Good morning and welcome to the Herman Miller's Fourth Quarter Earnings Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Kevin Veltman, Vice President of Investor Relations and Treasurer.

Good morning. Joining me today on our fourth quarter earnings call are Andi Owen, President and Chief Executive Officer; Jeff Stutz, Chief Financial Officer; John Michael, President of North America Contract; Debbie Propst, President of Herman Miller Retail; and Jeremy Hocking, President of international contracts. We have posted yesterday's press release on our Investor Relations website at hermanmiller.com. Wherever any figures are presented on a non-GAAP basis, we have reconciled the GAAP and non-GAAP amounts within that press release. Before I turn it over to Andi for a brief overview of the quarter, I would like to remind everyone that this call will include forward-looking statements. For information on factors that could cause actual results to differ materially from these forward-looking statements, please refer to the earnings press release as well as our annual and quarterly SEC filings. Any forward-looking statements that we make today are based on assumptions as of this date, and we undertake no obligation to update these statements as a result of new information or future events. At the conclusion of our prepared remarks, we will have a Q&A session. Today's call is scheduled for 60 minutes. With that, I'll turn the call over to Andi.

Thanks, Kevin. Good morning, everyone. Thank you for joining us today. In addition to the announcement of our planned acquisition of Knoll during the quarter, our fourth quarter results reflected the continued rebound from the pandemic, and highlights the resilience and diversity of our business model. Consolidated sales for the quarter were up 31% compared to last year, and orders were up 29% compared to the prior year. Sales and orders also increased sequentially from third quarter levels, highlighting the increased levels of activity that we're seeing in the markets that we serve. Our Retail business delivered another quarter of record-breaking performance with the best quarterly sales performance in our company's history. Sales for the Retail segment were up 106% over last year, and orders were up 81%. Segment operating margin of 19.2% for the quarter reflects the strong profitability levels we saw. We continue to see growing demand beyond the home office and DWR contract categories. Excluding those two categories, fourth quarter order growth was up 96% over last year. Our contract business is also feeling the positive impact of recovery from the pandemic as customers began accelerating their plans to return to the office, especially in the second half of the quarter. Order rates for the North American contract segment increased sequentially by 21% from Q3 and was flat compared to prior year. Leading indicators around the project funnel, markup, and proposal center activities have also been supportive and external measures such as the architectural billings and office demand indices have been trending positively. We continue to see rising demand across the International Contract segment as well, with orders up 55% compared to last year. Diluted earnings per share on a GAAP basis for the quarter were $0.12, while adjusted EPS, which excluded the impact of acquisition-related costs,…

[Operator Instructions]. Your first question comes from the line of Greg Burns with Sidoti & Company.

Relative to the guidance for the first quarter, your revenue was strong, a little bit better than we were looking for, but EPS was a little bit light. So can you just walk us through your outlook for margins for the first quarter? What's driving that EPS that you're looking for?

This is Jeff. I'll start and others can join in if they have some additional color they want to add. Maybe the first thing that I would say is just to level set, and Greg, I think you made reference to this in your note that you published this morning, but I think it's important that everyone understand. Our fourth quarter earnings per share reflects a lower-than-normal effective tax rate. So, let me start with our adjusted effective tax rate for the fourth quarter was just under 12%, and it was lower as a result of some favorable items that were all good news and will generate favorable cash flow for the business but lower that rate from typical levels. Our normalized tax rate you can think of as being somewhere between 21% and 23%, as you probably know, Greg. And so, what were those favorable items? We had about $4 million of favorable tax items, $2 million of which came from the utilization of an NOL as well as we sold off some state tax credits that we were able to find a buyer for, which was a great benefit to us. And then we had true ups that made up about another $2 million. So, there's about $4 million of favorability in the tax rate. If you normalize for that in the fourth quarter, then you'd see sequential improvement going from Q4 to Q1 in earnings per share, which is what you would expect, because our guide for revenue was higher in Q1. So, I just wanted to make sure we level set with the effective rate. Now to your question, within the guide, you look at the drivers of gross margin. It's no secret. We're feeling the impact of inflationary pressures in the business. We expect commodity…

In terms of the price increases, is that June – is that your second for this year or your first? What's your view on where we are in terms of the need for maybe additional price increases?

Yeah, that's our first one in this calendar year, Greg. We are keeping very, very tight watch on the commodity trends. And we will not hesitate to take additional action if we think that's needed. We're also doing, like we always have, everything we can to reduce costs by working with our suppliers, by looking at things like value add, value engineering within the manufacturing plants. So, those are all standard fare here at Herman Miller, and our teams are doing a great job leaning into those. However, the ramp up in costs are real. They're upon us and we're looking closely at and, if we have to, we will certainly consider an additional price increase. I don't know, John Michael, if you have anything that you'd add there from the North American contract side because so much of these commodity costs are impacting the contract business, so feel free to add any other commentary.

I think you've covered it well, Jeff. Obviously, we're feeling the pressure, but so are our competitors as well from a commodity perspective, and it kind of goes with sort of the general inflationary trend across our economy right now.

Lastly, in terms of the order patterns in the North American Contract business, I guess we're starting to see some green shoots pop up here and pointing to kind of recovery in that market. But can you just give us some insight into maybe how the order patterns have trended as we move into the first quarter here in the first couple of weeks?

John, do you want to take that one for North America?

As Andi mentioned in her opening comments, from a year-over-year perspective, in Q4, we saw significant strengthening in the second half of the quarter as opposed to the first half of the quarter, and from Q3 to Q4, again, significant increase as well, 21% sequentially from Q3 to Q4. Starting Q1, year-over-year comps were up just a tick under 30% from a year-over-year basis. So, we're seeing it strengthening really across the board. And I think one other thing of note is many of the largest markets in North America from Boston, New York City, the Bay Area, Chicago, Toronto are markets that are slower to open up than a number of other markets across North America that are already open. So, we're encouraged to see the strength that we're seeing already. And I think if some of these larger metro areas begin to open up even more in late summer and fall, that should continue to have a positive impact.

I might just add one other bit for you just to give you a sense for pacing through the quarter. At the consolidated group level, orders averaged in the month of March and April combined about $48 million a week. We saw a nice improvement in the month of May. They jumped up to $60 million. And in the first three weeks of the new quarter, they've maintained at that $60 million level. So we've seen a nice acceleration. I think it just speaks to the fact that it was late in the quarter that we saw the pickup. But the good news is it's continued through the early part of the first quarter. And as John mentioned, there's a lot of signs out there that give us reason for increased optimism going forward.

I would add, we're seeing the same in the international markets as well. So, that's another good point.

Your next question comes from Steven Ramsey with Thomson Group.

I guess a couple questions thinking about supply chain challenges. Does the Q2 sales guide reflect these challenges, holding back the ability to deliver demand in a timely manner? Or another way to ask it, is demand exceeding sales currently?

You referenced Q2, you mean Q1 guide. Just to clarify. Debbie and others might have some color that are really specific to their business. What I can tell you is that, on the edges, we are feeling some of the impacts of things like container shortages and container delays. We've tried to do everything we can. And we're managing it quite well to date by selectively adding inventory and doing some expedited freight, which obviously comes at a cost. But we're trying with everything we can to manage it. I think we're doing an okay job. So, there's nothing there that is terribly alarming right now, but it's something we're watching. And there's a lot of news these days on that. There's some additional challenges around availability of some inputs like glue. We have talked about foam earlier in the year, some other additives in the manufacturing process. We're working through those again. Nothing super significant. I think our biggest challenge right now is labor from a manufacturing standpoint, and that's occurring. And this is mainly a US based issue, though not exclusively in the US, but it's principally a US contract. So, as it stands right now, there are some extended lead times that we're seeing in pockets. And I don't know Debbie on the retail business, if you want to add any additional thoughts here. But we're managing it as best we can. But it's top of mind for sure. And, there are issues on the edges.

Absolutely. In Retail in particular, our sales as a percent of demand in Q4 was about 91%. That's actually pretty typical for what we would expect in Q4, given that we have one of our largest promotional events of the year at the end of May. And so, we typically expect to see those products ship in June and July. So, looking into June, we'll see those two numbers closer to even, which is what we would expect coming out of that large promotional period at the end of the quarter. And the place where supply chain issues are really impacting us is in our product lead time, which affects our conversion rate. So, certainly, as we bring customers into the funnel, we leave dollars on the table when those customers don't convert because of longer lead times than normal. And we believe that had a fairly significant impact in Q4. Of course, we're very happy with the performance of our sales growth and order growth in Q4. But there is some missed opportunity because of these order lead times. I will say, as I look across the competitive set, I feel like we've been in a relatively strong position, especially given the amount of our overall offering that we manufacture ourselves and do so domestically. And that's been a real benefit versus the competitive set. There's some places where our in stock rates are not quite where I'd like them to be, outdoor in particular has been impacted. And as Jeff said, we're working very diligently to continue to mitigate these supply chain challenges, but they are very real.

Couple other questions on Retail. Maybe to start with on margins, the self-help story meeting strong demand, clearly, bearing fruit. I know self-help never ends. But you've come off this low base sustainably, how much further is left on the big improvements you can make in Retail? And as you open up new stores, how much are the new store openings reducing near-term margins?

Well, the great news is that the new stores that we've been opening have been performing well above our operating income target. We're exceptionally pleased with the performance and have a rollout plan. The pace is about the same rate as what you've seen from us in terms of store openings over the last six months. So, those stores are adding to our operating income rates and our margin rates in what will become a meaningful way as that fleet grows. In terms of the current sort of mix of margin improvement that we're seeing within Q4 year-over-year, the biggest element of margin improvement comes from department mix. And so, we're monitoring closely as we see sort of shifting relationships between workspace and our non-workspace categories within Retail. However, given that absolute sales and workspace demand increased 4% in Q4 over Q3, the total base increased. And then, within our non-workspace category, we're actually seeing accelerated growth there versus what we're seeing in workspace. So, that's indicative of an improving overall opportunity in our decorative furnishings categories. And that is an area where I believe we have the opportunity to increase the amount of exclusivity in our assortment and the amount of private label development where there's enriched margin opportunities.

Just to add a thing to Debbie, we really are at the infancy of our residential retail growth spurt. And what Debbie and the team have been doing have been really sort of building the business model for the future, so that we can gain market share in our DWR concept, our Herman Miller brand new add store concept. And you have to remember, to that HAY is also just the beginning to get off the ground from a retail standpoint. So, as far as low hanging fruit, the operational processes and the discipline, the assortment opportunities that Debbie had in the business are just beginning to take hold. So, as we increase our market share in the residential part of the business, we see a long runway of opportunity in all of the brands that we have on the direct-to-consumer front.

On the retail margin moving from the high teens, low 20s percent range in the last few quarters, can you maybe bridge that to the low teens targets you have over the long term, trying to get a sense of how much of this is elevated sales and drop through and the impact of reduced expenses coming in in that segment alone?

Well, Steven, I view this as an investment return your for our retail organization. We have seen tremendous growth over the last 12 months. And that is on an infrastructure that was developed to support a very analog [indiscernible] model. So this is the year that we will be building out the infrastructure to support multi-brand omnichannel business that is focused on both customer acquisition and LTV growth. What that looks like is the build out of an omni channel POS, a planning and allocation system, an order management system refresh, all of these things are critical to scaling the business on the vision that I've been pursuing along with my team over the last 12 months. And as Andi said, we're at the infancy of executing that vision. These infrastructure investments are critical to allow us to continue to grow.

Last one for me. As you think about the office look and feel post pandemic, what you see in your order book and backlogs and conversations, does that look much different than the pre-pandemic office?

Just a couple anecdotes to add some color to your question. We had in the last couple of weeks a round table with a number of A and B firm principals, talking a bit about pre-pandemic versus post-pandemic client engagements that they're having. And they all share that pre-pandemic conversations were about cost per square foot and densification. And those types of topics that have now switched to how do we attract and retain employees, how do we facilitate collaboration and connection across our employee base. So, totally different set of criteria, if you will, that people are thinking about in terms of what they want their space to do for them. And that obviously drives some change and modification in terms of the specification and the product solution set that we provide for individual projects and clients. So, we're seeing that shift. And quite frankly, we're encouraged by it because those types of conversations about using space strategically, as an asset to improve business results is what we talk about and what we do well and what our products support. So, we're definitely, I think, seeing the market conversation kind of move right into some areas where we've got a lot of help to provide.

This is Jeremy. Let me just add some color from an international perspective. I'd say a couple of things here. One is, as someone said, some large users are talking about the need for less office space going forward because more people are working from home. But what we've been finding is that maybe the 90% of space that will be less – most all of it may not be quite fit for purpose. So, all of it needs to be dealt with. And we are well placed with all of the investment we've made in research and insight to have those conversations with customers around the world. And there's another piece that I think that's particularly interesting developments in recent years. As we've acquired more companies, and as we're on the brink of acquiring another large one, we bring more global industrial design talent into the stable. These are people who are well versed in the needs of global market and are bringing to market products like OE1 which has just launched to rave reviews. It's a British industrial design firm, tremendous credentials. And we're excited about the impact that's having as we preview that product line because it looks just like it was designed for this time, which it was. And that comes to market now. And so, we think we're extremely well placed to take advantage of the conversations that our customers are having as they scramble in these coming months to return [Technical Difficulty].

Your next question comes from Reuben Garner with The Benchmark Company.

First question – and apologies if this was asked, I had some connection issues at the end of Greg's questions. But can you just comment on the recent order trends? It sounds like it got better as the quarter progressed, even into June. What can you tell us about where orders are, whether it's year-over-year or maybe even relative to pre-pandemic levels in North American contract specifically?

We did touch on that briefly, but I'm happy to just recap it because I think it's really an important point to emphasize. So, order trends, let me start first just talking about sequential order trends from the third quarter to the fourth quarter. And in total, we saw orders at the consolidated level grow 23% sequentially. And what was kind of fascinating is that across each of the three business segments, it was quite consistent sequential order growth. The North American Contract business was 21%, 22%. Retail was up, I think, 26% sequentially, and the international business was up 23%. So, those are all very similar percentage changes, all positive sequentially, and I think very reflective of that growing momentum that we're seeing. And then, when you look at intra-quarter order pacing, I made this comment earlier, but I'll just repeat it. So in dollar terms, the average orders were $48 million per week in the month of March and April combined. That increased in May. So, we saw a nice acceleration to $60 million. And in the first three weeks of June, fiscal June, it's maintained at about that $60 million level. So, that's a good sign. It's not as though it bumped up in May and fell off a cliff in the early part of the of the quarter. And as Andi said at the beginning of the call, there's a lot of external – I know you're aware of this, but there's a lot of external factors that continue to point reasons for continued optimism and ongoing growth moving forward. So, hopefully, that gives you some color that's helpful to your question.

Jeff, what would the run rates have been in this time in 2019 relative to that $60 million dollars? Are we 20% off still? Any rough estimate?

I'll jump in and speak to Retail, while Jeff's pulling the contract numbers. But in Retail in particular, we're really focused on our performance to last last year 2019, given that we're now counting a quarter where we had stores closed and a surge in our e-commerce channel. But our order growth in Q4 was up 73% to 2019. And so, we feel very positive about that new water mark in the overall Retail business.

Reuben, on the consolidated level, just in total for the business, if you look at the month – orders were for the full quarter – now I'm comparing Q4 just completed to Q4 of 2019, so pre pandemic fourth quarter, they were down I think 7% organically in total. So, still down. But here's the encouraging part. In the month of May, the orders were up 6% at the consolidated level versus pre-pandemic. So, at this early phase of our recovery, that was a very encouraging metric to see the total orders for the entire group up to May of that 2019 year.

On the price cost, just a follow-up. I think you said there was $4 million of incremental cost pressure sequentially from Q4 to your Q1 guide, and then $1 million of direct labor. Did I hear that right?

That is correct.

The follow-up question to that is, maybe in terms of price cost, how much price cost pressure did you have in Q4? What does that look like in Q1? I know you're just starting to kind of layer in a price increase. And when do we see that price cost pressure on a year-over-year basis dissipate? Will it be as soon as Q2 or will you not be quite caught up yet?

We had commodity pressures – I just want to be clear on reference points here. So, if you look Q4 just completed fiscal 2021 versus the prior year fourth quarter, commodities accounted for about 50 basis points of gross margin decline. So, Kevin, keep me honest here. In dollar terms, $3 million?

About $3 million.

Year-over-year? And really no price increase to speak of to help offset that, Reuben. Now moving forward, we do have a price increase effective June 1. You referenced the $4 million expected additional pressure. We've got a lot of history to look back to see how this plays out. Obviously, there's lots of parts to this equation, including what happens to commodity prices from here forward because if they continue escalating, that's a very different answer. But we should start to see the effects of that price increase later. And we won't get much benefit in Q1. We should definitely start to feel the effects of it as we move into Q2. And then our hope and belief is we'll start to see some of these commodity pressures begin to abate in the back half of the calendar year. Pure speculation at this point. That's our belief. But even if it doesn't, that price increase will continue to escalate and benefit our results as we move into the latter part of FY 2022.

I think a couple of your competitors have a couple of price increases out there. Can you comment on maybe what the level of your one increase is? You mentioned I think it was larger than usual. Is your one increase sort of in the ballpark of what the others are out with two increases and that's the right way to look at it?

Our price increase in June is 5%. And then, as we look forward, I don't know you guys may or may not remember that we revamped our process around pricing increases that we're able to take them much more quickly if we need to. So, as Jeff alluded to earlier, we're going with the 5% because we are believing that the commodity pressure is going to ease out later on in the year. If we have to follow-up with another, we will. But we feel good about what we've done so far to offset. And as you guys know, retail is more fluid. That's really just for the contract business.

Last one for me, if I could squeeze one more in is – Debbie, a follow-up. And I don't know if this question is best for Debbie or Jeff or whoever. But the retail margin this year close to 20% for the year and that bridge to getting to the low-teens – so is low-teens the target for your fiscal 2022 and the difference between where you are today and there is you're investing in the business? But after 2022, assuming those investments go away, is there anything stopping the margins from going back toward the level that you've done over the last year? I guess, are there any other elements besides the investments that you're going to make this year to grow the business that take you from 20% to the low-teens?

What I outlined already is really an FY 2022 investment plan. And beyond FY 2022, we expect to see margin rates begin to build again. And those obviously investments we're making in growth, which I feel very bullish about. We will be continuing to invest in digital this year, with the relaunch of the HAY website in the US and the launch of our European HAY direct-to-consumer website experience at the beginning of next calendar year. From an assortment perspective, we're continuing to drive newness on a monthly basis and that's had a significant impact for the last fiscal year. In fact, our assortment newness between all the various categories in decorative furnishings and gaming drove $87 million of incremental volume in the full year. And so, as we continue to expand in newness, we'll be watching the impact on margin mix very carefully. And as I said, the private label development is an important part of that newness strategy, so that we're protecting those margins longer term. And then we continue to have really positive results in our marketing strategy as we've adjusted both our marketing channel mix and the quality of our content. And so, our marketing spend as a percent of sales was down below 5% in Q4 and that's versus 7.5% same period last year. And our cost to acquire customers is down below $50 versus above $90 for FY 2020. So, as we continue to enhance our data capabilities and our CRM capabilities, we should see continued growth in the LTV of our customer base as well as continuing to drive down our customer acquisition.

Just to recap, it's an investment year. And we anticipate we'll go from high-teens, and this is a neener-neener point, but to mid-teens, not low-teens, but we also anticipate that getting back to high-teens and beyond will be a definite possibility as we move out of this year, for sure.

Your next question comes from the line of Alex Fuhrman with Craig-Hallum Capital.

Would love to get a little bit more color on where you started to see the demand coming back in North America? Have there been any big variation in terms of regions of the country or industry groups? And then, in particular, I'd be curious to see, just recently, I guess only a couple of months ago, you launched Herman Miller Professional. Would be curious to see kind of what you're seeing from small and medium-sized businesses? And if that could be a big growth vertical and a big part of your business in sort of the post-COVID economy?

I think it absolutely will. Jeff, do you want to add to that?

I can speak to a few details on HM Professional, but I don't know if Andi or John, if you want to talk a little bit about what we're seeing regionally in North America.

I think from a regional perspective, clearly, South and Midwest seem to have bounced back to a bit more quickly in terms of their economies opening up, which obviously drives demand. As I mentioned earlier in the call, I also think a number of the largest markets in North America from a contract perspective, Chicago, New York City, the Bay Area, Toronto have been a bit slower to recover. We're starting to see that activity in those markets now and believe that will bode well for continued demand increase in the fall.

[Technical Difficulty] customers that are operating globally, maybe a little quiet on one coast to another in North America, but in fact, are very active in global markets. Let me give you a couple of examples. In India, we recently landed a $6 million order for one of the big tech companies and for another one in – sorry, can you hear me now? So, we also landed an $8 million order in Tokyo, Japan with a West Coast [indiscernible] tech company just in recent weeks. So, I think I would like to think about us globally, not just regionally, North America, because many of these clients are global clients of ours.

I might just tag on a couple metrics on Herman Miller Professional, which we're very excited about. Now, it's early days, right? We're two months in as of the end of the quarter. But early signs are really good and we have fairly high confidence that this is in effect incremental to what would be our typical book of business, and I think it really gets to that small and medium size of business question that you're asking. Early metrics are encouraging. We had 700 – almost 770 new customer registrations just in the first couple of months, over 500 projects created. Now, the average order value of these is pretty small, which by the way you would expect it to be because of the nature of the customers that are registering on the site. But we've got a great digital team that is kind of sitting behind this and helping support it and a terrific group of dealers that are also supporting this as well. So, anyway, we're very encouraged and we expect big things from this going forward.

And your last question comes from Rudy Yang with Berenberg. Your line is open.

Could you just talk a little bit about some of the spending patterns you've been seeing in retail? So, I guess, specifically, are you noticing kind of the average spend per customer starting to increase as work from home start to become more permanent for some workers?

As our channel mix has shifted quite a bit, we're seeing movement in our average order value. Average order value is much higher in our studio channels and then over the e-com channel it's a little bit lower. Average order value is up in Q4 year-over-year, and we'll continue to monitor that as we have channel mix shift.

Back to kind of your brick and mortar, it seems like store traffic is getting stronger and continue to drive sales. Can you just discuss some of the maybe new customer acquisition rates you're seeing from your physical stores? And given the continued success there, what does your plan look like to open more stores the upcoming fiscal year?

We've been happy with the new customer acquisition we're seeing from those stores, or about half of the volume that we're doing because of those new stores, particularly under the Herman Miller brand, our new customers. And both our repeat customer and our new customer segments increased year-over-year. Our customer acquisition for the full year in total across our whole business was up 136% to the prior year. So, the new stores are an important part of our awareness strategy. We know that this category of ergonomic seating in particular is a category that customers need a lot of help with. For a lot of our residential customers, it's a first-time purchase. And so, that store experience is crucial. And given where the operating margins are actualizing at a much higher rate than what we modeled, we feel bullish about our physical retail growth strategy. And we believe that the positioning of these Herman Miller seating stores, positioning the product as a performance and health and wellness tool is proving to engage in new customer beyond a customer that just thinks about an ergonomic office chair and a furniture to sit on. We believe that there is plenty of longevity in this model beyond the short-term pandemic need.

Hey, Debbie. Do you want to touch a little bit on the recent openings with HAY and the kind of demographic of that touching from a customer standpoint?

Absolutely. Within Q4, we opened a seating store on Greenwich Avenue in Greenwich, Connecticut. And then we opened Fulton Market, which is a multi-brand retail experience that includes HAY, Design Within Reach and Herman Miller. And then, we also opened within the quarter a HAY location in Berkeley, California and a new small format Design Within Reach location in Southampton. And so, all of the locations we opened within the quarter are performing well above our modeling expectations. HAY, in particular, is the first location in North America where they were appropriately engaging with the right demographic. And we believe that we now have a line of sight to a HAY physical retail model that will perform where we need it to. And the small format Design Within Reach in Southampton is a much lower investment way for us to get into secondary markets. And that particular location, coupled with the Design Within Reach within Fulton Market, is the first expression of our assortment expansion strategy, which covers a broader range of modern style that is then curated to the particular market that we're presenting it in. And so, we feel very positive about the brick and mortar opportunities across all three of these retail brands.

I think the way that Debbie and Ben Groom and the teams have managed our investments in our digital capabilities, coupled with brick and mortar expansion, in a prudent and thoughtful way will really enable us to reach a variety of customers more efficiently than we've been able to do before. So, we're very excited about that.

Last one from me is just on backlog. It obviously increased a bit since last quarter, but can you just break down what was driving most of your backlogs currently? And how much it is possibly being built up from the delay in shipments and deliveries?

You broke up a little bit there with the question. But I think the question in essence is the schedule of the backlog, and correct me if I'm wrong on that and we can speak to it. What I would tell you is that the backlog – and this is I think an encouraging sign. As order momentum has begun to pick up, it happened later in the quarter, we are seeing some projects, particularly in the North American Contract side, that are scheduled and pushed out beyond Q1, which I think informs part of the reason why orders were strong as they were in Q – excuse me, in Q4 and the revenue guide might be a little lower than it normally look in relation to order rates and it's because that backlog has a few more projects than normal that are dated beyond the first quarter. So, a little bit of a timing issue there. Let me pause there and make sure that that's the essence of your question or if there was something a little deeper?

No, that's perfect.

I am showing no further questions at this time. I would now like to turn the conference back to Andi Owen.

Thanks, operator. Thanks, everyone. Really appreciate you joining us today. We appreciate your continued interest in Herman Miller. And we're looking forward to updating you again next quarter. Be well, everyone. Bye.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.