Good morning, everyone, and welcome to this Herman Miller Incorporated First Quarter Fiscal Year 2015 Earnings Results Conference Call. This call is being recorded. This presentation will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include those risk factors discussed in the Company's reports on Form 10-K and 10-Q and other reports filed with the Securities and Exchange Commission. Today's presentation will be hosted by Mr. Brian Walker, President and Chief Executive Officer, and Mr. Greg Bylsma, Executive Vice President and Chief Financial Officer. Mr. Walker will open the call with brief remarks, followed by a more detailed presentation of the financials by Mr. Bylsma. We will then open the call for your questions. We will limit today's call to 60 minutes and ask that callers limit their questions to allow time for all to participate. At this time, I would like to begin the presentation by turning the call over to Mr. Walker. Please go ahead.

Good morning, everyone. Thank you for joining today's call. As you've seen in yesterday's earnings release, we delivered solid financial results in the first quarter, highlighted by some notable areas of sales and order growth and continued strength in gross margin. Margins in the quarter were bolstered by a combination of favorable product mix and channel diversity that was enhanced by the addition of DWR. These factors were complemented by continued operational improvements in key areas of the business and well managed spending levels. In my opening remarks I'll offer more on these highlights and the general market conditions we're seeing. To begin however, I want to provide a brief review and update on our acquisition of Design Within Reach, our most recent keystone investment aimed at accelerating our strategic vision. Many of you've joined us at our Investor Day event in July where we shared a detailed review of our growth strategy and updated three-year financial goals. For the past several years, Herman Miller has been pursuing a strategy built around four fundamental shifts that we are making in our business. Our acquisition of Design Within Reach specifically advances two of these key elements. The first is our shift to be an industry plus consumer brand, expanding our opportunity to connect directly and more powerfully with consumers of our products. With our rich history of design leadership, Herman Miller is a brand that people desire and want to know. We believe the addition of Design Within Reach gives us a potent new platform of connecting and communicating that design legacy to consumers, both as individuals and as businesses, and will help pull them to us. Design Within Reach's experienced leadership team brings valuable retail expertise to the management of our consumer segment, while expanded product portfolio and development capability…

Thanks Brian. Consolidated net sales in the first quarter of $510 million were 9% higher than the same quarter last year. Orders in the period totaled $517 million, nearly 10% above the prior year level. The acquisition of DWR in July added approximately $22 million of sales and $20 million of orders to our consolidated results in the quarter. On an organic basis, excluding the impact of DWR, dealer divestitures and foreign currency translation, sales increased 5% and orders increased 7% from the first quarter of last year. Also as an encouraging side note, DWR sales of $22 million in the month of August represent a growth of approximately 30% from the same period last year. Sales in our North American reportable segment of $320 million were up 1% from the prior year. New orders in the first quarter totaled $313 million, reflecting an increase of 5%, and showed continued improvement in the U.S. federal government project activity. Segment sales and orders increased 2% and 6% respectively compared to the first quarter of fiscal '14 on an organic basis. Our ELA reportable segment posted net sales of $95 million for the quarter. This represents a 17% increase from the same quarter last fiscal year and reflects growth across each of the segments, primarily geographic regions. New orders in this segment totaled $112 million in the quarter representing a year-over-year increase of nearly 13%, and on an organic basis segment sales increased 15% and orders increased nearly 11% from the first quarter of last year. Net sales in the first quarter within our Specialty segment totaled $55 million. This represents a 5% increase over sales in the same quarter last year. New orders in the quarter of $57 million increased 7% from the year ago period. Our Consumer segment reported net…

(Operator Instructions) Our first question today comes from the line of Josh Borstein of Longbow Research. Your line is open. Please go ahead.

Could you just assess the trends you're seeing right now in North American office, maybe contrast that with last quarter? Just trying to get a sense if customers are still being deliberate and cautious in their plans or is there a sense there's a greater willingness to pull the trigger and commit to projects.

Josh, I don't know that we sense any change other than what you can see coming through from the BIFMA data. I don't think we can give you anything on a particular kind of customer tone. I would say, activity levels remain pretty darn good, although obviously we've not all seen the strength that we might have thought coming into last calendar year from a BIFMA perspective because it has backed down. But I would say, overall the level of project activity is pretty good.

Okay. And would you say you feel any more or less optimistic about the trends you're seeing than you were three months ago?

I think that as we look – especially as you look at the second quarter, you'd have to say we're a little more optimistic because even if excluding DWR, we move the top line up a little bit. So I'd say, yes. I think the question really that is I think everybody feels is, you feel good about activity levels, it still bounces around a lot and then you're looking at all the geopolitical stuff, and I think that's the big question mark out there for all of us, as how is that – when or how is that going to potentially impact us.

Okay. And again with North American office, what were the trends like during the quarter? Did you see any acceleration as the quarter progressed?

Josh, this is Greg. I don't have the monthly numbers off the top of my head. I know that as we sort of monitored the forecast that what you're seeing is a shift to more larger projects which then make the number get more bumpy. So it's hard to say that in any one – because of that bumpiness, it's hard to say that that bumpiness relates to a trend, if you follow me.

Sure, okay. And how you're feeling about Herman Miller's position, market position right now? Do you think you've gained any share or lost any share or maintaining right now?

We think over the long run we've been gaining share over the last three to five years and I think the trend is continue to be kind of a steady, a bit of a steady climb, some of that because of course we have more places that we're playing now, in areas that we just weren't present in four or five years ago like ergonomic tools. With things like the SAYL chair, we've certainly expanded the range or reach of the price points we're in. So I would say it's come from some of the things we've done strategically, and certainly with Nemschoff we're playing a broader part of the healthcare piece. So it's a combination of growing through the new products that we've done as well as gaining new customers. That market share number has moved around in this industry depending on if you happen to have very large projects running through. So it's always one of the things. We try to look at a long-term trend rather than any one month or even three month line, it's more what's it going to be over a year or two as you watch projects move in and out.

Okay, thanks for that. And then just last one for me. Can you discuss a little bit the profitability in North American office? Even margins were down year-over-year on slightly higher revenues. Is there a mix issue there or something else going on that we should look for?

No. I mean I think overall the profitability in the North American business has actually been fairly steady. I mean you can see it move from quarter to quarter based on the mix in products or projects, but there has been no significant change to it. In fact, the operating margins were quite high. If there's an area that has been a little difficult, is around the healthcare side. Although healthcare has been improving from a gross margin perspective, we didn't quite get to the revenue number we needed in that, and that thing is combined in that North American number that pulled down the total a little bit. So the office side was actually quite strong from a profitability standpoint.

Great. I appreciate it. Thanks and good luck.

Our next question comes from the line of Budd Bugatch of Raymond James. Your line is open. Please go ahead.

This is Bobby actually filling in for Budd. Congratulations on the quarter and thank you for taking my questions. First question, on last quarter's call, we discussed lead times extending and project business being pushed out. Is that trend still continuing in the office segment?

No, Bobby, I don't think we – the pacing that we normally scheduled to was much more consistent in this quarter than what we've seen historically, or I should say is exactly what we've seen historically. The blip that we saw in the late kind of February-March-April timeframe seems to have gone back to normal.

Alright, thank you. That's helpful. And then excluding GSA, can you maybe comment on what other vertical segments in the office segment showed some strength during the quarter?

Bobby, financials did well, business services did well, and oil and gas did well.

On the large energy project, can you give any color on how much of that contribution was the quarter and what really is left there to ship, where we can try to get our models accurate?

I don't know off the top of my head the quarter, I know that that project is supposed to complete by next May, and I know it's going to be a pretty consistent march between now and I think March timeframe from a manufacturing perspective for us, which will obviously then tail into the fourth quarter with installation and final revenue recognition.

Alright. And then looking at the ELA segment, is the kind of outlook there really just centered around the geopolitical risk? Because this quarter showed some very strong revenue growth and if you try to parse the remaining nine month gross to get to your FY '15 goal, you're actually getting that relatively flat or even down-performance for the remaining nine months. Is that centered just around the geopolitical risk or is there something that we should be accounting for in our models going forward?

I think, Bobby, remember even when you look at the first quarter and the growth on the first quarter, in part that number is so big because of the first quarter last year and the performance last year. I think we only did like $84 million, $85 million. The rest of the Q2, Q3 and Q4 last year, we were closer up to that $95 million to $100 million. We did surprised ourselves a little bit with how big the order rate was in the first quarter. So I wouldn't necessarily read into our forecast or that goal, the goal that we have out there for growth, as some sort of minimizing relative to these risks. They are certainly out there and it's important to pay attention to, but I don't think – I think it's a function of prior year as much as anything.

Alright, thank you. And then lastly on CapEx, is it still expected to be between $70 million and $80 million?

I think we kind of revised that number down a little, Bobby, to probably $60 million or $70 million.

$60 million to $70 million, and can you remind me what portion of that $60 million to $70 million is probably for the DWR buildout for the stores?

It's not a giant number, Bobby. I can't remember off the top of my head. The big number in that $60 million to $70 million is the U.K. manufacturing building which is about $22 million.

Okay, perfect. Thank you for taking my questions and best of luck going forward.

Our next question comes from the line of Matt McCall of BB&T Capital Markets. Your line is open. Please go ahead. Matthew McCall - BB&T Capital Markets: Back to I think it was Josh's question about the activity. Greg, you didn't have it in front of you but I think we saw June industry down about 7, July industry up about 7, so by the [older] [ph] trends it looks like maybe August looked more like July than June and can you comment on I assume from the guidance you're seeing consistent trends with that in September?

Yes, I think the August to September trends, the first two weeks in September, I think have been right in line with where we've been running. So we are pleased by the first two weeks. I mean the first week was a shorter week with Labor Day but I don't know the exact August percentage, Matt. Let me look it up for a second, maybe we can get to you later on it, but like I said to Josh, because of the project sizes you can get this bumpiness that goes on in the order picture. So any one week or any one month that has a big giant project that lays into the number gives you – it doesn't tell you a trend. It's like we talked earlier, Matt, about the base business versus the project business and it continues to be that same theme where you have a decent number of projects out there in the funnel, in the queue and won, and when they enter it causes the sort of bumpiness that takes place. I don't know you can really read the trend from it. Matthew McCall - BB&T Capital Markets: Okay. So switching to DWR, remind me, the seasonality tied to the catalog and the Web business similar to what we can calculate based on the data in the supplemental from the stores, is there any differences that we need to think about?

Modest but there are some.

I would tell you that that's why we kind of gave you that data, Matt, so that you can see that. I mean DWR's strongest quarter will be – it sort of lines up with our business, that the second quarter tends to be a really good one. Most of their holiday sales really happen maybe the first week of December but really kind of into Q2. So they'll line up [fully] (ph) with us. So I will take that supplemental data and say, look that's typical. Matthew McCall - BB&T Capital Markets: Okay. And then maybe the comment about not reading too much into the rest of the year in ELA because of Q1, is there anything, Brian, that you provided at the Analyst Day that you now have – and I guess this would be mostly about DWR, but you have a few more or a month or two more of data and you can maybe tweak your outlook a little bit for this year, anything that's really changed? And I know you were hesitant to give an EBIT or EPS outlook then. Are you closer to doing that now?

You mean for the full year, Matt? Matthew McCall - BB&T Capital Markets: Correct. I think you just gave EBITDA.

Correct.

Matt, I don't have any – I would tell you all the data so far that we had that we provided to you guys there, I would say all looks like anything we've had since then has been nothing but confirmatory towards what we presented at that day. There's nothing that would tell me to modify it in a big way up or down. In fact, other than this little I would say upward revision we did on the next quarter, the question we can't really answer yet because of course we're still learning our way through this, as Greg said, and to be frank we moved DWR's periods around because they were a calendar year company. So we're learning a little bit amongst ourselves about what does it mean to shift that to our quarters and so where do things fall in from a comparability standpoint. We've still got some work to do around that. I would say right now though everything that we talked about then, we feel pretty good about and I wouldn't move it directionally a long way away other than by what you've seen through the first quarter and what we're talking about for Q2. Matthew McCall - BB&T Capital Markets: Okay, alright. Thanks Brian. One more. We think about the margin projections that are out there and we'll just stick to EBITDA, is there anything outside of just volume improvement that we should keep in mind that will help – I think somebody asked about the margin in North America, is there anything from a margin perspective that's kind of beyond volume, that's more in your control, are you doing anything at the factory level, are you doing anything at productivity level that will add incrementally to margins this year or next?

First of all, I think if you look, the one place that was a negative in the quarter actually which, it's hard to tell which way it's going to go, is currency. I mean Greg and I were looking in the paper before we got on the call, and if you look I think currency took about – what Greg, about $1 million out of the quarter. So that's one I think, Matt, that as you look at is probably the one that kind of ties this whole geopolitical question of what's going to happen from that perspective. So not in our control of course but one to just pay attention to that when you look at results, they are probably actually stronger if you looked at them without the currency impact. Other areas that certainly will help over time, as we talked to you guys about in August, is the more we have proprietary products at DWR, both theirs and ours, the margins are a little bit stronger. So as they continue to build out new products, that helps, and certainly the bigger format studios help because this is not a merge to have those be dominated by us or them because we still want it to be a marketplace, but when we have more space we can bring more products to bear with consumers and that's going to help on that side. On the contract end, the biggest place [for] (ph) margin improvement is on the healthcare side. Some of that is volume related. We still have efficiency work to do particularly around Nemschoff where we're just not where we need to be in terms of operating that business from a gross margin perspective. It's gotten better to be frank and we've seen signs of being much better but we've got work to do there. We have additional work to do that Greg is all over on in-sourcing a few things, both in West Michigan and in North Carolina. This should help over time. Now those will take multiple quarters to get implemented but that's why you've seen the kind of steady margins. Greg's team working on some of those in-sourcing things and combining that with a little bit of volume, that's how we're going to get gross margins to move. Matthew McCall - BB&T Capital Markets: So on the in-sourcing front, what's the savings that you can point to thus far, either percent or dollars?

Matt, I know as we talked on prior calls, last year we probably had $10 million to $14 million year on year improvement last year from things we were doing in-sourcing-wise and value engineering. I think second quarter last year we talked about a $4 million year on year. And I think we have, from operational standpoint we've been digesting new products here over the last two quarters, which has really been our main focus, and now that those are sort of digested, it will allow the ops guys to get back into the march of HMPS and value-added engineering work and some other stuff that will continue to drive that number forward. It is – I mean we have numbers that are obviously baked into our targets. The question is, your question really is, is there something else that gets us there faster or bigger, and you know one of the things that I personally look at HMPS, it's always hard to predict how soon you get them. We just know that you do get them based on our historical march down the path. So we'll keep driving and they'll keep coming. Matthew McCall - BB&T Capital Markets: Okay, perfect. Thank you, guys.

Our next question comes from the line of Todd Schwartzman of Sidoti & Company. Your line is open. Please go ahead. Todd Schwartzman - Sidoti & Company: First on pricing in North America, where are you with realization on that most recent increase?

Todd, it's right in line with our expectations and what we normally see. Todd Schwartzman - Sidoti & Company: Okay. On ELA, if you could maybe give us some puts and takes by country as far as orders in Q1?

I don't know by countries as much as probably by region, Todd, because we as a country, some of those get to be sort of micro and we play off of a lot of regional structure as you guys know. If you look at it, as we said in the release, on a revenue basis, every region was up pretty substantially. If you looked at it on an order basis, the orders were strongest in Europe. The one place that was not quite as strong in Europe actually was the Middle East which we include in our EMEA segment. So that was down a little bit. Asia, Greg, I think if I'm right was maybe down a little bit largely driven by – if we've seen a softness, it's been in China. We have seen some bounce back in other parts of Asia. Particularly Australia has been better. If you remember, Australia got pretty tough. It's come back a bit. Latin America on the order front, overall has been too bad and that one bounces around a little bit, it's a little bit more project focused. So if you look at it, the big strength on the order front was in Europe with of course a lot of that going to be in the U.K. just because that's a big base for us. So I would say, you get the biggest strength in Europe, Asia was down a little bit, if I remember right. Greg, is that right?

Herman Miller products in Asia were actually up quite a bit. Our POSH branded products were down a little bit. Todd Schwartzman - Sidoti & Company: And since August 30, again keeping with ELA, anything substantive, anything of note in the way of cancellations?

No. Todd Schwartzman - Sidoti & Company: Okay, thanks. A couple of just quick housekeeping things. Did you offer gross margin outlook for Q2? I think I missed it.

Yes, gross margin outlook is between 37% and 38%. Todd Schwartzman - Sidoti & Company: Okay. And also what were the DWR sales for the month?

Those were $22 million for August, $21.6 million if you want to put in your models. Todd Schwartzman - Sidoti & Company: Okay, thank you. And lastly the DWR openings, the studio openings, were those – all the cities that you called out, were those all new stores or are there any relocations included in that?

They are all new locations but not new cities, if you know what I mean. So for the most part, as we said during the Investor Day, largely what we're doing is not increasing the studio count or necessarily the city count at this point but actually moving to new locations within those markets, often moving to the larger format. So Chicago is an example. There were three stores previously in Chicago, we now have one with a larger format. What we're planning to do in Cambridge as we have a store today in Boston, a small store in Boston, a small store in Cambridge, and we'll combine – first we'll open a much larger location in Cambridge, longer-term the small location in Boston when the lease ends will probably go away, although we'll keep looking at Boston to see if we need another store there. Bit currently all the ones I'm talking about are essentially new locations in the same city with a bigger format. Todd Schwartzman - Sidoti & Company: So in terms of total store count, irrespective of size and which format we're talking about, if you look out let's say year-end fiscal '15 as well as year-end fiscal '16, what do you project the total store count to be?

Exactly what we told you guys in August or July in the data that we provided. We have 38 stores today. We don't think that will change dramatically. It will be right around 38, 39, kind of depends on whether there's a lease ending, when a new store is starting, but the number around fiscal '15 will not be a lot of new stores. Again, there'll largely be conversions. What you do have to pay attention to though, if you looked at the supplemental data, even the square footage is growing, right, because the key is larger format stores, not greater number but more square footage. Todd Schwartzman - Sidoti & Company: And what about the cost per square foot, what can you tell us about the incremental lease expense and whether you're moving from B locations to A or just sizing up but staying within an A type location?

Generally other than market movements in cost per square foot, we're not seeing a big change in cost per square foot. Todd Schwartzman - Sidoti & Company: Okay, sounds good. Thanks a lot.

(Operator Instructions) Our next question is a follow-up from the line of Josh Borstein of Longbow Research. Your line is open. Please go ahead.

Can you, Greg, touch upon – you talked a little bit about resourcing and back-sourcing. Is this a product that's coming back from low cost countries or domestic sources?

They are primarily what we're talking about, are things that we may have originally done with a supplier. They are generally in the U.S. But it's not one or the other and it's not because of changes in economics. It's much more that we know that we have room as we free it up around HMPS and we have room, we have space as well as some of those are capabilities that we think we want to own in the long run. So it's kind of a mix of us looking out at capabilities that we think are important to own in the long run, as well as we have capacity particularly in metal, in some areas around wood where we have capacity and we've just said why don't we figure out how to build those capabilities ourselves.

I see, okay, thanks. And then just last, can you talk a little bit about the momentum in height-adjustable desk, if what kind of trends you're seeing, what percentage of revenue maybe is coming from height adjustability now versus a prior time period?

I don't know if I know percentages for that off the top of my head. Certainly the industry overall I think you're seeing a continued increase in the mix of height adjustable tables and workstations. So that trend seems to be very, very strong. I would imagine if you look at as a percentage of the industry dollars, still it's probably not that big of a percent. I don't know that number off the top of my head. Certainly for us it's become a bigger part of the business. It isn't one though that I would say is like as big as something you might think of like in seating or something to that effect, but certainly it's a capability that is important to have in your portfolio if you're going to compete for the big projects.

And how do you regard your portfolio for height adjustability versus your peers?

Leading.

Leading. Okay, great. Thank you.

And I'm showing no further questions in queue. I'd like to turn the conference back over to management for any closing remarks.

Thanks everyone. We appreciate you joining us today and your continued interest in Herman Miller. We look forward to reporting further advances in December and the opportunity to talk to you again. Have a great day.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect. Have a great rest of your day.