Loading...
Docoh

Kimball International (KBAL)

Participants
Kristi Juster CEO
T.J. Wolfe EVP and CFO
Rudy Yang Berenberg
Tom Maher Hilton Capital
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Good afternoon, ladies and gentlemen. At this time, I would like to welcome everyone to the Kimball International Fourth Quarter and Full Fiscal 2021 Earnings Conference Call.

As with prior conference calls, today's call, August 4, 2021, will be recorded and may contain forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from the forward-looking statements. Risk factors that may influence the outcome of forward-looking statements can be seen in the Kimball International Form 10-K.

website. presenters presentation making the that section Kimball the earnings to Investor call, of deck slide is International's today's will references be an Relations During available on of On Kimball today's Kristi call Juster, International; T.J. are and CEO Officer. Wolfe, Chief Executive and Vice President Financial now today's call like Kristi over turn to would to Juster. I Ms.

may you Juster, begin.

Kristi Juster

growth a Results a us to are Robust business our outlook. orders am International our pleased for Thank and note. our Quarter benefit discuss you, joining everyone, on and and fourth in Fourth from that indicate Kimball to Workplace quarter markets end from challenging we that and upturn. ended the report is that in Health review high positioned well to Full year these Year industry XXXX I markets recovery

from by quarter begin covering fourth Slide takeaways key the our X. me on performance Let

since this our boost expected increased Health onset in will the these of first year. the XX% on and fiscal markets at of next double-digit accounted two year XX% least the year. Health First, total that Workplace our and to markets XXXX their from quarter and revenues revenues for was our quarter growth revenues end pandemic fourth Workplace of

markets rates a continued improved Second, and orders. this conversion into in throughout Workplace in of and order the into the quarter, our pickup progressively indicating Health momentum July, bidding activity

Workplace day-to-day as bookings Health led and strong year-over-year orders by were Our we anticipated.

in Health both indicator levels. and at markups leading double-digit activity to Workplace in rates QX Our metrics quoting strong increased compared

Another indication ahead. conditions market of better

in and development orders Workplace the both and consistent with Health. pleased continued are We of

we our in inflation, savings as the share to in gain sequential X.X due increase considerable not our both in continued the priorities confirmed discuss one we had and the in the we represented very fourth as inflection targets and to Connect in year Fourth, T.J. this detail markets will initially our acquisition. choices our although stage lastly, summary, quarter, Poppin continued exceeding what by over driving the more our with end And later expected call. clear cost believe reported margin growth future we are for full traction in gross business growth. path made to quarter high XX%. point have we we the forward our is a in an strategy, pleased targeted Third, in our fourth In in on progress

business Now Kimball let's end recovery. with review positioning markets on X. their Health to with and International relative Slide respect Beginning

faster increase workers, continues medical As we this increased quarter the of health well behavioral expansion all areas Fourth health, Health XX% the reflecting of orders shared, to have number in and and XX% by public a administrative size hospitals. and QX market specialty a up funding, post-COVID, compared return as increase centers, and over driven academic to ramp order year. year-on-year, last sales orders of to were such market increased the XX%, XX% in

our partnership portfolio. Veterans such Our industry systems, International Fed in key health our of focus with health with Interwoven, this extensive full team market Affairs, the experience, experts Kimball with on brand the selected XX sector, connecting our our dedicated and knowledge access as are our to multi-branded and differentiators health government

comfortable environment, more to nurses. role design, said health a concluded in health said that The in and given leadership patients' physical Over need they Health. were determining and research continue The indicators construction XX% confidence said of to furniture. the give results health, the delivery trends a environments has and benefits a of QX in us of work key plays future our us areas the flexible they XX% hospital telehealth, in efficient the course, planning of in of also in and environment, XX% and the a from of The importance Health. years. in behavioral environment insight focus caregivers flexibility an just outcomes. to environment the range non-clinical and X importance in need have the in interior adaptability proprietary required next results We healthcare industry the changing blending and our space confirm and of investment project in tremendous future for from systems, the the doctors

indications begin X, the portion and move we market, market our is underway. recovery In let's see business, the that our of represents which to Now Slide the also where of Workplace largest we in we the year-over-year firm we're where that a pleased in increase orders orders, And for sequential Education Commercial. a experienced increase XX% in quarter, a featured Poppin fourth demand increase Workplace XX% and report products. to Workplace led considerable by discussion

for that with are although of center flexibility each ahead teamwork, work, was significantly X, will new while we lagging On fiscal community, ramped a on Our consistent the to of quarter. principles talent company, year-over-year of through unique a hybrid up the share business still and for sales project year, day-to-day very which to hub is model fourth in highly K Workplace forming future retaining beliefs and XX the our educational culture attracting large last Slide last And The XXXX. pre-pandemic quarter. collaborative levels return entering and the last to is through of be year's for highly consistent. our reached strategy. fourth year our XX% quarter buying orders centralized outlook learning space season and are And

continued flexibility in to entice human-centric wellness focus freedom and comfortable back For connectivity staff will with employers focused success, future on and and to for of elements work spaces, mind, work. create need socialization, offer

connecting, to office motivating will to times developing, As moves of believe best-in-class blended comfort. our and home and office. attracting, more portfolio, International's the than durability of return support Kimball furnishings, hybrid our the with in important a recently together employees of comfort work ever in gain level product new with share become We the the the the ability as our furnish lead introductions expect merging released confidence with continues, to talent. our industry office more

our an the is be exciting selling and multi-branded in Our ramps. open as ancillary approach, space the to winning secondary portfolio, proving path to product in expertise commitment markets industry

broad provides brands dealers specific a where collaborative Workplace ideally office over suited their for options and our place are on provide of the their environment. ancillary requirements. rate for XX% a Our for Workplace our approximately reentry needs depending taking of new in of the in from customer, atmosphere business larger our which areas. products Today, is secondary office solutions derived metropolitan at of budget XX% than is to tailored are category, faster And markets portfolio

increased update see by transaction for an expertise and increased bringing Kimball we portfolio. a and as in XX%, Now sequentially Revenue to next sequentially proven Slide be that which should Poppin, X transformational bookings International, X the for digital direct and XX%, recognized our on quarters. by have into

metrics. a metro furnishings our of core Poppin's model growth markets recognized average with faster COVID closer rate at channel. significant pre-pandemic out This we BXB acquisition. We are commercial return reigniting model value areas, seeing order Poppin direct traditional business than showroom at a in major Poppin higher the to from The digitally-driven that projects the has is leading of come

expansion program X our talent to providing stage relationships. X officially markets, priorities XXXX. we locations fiscal be of we and PoppinPro the our Kimball and in is These will reflected access categories, full showroom late are suite new over as of scope X for Slide identified Poppin long-standing leveraging dealer dealers. in services X,XXX launched May, well Poppin to existing on products, the have for underway, in XX markets As well secondary International

our has team early the traction to spent Our months and past the educating dealer X plan. internal network, show strong indicators

We use, with and adaptability an Kimball strategy forming. all providing two in line private, excited the the excels the PoppinSpaces, of are open-space new where group categories of for in about environment individual, International in and also market flexibility PoppinPod is each and

thinking market's Now how performance for moving QX are the to XXXX. about and Hospitality we

our fiscal custom partnering we market is products, is XXXX with the customers, we and as we XX% be group the longer fiscal the last business margins recovery our will in mix will and a and composition, a and sales timing, managing very of business and constrained our are sequential sales we preparing costs. the year-on-year, profitable beyond. and decreased tracking cost, expect With similar have we to fiscal ramp, up our shared, and as in Health no significant growth large of end of for travel Workplace improvement market speed broadly with line increasing expectations, Fourth confidence wrap in quarter up, freight continue need As for take until managing XXXX. into growth high setting for us carefully to approach the return, gain Hospitality with more lead strategy due our XXXX, times To remain returns. to

Officer, I financial Now, are fourth over guidance share fiscal Chief to of XXXX. review experiencing, turn for we to our Wolfe, a dynamics the will our talk our provide quarter, T.J. the and call about inflationary Financial

T.J. Wolfe

Thanks, more Kristi. spend quarter XXXX. and the quarter fiscal of XXXX the for financial next on the few everyone. our providing fiscal Good and fourth details minutes upcoming I'll afternoon, performance during our year expectations

in we supply we As have and are challenges, underway, place year us the put have are now year inflation set and confident fiscal the while Kristi for expect some we up in growth that noted, we the strategies over a chain short-term of confident XXXX. recovery past is

account pandemic. this quarter, financial highlights. a Net each the growth with about year were in of XX million including the Poppin since the more million first to Gross Workplace quarter as organic contribution with depressed gross Slide third I'll XXX of on the below quarter. market the point in quarter, $XX.X sequential points were of was Hospitality making talk our and an compared in and growth results start that reduced in $XXX.X a key These onset million expectations, moment revenue XX% sales detail Let's from margin basis for our margin $XXX.X in end the prior in reserve improvement in prior came quarter the million $XXX.X LIFO remaining Health, approximately the to inflation-related reported at in basis but XXX levels. sequential due expected, which year-over-year. sales our increase mainly total XX.X%, the by our a from

we that margin which that the offset I and note The price of these pressures, quarter's supply-chain further and by product to partially shipping lead domestic we impacts containers, should availability disruptions ocean experience increase driven March constraints should This modest from was some a and October effective and impacted raw higher costs in in begun to certain announced extended production negative also materials implemented material the raw mitigate have recently gross by related we've increase price inflation. times. freight inflation.

QX on of X over second guidance We no administrative quarters, Poppin. revenue resulting more in related but sales, expect expenses and year reflecting Selling $XX.X shift a quarter. $X.X inclusion year having to full quarter full normalize these I'll were to moment. and the provide on issues detail million, to to a first next impact the million up from expenses in

totaling amortization administrative from XX.X% XX.X% charges, million million year. transition sales of the well $XX.X and adjustments, in acquisition Excluding $X.X to as the cost, Poppin as costs million compared or acquisition-related were adjusted prior selling and CEO or SERP $XX.X

impact Our This million, a the quarter we acquisition subsequent revalued in to the to based of $XX.X liability quarter. growth year to the and bringing recorded transformation pandemic. with ago share. adjustment in our during tax tax reinvested the the we differences, our $X.X by and This Poppin fourth longer-than-anticipated a total million decline estimate EPS exit million amounted in or which change $XX.X recorded projection. quarter, year The million a benefiting the the to $X.X will tax pump the our as $X.XX of quarter continue by million, contingent of our to demand upon earn-out a book due net liability fair downturn. tax, quarters been rate earn-out was savings support approximately transformation the value of portion represents we the savings adjustment permanent in $XX savings benefit We ahead per certain of strategy XX.X% full driven reflects have during be conjunction statutory these to of projections. A of a in recorded to including cost financial compared in

million to the Poppin year be the in As or net was the or of $X.X of gain per end GAAP Fourth ago diluted income This million after-tax XXXX quarter compares fiscal $X.XX diluted stated, expect per $X.X we $X.X by share, including we million. earn-out positive EBITDA quarter. year contingent $X.XX XXXX. to previously share

while return Poppin also fiscal as or reflecting same as others, Within Excluding adjusted million Government with diluted onetime improving compared increased $X.XX quarter. particular being the acquisition intangible well this well orders respectively. the sales that many on see $X.X per end XX%, we do Workplace office overall of activity the after-tax Net $XX.X accounted among Revenue and the sales, compared at in trends. our validating by in until year. share to end fiscal million we orders ago show restructuring over as Education $X.X were approximately as year trends and to amortization $X.XX net Workplace value XX%, not the total Orders in and in market, driven XXXX business the item to $X.X levels, long-term up order charges vertical quarter. was in Slide expect as Health to saw return Health, this provided market which million well diluted the was Adjusted XX% strength expense in million in XX. orders of $XX.X costs, and this net EBITDA vertical and by income increased a earliest would million, market as acquisition-related by we Workplace, markets. and depressed increased belief are totaling period. for Commercial end the the fourth or Hospitality X% per along recovery. remain share significant the sales XX%,

the the at prior Our quarter million at total the end quarter of to the of and $XXX $XXX million end year. compared in backlog prior the was $XXX million

most fiscal year the million, backlog combined million is cash pre-pandemic and invested the total fiscal at million our The majority year $XX.X credit cash our the capital just XXXX, operating the expectations was Full ended of the unused expenditures facility. compared a year to $XX.X and XX. at the million, was million. note new quarter and In versus important our was year in were of year Switching end and recent investments of in cash $XX.X We Full shareowners our capital pre-pandemic liquidity to backlog Although sheet quarter. of on below manufacturing repurchases. form $XX million fiscal $XX.X excellence flow XXXX, we slightly operational ago. of drive million below of with the dividends to CapEx portion our $XX technology. balance and XXXX total end it returned the flows equipment representing to share in programs the available of Slide Health Workplace million $XX $XXX.X remains of that levels, QX to

a are reflecting year also taking this business initiate We to recovery. full guidance year opportunity for fiscal XXXX, our significant expectation for

expect site. of the to As approximately in we pronounced year-on-year taking you in highest sequentially by and Capital effective million gross year-over-year Slide year can primarily total range the approximately driven our fiscal second result with XXXX, on increase we $XX the the the existing expected growth in our increase progressively in revenue half. comparisons full construction more excellence will will we cost approximately by see Operational Similarly, increasing the gains warehouse offset rate with expenditures, of million, Jasper, of XX%, sale the are in fiscal be believe XX% the of margins of XXXX, to second expect with savings XX, half. in XX% to tax year our net XX%. throughout to place of $XX throughout disposals, new projects

$XX into growth. XXXX. in revenue backlog XXXX Sales and expect the constraints which are to fiscal at current our to fiscal in approximately continued Based spend fourth high-single quarter scheduled end $XXX and future noted and XXXX, the fiscal as These back well first increasing in earlier, of of of on of result end trends the will higher Kristi support will new by digits, into quarter ship as marketing opening the Poppin the than Hospitality. mid-single our year-over-year. three sales spend Health capacity showrooms promotional softness to investments with first in order markets We in business building our savings quarter, earlier, offset accelerating in grow digits as projected S&A to to invest increase force, mentioned the Workplace continue I million take include XXXX, fiscal million account production we

quarter the the call and turn increase XX%, closing for Kristi will of First slightly be to that, the range XX% should QX from I in remarks. margin gross will level. XXXX to back her expenses With S&A

Kristi Juster

T.J. you, Thank

sustaining Slide What to time is I XX. growth value this in make taken Kimball Turning set proud creation. XXXX bold further am moves up for most International of we have to to and

market end reorganized units. into have four We business

created organization. have multi-branded We a selling

We have at product have rate. new vitality XX% focus our and to delivering expanded our health, commitment we pipeline, on expertise a continued to

of year targets. We a third have our exceeding savings delivered cost

industry digitally a the we In we commitment like along, guidance to summary ESG our purpose on all on have culture are our on that kept XXXX. our purchased have certainly there possibilities. and confident direct creating are company-wide take we of the And in to upswing challenges We and And business. in to horizon, June caring and while for native fiscal published our a XX. closing, report comment moment I'd of

a have responsible environment, having of a maintaining practices. and caring stewards being culture, diverse strong long-standing We to corporate governance commitment the and

making more our we of the part future a difference -- commitment and communities reaffirming we our to our in in serve. a journey, As are sustainable

have strategy on the Our focus to areas forward our look much interconnected very areas where marquee XX. that our We social on Slide continual questions features reporting as like most environmental our report. the call the a to Kimball back the International for and I'd open to With basis want to call operator. read ESG turn progress impact, and to five and we ESG resources practices and summary believe shown you on encourage that,

Operator

first Rudy with [Technical Yang will Berenberg. Difficulty] from question come Instructions] Our [Operator

Rudy Yang

did in for on future? magnitude you issued more one you've that how price in previously in compare the increase March, with So any announced be the my October. I and would the question guess, even considered is first

T.J. Wolfe

as I March. October be we our magnitude impact will the quarter its but took fiscal price characterize And in would X, a what until again, January. increase to price increase Sure. so felt the similar a will go reminder, fully effect into October the beginning as QX,

decisions then to year similar. as the continue of look yes, input far as So, year, and when we'll at pricing think throughout think very the landscape to monitor inflation, continue And costs and the then inflation, for as make I the monitor you those dictate. I labor remainder

Rudy Yang

Super the reduction in that, as understand a could would driving over Great. expectations increases much better next margin, And point and gross kind help there regarding we price XXX of for shortfall the think And follow-up impacts? sequential margin recovery kind of about the future how should basis the year then to that? of helpful. you us drivers and how then be

T.J. Wolfe

Sure.

margin fact think And part of fiscal the then in headwind And And see basis this in of a see year that you increase recovery that our begin programs. at to the And the evolution into related decrease point look was I it several reflected out quarter inflation is XXXX, expectations that immediately we throughout fact the P&L by significant will that's inflation and our volumes October, will talk continuation improvement the XXX the operating as when expansion for points. real-time of the be quarter, we So we is going the that which a with from our our the LIFO was will but being the price below quarters. next as year-over-year that in the XXX in the year. leverage And really of is, XXX above of increases, amount just point driven quarter go that basis The was as excellence you what we in. comes impact sequential really, effect to about the prior on was offset called current that the of when that operational price basis the expectations. grow the in great at shortfall, for to along continue gross really reserve. look

experience which for will -- to things contribute again inflation margin the expect next three be those experience by the So quarters. your expansion, several offset that we will we'll

sort of year last that's from that waterfall So takes fiscal the you to XXXX.

Rudy Yang

Okay. kind my order been and super conversations on trends then with question is helpful. having of next And customers. That's you've

de-intensification been even So the I then are conversations what Delta and of is there about want concerns I still regarding at guess, seeing workspaces distancing there variant? now catering you've to right customers guess, has any -- social been kind And of all? is

Kristi Juster

Rudy. that, Sure. I'll take

let and me weeks over kind variant Delta that we're and make the few of learning So about with the to work any sure done business. the to we've the impact understanding past just start

to So at change first thing indicators have all. not early any I would say our we is seen

So we closely. are those very watching

we respect not -- And seen so area. do choices. that companies very unique are have in will do we a making change that We I say

very that talk the all workspace, the here making our ramping the environment are our of collaborative of with the managing activity up the flexibility. is to work as When we de-intensifying as do a of hybrid But workforce thing is workspace more about that talk of more more making. through in that and for decisions up hear that You environment set kind the different and we of sure about market people the that much dealers you amount is types quite are the intense. dealers,

is at reported since that quarter. last very That's that definitely the all. So not changed dominant been consistent theme, has we and

our so see pandemic, in ready of reacted the market. staying that But I react anything in track. have we are place, also will see and on protocols And we we the all during say we everything to we well to very

Rudy Yang

Great. changes markets. Super past, In disclosed last you've helpful. from the in then within me. rates sequential And your order secondary question

quarter or secondary there's provide quarter? during the other this you if sales have number So I'm if market just around wondering color a still can you any for

T.J. Wolfe

significantly we we to we I Rudy, but strength quarter, this things, still is -- in begin see ticking secondary, the up We quarter-over-quarter. markets see Yes. of actually saw think that one metro

them so to fact quarter. really opening had that seen prior this you up metro, that that depressed I large they and were truly no unlocking think see in really began that's -- just and recovery the the

So benefit I to us, you pick -- our comps. the hold large markets in thesis we markets think metro past secondary begin but quarter, again, still in will the metro see that up strength due that just and accelerate did to

Operator

next from Tom [Operator Our Hilton Instructions] come Maher Capital. question with will

Tom Maher

put sort issues, the A kind you discussed I'm was be materials, of little and inflation cost guys to too it, raw When freight margins. a it it or in just curious, of some on mean, of transitory? a point was inflation terms but issues raw fine because freight follow-on obviously, more I material not there's to of then and those trying perhaps question seem more pressure

T.J. Wolfe

Tom. Sure, Sure.

for So would actually, raw was be the the materials. quarter, freight had then And impact. largest second

ocean moderate. So ability to you both I the do we as see freight over-the-road freight, transitory again, and think, trucking, and those as say, having

inflation. at of the But, and be that of possible. biggest we think we're about the, to stickier impact trying expense might say, the foremost when first is freight implement Try the the elements do and we things our think higher pricing to we what much cover one look thing So we we'll yes, plans when offset is price in increases, as that year-over-year. as was

Tom Maher

then the the way it inefficiency year right output, and potential you? just think I margins, will how about in that on the to terms of of below not look not sort the is margins And its naturally that own improve sort manufacturing of knowing sort for or through much but sort this, running of in next I of Okay. for of gross progression at apologize as terms

T.J. Wolfe

No, it is.

kind I think I elements. of Rudy's in if of question, kind just order mentioned of cast, in three magnitude the and we

impact. recovery leverage, would relatively As far expansion both those price and equal. would then excellence your the the to point, operational margin as protection, of or be And biggest have

in of magnitude. and of cost operating think savings order then as leverage first price think kind magnitude, similar being I So I and

Tom Maher

line order? looking when you ways Okay. of it's any on to market, And Any back finally I product a do in then little terms that of market thoughts Is what great. a revamped have with to out be on they're where Hospitality kind to but health, it of do the does sort know they're thoughts relaunch? or going that. once to That's

Kristi Juster

this It's focused mention business the at in Tom, had. The that we The significantly operating change area business. any the levels custom on the way market. -- has just Hospitality that historically. don't We program Yes. is -- versus lower is that dramatic expanding still I'll see market. market than are the the we've it

of a So travel. initiatives really the out job and financials. in kind doing waiting of to team, indicator I we're of of large business that, that see of to they're our come the biggest that's one that group 'XX think is fruition good kind we'll play and The

will We are seeing point personal individual that starting have travel up, we Hospitality pick pickup, kind be dynamics up. large smaller group seen business picking of travel market. the not We've but and to seen group true turning of that

Operator

like for over any in this Kristi the time. at questions back to to I Juster turn remarks. further no closing now call the would showing I'm you. queue Thank Ms.

Kristi Juster

and on want for you, joining Great. us Thank Sheri, I call the thank today. everybody to

to we of as their choices employees just feel International it about has incredible I enter all for of made want feel about very work we good and the thank excel middle the us think XXXX, to of 'XX. we pandemic, we that entering up amount Kimball the diligence 'XX commitment during that we in the As we've set of through the do change as already pandemic. set and that defined

that have the a the bright As and we're and Health, we returning that confident Workplace we future. we very and the across is indicators early orders market feel seeing at that look

our So we in look -- your going with forward Thank sharing you. everybody progress to forward evening. and enjoy

Operator

Thank conference concludes for you participation. your this today's Ladies and call. gentlemen,

You disconnect. may now