MillerKnoll, Inc. (NASDAQ:MLKN) Q2 2025 Earnings Conference Call December 18, 2024 5:00 PM ET Company Participants Wendy Watson - VP of IR Jeff Stutz - CFO Andi Owen - CEO Debbie Propst - President, Global Retail John Michael - President, Americas Contract Conference Call Participants Greg Burns - Sidoti Brian Gordon - Water Tower Research Alex Fuhrman - Craig-Hallum Capital Group Operator Good evening, and welcome to MillerKnoll's Quarterly Earnings Conference Call. As a reminder, this call is being record ...

MillerKnoll, Inc. Reports Second Quarter Fiscal 2025 Results * Zeeland, Mich., December 18, 2024 – MillerKnoll Inc. (NASDAQ: MLKN) today reported results for the second quarter of fiscal year 2025 ended November 30, 2024. Financial Highlights • Consolidated net sales in the second quarter were up 2.2% year-over-year, driven by strength in International Contract & Specialty and in Americas Contract. • Maintaining gross margin strength, with consolidated gross margins of 38.8% in the quarter. • Returned appro ...

Financial Performance - Net sales for the three months ended August 31, 2024, were $861.5 million, a decrease of 6.1% compared to $917.7 million for the same period in 2023[4] - Gross margin decreased to $336.3 million, down from $358.1 million, reflecting a decline of approximately 6.1%[4] - Operating earnings significantly dropped to $15.2 million, compared to $40.3 million in the prior year, representing a decline of 62.3%[4] - Net loss attributable to MillerKnoll, Inc. was $1.2 million, contrasting with net earnings of $16.7 million in the same quarter last year[4] - For the three months ended August 31, 2024, MillerKnoll reported a net loss of $0.5 million compared to net earnings of $16.1 million for the same period in 2023, representing a significant decline[9] - Net cash provided by operating activities was $21.1 million, a decrease of 83.8% from $130.9 million in the prior year[9] - The total operating expenses for the three months ended August 31, 2024, were $321.1 million, slightly higher than $317.8 million for the same period in 2023[4] - Operating earnings for the total reportable segments decreased from $55.0 million in the three months ended September 2, 2023, to $30.9 million for the same period in 2024, a decline of approximately 44%[69] Assets and Liabilities - Total current assets increased slightly to $1,071.8 million from $1,069.6 million as of June 1, 2024[6] - Total liabilities rose to $2,610.0 million, up from $2,584.6 million, indicating a growth of 0.98%[7] - Cash and cash equivalents decreased to $209.7 million from $230.4 million, a decline of 8.9%[6] - Accounts receivable decreased to $277.3 million from $308.3 million, a reduction of 10.1%[6] - Total stockholders' equity decreased to $1,332.5 million from $1,385.1 million, reflecting a decline of 3.8%[7] - Long-term debt increased to $1,324.0 million from $1,291.7 million[7] - The carrying value of the company's financial instruments was $1,381.6 million as of August 31, 2024, with a fair value of $1,448.7 million[46] Revenue Segments - Product revenue from single performance obligations was $789.2 million, down from $845.5 million, while multiple performance obligations generated $68.8 million, slightly up from $68.7 million[23] - The Americas segment reported total contract revenue of $454.6 million, a decline of 7.3% from $490.4 million in the previous year[25] - International contract and specialty revenue totaled $213.5 million, down 6.5% from $228.3 million[25] - The Americas Contract segment net sales were $454.6 million for the three months ended August 31, 2024, down from $490.4 million in the prior year, a decrease of about 7.3%[69] Integration and Restructuring Costs - The company incurred $28.3 million in costs related to the Knoll Integration for the three months ended August 31, 2024, compared to $3.9 million for the same period in 2023, reflecting a significant increase in integration expenses[73] - The restructuring charges related to the 2024 restructuring plan amounted to $30.8 million for the fiscal year 2024, with no future costs expected[76] - The Company recorded a total of $144.4 million in pretax integration expenses related to the Knoll Integration plan[72] Tax and Compliance - The effective tax rate for the three months ended August 31, 2024, was 66.2%, significantly higher than the 24.4% effective tax rate for the same period in 2023, primarily due to a pre-tax loss and favorable discrete impacts from stock compensation[40] - The company's recorded liability for potential interest and penalties related to uncertain tax benefits was $0.9 million as of August 31, 2024, compared to $0.8 million as of June 1, 2024[42] - The Company recorded a liability for uncertain tax positions of $1.5 million as of August 31, 2024[42] Cash Flow and Capital Expenditures - Cash flows from operating activities were $21.1 million, down from $130.9 million year-over-year[9] - Capital expenditures for the three months ended August 31, 2024, were $22.6 million, an increase from $19.9 million in the same period last year[9] - The company repurchased and retired 1,544,733 shares of common stock for $43.7 million during the quarter[11] Inventory and Goodwill - Finished goods and work in process inventory increased to $324.8 million from $314.3 million, while total inventory rose to $440.5 million from $428.6 million[27] - Goodwill totaled $1,234.4 million as of August 31, 2024, with accumulated impairments of $36.7 million in the Americas segment and $88.8 million in the Global Retail segment[28] Other Comprehensive Income - The company recognized a loss of $21.3 million in other comprehensive loss for the effective portion of interest rate swap agreements for the three months ended August 31, 2024, compared to a gain of $7.8 million for the same period in 2023[55] - The accumulated other comprehensive loss improved from $(95.1) million on June 3, 2023, to $(98.5) million as of August 31, 2024, reflecting a worsening of approximately 3.6%[66] Future Outlook - The company is evaluating the impact of recently issued accounting standards on its consolidated financial statements, with no expected material impact identified[21] - The Company expects to complete the settlement of defined-benefit pension plan liabilities in fiscal 2025[34] - The Company’s fiscal year 2025 is expected to end on May 31, 2025, and will consist of 52 weeks[17]

Financial Data and Key Metrics Changes - Consolidated orders for Q1 2025 were $936 million, up 2.4% year-over-year on a reported basis and up 3.5% organically [11] - Consolidated net sales for Q1 2025 were $862 million, reflecting a decrease of 6.1% year-over-year on a reported basis and a decrease of 5.3% organically [12] - Consolidated gross margin was 39%, essentially flat compared to the prior year [12] Business Line Data and Key Metrics Changes - Americas Contract segment net sales were $455 million, representing an organic decrease of 7% from the same quarter a year ago [13] - International Contract and Specialty segment net sales were $214 million, down 6.5% on a reported basis and down 6.3% organically year-over-year [14] - Retail segment net sales were $193 million, a reported decrease of 2.8% and essentially flat performance on an organic basis [15] Market Data and Key Metrics Changes - Orders in the Americas Contract segment totaled just under $513 million, up 5.7% over last year organically [13] - Orders in the International Contract and Specialty segment totaled $234 million, resulting in a year-over-year increase of 2.7% on a reported basis [14] - Retail business in North America outperformed year-on-year retail industry comparisons by approximately 6 points during the quarter [8] Company Strategy and Development Direction - The company launched several initiatives to support its contract business and meet evolving client needs [5] - New flagship locations were introduced in London and New York to enhance customer experience [6] - The company is focused on growth and positioning itself for the future, with a strong emphasis on team experience and talent acquisition [9][10] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the year ahead, citing improved demand trends and a strong backlog position [10][17] - The company anticipates that a slight drop in interest rates will stimulate order placements from customers and trade partners [9] - Management noted that the retail segment is expected to benefit from improving macroeconomic conditions and a rebound in the housing market [9][35] Other Important Information - The company generated $21 million in cash flow from operations and repurchased approximately 1.5 million shares for a total cash outlay of approximately $44 million [13] - The company has been certified as a 2024 US Great Place to Work, highlighting its commitment to associate experience [9] Q&A Session Summary Question: Guidance for Q2 margins and revenue - Management indicated that gross margin improvements are expected due to increased order activity, but a shift in business mix may keep margins lower [20][21] Question: Retail market outlook - Management expressed optimism about retail demand trends, anticipating improved consumer confidence due to recent interest rate cuts [22] Question: Delivery times for orders - Management explained that longer delivery times are due to an increase in larger, more complex projects and changing customer behavior [25][26] Question: Industry groups driving order growth - Management noted strong activity in financial services, healthcare, and technology sectors, with many companies looking to bring employees back to the office [28][29] Question: Long-term margin expectations - Management believes that economic improvements will allow for better overhead cost leverage, potentially leading to higher margins in the future [32][33] Question: Integration of Knoll and other brands - As of Q1, 60% of the international dealer network has been integrated, with plans to complete the process by the end of the fiscal year [36] Question: Back-to-work and hybrid trends - Management noted a shift towards more frequent in-office collaboration and expressed confidence in their product portfolio for hybrid work environments [37][38]

Financial Performance - Consolidated net sales for Q1 FY2025 were $861.5 million, a decrease of 6.1% year-over-year[5] - The company reported a diluted loss per share of $0.02, compared to earnings of $0.22 in the same period last year[6] - Adjusted earnings per share decreased to $49.9 million, down from $55.4 million, indicating a decline of 9.9%[34] - For Q2 FY2025, net sales are expected to range between $950 million and $990 million, with adjusted diluted earnings projected between $0.51 and $0.57 per share[16] - Organic sales growth showed a decline of 6.1% year-over-year, with total net sales reported at $861.5 million for the three months ended August 31, 2024[39] - Adjusted earnings per share for the same period were $0.36, slightly down from $0.37 in the prior year[35] Orders and Backlog - Orders in Q1 increased by 2.4% to $935.9 million, with organic growth of 3.5%, driven by a 5.2% increase in Americas Contract orders[2] - Ending backlog rose to $758.0 million, reflecting a 9.2% increase from the previous year[2] - The backlog for MillerKnoll as of Q1 FY2025 was reported at $758.0 million[44] Segment Performance - Americas Contract segment net sales were $454.6 million, down 7.3% year-over-year, while operating margin decreased to 3.8%[8] - International Contract and Specialty segment net sales were $213.5 million, down 6.5% year-over-year, but orders increased by 2.7%[10] - Adjusted operating earnings for the Americas segment were $43.3 million, down from $52.0 million, reflecting a decrease of 16.3%[34] - Operating earnings for the Global Retail segment increased to $5.5 million, up from $3.1 million, showing a growth of 77.4%[34] Expenses and Margins - Operating expenses for the quarter were $321.1 million, up 1.0% from the prior year, while adjusted operating expenses decreased by 5.2% to $286.9 million[6] - Gross margin remained flat at 39.0%, despite lower revenue levels[5] - Gross margin for the International Contract & Specialty segment improved to 44.5%, compared to 42.4% in the previous period[34] - Operating expenses increased to $321.1 million, resulting in an operating expense percentage of 37.3%, up from 34.6% in the prior year[37] Assets and Liabilities - Total current assets increased slightly to $1,071.8 million from $1,069.6 million[24] - Total liabilities increased to $2,610.0 million from $2,584.6 million, marking a rise of 0.98%[25] - The company reported a total of $4,019.1 million in assets, a slight decrease from $4,043.6 million[24] Cash Flow and Debt - Cash and cash equivalents decreased to $209.7 million from $230.4 million, a decline of 8.9%[24] - The trailing twelve-month adjusted bank covenant EBITDA was $412.5 million, with total debt less cash at $1,170.7 million, resulting in a net debt to adjusted EBITDA ratio of 2.84[38] Tax Rate - The effective tax rate for the three months ended August 31, 2024, was 66.2%, significantly higher than 24.4% in the prior year[43] Integration Charges - Integration charges for the Americas segment were $22.5 million, compared to $3.1 million in the previous period, reflecting a significant increase[34] Guidance and Future Outlook - The company anticipates a shift in holiday promotional periods, potentially moving $17 million to $23 million of net sales from Q2 to Q3 FY2025[17]

Channels of Distribution • Independent Contract Furniture Dealers - Most of the Company's product sales are made to a global network of independently owned and operated contract furniture dealerships. These dealers purchase the Company's products and distribute them to end customers. Many of these dealers also offer furniture-related services, including product installation. • eCommerce - The Company sells products in its portfolio of brands across the globe, through localized Herman Miller, Knoll, and DWR ...

John Maeda, Tina Edmundson and Jeanne Gang Join MillerKnoll's Board of Directors ZEELAND, Mich., July 29, 2024 /PRNewswire/ -- MillerKnoll (NASDAQ: MLKN), a global leader in design, appointed three new directors – John Maeda, Tina Edmundson and Jeanne Gang – to its Board of Directors. With the retirement of two directors, MillerKnoll evaluated the composition of its board of directors and recruited new members with skills, qualifications and diverse backgrounds to augment the expertise of the current board ...

Financial Data and Key Metrics Changes - For Q4, the company reported adjusted diluted earnings of $0.67 per share, exceeding guidance, driven by strong gross margin performance and favorable tax benefits [68] - Consolidated net sales for Q4 totaled $889 million, reflecting an organic decrease of 5.2% year-over-year, while new orders totaled $933 million, indicating organic growth of approximately 3% [68] - The consolidated gross margin improved to 39.6%, up 250 basis points year-over-year and 100 basis points sequentially, driven by price realization and inventory management [69] Business Line Data and Key Metrics Changes - In the Americas Contract segment, net sales were $417 million, down 12.2% year-over-year, but new orders increased by 5.7% [71] - The International Contract and Specialty segment saw net sales of $245 million, up 3.8% organically year-over-year, with new orders remaining flat [72] - The Global Retail segment reported net sales of $227 million, a decline of 7.2% year-over-year, but organic demand growth was noted [77] Market Data and Key Metrics Changes - Traffic at trade shows globally has improved, nearing pre-COVID levels, indicating a positive trend in the contract market [14][62] - The North American housing market slowdown is affecting demand levels, but there are signs of easing negative trends in home sales [64] Company Strategy and Development Direction - The company plans to invest in MillerKnoll showrooms, digital platforms, and tools to support contract business and dealers [57] - There is a focus on expanding the retail footprint and optimizing product assortment to drive long-term sales growth [58] - Sustainability and innovation are emphasized as key considerations for customers, with ongoing efforts to incorporate more sustainable materials [65] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about fiscal 2025, expecting net sales to exceed fiscal 2024 levels and adjusted earnings per share to be in the range of $2.10 to $2.30 [14] - The demand environment for contract and key markets is improving, with healthy activity levels across the business [61] - The company is prepared to harness pent-up retail demand as the home furnishings market is expected to improve [64] Other Important Information - The company achieved annualized run rate savings of $160 million from acquisition cost synergies, exceeding initial targets [73] - The company launched over 30 new products at recent design events, showcasing a commitment to innovation [75] Q&A Session Summary Question: Can you elaborate on the investments on the commercial side? - Management highlighted investments in digital platforms and tools to support dealers, expanding international contracts, and enhancing retail presence [2] Question: What is the outlook for gross margin? - Management did not provide specific guidance but noted factors influencing margins, including pricing benefits and operational efficiencies [4][22] Question: Is there evidence of a plateau in return to work? - Management indicated that the return to office is evolving positively, with increased collaboration and hybrid work models becoming more common [8] Question: What is the status of the dealer network integration? - The dealer network is stable and well-aligned, with ongoing improvements and strategic consolidations enhancing market position [28] Question: What are the expectations for consumer demand in the upcoming year? - Management expressed optimism about pent-up demand in retail, anticipating improvements in the housing market to positively impact sales [64]

INVESTOR PRESENTATION Company Snapshot Forward looking statements 2 The MillerKnoll Collective MillerKnoll COMPANY SNAPSHOT $3.6B International Contract & Specialty 26% Global Retail 24% Americas Contract 50% % Revenue 70+ Brands Dealers in 110 Countries Employees around the globe 5 HOLLY HUNT PREMIUM GEIGER maharam Edelman T HermanMiller LD DATESWEISER - KnollTextiles spinneybeck filzfelt * Knoll colebrook bosson saunders MUUTO HAY ACCESSIBLE Bubble size indicates relative revenue MillerKnoll 6 STRATEGIC C ...

MillerKnoll, Inc. Reports Fourth Quarter and Fiscal 2024 Results Zeeland, Mich., June 26, 2024 – MillerKnoll Inc. (NASDAQ: MLKN) today reported results for the fourth quarter and full fiscal year 2024, which ended June 1, 2024. Business Highlights • Orders in the fourth quarter were up 1.1% on a reported basis and up 2.9% organically from last year. • Fourth quarter and full year gross margin improved 250 basis points and 410 basis points, respectively yearover-year. • Achieved annualized run-rate cost syne ...