Financial Data and Key Metrics Changes - Adjusted earnings per share for the second quarter were $0.43, exceeding expectations, reflecting stronger-than-expected sales and gross margin performance [13] - Consolidated net sales for the quarter were $955 million, down 1.6% year over year on a reported basis and 2.5% lower organically [13] - Consolidated gross margin was 39%, including approximately $1 million in net tariff-related costs [14] - Operating cash flow generated was $65 million, with liquidity at $548 million [14] Business Line Data and Key Metrics Changes - North America contract segment net sales were $509 million, down 3.1% year over year, with orders increasing to $507 million, up 4.8% from the prior year [16] - International contract segment net sales were $171 million, down 6.3% on a reported basis, with orders rising to $162 million, up 6.6% [17] - Global retail segment net sales were $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year over year [18] Market Data and Key Metrics Changes - Orders in North America retail increased 8%, with comparable sales growth also up 8% [6] - During the holiday cyber promotional period, orders rose 12% compared to the same period last year [7] - Total healthcare orders were up 5% year to date, indicating strong demand in resilient sectors [10] Company Strategy and Development Direction - The company is focused on expanding its retail footprint, delivering innovative products, and deepening customer engagement globally [5] - Plans to open 14-16 new stores in the US for the full fiscal year, aiming to double the DWR and Herman Miller store footprint over the next several years [8] - The strategy includes leveraging supply chain strength, with approximately 70% of North America retail's cost of goods sourced from the U.S. [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism based on solid order growth across all segments and encouraging signals in the market [11] - The return-to-office trend is positively impacting demand for commercial real estate and contract furniture [10] - Management highlighted the importance of innovation and partnerships in driving future growth [11] Other Important Information - The company announced the consolidation of its Muskegon, Michigan facility, expected to deliver $10 million in annual run rate savings by fiscal 2028 [15] - The company is focused on maintaining a strong balance sheet while balancing investments and growth [15] Q&A Session Summary Question: Insights on second quarter performance and expectations - Management noted that gross margin exceeded expectations due to channel and product mix, along with effective pricing realization [22][23] Question: Order trends and pipeline insights - Orders were consistent across all businesses, with mid-single-digit growth observed in the first weeks of the new quarter [24][25] Question: Geographic and industry strength - Strong demand was noted in the Bay Area, Southern California, and the Northeast Coast, with energy and professional services industries being particularly active [27] Question: Impact of AI on demand - Management indicated that while the impact of AI on workspaces is still minimal, future productivity gains are anticipated [29] Question: Expectations for the contract business in Q3 - Orders in North America contract were up about 5% on an organic basis, with expectations of continued mid-single-digit growth [34] Question: Retail growth drivers - Brand awareness and store openings were highlighted as key factors driving retail growth, with marketing spend remaining consistent year over year [39][40] Question: Roadmap for doubling store count - Plans to open 14-16 stores annually were confirmed, with expectations of improved operating income from new store investments in the upcoming fiscal year [49][50]

Financial Data and Key Metrics Changes - Adjusted earnings per share for the second quarter were $0.43, exceeding expectations, reflecting stronger-than-expected sales and gross margin performance [13] - Consolidated net sales for the quarter were $955 million, down 1.6% year-over-year on a reported basis and 2.5% lower organically [13] - Consolidated net sales for the first half of the fiscal year reached $1.9 billion, up 4% year-over-year [13] - Second quarter consolidated gross margin was 39%, including approximately $1 million in net tariff-related costs [14] - Operating cash flow generated was $65 million, with liquidity at $548 million and a net debt-to-EBITDA ratio of 2.87x [15] Business Line Data and Key Metrics Changes - North America contract segment net sales were $509 million, down 3.1% year-over-year, while orders increased to $507 million, up 4.8% from the prior year [16] - International contract segment net sales were $171 million, down 6.3% on a reported basis, with orders rising to $162 million, up 6.6% [17] - Global retail segment net sales were $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year-over-year [17][18] Market Data and Key Metrics Changes - Orders in North America retail increased 8%, with comparable sales growth also up 8% [6] - During the holiday cyber promotional period, orders rose 12% compared to the same period last year [7] - Total healthcare orders were up 5% year-to-date, indicating strong demand in resilient sectors [10] Company Strategy and Development Direction - The company is focused on expanding its retail footprint, delivering innovative products, and deepening customer engagement globally [5] - Plans to open 14-16 new stores in the U.S. for the full fiscal year, aiming to double the DWR and Herman Miller store footprint over the next several years [8] - The strategy includes leveraging a strong supply chain, with approximately 70% of North America retail's cost of goods sourced from the U.S. [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism based on execution and accomplishments in the first half of the fiscal year, with encouraging signals for continued growth [11] - The return-to-office trend is positively impacting demand for commercial real estate and contract furniture [10] - Management noted that the impact of AI on workspace design is still minimal but is being considered for future planning [30] Other Important Information - The company announced the consolidation of its Muskegon, Michigan facility, expected to deliver $10 million in annual run rate savings by fiscal 2028 [15] - Management emphasized the importance of operational excellence and scaling innovation as part of their strategic priorities [66] Q&A Session Summary Question: Insights on second quarter performance and expectations - The gross margin exceeded expectations due to channel and product mix, along with effective tariff mitigation strategies [23] Question: Order trends during the quarter - Orders were consistent across all businesses, with organic growth of 4.5% [25] Question: Geographic and industry strength - Strong performance noted in the Bay Area, Southern California, and the Northeast Coast, with healthcare as a growth driver [27] Question: Expectations for the contract business in Q3 - Orders in North America contract were up about 5% on an organic basis, with a positive outlook for the second half of the year [35] Question: Retail growth dynamics - Brand awareness and assortment expansion contributed to strong retail performance, with average order value increasing year-on-year [47] Question: Capital allocation and leverage targets - The company aims to reduce its leverage ratio to the 2 to 2.5 range while maintaining dividends and share repurchases [62]

Financial Data and Key Metrics Changes - Adjusted earnings per share for Q2 2026 were $0.43, exceeding expectations, reflecting stronger-than-expected sales and gross margin performance [10] - Consolidated net sales for the quarter were $955 million, down 1.6% year over year, with a 2.5% organic decline [10] - Consolidated net sales for the first half of the fiscal year reached $1.9 billion, up 4% year over year [10] - Orders for the quarter grew to $973 million, up 5.5% as reported and 4.5% higher on an organic basis [10] - Second quarter consolidated gross margin was 39%, including approximately $1 million in net tariff-related costs [11] Business Line Data and Key Metrics Changes - North America contract segment net sales were $509 million, down 3.1% year over year, while orders increased to $507 million, up 4.8% [12] - International contract segment net sales were $171 million, down 6.3% on a reported basis, with orders rising to $162 million, up 6.6% [13] - Global retail segment net sales were $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year over year [13] Market Data and Key Metrics Changes - North America retail orders increased 8%, with comparable sales growth also up 8% [4] - During the holiday cyber promotional period, orders rose 12% compared to the same period last year [5] - Total healthcare orders were up 5% year to date, indicating strong demand in resilient sectors [7] Company Strategy and Development Direction - The company aims to double its DWR and Herman Miller store footprint over the next several years, anticipating the opening of 14-16 new stores in the US for the full fiscal year [5] - The strategy focuses on expanding retail footprint, delivering innovative products, and deepening customer engagement globally [4] - The company is optimistic about growth through enhanced innovation initiatives and expanding dealer networks [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in an improving demand environment and the ability to execute growth strategies [10] - The return-to-office trend is positively impacting demand for commercial real estate and contract furniture [6] - Management remains optimistic based on execution and accomplishments in the first half of the fiscal year, with encouraging signals for continued growth [8] Other Important Information - The company generated $65 million in operating cash flow and ended the quarter with $548 million in liquidity [11] - The net debt-to-EBITDA ratio was 2.87 times, reflecting a disciplined approach to capital allocation [11] - The company announced the consolidation of its Muskegon facility, expected to deliver $10 million in annual run rate savings by fiscal 2028 [11] Q&A Session Summary Question: Can you discuss the drivers behind the better-than-expected gross margin and operating expenses? - Management indicated that the better gross margin was due to channel and product mix, along with effective pricing realization and tariff mitigation efforts [18] Question: How did order rates fluctuate during the quarter, particularly in the Americas contract segment? - Orders were consistent across all three months of the quarter, with mid-single-digit growth observed [20] Question: What specific geographies or industries are showing strength in the contract business? - Strength was noted in the Bay Area, Southern California, and the Northeast Coast, with active demand in energy, professional services, and legal sectors [22] Question: What are the expectations for the contract business in the third quarter? - Orders in North America contract were up about 5% on an organic basis, with expectations for continued mid-single-digit growth [30] Question: How is the retail growth being driven, and what are the dynamics within customer segments? - The growth is attributed to increased brand awareness, new store openings, and a 22% year-on-year increase in product assortment [42][43] Question: What is the roadmap for doubling the store count, and what is the expected margin profile? - The company plans to open 14-16 stores annually, with expectations for improved operating income as new stores begin to contribute revenue [45][47] Question: What macro trends are contributing to the improved order momentum? - The return to office trend is driving demand, with organizations becoming more serious about workspace decisions [54]

Core Insights - The company has shown strong customer engagement and positive responses to its strategic initiatives, particularly in North America, where the return to office trend is boosting demand for commercial real estate and contract furniture [1][4][42] - The company is expanding its retail footprint, with plans to open 14 to 16 new stores in the fiscal year, driven by new store openings, product assortment expansion, e-commerce acceleration, and increased brand awareness [2][14][39] - Orders in North America retail increased by 8%, with comparable sales growth also up 8%, indicating strong performance during peak shopping periods [3][10] Financial Performance - In Q2, adjusted earnings per share were $0.43, exceeding expectations, while consolidated net sales were $955 million, down 1.6% year over year [9][10] - For the first half of the fiscal year, consolidated net sales reached $1.9 billion, up 4% year over year, with orders growing to $973 million, up 5.5% [10][11] - The second quarter gross margin was reported at 39%, with proactive measures expected to offset tariff-related costs in the second half of the fiscal year [10][16] Segment Performance - North America Contract segment net sales were $509 million, down 3.1% year over year, while international contract segment net sales were $171 million, down 6.3% [12][13] - The Global Retail segment saw net sales of $276 million, up 4.7% on a reported basis, with orders improving to $304 million, up 6% year over year [13][14] - The healthcare sector remains a growth driver, with total healthcare orders up 5% year to date [5][42] Strategic Initiatives - The company is focused on expanding its dealer network and enhancing its global showroom footprint, with new showrooms introduced in key international markets [5][6] - The strategy includes leveraging operational efficiency and optimizing production capabilities, with a consolidation plan expected to deliver $10 million in annual savings by fiscal 2028 [11][12] - The company is optimistic about future growth, driven by innovation initiatives and strong partnerships [6][44] Market Trends - The return to office trend is positively impacting demand, with organizations prioritizing workspace refreshes [1][42] - There is a noted increase in orders and dealer sentiment, indicating a favorable market environment for the company [1][4] - The competitive landscape remains promotional, but the company has maintained marketing spend levels while achieving strong sales growth [33][36]

Company Overview - MillerKnoll's FY25 revenue reached $3.7 billion[10] - The company has a global presence with dealers in over 110 countries[10] - MillerKnoll operates through three segments: North America Contract (54%), Global Retail (28%), and International Contract (18%)[11] Financial Performance - FY25 Adjusted Earnings Per Share was $1.95[44] - FY25 Adjusted EBITDA was $360 million[44] - FY25 Free Cash Flow was $102 million[47] Recent Quarterly Trends (Q2 FY26) - Net sales were $955.2 million, a decrease of 1.6% from the prior year[56, 57] - Orders increased 5.5% from the prior year[57] - Adjusted Earnings Per Share was $0.43[57] Q3 FY26 Guidance - Revenue is projected to be between $923 million and $963 million[63] - Gross Margin % is expected to be between 37.9% and 38.9%[63] - Adjusted Earnings Per Share, Diluted is guided to be $0.42 to $0.48[63] Debt and Liquidity - Cash balance as of Q2 FY26 is $180 million[50] - Long-term debt as of Q2 FY26 is $1.321 billion[50] - Net Debt to EBITDA Ratio is 2.87x[50]

Core Viewpoint - MillerKnoll, Inc. reported strong second-quarter earnings, surpassing analyst expectations for both earnings per share and revenue, indicating effective execution of strategic priorities and brand strength [1][3]. Financial Performance - Adjusted earnings per share for the quarter were 43 cents, exceeding the analyst estimate of 41 cents [2]. - Quarterly sales reached $955.2 million, surpassing the Street estimate of $943.13 million [2]. - Net sales decreased by 1.6% year-over-year and 2.5% organically [5]. - Orders totaled $972.5 million, reflecting a 5.5% increase as reported and a 4.5% increase organically year-over-year, driven by growth across all segments [5]. - Gross margin improved by 20 basis points [5]. Future Outlook - For the third quarter, MillerKnoll anticipates adjusted EPS between 42 cents and 48 cents, compared to the 41 cents estimate [3]. - Revenue guidance for the third quarter is projected to be between $923 million and $963 million, exceeding the analyst estimate of $915.87 million [3]. Stock Performance - Following the earnings report, MillerKnoll's stock rose by 5.82% to $18.55 in extended trading [4].

Financial Performance - Net sales for Q2 FY2026 were $955.2 million, a decrease of 1.6% year-over-year, while net sales for the first half increased by 4.3% to $1,910.9 million[4]. - Orders for Q2 FY2026 reached $972.5 million, up 5.5% year-over-year, with growth in every segment, including record performance in the Global Retail business during the Black Friday/Cyber Monday period[6]. - Gross margin for Q2 FY2026 was 39.0%, an increase of 20 basis points compared to the prior year[4]. - The operating margin for Q2 FY2026 was 5.1%, down from 6.4% in the prior year, while the adjusted operating margin was 5.9%, compared to 7.1% previously[4]. - Earnings per share (diluted) for Q2 FY2026 were $0.35, a decrease of 28.6% year-over-year, while adjusted earnings per share were $0.43, down 21.8%[4]. - Adjusted operating earnings for the three months ended November 29, 2025, were $56.0 million, representing an adjusted operating margin of 5.9% compared to 7.1% in the prior year[32]. - The diluted earnings per share for the three months ended November 29, 2025, was $0.35, down from $0.49 in the same period last year[34]. - Adjusted earnings per share for the three months ended November 29, 2025, was $0.43, compared to $0.55 for the same period in 2024[34]. Operating Expenses - Operating expenses for Q2 FY2026 increased to $323.7 million, with adjusted operating expenses rising to $316.3 million, primarily due to higher compensation and new store costs[4]. - Operating expenses for the three months ended November 29, 2025, were $323.7 million, or 33.9% of sales, up from $314.5 million and 32.4% in the prior year[36]. - Adjusted operating expenses for the three months ended November 29, 2025, were $316.3 million, or 33.1% of sales, compared to $308.1 million and 31.7% in the prior year[36]. Cash Flow and Liquidity - Cash flow from operations for Q2 FY2026 was $64.6 million, an increase from $55.3 million in the same quarter last year[9]. - As of November 29, 2025, liquidity was $548.3 million, reflecting cash on hand and available credit[9]. Sales and Segment Performance - The North America Contract segment reported net sales of $508.5 million, with an operating earnings margin of 8.7% for the three months ended November 29, 2025[32]. - The International Contract segment's net sales were $170.9 million, with an operating earnings margin of 9.3% for the same period[32]. - The Global Retail segment achieved net sales of $275.8 million, with an operating earnings margin of 1.5% for the three months ended November 29, 2025[32]. - Organic sales growth for North America Contract segment was reported at a decrease of 3.1% year-over-year, while Global Retail segment saw an increase of 4.7%[38]. - The consolidated backlog for MillerKnoll as of Q2 FY2026 was $708.3 million, slightly down from $709.4 million in Q2 FY2025[42]. Store Openings and Count - New retail store openings included a DWR in Salt Lake City, UT, and three Herman Miller stores in Nashville, TN, El Segundo, CA, and Walnut Creek, CA[14]. - The total store count increased to 86 in Q2 FY2026, with 6 new openings and 2 closures compared to the previous year[43]. Future Outlook - The company expects Q3 FY2026 net sales to range between $923 million and $963 million, with an adjusted effective tax rate of 20.5% to 22.5%[12]. Risks and Challenges - MillerKnoll's growth strategy faces challenges and may be based on inaccurate assumptions[48]. - Consumer spending levels significantly impact demand for products within the Global Retail segment[48]. - The company is exposed to risks from heightened inflation and uncertainty regarding future interest rates[48]. - Increased debt from the acquisition of Knoll may lead to higher interest expenses and compliance risks[48]. - Availability and pricing of raw materials are critical factors affecting production costs[48]. - Cybersecurity threats pose risks to the company's operations[48]. - Public health crises, such as pandemics, can disrupt business and economic stability[48]. - The financial strength of dealers and customers is essential for maintaining sales[48]. - Government procurement pace and levels can influence overall demand for products[48]. - Ongoing litigation or governmental audits may impact the company's operations and financial health[48].

ZEELAND, Mich., Dec. 17, 2025 /PRNewswire/ -- MillerKnoll Inc. (NASDAQ: MLKN), a growth-oriented small-cap value company in the industrial and consumer sectors, today reported results for the second quarter fiscal 2026 ended November 29, 2025. Visit the Company's investor relations website to view the earnings release. MillerKnoll is a global collective of design brands built on the foundation of two icons of modernism: Herman Miller and Knoll. The portfolio also includes furniture and accessories for comme ...

Core Insights - MillerKnoll, Inc. is set to release its second quarter fiscal 2026 results on December 17, 2025, after market close, followed by a conference call at 5:00 p.m. Eastern time to discuss financial and operational results [1][2]. Company Overview - MillerKnoll is a global collective of design brands, including Herman Miller and Knoll, focusing on furniture and accessories for both commercial and residential spaces [3]. - In fiscal year 2025, MillerKnoll generated net sales of $3.7 billion, indicating a strong market presence in the industrial and consumer sectors [3].

Core Insights - Value investors traditionally use the price-to-earnings (P/E) ratio to identify value stocks, but for loss-making companies, the price-to-sales (P/S) ratio is more relevant. The price-to-book (P/B) ratio is also a useful tool for identifying undervalued stocks with high return potential [1][5][9]. Valuation Ratios - The P/B ratio is calculated as market capitalization divided by book value of equity, helping to identify low-priced stocks with high growth prospects [2][5]. - A P/B ratio of less than one indicates that a stock is trading below its book value, suggesting it may be undervalued, while a ratio above one may indicate overvaluation [5][6]. - The P/B ratio is particularly useful for industries with tangible assets, such as finance and manufacturing, but can be misleading for companies with high R&D expenses or significant debt [8]. Book Value Definition - Book value represents the total value remaining for shareholders if a company were to liquidate its assets after settling all liabilities, calculated by subtracting total liabilities from total assets [3][4]. Screening Parameters - Stocks with a P/B ratio lower than the industry median are considered to have potential for price appreciation [11]. - Additional screening criteria include a P/S ratio below the industry median, a P/E ratio below the industry median, a PEG ratio less than 1, a current price of at least $5, an average 20-day volume of at least 100,000, and a Zacks Rank of 1 or 2 [12][13][14]. Selected Stocks - Five stocks identified with low P/B ratios and solid growth potential include: - **StoneCo (STNE)**: Financial technology solutions provider with a projected 3-5 year EPS growth rate of 30.3% and a Zacks Rank of 2 [15]. - **Great Lakes Dredge & Dock (GLDD)**: Largest U.S. dredging services provider with a projected EPS growth rate of 12.0% and a Zacks Rank of 1 [16]. - **EnerSys (ENS)**: Manufacturer of industrial batteries with a projected EPS growth rate of 15.0% and a Zacks Rank of 2 [17]. - **MillerKnoll (MLKN)**: Design solutions provider with a projected EPS growth rate of 12.0% and a Zacks Rank of 2 [17]. - **Keros Therapeutics (KROS)**: Clinical-stage biotech with a projected EPS growth rate of 23.6% and a Zacks Rank of 1 [18].