insights to really help innovation and develop our product assortment and we feel really strongly about that.

[Brian Gordon, analyst]

Great. Thank you very much for the additional detail.

[Operator]

And there are no further questions. So I will now turn the floor back to President and CEO, Andi Owen for any closing remarks.

[Andrea Owen, executive]

Thanks again, everyone, for joining us on the call, and we appreciate your continued support of MillerKnoll, and we're looking forward to updating you on our next quarterly call. Have a lovely evening.

[Operator]

And ladies and gentlemen, this concludes today's call. We thank you for your participation. You may now disconnect.