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MillerKnoll (MLKN +12%) is trading sharply higher following a nice EPS beat for Q4 (May) last night. This is a nice bounce back quarter after a very modest beat in Q3 (Feb). The upside move in this office furniture supplier appears to be driven by management's cautiously optimistic tone and encouraging trends, including continued momentum around office re-entry. As such, investors are responding positively to the improved outlook.

• The EPS beat can be attributed to better-than-expected sales and strong gross margin performance, which improved 130 bps sequentially to 39.2%. Revenue came in at $962 mln, up 8.2% yr/yr and well above the mid-point of guidance.
• Management attributed the upside to broad-based strength across all segments, marking a clear rebound from Q3, which was noticeably impacted by macroeconomic headwinds.
• MLKN's North America Contract segment saw a 13% yr/yr increase in sales, with new orders up nearly 16% yr/yr. This growth was largely driven by demand being pulled forward ahead of the company's April 21 tariff-related surcharge and June 2 price increase. Additionally, the International Contract segment saw sales up 6.9% yr/yr and new orders up 3.6% yr/yr.
• What really stood out about this report was the upside guidance for Q1 (Aug), the mid-point of which was well above analyst expectations. MLKN cited increased office leasing activity and consistent yr/yr growth in industry orders. Management also highlighted several levers it can pull to drive revenue in light of the current macro environment.

Investors were pleased to see the large EPS upside and especially the bullish guidance for Q1. The investment community has been hoping for solid signs of a return to work. This report was a good sign that MLKN is making progress. Shares have been trading mostly sideways in the $16.50-$17.50 range over the last month. Investors were cautious heading into this report given the lackluster Q3 report. As such, it was good to see the stock break above that range on this report.