Q3 2025 MillerKnoll Inc Earnings Call
Good evening and welcome to Millennials culturally earnings conference call.
A reminder, this call is being recorded.
Now I'd like to churn.
Watson: I introduce you to your host for today's conference when do you Watson Vice President of Investor Relations.
Speaker Change: Good evening and welcome to our third quarter fiscal 2025 conference call.
Speaker Change: Along with me are Andi, Owen Chief Executive Officer, and guests debts, Chief Financial officer, joining them for the Q&A session are John Michael President of North American contract and Debbie probes President of global retail.
Speaker Change: We issued our earnings press release for the quarter ended March one 2025 after market close today.
Speaker Change: Along with our earnings release, we filed an 8-K announcing a change in our segment reporting structure.
Speaker Change: 8-K includes recast segment financials from fiscal 'twenty to 'twenty three to date, reflecting the new reportable segments.
Speaker Change: The segment change has no impact on our historical consolidated financial results.
Speaker Change: These documents are available on our Investor Relations website at Miller NOLA Dot com.
Speaker Change: Before I turn the call over to Andy Please remember our safe Harbor regarding forward looking information.
Speaker Change: 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.
Speaker Change: Please evaluate the forward looking information and the context of these factors, which are detailed in today's press release.
Speaker Change: The forward looking statements are made as of today's date and except as may be required by law, we assume no obligation to update or supplement these statements.
Speaker Change: We will also refer to certain non-GAAP financial measures in our press release includes the relevant non-GAAP reconciliations.
Speaker Change: Replay of this call will be available on our website within 24 hours with that I'll turn the call over to Andy Thanks, Wendy and good evening, everyone and thank you for joining us Tonight.
Speaker Change: Our results in the third quarter of fiscal year 2025.
Speaker Change: The advantages of our diverse that's about it's this model strong performance in certain markets and channels mitigated sauces, and others and a disciplined focus on our cost structure helped us weather unpredictable and dynamic macroeconomic conditions.
Speaker Change: During the quarter, we saw a notable difference in demand in our retail businesses compared to most of our contract businesses, leading indicators within our contract segments are mixed and overall demand in many geographies were sluggish during the quarter and then uncertainty related to tariffs and other macroeconomic factors are.
Speaker Change: Our consolidated net sales were up year over year, and we saw impressive order growth in global retail, particularly in North America.
Speaker Change: Earnings in the quarter met our expectations I'm, especially proud of how nimble and responsive our teams have been I want to thank them for driving sales and order growth in a challenging environment and for their focus on controlling our costs and preserving our growth investments.
Speaker Change: Next before I move to segment specific highlights from the quarter I wanted to walk through the changes we've made to better align the business with our long term strategies and to offer more visibility into our performance in key end markets, but the integration of know are largely behind us and a pivot towards driving growth. We have re segmented our operations are three.
Speaker Change: Since reporting segments are now at North America contract International contract in global retail.
Speaker Change: We moved our textile business is muharram knoll, textiles, and edelman as well as spending that fell into.
Speaker Change: Our North America contract segment aligning these teams allow us to report all of our business to business sales in North America through one reporting segment.
Speaker Change: And if we continue to focus on the tremendous opportunities for growth abroad, Our Latin American contract business will now be reported within our international contract segment, Our Latin America region is very similar to our other international markets.
Speaker Change: Lastly, remaining Holly hunt toward global retail segment, Holly Hunt shows an important similarity with design within reach because they don't have close ties with the residential to the trade designers as.
Speaker Change: As you may have seen in the earnings release are now reporting under this new segment structure and just when you mentioned concurrent with the filings in the earnings release, We also filed to recast segment financials back to fiscal 2023 to assist you in understanding the new segments.
Speaker Change: So now I'll move to some highlights and trends in these new segments of deals were up North American contract orders were lower than expected marked by caution in the current environment and international contract. We continue to see positive signs in less mature markets.
Speaker Change: Pleased with strong orders in EMEA, especially in the Middle East, India, and Japan, along with Mexico, Brazil, and portions of mainland Europe, but you also had a new team members in key geographies I feel increasingly positive about momentum going forward.
Speaker Change: And while the retail there was much to be excited about in the third quarter reported orders were up nearly 15% organic orders were up 17% and organic orders adjusted for the year over year timing differences in the Black Friday, cyber Monday period were up over 4%.
Speaker Change: We're particularly pleased with retail demand in North America, our cyber adjusted orders were up 14%.
Speaker Change: In the quarter, we saw strength in both new product introductions.
Speaker Change: Our best sellers.
Speaker Change: Continuing to grow overall product assortment.
Speaker Change: New product development with an eye towards unique Arthur design and depreciation for style quality and visibility our new product pipeline is driven by a strong combination of timeless iconic pieces and new exclusive collaborations with external designers.
Speaker Change: New product launches in the spring summer 2025 are up over 65 per cent compared to spring summer 2024.
Speaker Change: As we grow our product assortment. We are also growing our store footprint and brand awareness in the quarter, we opened a new design within reach studio in Palm Springs, California.
Speaker Change: And Miller's tour, Interfax, Virginia, and Palm Springs Dream monitoring and week, we hosted a series of events and brand Activations and foot traffic during opening week was triple back some of our most highly visited locations.
Speaker Change: We plan to open two more stores in the fourth quarter and finally to reach studio in Paramus, New Jersey, and Herman Miller's tours in Coral Gables, Florida. Currently we're working on over 15 exciting new locations in North America, and expect to open 10 to 15, new locations in fiscal 2026.
Speaker Change: And just in time for Fulton market design days as Schumer opening a newly repossession defined central location, just steps away from our existing showrooms. These patients will create a much improved co located flashing flagship experience, bringing together the full breadth of our contract and retail design portfolio. A few highlights include new design within reach and Herman Miller stores.
Speaker Change: Your Chevron presentations from Noel Herman Miller motto, Hey, and not one and the urban courtyard designed by Michael's and Vulcan Berg Associates.
Speaker Change: We also recently opened in Illinois archives that our space in Holland, Michigan defined here as location showcasing 100 plus years have just been history are all clubs are critical resource for millennial associates as well as our architecture and design partners curators and academics. The early response to these new spaces and overwhelmingly positive.
Speaker Change: We are eager and excited to continue to introduce our brands in our spaces to more customers as we expand our footprint.
Speaker Change: Now, let's shift towards supply chain update and discuss how we are navigating tariffs as you've seen in the past several weeks recent tariff announcements have created uncertainty in our industries, but its policies, we will remain flexible and seek to adjust our approach to minimize impact to our valued customers.
Speaker Change: We're using what we've learned from earlier rounds of tariffs and the pandemic along with your manufacturing and supply chain footprint to manage our approach in this dynamic environment to begin we recently announced a 4.5% list price increase which will become effective on June 2nd. In addition, we will partner with suppliers leverage value engineering and available.
Speaker Change: Flexibility within our supply chain and manufacturing footprint to offset cost impacts wherever possible.
Speaker Change: And we will also consider incremental price surcharges, if necessary to manage this period of volatility imports.
Speaker Change: Importantly, all of this will be done with an eye towards what will be the most transparent and least disruptive for our customers and dealers.
Speaker Change: Doug will discuss the expected impact of the tariff related cost increases in connection with her outlook later in the call.
Speaker Change: To close despite entering the fourth quarter amidst an uncertain macroeconomic environment. We remained focused on our longer term strategies and gross neighbors, while managing our costs remaining as nimble as possible. We have the balance sheet strength to weather the current conditions and that will allow us to invest in profitable growth opportunities I'll now turn it over to Jeff to discuss our results in more detail.
Jeff: And share our outlook for the remainder of fiscal 2025.
Jeff: Great Thanks, Andy and good evening everyone.
Jeff: I'll start with an overview of our third quarter performance, followed by our outlook, which as Andy mentioned, we will include our most up to date do you Wanna tariffs.
Jeff: In the third quarter, we generated adjusted earnings of 44 per share.
Jeff: Without the midpoint of our guidance driven by proactive cost containment measures.
Jeff: While extremely dynamic tariffs and policy uncertainty negatively impacted sales and order pacing this quarter like Andy I want to thank our teams across the company for their quick and decisive actions to reduce cost.
Jeff: Consolidated net sales in the third quarter were $876 million.
Jeff: The increase over last year on a reported basis.
Jeff: Slightly of one 8% organically.
Jeff: Third quarter consolidated orders of $853 million were up two 7% as reported and four 1% higher on an organic basis.
Jeff: Our consolidated backlog in the quarter.
Jeff: $686 million, which is up seven 4% from a year ago.
Jeff: In the period, our consolidated gross margin was 37, 9% down 70 basis points to last year, primarily from unfavorable channel and product mix as well as lower fixed cost leverage.
Jeff: At the consolidated level, we reported a loss per share of <unk> 19 says for the quarter compared to diluted earnings per share of <unk> 30 in the prior year.
Jeff: This loss in the quarter included special charges related to intangible amortization impairment and restructuring of $140 million.
Jeff: All of these special charges $130 million related to pretax noncash impairment of goodwill attributed to the Holly Hunt and global retail reporting units.
Jeff: An indefinite lived intangible assets for the Knoll and <unk> trade names.
Jeff: $6 million of the noncash charges related to our typical quarterly amortization of purchased intangibles.
Jeff: And the remaining $4 million of special charges related to restructuring actions taken in the quarter to better align our cost structure to the current demand environment through workforce reduction.
Jeff: On an adjusted basis, which excludes these items diluted earnings per share were 44 cents in the quarter compared to 45.
Jeff: In the same period a year ago.
Jeff: Turning to cash flows and the balance sheet in the third quarter, we generated $62 million in cash flow from operations.
Jeff: We repurchased approximately 786000 shares for $18 million and importantly, we reduced our long term debt by $61 million we.
Jeff: We finished the quarter with a net debt to EBITDA ratio as defined by our lending agreement of $2 93 turns.
Jeff: And our available liquidity at quarter end was $468 million.
Jeff: Now with that I'm going to move to our performance by segment.
Jeff: Within our North American contract segment net sales for the quarter were $468 million.
Jeff: One 4% on a reported basis.
Jeff: One 7% organically from the same quarter a year ago.
Jeff: New orders in the period were $434 million, reflecting a one 8% reported decrease and at 1.5% organic decrease versus last year.
Jeff: Order trends during the quarter were lower than we expected and while we saw solid year over year growth in December orders declined significantly in January concurrent with trade policy and larger macro economic uncertainty.
Jeff: Encouragingly, we did see orders improved versus the prior year in February and this improvement has continued into March where.
Jeff: Orders in the first three weeks are up more than 30%.
Jeff: Highlighting the lumpy nature of projects in the contract segments of our business.
Jeff: Third quarter operating margin in this segment was three 6% compared to five 5% last year.
Jeff: Adjusted operating margin was nine 1% in the quarter and an 80 basis point improvement compared to the same quarter last year, primarily due to lower variable incentive compensation and focused cost control in general.
Jeff: And the international contracts that go into the business net sales in the third quarter were $146 million.
Jeff: 5% lower on a reported basis and 1.5% lower organically year over year.
Jeff: New orders in the quarter were $159 million at one 6% decline on a reported basis, but a one 4% increase organically year over year here.
Jeff: Here again similar to the North American segment order trends in the quarter were much lower than what we saw in the month of December with global trade policy and macroeconomic challenges impacting demand significantly more than we expected.
Jeff: On the positive side as Andy mentioned of order growth in the <unk> region. Among others continues to be strong and it's worth noting that the international contract orders in the first three weeks of March have trended up 2% to last year.
Jeff: From an operating margin perspective in the third quarter reported operating margin was six 8% compared to 11, 4% last year.
Jeff: And adjusted operating margin was nine 3% down 260 basis points, primarily from deleverage on lower revenue.
Jeff: Turning to the retail segment net sales in the quarter were $263 million.
Jeff: Up one 9% on a reported basis and up three 9% organically.
Jeff: New orders in the quarter were $260 million, which is up 14% 14, 7% to last year on a reported basis and up almost 17% organically compared to last year.
Jeff: Although sales and orders in the third quarter benefited from the shift in timing of this year's holiday in cyber promotional period compared to last year, New orders were up 4% in this segment and up 14% in the North America region. After adjusting for this timing difference.
Jeff: Furthermore, retail segment orders in the first three weeks of March are up 10% to last year.
Jeff: We did report a negative operating margin in the retail segment this quarter of 36% compared to positive four 7% last year and this loss in the current period resulted from the asset asset impairments I previously described.
Jeff: Excluding these noncash charges adjusted operating margin totaled six 2% in the quarter, which is 80 basis points higher than the same quarter, a year ago, driven by higher shipping revenue and increased leverage on higher sales.
Jeff: Now I'll turn to our Q4 guidance and outlook, which is informed by our recent order trends and our most up to date information on tariffs and related mitigation efforts.
Jeff: For the fourth quarter of fiscal 2025, we expect net sales to range between 910, and $950 million, which would be about four 6% versus last year at the midpoint of $930 million.
Jeff: Our gross margin is expected to range from 37, and a half to 38, 5% and adjusted diluted earnings are expected to range between 46, and <unk> 52 per share.
Jeff: Our gross margin and EPS outlook includes our estimate of tariff related costs in the fourth quarter of between $5 million and $7 million before tax and between five and seven of net earnings per share.
Jeff: This range includes our expected exposure under all known active tariffs.
Jeff: Net of expected mitigation efforts in the period.
Jeff: Given its fluid nature as the tariff situation changes, we will provide further updates of course in future calls.
Jeff: For all other details related to our outlook for the remainder of fiscal 'twenty five please refer to our press release.
With that overview of our financial performance and outlook I'll now turn the call over to the operator and we'll take your questions.
Jeff: Thank you.
Jeff: Before we open the floor for questions just.
Jeff: Just a quick reminder, if you'd like to ask a question. Please press Star then the number one on your telephone keypad again that is star and the number one I'm just telephone keypad.
Brian Gordon: And our first question comes from the line of Brian Gordon from Water Tower research.
Jeff: Your line is open.
Speaker Change: Hey, good afternoon, everyone.
Speaker Change: I guess my first question is about the impairment charges, especially in global retail and how we can sort of square that.
Speaker Change: With the rather impressive performance, especially in North America.
Speaker Change: Yes, Brian This is Jeff So there's a couple of things first of all the you know.
Speaker Change: We're required under U S GAAP to do a quarterly evaluation and be on the lookout for any any triggers that might signal impairment in this quarter. There were two things first off relative to our own internal expectations. The overall prop.
Speaker Change: Profitability of the segments.
Speaker Change: Lagged expectations. So that was our first signal we also re segmented the business as we outlined in our prepared remarks, and so for that reason we ended up doing under as required a full review and evaluation, which would normally take place in the fourth quarter of the fiscal year, but we pull that ahead a quarter.
Speaker Change: Required of the rules and.
Speaker Change: And so that really that was the driver behind it.
Speaker Change: Okay, well that definitely makes sense and just sort of like a follow up on the new stores. The new locations that you guys are thinking about in that segment.
Speaker Change: For the 10 to 15, new locations number how even will that be across the 26 timeframe.
Debbie: Hi, there. Thanks for the question. This is debbie our pay fill them pretty evenly quarter by quarter.
Debbie: We have two additional locations as we said this quarter.
Debbie: And then he's fairly evenly throughout the quarter into next year.
Debbie: Okay, great. Thank you guys very much.
Debbie: Thank you.
Debbie: Our next question comes from the line of Greg Burns from Sidoti and co.
Debbie: Your line is open.
Speaker Change: Good afternoon, just in regards to tariffs I know, it's a fluid situation and the net impact is going to be.
Speaker Change: $5 million to $7 million in the fourth quarter, but do you think you're based on what you see now will be able to fully offset that in future quarters.
Jeff: Yeah, Greg This is Jeff I'll start and then Andy if you want to add.
Speaker Change: Yeah, our belief would be here's the wildcard is what happens in April right. There's a whole slew of of potential tariff that changes that seem to be changing a bit by the day. So our outlook. We carve all that out we that's really difficult for us to estimate right now what that's going to look like until we see some of the movement settled.
Speaker Change: Settle down so based on what we see there's active today, yeah. Our belief is that through pricing and other mitigation efforts, we can offset those.
Speaker Change: Okay great.
Speaker Change: And then in terms of the the revenue guidance.
Speaker Change: Youre coming in with a higher backlog at Newport, I think you said plus 7% and.
Do you order growth seems to be accelerating at least in the first part so maybe there's.
Speaker Change:
Speaker Change: Yeah fully show out of the quarter is going to shake out, but it seems like.
Speaker Change: You know things are.
Speaker Change: Building, a little bit of momentum from the softness you saw this quarter I'm, just trying to like square away the that higher like backlog plus the.
Speaker Change: The improved order growth versus.
Speaker Change: The.
Speaker Change: The revenue guidance for like 4% to 5% growth.
Speaker Change: I think what you're seeing there Greg I think the lumpy nature of the business in Q3 and Q4 I think we're really excited about what we're seeing the beginning of Q4, however, and we're all reading the headlines we all know what's happening in the world and I think as we look at Q4, and we're trying to be prudent and how we think about how does that all shake out so I.
Speaker Change: I think what you see there is a little bit of our prudent in how we're guiding right now for the quarter, but I think we're very optimistic about what we're seeing and the momentum I think given some of the choppiness in this last quarter.
Speaker Change: We're hoping for his son.
Speaker Change: Stability.
Speaker Change: And I think that would be welcome.
Speaker Change: Yeah.
Speaker Change: Oh, sorry.
Speaker Change: Right.
Speaker Change: Yeah. So just maybe digging into like what you saw this quarter and the.
Speaker Change: Our North American contract segment in the last couple of quarters, you've talked more part more positively I think about some of the pipeline metrics the pipeline activity that seem to be a little bit more mixed this quarter. So can you just talk about maybe what.
Speaker Change: What you saw there how it maybe change this quarter and if you're seeing any improvement in those.
Speaker Change: Pipeline activity metrics that you've talked about in the past like mock ups or anything like that.
Speaker Change: Yeah, I think those metrics are still strong I think it's a little bit more of a mixed bag, but we're not seeing massive changes I'll, let John I'll, let you go into specific therapy Atlanta sure. Thanks Sandy.
Speaker Change: I think from a from a leading indicators perspective, we still have quite a bit of optimism and momentum. If you look at things like or 12 month funnel.
Speaker Change: It's up 7% year over year.
Speaker Change: We look at awarded projects that haven't ordered yet.
Speaker Change: That's up 27% year over year contract Activations, where we let pricing for projects is up double digits as well. So I think what youre seeing in and as Jeff alluded to the the nice start to Q4.
Speaker Change:
Speaker Change: It just takes a little longer for some of these leading indicators to us to show up in the order rate and as Andy and Jeff alluded to it's a little bit choppy here.
Speaker Change: Perhaps than we're accustomed to but certainly backlog order momentum in leading indicators.
Speaker Change: Are all pointing in the right direction.
Speaker Change: Alright, great. Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Alex Fuhrman from Craig Hallum.
Speaker Change: The line is open.
Alex Fuhrman: Terrific. Thanks for taking my question wanted to ask what you're seeing in terms of demand from from consumers on their direct to consumer side of the business. I think you mentioned that orders to date in March had been off really nicely year over year is that is that indicative of.
Speaker Change: Demand remaining strong.
Speaker Change: From your high end consumer for your consumer brands or is there maybe something about the timing of promotions that that maybe would have influenced that March results.
Speaker Change: I think so far Alex we're saying a plus 10, so far this quarter for orders, which were really encouraged about I think we have a couple of things to unpack in a retail business number one is I I feel like I say always we're very Nathan It says we have a lot.
Speaker Change: Lot of opportunity to grow in best locations on assortment and what you're beginning to see is some of that new assortment and product extensions that Debbie and her team have been putting in place for the last several years have you any track and so we're very positive about the way that will help us kind of outperformed the competition. That's one of the key indicators as long as the locations that were opening so we see them.
Speaker Change: I mean that business continuing to be what would you add I'd just add Alex that as you know we shared in our remarks that our North America retail business was up 14% last quarter adjusted for the cyber shift.
Speaker Change: That business is almost entirely direct to consumer direct to trade them, whereas our international business is more significantly wholesale and so where we are able to control all the levers to drive demand, we're performing versus our wholesale business, where we are dependent on the open to buy a third party retailers.
Speaker Change: So we're really excited that our new offerings in our assortment with 30, new collections added last quarter, our new store locations. These things are all off to a great start and our marketing attribution capabilities are also driving progress. So what's working is repeatable and as Andy said, we have a lot of market share opportunity.
Speaker Change: And our total addressable market is growing as we expand our assortment offering.
Speaker Change: Okay. That's really helpful. Thank you both.
Speaker Change: Our next question comes from the line of Reuben Garner from the benchmark company.
Speaker Change: Your line is open.
Reuben Garner: Thank you good evening everybody.
Speaker Change:
Speaker Change: So I guess to start on the changes in the outlook for the full year. So I understand the tariffs piece I have a question on that in a second but.
Speaker Change: The bulk of the cut seems to be outside of that I'm trying to figure out what what exactly has changed from three months ago. When you gave that to make that level of.
Speaker Change: Adjusted on the earnings side, and I understand you didn't necessarily give specific top line guidance before or at least I don't think you did.
Speaker Change: So maybe the outlook was much higher but maybe walk me through the components are the pieces that have changed since you last updated us.
Speaker Change: Yes, Reuben this is Jeff so maybe I'll confirm to start we had not provided a top line guide for the full year. So we had been talking kind of more from a bottom line perspective, but look I would just double down on what Andy just highlight and that is.
Speaker Change: We really do you our fourth quarter guidance as being a prudent view of the next 13 weeks given what.
Speaker Change: What we see in the news every day I mean, this has been a wild ride of changes related to trade policy and as you know you've followed the space for a long time confidence matters. It matters a lot in this business and that's true for both the contract side of our business with business confidence measures.
Speaker Change: It's also true of course, and the retail side of our business with consumer confidence and consumer confidence has taken a real beating here the last four months straight.
Speaker Change: Still waiting on the next reading of CEO confidence, but I think you know based on the headlines and all of the work internally that we've been doing to try to keep abreast of the raft of changes that are coming about potential tariffs and I emphasize potential you know every every one of our customers is doing the same thing. So we just viewed it.
Speaker Change: It is reasonable and appropriate in the current environment to be more cautious perhaps more so than normal and the outlook. That's really so it really kind of comes down to a topline story.
Speaker Change: Yeah.
Speaker Change: Okay, and so I guess, that's where so it's not actually anything you're seeing in your business, that's leading to this level of reduction because I mean, the bulk of the tariff uncertainty has been in the last 60 days and it sounds like your orders if accelerated over the last 60 days.
Speaker Change: That would be correct that is true absolutely crap that is true Ruben and I think again as I as I mentioned that I don't want to I don't want to overemphasize. It because we don't know where this is going to go but there's a there's an awful lot of kind of next wave talk.
Speaker Change: What the impact of tariffs could be and the and the wildcard question at one level becomes what and I'm not an expert in this area by the way so I'm gonna, partly pretend to be one right now, but what what happens with retaliatory.
Speaker Change: Tariff impacts and what that means for end market demand and we certainly are not trying to make a prediction of that.
Speaker Change: But we're doing the best we can with the outlook and as you know just again would just say, it's probably a bit more cautious than normal, but we felt it was prudent under the circumstances.
Speaker Change: And I think given the situation I think that I think it's important for us to keep outlining here is that our revenue was growing until last year. We are we are growing even at wednesday's circumstances, and I think it's important to note that and not lose sight of that.
Speaker Change: Okay, and then on the tariff side, just given how uncertain. It is why take the approach of putting through I think you set a price increase a list price increase in June.
Speaker Change: Just given some of these tariffs could come in so are already coming and go and why not use a surcharge tactic I know you referenced you could use that but why not lead with that.
Speaker Change: Well the first thing I would say as you know the pricing it would be wrong to think that the price increase is squarely aimed as a response to tariffs. That's in part that but you know I would point out that even domestic U S steel prices have run up.
Speaker Change: Since the start of the calendar year and it has been coincident with this tariff conversation and that has happened in the past as well. So it's not just the potential cost implications of the tariffs. There are some derivative effects that seem to be having an impact on key input costs like steel.
Speaker Change: And there are other cost inflationary pressures in the business as well so we felt like a base price increase was appropriate.
Speaker Change: As we mentioned on the call we will we're at the ready with surcharges if needed.
Speaker Change: Okay, and then one more clarification for me.
Speaker Change: <unk>.
Speaker Change: I don't think you give backlog specific to North America, maybe with the new <unk>.
Speaker Change: One thing, but what are you you're not seeing any cancellations to date in in orders is that correct.
Speaker Change: No.
Speaker Change: Yes, that's correct.
Speaker Change: Yeah.
Speaker Change: Okay, and I said last one I'm going to sneak one more in actually the.
Speaker Change: Oh I'm sorry on the on the restructuring side I feel like we we didn't really hit necessarily.
Speaker Change: What what the goals are or the purpose of that I understand there's some charges workforce.
Speaker Change: Realignments that sounds like you're also adding in retail you talked about investments last quarter in North America, where are these.
Speaker Change: Cost reductions.
Speaker Change: Aimed and I guess, what are the ultimate savings that come from the one time expenses.
Reuben Garner: Yes, Reuben so I'll just directly answer the question, we had $4 million as I mentioned in the prepared comments $4 million of <unk>.
Reuben Garner: Restructuring related charges, they were principally related to workforce reduction, we expect annualized savings from that on the order of $4 million is between four to four and a half is our best estimate.
Reuben Garner: And look this was this we have a long we have a long track record of when we sense that there is.
Reuben Garner: Potential for uncertainty in the business and we're feeling the effects of that on.
Reuben Garner: On our cost structure and our leverage look we we will take action and so we view that as again with a prudent with a prudent outlook, we felt like it was appropriate to.
Reuben Garner: To manage cost and and you know it was a.
Reuben Garner: A set of painful decisions, but certainly what we felt were right for the business I don't know Andy if you want to add any.
Reuben Garner: It also enables the thing that's it's just good hygiene and you're always looking at these things right. If you look at your outlook and with the uncertainty out there I think we want it to be again prudent and also to make sure that we are able to continue to invest in our growth strategies like retail like close in international so continuing to invest in research and development around new products. It doesn't.
Reuben Garner: Things were really protecting here.
Reuben Garner: Got it thank you guys and good luck.
Reuben Garner: Okay.
Reuben Garner: Yeah.
Reuben Garner: Thank you.
Speaker Change: There are no further questions ill turn the floor back to president and CEO Andi Owen for any closing remarks.
Speaker Change: Thanks, again to everyone for joining us on the call and we appreciate your continued support and we look forward to updating you on our next quarterly call have a good night.
Speaker Change: The meeting is now concluded thank you all for joining.
Speaker Change: Have a pleasant day.
Speaker Change: Yeah.
Speaker Change: [music].