[Management View]
MillerKnoll, Inc. (MLKN) reported strong sales and order growth across all business lines, with significant backlog expansion. The company emphasized its design leadership and opportunities for market share growth in North America and internationally. New flagship locations in London and New York have enhanced customer interactions, and the company plans to continue investing in new retail locations and product innovation.

[Outlook]
For Q1 FY2026, MillerKnoll expects net sales between $899 million and $939 million, with gross margins of 37.1% to 38.1%. Adjusted EPS is projected to be $0.32 to $0.38, including tariff-related costs. The company plans to open 10 to 15 new US stores in FY2026 and expects capital expenditures between $120 million and $130 million.

[Financial Performance]
- Consolidated Net Sales: $962 million, up 8.2% YoY
- Adjusted EPS: $0.60, exceeding guidance midpoint
- New Orders: $1.04 billion, up 11.1% YoY
- Gross Margin: 39.2%, up 130 basis points sequentially
- North America Contract Net Sales: $496 million, up nearly 13% YoY
- International Contract Net Sales: $186 million, up 6.9% YoY
- Global Retail Net Sales: $280 million, up 2.2% YoY

[Q&A Highlights]
Question 1: Did the pull-forward effect from pricing actions impact early Q1 orders?
Answer: Jeff Stutz confirmed that order entry was down mid-single digits in the first three weeks of Q1, aligning with expectations due to the pull-forward effect seen in Q4.

Question 2: Confidence in retail store expansion amid a softer demand environment?
Answer: Andi Owen expressed confidence in the retail expansion, citing under-stored markets and prudent real estate selection. Jeff Stutz added that the long-term goal is mid-teens operating income for the segment, with new stores becoming profitable within the first year.

Question 3: Clarification on North American pull-forward estimate and its impact?
Answer: Jeff Stutz confirmed the pull-forward estimate of $55 million to $60 million, primarily affecting Q1 and Q2 margins due to pre-pricing backlog.

Question 4: Impact of tariffs on profitability and duration of this effect?
Answer: Andi Owen stated that the tariff impact would be most significant in Q1, lessening in Q2, with healthy coverage expected in Q3 and Q4.

Question 5: Free cash flow and leverage targets for the new fiscal year?
Answer: Jeff Stutz highlighted a focus on debt reduction and higher capital expenditures for store build-outs, with a prudent approach to managing debt levels.

Question 6: Nature of North American contract sales and order growth?
Answer: John Michael indicated that the majority of growth came from project-oriented business, with some day-to-day business due to pricing actions.

Question 7: Demand pull-forward in the retail segment and promotional environment?
Answer: Debbie Propst reported no significant pull-forward in retail, with growth offsetting incremental costs and a small impact on the Holly Hunt business.

[Sentiment Analysis]
Analysts and management maintained a cautiously optimistic tone, acknowledging near-term challenges from tariffs and order pull-forward while expressing confidence in long-term growth strategies and market opportunities.

[Quarterly Comparison]
| Metric | Q4 FY2025 | Q4 FY2024 |
|---------------------------------|-----------|-----------|
| Consolidated Net Sales | $962M | $889M |
| Adjusted EPS | $0.60 | $0.55 |
| New Orders | $1.04B | $936M |
| Gross Margin | 39.2% | 38.1% |
| North America Contract Net Sales| $496M | $439M |
| International Contract Net Sales| $186M | $174M |
| Global Retail Net Sales | $280M | $274M |

[Risks and Concerns]
- Tariff Impact: Expected to negatively impact margins in the near term, with projected earnings decrease of $9 million to $11 million before tax.
- Retail Segment Margin Pressure: Decline due to new store opening costs, lower international sales, unfavorable product mix, and higher incentive compensation.
- Order Pull-Forward Effect: Near-term order softness due to pre-tariff buying advance.

[Final Takeaway]
MillerKnoll delivered strong Q4 results, exceeding expectations despite tariff-related challenges. The company is focused on strategic investments in new retail locations and product innovation, with a cautiously optimistic outlook for FY2026. Management remains confident in their ability to navigate macroeconomic volatility and capitalize on growth opportunities, while addressing near-term margin pressures from tariffs and order pull-forward effects.