Preview: Watching Order Trends, Margins in 1QFY24 Report
MillerKnoll reports 1QFY24 after market close on Tuesday, September 26. It will host its earnings conference call that afternoon, starting at 5:00 pm ET. Our estimates are non-GAAP (adjusted) EPS of $0.20 on revenue of $889 million. Consensus is EPS of $0.21 on revenue of $896 million. Management guidance is for revenue of $880-920 million and adjusted EPS of $0.18-0.24. Order trends and margins will be the primary focus. Our 1QFY24 estimate calls for a 37.1% gross margin versus 34.5% in 1QFY23, but on lower revenue (~17.6% Y/Y). Despite a higher gross margin, the lower revenue precludes operating expense leverage. Our adjusted operating income margin estimate is 4.1% versus 5.8% last year. Americas Contract order trends. We are modeling negative 5%, with units down 15%, offset by pricing of positive 10%. MillerKnoll is more heavily exposed to consumers and retail than its competitors. In 4QFY23, retail orders fell 17%. We expect the rate of decline to moderate but remain negative for some time. During the pandemic shutdown, consumer demand for furniture surged and was fulfilled. Consumers since turned to other areas (travel and dining), while housing turnover, a key driver of residential furniture sales, has grounded to a crawl. As we have seen with some residential reports, Y/Y comparisons, while still negative, seem to be bouncing along the bottom.Herman Miller researches, designs, manufactures, and distributes interior furnishings for use in various environments including office, healthcare, educational, and residential settings and provides related services. The company's segments include: North America Contract, which designs, manufactures, and sells furniture and textile products for work-related settings throughout the U.S. and Canada; International Contract, which designs, manufactures and sells furniture products in the Europe, Middle East and Africa, Latin America and Asia-Pacific geographic regions; and Retail, which sells furnishings and accessories to third party retail distributors and direct to consumer sales.
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