Good evening and welcome to Herman Miller's First Quarter Earnings Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Antonella Pilo, Vice President of Investor Relations and FP&A. You may begin.

Good morning. Joining me today on our first quarter earnings call are Andi Owen, Chief Executive Officer; Jeff Stutz, Chief Financial Officer; John Michael, President America Contract; Debbie Propst, President Global Retail; Chris Baldwin, Group President MillerKnoll; and Kevin Veltman, Senior Vice President, Integration Lead. We have posted the 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 the 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, Antonella. And you guys clearly know that I am at home today with my son and my family. So welcome to my world. Good evening and thank you for joining us. This is an exciting day. We finalized our acquisition of Knoll in the first quarter and today we are discussing our results as MillerKnoll for the very first time. Herman Miller is doing business with MillerKnoll and we're seeking shareholder approval at this year's annual meeting to change our name officially to MillerKnoll, Inc. So before I turn the call over to Jeff, I wanted to share a few remarks about our business overall, and the progress we're making behind the integration. Jeff will then take you through our financial results in greater detail, including changes to our reporting segments. We started the year with positive momentum and really strong demand around the globe. Q1 orders grew across every segment of our business. This positive order demand is an indicator of the strength of our business fundamentals, as well as our strategy and it underscores our confidence in the future. Our teams are executing and driving progress against our strategic priorities. Both our retail and contract businesses continue to grow. And we're bringing new customers to our brands with growth initiatives like gaming, store and studio openings, and growing digital presence around the world and across all of our segments. As MillerKnoll, we're now one of the largest and most influential design companies in the world, positioned to redefine modern design and transform our industry. With a broader portfolio of complementary brands, enhanced scale and capabilities and the financial strength of our diversified businesses, MillerKnoll is uniquely positioned to imagine and create beautiful design solutions that both endure and inspire. Since the early days of the integration, our…

Great, thanks, Andi. I'll start by seconding your comments about the integration. It has been really inspiring to watch this work unfold and our teams are exceeding our expectations. Given their efforts, we're confident in our ability to deliver on our synergy targets. As we discuss results today, a quick reminder that our reporting segments have changed now that the acquisition is complete. As MillerKnoll we will be reporting results under four business segments; Global Retail, which reflects the legacy North America Retail segment, and now includes our International Retail business; Americas Contract, which reflects the legacy North America Contract segments combined with Latin America and the Design Within Reach Contract business; International Contract, which reflects contract business outside the Americas; and Knoll, as the acquired Knoll business will initially be reflected as a standalone segment. Earlier today, we issued a Form 8-K that provides historical information based on these revised segment definitions to assist you in your modeling and your analysis. So on to the numbers, consolidated net sales of $789.7 million were up 26% from the same quarter last year, which is an increase of approximately 0.4% organically. Now keep in mind that we're facing a challenging year-over-year comparison due to the elevated backlog from COVID related manufacturing and retail studio shutdowns last year. Additionally, our ability to ship orders this quarter was impacted by the supply chain disruptions that our industry is facing. While we do expect this to moderate in time, our outlook for Q2 considers the near-term impact of these pressures. Orders were up 65% over last year or 35% organically. And as Andi mentioned, the strong demand was seen across all segments. Global Retail had another strong quarter with orders up 22% over the prior year period. The Americas Contract segment saw orders increase…

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

So just, first, in terms of the inflationary pressure. What was the amount of the price cost gap this quarter? And what's your line of sight on kind of closing that given the cadence of the price increases you've instituted?

So let me maybe take a step back and give you a sense for kind of the year-over-year impact in basis point term, because this might actually help unpack really the crux of your question. Is that helpful, if I do it that way?

Yes. Yes, that’s great.

Yes. So from a -- so the -- without a doubt, the big gross margin pressure we felt came in the form of three inflationary components, commodities as kind of one basket of impacts and commodity inflation in total eroding gross margins to the tune of about 120 basis points compared to last year. The big factor, there was steel, which probably doesn't surprise you. But we saw inflation across almost every material category. The second bucket, I would point out, and this is one that affected us more late in the quarter than it did early in the quarter is freight and delivery charges. We've been -- you may hear more from us on that as we talk about the segments of the business. But in total freight and delivery, we estimate impacted us negatively by about 70 basis points, year-on-year. And then the last component is really a labor related inflationary impact and total labor in terms of direct labor as well as overhead labor, we estimate was about a 90 basis point impact. So those are the three components. Hopefully that gives you the color you're looking for.

Yes. But in terms of maybe getting back to like price cost neutral and getting some of this, like what's your line sight on closing that gap?

Okay. So here's what I would tell you is, I mentioned in my prepared remarks, we -- on the legacy Herman MillerKnoll -- Herman Miller side of the business implemented a price increase back in June. The Knoll business did one, I believe, in May. And there are additional increases that have already been announced in October and November, so upcoming. And as you know, in the contract side of the business, it takes some time for those to roll and layer themselves into the gross margin. And what I would tell you is at current commodity levels, we are having conversations about whether that's going to be enough. So I'll leave it at that, but I would just tell you that, at the current elevated levels, that's a discussion we're having internally. I would expect, as we have seen in the past, when we do these price increases, after about three months, you start looking -- you start seeing some incremental benefit from those increases. And again, I'm talking mainly on the contract side of the business and our guide reflects some of that, but it really will be after the first of the calendar year that we start to feel the big impacts or the big benefits from that. Now, the retail business is different, right, we can do pricing on the retail business. And that's a little bit of more real time. And so -- and Debbie and team have looked at that and have actually implemented some of those as well.

Okay. And then on the supply chain issues, I guess there's a $30 million headwind this quarter. Is that what's implied in the guidance? Are you still expecting that type of level of order delays next quarter due to supply chain?

In general terms, yes, Greg. These are not going to abate anytime soon. At least, we certainly don't anticipate those abating in the second quarter. So I would say order of magnitude, maybe even a bit more than that, because we're going to pick up the Knoll business for an additional 6.5 weeks. So I would say that's a fair assumption.

Okay. And then the demand, the order numbers were really strong, I don't remember. I don't know if 700 or 750 for the core business is a record number, but it’s the highest I think I've seen since I've covered the company. So the orders are obviously very strong. Can you just talk about the cadence of the order patterns throughout the quarter? And what we've seen, kind of into the early part of this quarter, and have you seen -- do you think you’ve seen any pull forward in orders, given the number of price increases that have been instituted?

So Greg, I'll take -- I'll start this one and then the business unit leads can chime in, if they have some specific commentary around what they think they're seeing in terms of pull ahead impact. I don't anticipate that there has been much pull ahead into the first quarter, as a general comment. The cadence of orders, we had a pretty strong June, right out of the gate. From an organic perspective, the Americas segment started the quarter quite strong. We were positive of -- not maybe not surprisingly, when you see the numbers in total, we were positive across all of the business segments in every month of the quarter, in strong double-digits, in fact, in every month of the quarter. And I would say the good news is, the quarter ended, maybe not quite as strong as it started in June but it picked up from a little bit of a lull in July. So we ended the quarter with some pretty good momentum. And that's true across each of the business segments. And I don't know, John, if you want to give some color on -- your thoughts on the balance of this question.

Sure. Jeff. Thank you. I would agree. From a pull ahead perspective, I don't think that we really saw any. I think in June, maybe a little bit of pent up demand, as back to work, return to work was ramping up at that point in time. And then I think we've seen really through August and the first part of Q2, fairly steady cadence and order pattern so far. So that's what we've seen to-date.

Our next question comes from the line of Rudy Yang with Berenberg.

So first off, you stated that you believe you'll still be able to achieve $100 million as run rate cost synergies in two years, with some of that coming from procurement and supply chain opportunities. I'm just curious to your thoughts on how current supply chain issues are affecting your ability to realize those synergies and why you kind of remain confident still that your timeline to realize these synergies won't get pushed back at all?

This is Andi, it's a great question. We've done a lot of very, very thorough and intense work on this and we think a lot of these procurement and supply chain issues are a point in time, and we're certainly not going to take one round at it. We have got a couple of years to get these, and we see opportunity from both scale and reach in our supply base. So, the more we've looked into it, the more confident we have become, and we do think it's a difficult environment and it's a little bit of a moving target. But it doesn't deter us from looking at the long-term in a 24 month period, and feeling very confident in what we can achieve there. And I would just point to some of the price cost questions that Greg asked and looking at the supply chain environment, in general, we have a history of operational discipline and efficiency and creativity around these things, and we'll continue to apply that in those situations. But Kevin Veltman is our integration lead. So Kevin, is there anything you would add to that confidence around synergies?

Yes. I would add Rudy that over the -- since we -- really since we announced the deal, we've been working on integration planning. And as you might imagine that’s going deep with each team in each business unit to really solidify those plans and think about where the levers of value capture are. And so, we feel -- we reaffirm and feel more confident about delivering that $100 million within the two years that we've talked about. And the mix we expect to be actually pretty similar to what we thought initially that about 40% of it will come from cost of goods sold and 60% will come from the SG&A side.

Great. That's helpful. And then secondly, you guys kind of started -- you mentioned a little bit about how you started to integrate the dealer channels together. I guess is there any more detail you can provide on any expected dis-synergies and how you expect to mitigate this now that you kind of put the plan into action?

Yes. And Rudy, of course, as we did our deal model, we planned on dis-synergies. We don't know where they'll come from certainly at this point in the plan. But we did put in a whole set of those. But John Michael since you’re just primarily in the Americas, do you want to elaborate a little bit on that, the dealer network?

Sure. Andi, thank you. I think in terms of mitigating some of the dis-synergies, a couple of things that we've done. Number one, we are taking direction from both customers and influencers, as well as dealers. We've surveyed more than 500 customers over the last 60 days. We have had in-depth conversations with specifiers, and we've leaned into the dealer councils of both Herman Miller and Knoll to make sure that we understand concerns that we are hearing what the issues are and we're responding appropriately. And I think our overall attitude and mindset is, we've got to be sure that we're providing a value proposition to our dealer network, so that they are aligned and really leaning into the power of what MillerKnoll can be. And so, I think, working together with them, and working through the issues and being good listeners and then responding is key to mitigating the dis-synergies.

Got it. And then last one from me. You said your net leverage ratio, including expected synergies is about 2.3x right now. I guess is there any change to what your target ratio is going to be and your timeline for delevering towards that?

Rudy, this is Jeff. No, no change. Certainly we are super focused on managing costs, given the margin pressures that we're facing and the resulting impact on cash flow. But we are -- we continue to believe that we can delever to the target level one year forward from the close of the deal. And nothing at this point is throwing us off of that.

Our next question comes from the line of Steven Ramsey with Thompson Research.

I guess, I want to clarify my understanding on this. The organic growth, can you talk about the organic growth of Knoll, 12% for just Herman Miller or did that include Knoll's organic growth? Maybe can you clarify that for me?

Hey, Jeff, do you want to start with that one? Then maybe we can turn it over to Chris?

Yes. I guess maybe what I want to do is make sure I am -- so what I had alluded to earlier was order growth. Steven, are you -- is this a revenue growth question?

No. I'm sorry. That’s order growth, yes.

So year-over-year -- again, I just want to make sure I'm answering your question. Are you -- is this a year-over-year order growth question?

Correct. Yes. I'm trying to get a feel for Herman Miller's organic growth and Knoll's organic growth.

Yes. So let me -- maybe I'll take a stab at it this way. So if you look at the legacy Herman Miller side of the business, for the full quarter, order growth was on the order of 36% consolidated year-on-year with just the Herman Miller components across the three legacy segments. Knoll, now bear in mind, we had Knoll for a partial quarter. So I think for the 6.5 weeks that we had consolidated Knoll into the group, the order growth for that period of time was about 29%. But if you -- on a pro forma basis, if you just look back and count the entirety of Q1 and compare that to the same period in prior year, I think the Knoll order growth was on the order of 25%. Does that help?

That does, yes. Okay. Thank you for clarifying. And then I wanted to think for a minute on Global Retail margins. I guess what do you think of as a fair margin level for retail with the impacts of inflation and investments going on right now? I guess, how do you see this evolving over the next 12 to 24 months as hopefully inflation moderates over that time? I guess how long do you expect elevated levels of growth investments over that timeframe and how to think about margins evolving?

Hi, Steven, thanks for the question. This is Debbie. So our margin rate in the Global Retail business for the quarter came in at 43.7 and versus last year is 47.7. And so the elements that were impacting that margin degradation from last year in order, it impacts our product costs, which is driven by the raw material increases and labor increases that Jeff already spoke to. Shipping costs in both freight and category mix, and the category mix is actually a marginal piece of that margin trend. From an OpEx perspective, most of our increases over last year with OpEx are driven by variable selling increases, occupancy associated with new stores, and content benefits. And then as you know, we're making multiple investments in this business and we will continue to do so for the next 12 to 18 months as we rectify our infrastructure to support the business model we're running today. The infrastructure we're running this business on was built for a very different business model. One that it was very analog and showroom-driven as moved to an omni-brand, omni-channel model, we needed much more robust and dynamic infrastructure to support this business but in a scalable way and in a way that continues to enhance our customer experience. So we'll be continuing to make those investments over the next 12 to 18 months. And as we said in our release, we expect to see operating income in the low- to mid-teens while we're making these investments.

And Steven, just to add things to Debbie. In the long run, this is a business where we see us normalizing in the mid- to high-teens from an operating margin standpoint. To Debbie’spoint, the investments that we're making, we see those on a much shorter term, 12 to 18 months. And part of that, obviously -- go ahead, continue. Sorry.

No, no. I was just saying that, that's very helpful. I didn't mean to cut you off. But that's super helpful. And that does it for me. Thank you.

Our next question comes from the line of Reuben Garner with Benchmark.

So just to start off, a clarification, Andi, I think you mentioned multiple choices in a single market from the dealers and how you're going to go-to-market with Herman Miller and Knoll. And maybe it's too early to answer this and obviously, if you haven't communicated the strategy with the dealers, you can't tell us yet. But what -- I mean, how's this is going to work or are the Knoll dealers going to tell both Knoll and Herman Miller product now that they have access to everything? Is it going to be by market to how that decision is made or is Knoll going to sell Knoll, and Herman Miller is going to sell Herman Miller for a period of time? What does that look like?

These are all excellent questions, Reuben, and the answer to all of them is yes. So we will have one dealer network, and every dealer will sell all of Miller and all of Knoll. So we will be bringing them all together so that they can basically offer our entire portfolio. Part of the work there is that we’ve taken both dealer networks, and done extensive and exhaustive interviews with our customers, as John Michael spoke to earlier, as well as with our dealers, looked at the size of the market to determine which markets support how many dealers, which markets don't. And we've been working on a market-by-market basis with a network to determine what's the right number of dealers in every market? And that is a lengthy process but we have to be very thoughtful. And we have to have a very tailored approach to make sure that we land the right assortment. And, John Michael, you're much closer to this. So I don’t know what you would like to add.

I think that was well said, Andi. I think Reuben the -- just to clarify it, so to reaffirm what Andi said, right? One MillerKnoll network selling the full collective of brands, and then really a tailored approach by market. We -- you mentioned at the start of your question multiple dealers in the market and both Knoll pre the deal and Herman Miller had markets with multiple dealers in them. So that's not a new phenomenon in any way. And we know how to navigate those situations and make sure that it's beneficial for all the parties involved. So we're very actively involved in going through that process right now. And working on obviously a number of different initiatives, not only to establish the dealer footprint but then also set up the infrastructure so that they are all fully trained and ready and have the tools that they need to represent all the brands well in the marketplace.

Okay. And so just to be clear, today if I -- if there was a company going in to buy office furniture from one of your dealers, either Knoll or Herman Miller’s legacy dealers, would they be able to buy products from both, the entire MillerKnoll suite of products?

Not quite yet. The -- yes, we're in a beta test situation right now, where we're working on the mechanics of how that will all flow and our intent is by the middle of 2022 that all those pieces will be in place. And then, we'll be able to do what you said, each dealer will be able to represent all the brands.

And the good news there, Rueben, and you know this, but all of our dealers sell things from multiple manufacturers today. So, ordering from a variety of manufacturers is not a new thing for them. Really for us the focus is on how we enable them from a back of house standpoint, how we provide them with the right training on both product portfolios, so that their dealer salespeople and designers can get up to speed as quickly as possible. And I think, I can look at my leadership team and say, this is our number one priority right now and we want to get after this quickly as we can.

Understood. Helpful. Thank you. On the supply chain, so I think, back of the envelope here implies that there is a pretty nice ramp up in your business across MillerKnoll altogether from the current quarter to next quarter, at least on the top line. And it sounds like there is still going to be supply chain headwind. So, can you help me understand how you go from say, $900 million to $950 million in revenue, and maybe that's not the right number with Knoll, a full quarter of Knoll incorporated up to something like a $100 million higher sequentially. Is it that, do you guys not have any capacity constraints on your end and it's simply just an inability to get the materials you need on time and the trucks you need on time. And I guess if you can't -- if it was tough to do that at $900 million of revenue, what has to happen for you to go to north of $1 billion?

Well, Reuben, this is Jeff. Let me just make sure we're not talking past each other on this point. Bear in mind, we had Knoll in our consolidated results for 6.5 weeks, right? So, we're moving from 6.5 weeks, where we took orders on a consolidated basis of just over $900 million to a full 13 weeks of order entry on the Knoll side as well as the legacy Miller side. So, the Q1 to Q2, right, is not apples-to-apples, because you're going to end up having a lot more Knoll volume just by virtue of the fact that you've got 6.5 more weeks of activity. So, let me...

Yes. Jeff, the $900 million I was referencing to, I was trying to layer in another 6.5 weeks of Knoll shipments that you might've had. I'm just guessing that if you had Knoll for the whole quarter, your revenue this quarter might have been something north of $900 million, and now you've got to go from $900 million of revenue to over $1 billion next quarter. I'm trying to see how you go from this quarter next quarter, where the incremental capacity comes from, or maybe you don't have capacity constraints and it's on the material side.

Yes. We have capacity constraints. Those are not immediately going away. Now, they have -- look, our operations team have done a great work mitigating a lot of the pressure. So, they're still dealing with them. But we are moving the needle if you will, in terms of our ability to improve throughput. And that's true in our domestic U.S. operations. It's also true internationally. One of the things I'll point out is that, we had COVID-related closures in some -- a particular key market, actually in India. And that was a drag on the revenue, right, the throughput activity within International Contract business and it was one of those factors that limited our revenue. So there's a number of things here. We do think we're going to see a ramp up in activity or in our ability to producing ship in Q2, and that's all reflected in the guide.

Yes. And also remember, we're going into this quarter with a really strong backlog and I would say material availability that’s really more of a constrained than labor and we are starting to see -- and I'm not going to say like our labor challenges are not there, because they can go down macroeconomically. But we are starting to see a little bit of progress there. So if that helps to answer that.

Yes, it does. And last question for me on -- sneak one more in. The -- so correct me if I'm wrong, but I think Knoll when it was a standalone was maybe -- there was some footprint consolidation going on. Does the current demand environment and constraints that you're having will maybe change the outlook on any footprint consolidation? And maybe I am behind the curve and those have already been -- those actions have already been made. But is it -- I guess, have you rethought any of the moves that are happening either related to the integration or in either company from a standalone perspective.

Hey, Reuben, it’s Chris Baldwin just to speak on the Knoll side. So I think part of your question is, did the consolidation already occur on the Knoll side? And the answer is yes. That's already happened. So that already went down our facility, which has been great from a cost standpoint and also no impact to production capability from that, obviously, the supply chain issues notwithstanding that are more general. So that's already taken place, and there's no need to then put anything on hold, this is complete. And when it comes to the integration work, like Kevin talked about that, but then that's a fresh look, that there's really no current plans to close in the facility. It's really work around procurement and things that Kevin talked about to achieve our $100 million by 2 years.

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

Thanks very much for taking my question and congratulations on the Knoll integration here. I wanted to ask about the retail business. Obviously, there's been a lot of conversation on the call about your corporate business and rightfully so. But now with the new reportable segments, it looks like Global Retail is more than 25% of your sales on its way, presumably to 30%. Can you talk more about the strategy for this segment going forward? And specifically, I'm curious, how your initial Herman Miller and your seating stores have been performing as we've been moving farther away from the depth of last year as locked down? And if you think there's an opportunity to continue opening new stores under the flagship brand in the years ahead?

Now I'm going to turn this over to Debbie, our President of Retail, but I would say our retail strategy has been bearing fruit. I think we were very thoughtful in how we thought about our direct-to-consumer business, and that we knew that one of our sweet spots is our ability to deliver a healthy and ergonomic seating to a wider variety of folks with the hybrid work environment that we see. Our Herman Miller seating stores have been very, very successful and we see a continuation of that growth in our retail business. I also think that we are really just at the beginning of what our retail business could be. Debbie is an experienced and amazing retail leader and I think having her eyes on the business and looking at it differently from a growth perspective really will enable us to grow around the globe with the different brands that we have underneath the retail umbrella. So Debbie, I need to turn it over to you for a quick word on the strategy.

Thanks Andi. So I'd say our number one priority is, first and foremost, optimizing for omni-channel customer journeys, ensuring that our brands show up in a consistent way from an experience standpoint, in whichever channel the customer wants to engage with us in. And in addition to that, we have strategies by brands, so we're running a portfolio of retail brands, with different growth levers within each, for example, within Design Within Reach, the primary growth lever we've been driving has been assortment expansion, where our non-comp units quarter-on-quarter is driving the bulk of our growth. Within Herman Miller, our expansion strategy has been around improving awareness of the benefit to existing wall, and we've been doing that through omni-channel touchpoints with the customers with our performance seating stores being a critical element of that. And we've been continually impressed by the type of four-wall profitability we've been seeing from those small format locations that are obviously a substantially smaller investment to open up and get into some of our legacy retail footprint. So we opened additional three locations within Q1. And since Q1 ended, we've opened two more. So we're now in a total of 11, with the goal to continue to pace openings at a similar rate for the balance of the fiscal year. And then from additional perspective obviously, HAY is a brand that is younger, and its awareness in North America and we're focusing on assortment strategies there so that we can be a dependable and well ready resource for home decorating.

We have a follow-up from the line of Greg Burns.

So just to follow-up on some of the commentary around seating. When we think about, offices reopening and the prior growth around home office, work from home, how does that change? Now that offices are reopening, are you seeing the demand levels for home office, home seating change at all? And then secondly, could you just touch on the accretion you saw from Knoll this quarter, is that kind of what we should expect going forward? Thanks.

Debbie, why don't you take the first part and then Jeff the second?

Absolutely. Well, I'm very -- I'm happy to say that our workspace category in the retail channels continues to grow over last year, despite double-digit comps this time last year. So it's proving to be a pretty resilient strategy to the return to office trends that are starting to emerge. And I think one of the elements that's driving that is the sort of pandemic positioning that this product is a wellness product, and it improves your overall work life balance, and health benefits. And so if we can position the product in that way, which is the way that this product has not traditionally been positioned in the category, that allows us to drive momentum beyond pandemic trends.

I also think you have to remember -- Jeff, sorry, just before you bring in, we can't forget our gaming business, which is also part of our seating business, which has been phenomenally successful. And just to remind you, well that’s a [$169 billion] toy market that we have just scratched the surface, Greg. And I think with our innovation around that category, we'll continue to see growth there. So, it is a multidimensional category that is beyond just a work-from-home, it also encompasses a variety of other uses. Jeff, sorry, the Knoll question?

Yes, no. Good commentary. So Greg, your question on the accretion. So, you can imagine, we were pleased to -- right out of the gates with a partial quarter to see some EPS accretion from the acquisition. What I would caution is, bear in mind, we didn't reflect a full quarter drag of the weighted average share count. I would expect that in the coming quarters, you're going to see the impact of the Knoll integration when you factor in of course the higher debt borrowing costs and share counts to be close to neutral, maybe a slight drag on earnings per share in the short run. We continue to be believers that, stick with our point of view, from the announcement date, which was on a cash basis, meaning adjusting for the acquisition related amortization, we think that the deal can be accretive after one full year and on a GAAP basis after two years. So, that's my continued expectation, and I'd stick with that.

Okay. And then just one more in terms of kind of some of the forward-looking metrics you discussed in terms of pipeline of orders, mark-ups and things like that. It doesn't sound like you've seen any slowdown due to Delta and things getting pushed out. We've seen a lot of headlines of businesses pushing out their return to office plans. And -- but we did -- one of your other competitors did have some more cautious comments around that, like they were seeing a little bit of a slowdown in some of those areas. So, can you just talk to that? And just generally, have you seen any impact of COVID with the conversations you are having with customers?

I'll let John and Chris weigh in on this. But I would say, overall, projects pushing are not an unusual thing in our business. And I think in the last couple of years, COVID has been a little bit of push and pull across the world. So, we have seen some things push, but we've seen some things push from quarters into this quarter as well. So ultimately, the big point for us Greg is that we're not seeing cancellations, and that's really, really encouraging. And the demand is increasing because people are really thinking differently about their environment, and with vaccines and masks, I think people have a lot more confidence this year than they did last about bringing people together in different ways. So, we're encouraged. Certainly, Delta throws us a curveball and will continue to, but cancellations are what we really look for as the canary in the coal mine, and we have not seen that. So, John Michael, would you add anything to that?

I would just say that, in terms of clients that we were working with that were perhaps going to return in September, October, some have pushed to say January and some of the January original dates have pushed say to March. So, the pushes have been 60 to 90 days, not months and months. And the other thing that I think that's -- as the market, as customers have evolved and figured out how to navigate with COVID is, if you think about this time last year, there was a lot of uncertainty, but there was uncertainty about, are we going back to the office, and what's the importance of the office? And there is no uncertainty around that anymore, right? People really acknowledge, understand that collaboration and connection and culture and innovation and heads down work, all need to happen in a destination place that's attractive to employees. And our customers understand that, and they are seeking that and we're helping them with that. So, the timing is moving around a little bit, but the demand is still there.

I'm showing no further questions in the queue. I would now like to turn the call back over to Andi for closing remarks.

Great. Thank you so much, everyone, for joining us today. We really appreciate your continued interest in MillerKnoll and we look forward to updating you again next quarter. Hope you have a good night.

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