Core Insights - The article discusses the performance and strategic developments of MillerKnoll, Inc. (NASDAQ: MLKN) since the merger of Herman Miller and Knoll in spring 2021 [1]. Group 1: Company Overview - MillerKnoll, Inc. is a result of the merger between Herman Miller and Knoll, which was announced in spring 2021 [1]. - The investing group "Value In Corporate Events" focuses on identifying opportunities in major corporate events such as IPOs, mergers & acquisitions, and earnings reports [1]. Group 2: Investment Opportunities - The service provides coverage of 10 major events each month, aiming to find the best investment opportunities for its members [1].

Leadership Changes - MillerKnoll announced the appointment of John Hoke as Board Chair, effective October 13, 2025, following Mike Volkema's retirement after 25 years on the Board [1][2] - Jeff Stutz has been named Chief Operating Officer, effective September 8, 2025, continuing to report to Andi Owen, President and CEO [1][3] Leadership Background - John Hoke has been on the MillerKnoll Board since 2005 and has over 30 years of experience at Nike Inc., where he served as Chief Innovation Officer [2][3] - Jeff Stutz has been with the company since 2001, previously serving as Chief Financial Officer and has played a key role in navigating macroeconomic challenges [3][4] Responsibilities and Focus Areas - In his new role, Stutz will oversee MillerKnoll's International Contract Business, global manufacturing and distribution operations, and Europe-based brands [4] - Stutz aims to grow the International Contract and Group brands through the dealer ecosystem and optimize manufacturing operations globally [4][5] Company Overview - MillerKnoll is a collective of design brands, including Herman Miller and Knoll, focusing on furniture and accessories for commercial and residential spaces [6] - The company generated net sales of $3.7 billion in fiscal year 2025 [6]

Company Overview - MillerKnoll, Inc. is a growth-oriented small-cap value company operating in the industrial and consumer sectors, formed from the merger of two modern design icons, Herman Miller and Knoll [5] - The company offers a diverse portfolio of furniture and accessories for both commercial and residential spaces, including brands like Colebrook Bosson Saunders, DatesWeiser, DWR, Edelman, Geiger, HAY, HOLLY HUNT, Knoll Textiles, Maharam, Muuto, NaughtOne, and Spinneybeck | FilzFelt [5] - In fiscal year 2025, MillerKnoll generated net sales of $3.7 billion [5] Upcoming Financial Results - MillerKnoll will release its first quarter fiscal 2026 results on September 23, 2025, after market close [1] - A conference call and webcast to discuss the financial and operational results will take place at 5:00 p.m. Eastern time on the same day [1][3] - Investors can access the press release and supporting materials on the company's investor relations website [2]

Part I [Business Overview](index=3&type=section&id=Item%201%20Business) MillerKnoll, Inc. is a global leader in designing, manufacturing, and distributing interior furnishings for various environments, operating through three reportable segments - MillerKnoll operates through three reportable segments: North America Contract, International Contract, and Global Retail, with a corporate category for unallocated expenses[12](index=12&type=chunk) - The company's principal business involves research, design, manufacture, selling, and distribution of seating products, furniture systems, other freestanding furniture, textiles, leather, felt, home furnishings, and related services[13](index=13&type=chunk) - Approximately **53.7% of the Company's sales** in fiscal year ended May 31, 2025, were made directly through independent dealers, with the remainder through direct sales to end-users, retail channels, or independent retailers[16](index=16&type=chunk) Research, Design and Development Expenses (Fiscal Years 2023-2025) | Fiscal Year | Expense (Millions USD) | | :---------- | :--------------------- | | 2025 | $60.7 | | 2024 | $62.0 | | 2023 | $67.6 | - The company had approximately **10,382 employees** as of May 31, 2025, with about **2% covered by collective bargaining agreements**, primarily in the United Kingdom, Italy, and Brazil[32](index=32&type=chunk)[31](index=31&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A%20Risk%20Factors) The company faces various risks including challenges in implementing its growth strategy, increased indebtedness from the Knoll acquisition, and adverse macroeconomic conditions affecting customer demand - The company's consolidated long-term debt was **$1.31 billion** as of May 31, 2025, primarily due to the Knoll acquisition in July 2021, increasing interest expense and potentially reducing business flexibility[47](index=47&type=chunk) - Sales to the U.S. federal government represented approximately **4% of total Company net sales** in fiscal year 2025, making the business susceptible to changes in government spending policies[60](index=60&type=chunk) - Purchases of direct materials from China represented an estimated **3% of consolidated cost of sales** for fiscal 2025, limiting the direct impact of tariffs on Chinese imports but steel costs remain sensitive to trade tensions[63](index=63&type=chunk) - The company recognized a total non-cash impairment charge of **$30.1 million** and **$62.2 million** in its Global Retail and Holly Hunt reporting units, respectively, during the third quarter of fiscal year 2025, primarily due to reduced sales and profitability projections and an increased discount rate[223](index=223&type=chunk) - During the third quarter of fiscal year 2025, the company recognized **$37.7 million in non-cash impairment charges** related to the Knoll and Muuto trade names due to indicators of impairment[232](index=232&type=chunk) [Unresolved Staff Comments](index=14&type=section&id=Item%201B%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report [Cybersecurity](index=14&type=section&id=Item%201C%20Cybersecurity) MillerKnoll employs a comprehensive cybersecurity risk management program, overseen by its Board of Directors, CTO, and CISO - The Board of Directors, Chief Technology Officer (CTO), and Chief Information Security Officer (CISO) are actively involved in the oversight of MillerKnoll's cybersecurity risk management program[91](index=91&type=chunk) - The company identifies and assesses cybersecurity risks through monitoring threat environments, analyzing threat reports, conducting scans, and utilizing internal and external audits and vulnerability assessments[92](index=92&type=chunk) - Key mitigation measures include incident detection and response, vulnerability management, disaster recovery plans, data encryption, network security controls, access controls, physical security, asset management, systems monitoring, vendor risk management, and employee training[97](index=97&type=chunk) - To date, no risks from cybersecurity threats have materially affected the Company, and management does not believe any such material effect is reasonably likely[94](index=94&type=chunk) [Properties](index=17&type=section&id=Item%202%20Properties) MillerKnoll owns or leases numerous facilities globally for manufacturing, warehousing, offices, and retail, which are considered adequate for current and future operational needs Significant Owned Locations (May 31, 2025) | Location | Square Footage (in Thousands) | Use | | :------------------------ | :---------------------------- | :------------------------- | | Zeeland, Michigan | 771 | Manufacturing, Warehouse, Office | | East Greenville, Pennsylvania | 735 | Manufacturing, Warehouse, Office | | Spring Lake, Michigan | 615 | Manufacturing, Warehouse, Office | | North York, Canada | 386 | Manufacturing, Warehouse, Office | | Muskegon, Michigan | 367 | Manufacturing, Office | | Holland, Michigan | 357 | Warehouse | | Holland, Michigan | 293 | Manufacturing, Office | | Foligno, Italy | 260 | Manufacturing, Warehouse, Office | | Holland, Michigan | 242 | Office, Design | | Melksham, United Kingdom | 170 | Manufacturing, Warehouse, Office | | Graffignana, Italy | 108 | Manufacturing, Warehouse, Office | Significant Leased Locations (May 31, 2025) | Location | Square Footage (in Thousands) | Use | | :------------------------ | :---------------------------- | :-------- | | Alburtis, Pennsylvania | 718 | Warehouse | | Batavia, Ohio | 618 | Warehouse | | Dongguan, China | 423 | Manufacturing, Office | | Ringsted, Denmark | 274 | Warehouse | | La Grange Highlands, Illinois | 210 | Warehouse | | Atlanta, Georgia | 180 | Manufacturing | | Buffalo, New York | 128 | Manufacturing | | New York City, New York | 112 | Showroom | - As of May 31, 2025, the Company operated **75 retail stores** (including 38 DWR, 1 HAY, 30 Herman Miller, 3 Muuto, 2 Knoll, and a multi-brand Chicago store) totaling approximately **506,811 square feet of selling space**, plus 3 retail outlet stores[99](index=99&type=chunk) [Legal Proceedings](index=17&type=section&id=Item%203%20Legal%20Proceedings) MillerKnoll is involved in routine legal proceedings and litigation, but management believes the outcomes will not materially affect the company's consolidated operations, cash flows, or financial condition - Management believes the outcome of current legal proceedings and litigation will not materially affect the Company's consolidated operations, cash flows, or financial condition[101](index=101&type=chunk) [Additional Item: Executive Officers of the Registrant](index=18&type=section&id=Additional%20Item%3A%20Executive%20Officers%20of%20the%20Registrant) This section lists the executive officers of MillerKnoll, Inc. as of May 31, 2025, including their positions and ages Executive Officers of MillerKnoll, Inc. (May 31, 2025) | Name | Position | Age | | :---------------- | :---------------------------------------- | :-- | | Andrea R. Owen | President and Chief Executive Officer | 60 | | Jeffrey M. Stutz | Chief Financial Officer | 54 | | Chris Baldwin | Group President, MillerKnoll | 52 | | Megan Lyon | Chief Strategy and Technology Officer | 45 | | John Michael | President, North America Contract | 63 | | Debbie Propst | President, Global Retail | 44 | | Jacqueline H. Rice| Chief Legal Officer and Corporate Secretary | 53 | | B. Ben Watson | Chief Creative and Product Officer | 60 | [Mine Safety Disclosures](index=18&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This item is not applicable to MillerKnoll, Inc Part II [Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=19&type=section&id=Item%205%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) MillerKnoll's common stock trades on the Nasdaq Global Select Market (MLKN), with approximately 32,000 shareholders, and the company maintains a quarterly cash dividend and a share repurchase plan - MillerKnoll's common stock is traded on the Nasdaq Global Select Market System under the symbol **MLKN**[107](index=107&type=chunk) - As of July 18, 2025, there were approximately **32,000 shareholders of record** for the Company's common stock[107](index=107&type=chunk) - The Board of Directors approved a quarterly cash dividend of **$0.1875 per share** on April 15, 2025, paid on July 15, 2025[108](index=108&type=chunk) Share Repurchase Activity (Fiscal Quarter Ended May 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :-------------- | :------------------------------- | :--------------------------- | | 3/2/25-3/29/25 | 2,948 | $21.50 | | 3/30/25-4/26/25 | 2,198 | $18.03 | | 4/27/25-5/31/25 | — | $— | | Total | 5,146 | | - As of May 31, 2025, **$181.4 million remained available** for purchase under the share repurchase plan, which was increased by an additional **$200.0 million** on July 16, 2024[110](index=110&type=chunk)[111](index=111&type=chunk) - Fiscal year 2025 share repurchases in excess of issuances are subject to a **1% excise tax** under the Inflation Reduction Act of 2022[114](index=114&type=chunk) [Reserved](index=19&type=section&id=Item%206%20%5BReserved%5D) This item is reserved and not applicable [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%207%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MillerKnoll's fiscal year 2025 saw a slight increase in net sales, driven by contract segments and pricing actions, despite declines in Global Retail and unfavorable currency impacts Key Financial Highlights (Fiscal 2025 vs. 2024) | Metric | Fiscal 2025 (Millions USD) | Fiscal 2024 (Millions USD) | % Change | | :------------------------- | :------------------------- | :------------------------- | :------- | | Net sales | $3,669.9 | $3,628.4 | 1.1% | | Gross margin | $1,422.6 | $1,419.5 | 0.2% | | Gross margin % | 38.8% | 39.1% | (0.3)% | | Operating expenses | $1,372.1 | $1,252.3 | 9.6% | | Operating earnings | $50.5 | $167.2 | (69.8)% | | Diluted (Loss) Earnings per Share | $(0.54) | $1.11 | (148.6)% | | Adjusted Diluted Earnings per Share | $1.95 | $2.08 | (6.3)% | - Net sales increased by **$42 million (1.1%)** in fiscal 2025, primarily driven by increased sales volume in North America Contract and International Contract segments, and net price increases, partially offset by the closure of the HAY eCommerce channel and decreased Global Retail sales volume[157](index=157&type=chunk) - Gross margin declined by **30 basis points to 38.8%** in fiscal 2025, mainly due to increased material costs (including tariffs) and unfavorable channel/product mix, partially offset by effective pricing strategies[157](index=157&type=chunk) - Operating expenses increased by **$120 million (9.6%)** in fiscal 2025, primarily due to a **$113 million increase in non-cash intangible impairment charges**[161](index=161&type=chunk) Segment Net Sales and Operating Earnings (Fiscal 2025 vs. 2024) | Segment | Net Sales 2025 (Millions USD) | Net Sales 2024 (Millions USD) | % Change | Operating Earnings 2025 (Millions USD) | Operating Earnings 2024 (Millions USD) | % Change | | :----------------------- | :---------------------------- | :---------------------------- | :------- | :------------------------------------- | :------------------------------------- | :------- | | North America Contract | $1,965.2 | $1,922.3 | 2.2% | $120.9 | $106.7 | 13.3% | | International Contract | $660.0 | $645.6 | 2.2% | $63.3 | $61.6 | 2.8% | | Global Retail | $1,044.7 | $1,060.5 | (1.5)% | $(66.0) | $51.0 | (229.4)% | | Corporate | N/A | N/A | N/A | $(67.7) | $(52.1) | 30.0% | [Executive Overview](index=22&type=section&id=Executive%20Overview) MillerKnoll is a global design collective creating interior furnishings for various environments, emphasizing lean manufacturing and a multi-channel distribution strategy, with a focus on scaling its Global Retail business - MillerKnoll is a collective of dynamic design brands focused on creating positive impact through interior furnishings for residential, office, healthcare, and educational settings globally[121](index=121&type=chunk)[122](index=122&type=chunk) - The company's manufacturing strategy emphasizes lean manufacturing (MillerKnoll Performance System - MKPS) and limiting fixed production costs by sourcing component parts from strategic suppliers, resulting in assembly-based operations and high inventory turns[123](index=123&type=chunk)[124](index=124&type=chunk) - A key growth strategy is to scale the Global Retail business through Herman Miller and Design Within Reach (DWR) channels, offering iconic and design-centric products from various brands to retail customers[125](index=125&type=chunk) - The company's reportable segments are North America Contract, International Contract, and Global Retail, with a corporate category for unallocated expenses[126](index=126&type=chunk)[127](index=127&type=chunk) [Core Strengths](index=23&type=section&id=Core%20Strengths) MillerKnoll's core strengths include a diverse product portfolio, design leadership, a unique multi-channel business model, global scale, and a highly engaged workforce - **Product Portfolio and Brand Collective:** MillerKnoll encompasses globally recognized design brands like Herman Miller and Knoll, leveraging over 100 years of design research to connect with new audiences and categories[128](index=128&type=chunk) - **Design Leadership:** Commitment to research-based functionality and aesthetically innovative new products, collaborating with a global network of independent designers[128](index=128&type=chunk) - **Unique Business Model:** Multi-channel distribution capability (contract furniture dealers, direct sales, retail stores, eCommerce) and lean manufacturing (MKPS) for efficiency and quality[128](index=128&type=chunk) - **Global Scale and Reach:** Global network of designers, suppliers, manufacturing operations, and R&D centers to serve contract and residential customers worldwide[128](index=128&type=chunk) - **Extraordinary People:** Focus on identifying, hiring, developing, motivating, and retaining employees as a critical success factor[128](index=128&type=chunk) [Channels of Distribution](index=23&type=section&id=Channels%20of%20Distribution) MillerKnoll distributes products through independent contract furniture dealers, direct sales, eCommerce, wholesale, and owned retail locations, including 75 retail studios - **Independent Contract Furniture Dealers:** Most product sales are made to a global network of independently owned and operated dealerships, which also offer furniture-related services[128](index=128&type=chunk) - **Direct Contract Sales:** Products and services are sold directly to end customers (e.g., U.S. federal government) without an intermediary, often contracting separately for installation services[128](index=128&type=chunk) - **eCommerce:** Global sales through localized Herman Miller, Knoll, and DWR websites, complementing existing distribution and extending brand reach[129](index=129&type=chunk) - **Wholesale:** Certain products are sold on a wholesale basis to independent retailers globally through the Global Retail segment[129](index=129&type=chunk) - **Retail Locations:** As of May 31, 2025, the Company operated **75 retail studios** (DWR, HAY, Herman Miller, Muuto, Knoll, multi-brand Chicago store) and 3 outlet studios[129](index=129&type=chunk) [Challenges Ahead](index=24&type=section&id=Challenges%20Ahead) The company acknowledges specific business and industry risks, referring to Item 1A for detailed risk factors and Item 7A for market risk disclosures - The Company acknowledges specific business and industry risks, referring to Item 1A for risk factors and Item 7A for market risk disclosures[130](index=130&type=chunk) [Areas of Strategic Focus](index=24&type=section&id=Areas%20of%20Strategic%20Focus) MillerKnoll's strategic focus areas include driving customer demand through showroom expansion and online tools, fostering engaged associates, and delivering shareholder value by capitalizing on growth opportunities and product innovation - **Drive Customer Demand and Order Growth:** Prioritizing world-class client experiences, investing in MillerKnoll showrooms in key markets (Atlanta, Chicago, Dallas, London, Los Angeles, New York, Toronto, San Francisco), expanding DWR studios and Herman Miller stores in North America, and launching new online tools for trade customers[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - **Foster a Culture of Highly Engaged Associates:** Nurturing talent through a global HR technology platform, competitive compensation and benefits, development opportunities, and investing to be an employer of choice[134](index=134&type=chunk)[135](index=135&type=chunk) - **Deliver Value to our Associates and Shareholders:** Capitalizing on growth opportunities across business segments, leveraging global operations, leading in product innovation, design excellence, and sustainability, fortifying flagship brands, driving growth in North America and International Contract, and transforming Global Retail[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [Business Overview](index=26&type=section&id=Business%20Overview) Fiscal 2025 saw slight net sales growth for MillerKnoll amidst macroeconomic challenges, with contract segments performing better than Global Retail, and the company focusing on cost management and strategic investments Fiscal Year 2025 Financial Summary | Metric | Fiscal 2025 (Millions USD) | Fiscal 2024 (Millions USD) | % Change | | :----------------------------------- | :------------------------- | :------------------------- | :------- | | Net sales | $3,669.9 | $3,628.4 | 1.1% | | Gross margin | 38.8% | 39.1% | (0.3)% | | Operating expenses | $1,372.1 | $1,252.3 | 9.6% | | Effective tax rate | (53.1)% | 14.8% | (458.8)% | | Diluted loss per share | $(0.54) | $1.11 | (148.6)% | | Adjusted diluted earnings per share | $1.95 | $2.08 | (6.3)% | | Cash dividends per share | $0.75 | $0.75 | 0.0% | - The global macroeconomic environment, characterized by higher interest rates, tepid housing demand, low confidence levels, and geopolitical uncertainty, continues to challenge the industry[141](index=141&type=chunk) - The company is focused on prudent cost management and investment in targeted growth opportunities, including Global Retail expansion and product design/innovation in contract segments[141](index=141&type=chunk) - Changes in trade policies and commodity costs (tariffs) have increased cost pressures, which the company aims to offset with pricing actions and mitigation strategies[141](index=141&type=chunk) Segment Performance Highlights (Fiscal 2025 vs. 2024) | Segment | Net Sales Change (YoY) | Organic Sales Change (YoY) | Operating Margin Change (YoY) | Adjusted Operating Margin Change (YoY) | | :----------------------- | :--------------------- | :------------------------- | :---------------------------- | :------------------------------------- | | North America Contract | +2.2% | +2.4% | +60 bps | +50 bps | | International Contract | +2.2% | +2.7% | +10 bps | -10 bps | | Global Retail | -1.5% | -0.3% | -1,110 bps | -110 bps | [Reconciliation of Non-GAAP Financial Measures](index=27&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) MillerKnoll uses non-GAAP measures like Adjusted EPS and Organic Growth to provide a clearer view of financial performance by excluding non-recurring or non-operational items - Non-GAAP financial measures, such as Adjusted Earnings per Share, Adjusted Operating Earnings (Loss), Adjusted Operating Margin, and Organic Growth (Decline), are used to provide a more comparative basis for financial performance, excluding specific non-recurring or non-operational items[142](index=142&type=chunk)[143](index=143&type=chunk) - **Adjusted Earnings per Share:** Excludes amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, Knoll pension plan termination charges, and related tax effects[144](index=144&type=chunk) - **Adjusted Operating Earnings (Loss):** Adds back integration charges, amortization of Knoll purchased intangibles, restructuring expenses, impairment charges, and Knoll pension plan termination charges to reported operating earnings[145](index=145&type=chunk)[146](index=146&type=chunk) - **Organic Growth (Decline):** Represents changes in sales and orders, excluding currency translation effects and the impact of the closure of the North America HAY eCommerce channel[147](index=147&type=chunk) Adjusted Operating Earnings by Segment (Fiscal 2025 vs. 2024) | Segment | Adjusted Operating Earnings 2025 (Millions USD) | Adjusted Operating Earnings 2024 (Millions USD) | | :----------------------- | :-------------------------------------------- | :-------------------------------------------- | | North America Contract | $191.0 | $177.2 | | International Contract | $73.5 | $72.4 | | Global Retail | $51.9 | $64.6 | | Corporate | $(67.7) | $(52.0) | | **MillerKnoll, Inc. Total** | **$248.7** | **$262.2** | Organic Net Sales by Segment (Fiscal 2025 vs. 2024) | Segment | Net Sales 2025 (Millions USD) | Organic Net Sales 2025 (Millions USD) | % Change from PY (Organic) | | :----------------------- | :---------------------------- | :------------------------------------ | :------------------------- | | North America Contract | $1,965.2 | $1,967.6 | 2.4% | | International Contract | $660.0 | $663.1 | 2.7% | | Global Retail | $1,044.7 | $1,045.4 | (0.3)% | | **Total** | **$3,669.9** | **$3,676.1** | **1.6%** | Organic Orders by Segment (Fiscal 2025 vs. 2024) | Segment | Orders 2025 (Millions USD) | Organic Orders 2025 (Millions USD) | % Change from PY (Organic) | | :----------------------- | :------------------------- | :--------------------------------- | :------------------------- | | North America Contract | $2,021.0 | $2,023.3 | 6.3% | | International Contract | $665.9 | $671.4 | 0.6% | | Global Retail | $1,060.8 | $1,061.9 | 2.2% | | **Total** | **$3,747.7** | **$3,756.6** | **4.1%** | EPS to Adjusted EPS Reconciliation (Fiscal 2025 vs. 2024) | Metric | Fiscal 2025 | Fiscal 2024 | | :------------------------------------------------------------------ | :---------- | :---------- | | (Loss) Earnings per Share - Diluted | $(0.54) | $1.11 | | Add: Amortization of Knoll purchased intangibles | $0.35 | $0.32 | | Add: Integration charges | $0.41 | $0.31 | | Add: Restructuring charges | $0.22 | $0.42 | | Add: Impairment charges | $1.88 | $0.24 | | Add: Knoll pension plan termination charges | $0.01 | — | | Tax impact on adjustments | $(0.38) | $(0.32) | | **Adjusted earnings per share - diluted** | **$1.95** | **$2.08** | [Financial Results](index=33&type=section&id=Financial%20Results) MillerKnoll's fiscal 2025 saw a slight net sales increase but a significant decline in operating earnings and net earnings, primarily due to higher operating expenses from intangible impairment charges and increased other expenses Consolidated Statements of Comprehensive Income Summary (Fiscal 2025 vs. 2024) | (Dollars in millions) | Fiscal 2025 | Fiscal 2024 | % Change | | :-------------------------------------------------- | :---------- | :---------- | :------- | | Net sales | $3,669.9 | $3,628.4 | 1.1% | | Cost of sales | $2,247.3 | $2,208.9 | 1.7% | | Gross margin | $1,422.6 | $1,419.5 | 0.2% | | Operating expenses | $1,372.1 | $1,252.3 | 9.6% | | Operating earnings | $50.5 | $167.2 | (69.8)% | | Other expenses, net | $72.4 | $67.5 | 7.3% | | Earnings before income taxes and equity income | $(21.9) | $99.7 | (122.0)% | | Income tax expense | $11.6 | $14.7 | (21.1)% | | Equity income (loss) from nonconsolidated affiliates, net of tax | $0.3 | $(0.4) | (175.0)% | | Net earnings | $(33.2) | $84.6 | (139.2)% | | Net earnings attributable to MillerKnoll, Inc. | $(36.9) | $82.3 | (144.8)% | - Net sales increased by **$42 million (1.1%)** in fiscal 2025, driven by increased sales volume in International Contract (**$28 million**) and North America Contract (**$25 million**), and net price increases (**$14 million**)[157](index=157&type=chunk) - Offsetting factors included a **$12 million reduction** from the HAY eCommerce channel closure, a **$7 million decrease** in Global Retail sales volume, and an unfavorable foreign currency impact of **$6 million**[157](index=157&type=chunk) - Gross margin declined by **30 basis points to 38.8%** in fiscal 2025, primarily due to tariff-related costs (**30 bps**) and unfavorable channel/product mix (**30 bps**), partially offset by effective pricing strategies (**30 bps**)[157](index=157&type=chunk) - Operating expenses increased by **$120 million (9.6%)**, mainly due to a **$113 million increase in non-cash intangible impairment charges**, **$10 million higher selling and marketing expenses** in Global Retail, and **$7 million higher variable selling costs**. This was partially offset by a **$16 million reduction in restructuring charges**[161](index=161&type=chunk) - Net other expenses increased by **$4.9 million to $72.4 million**, primarily due to a **$2.3 million reduction in net periodic benefit income** from the Knoll pension plan termination and a **$3.1 million increase in foreign currency losses**[162](index=162&type=chunk) [Operating Segments Results](index=36&type=section&id=Operating%20Segments%20Results) MillerKnoll reorganized into three segments: North America Contract and International Contract showed sales and operating earnings growth, while Global Retail experienced sales decline and a significant operating loss due to impairment charges - Effective March 1, 2025, the company implemented an organizational change, resulting in three reportable segments: North America Contract, International Contract, and Global Retail. Historical results have been recast to reflect this change[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - The Chief Executive Officer (CODM) uses Adjusted Operating Earnings (Loss) as the key metric to measure segment profit or loss, evaluate performance, analyze variances, and allocate resources[479](index=479&type=chunk)[480](index=480&type=chunk) North America Contract Segment Performance (Fiscal 2025 vs. 2024) | Metric | Fiscal 2025 (Millions USD) | Fiscal 2024 (Millions USD) | Change (Millions USD) | | :----------------- | :------------------------- | :------------------------- | :-------------------- | | Net sales | $1,965.2 | $1,922.3 | $42.9 | | Gross margin | $702.3 | $697.8 | $4.5 | | Gross margin % | 35.7% | 36.3% | (0.6)% | | Operating earnings | $120.9 | $106.7 | $14.2 | | Operating earnings % | 6.2% | 5.6% | 0.6% | - North America Contract net sales increased **2.2% (2.4% organic)** due to increased sales volume (**$25 million**) and price increases (**$20 million**), partially offset by unfavorable foreign currency translation (**$2 million**)[173](index=173&type=chunk) - Operating earnings increased **$14.2 million (13.3%)**, driven by decreased operating expenses (**$9.7 million**, mainly from reduced restructuring charges and incentive compensation) and higher gross margin (**$4.5 million**)[174](index=174&type=chunk) - Gross margin percentage declined by **60 basis points** due to unfavorable product mix (**40 bps**), higher tariff-related costs (**30 bps**), and increased commodity/distribution costs (**30 bps**), partially offset by incremental list price increases (**70 bps**)[174](index=174&type=chunk) International Contract Segment Performance (Fiscal 2025 vs. 2024) | Metric | Fiscal 2025 (Millions USD) | Fiscal 2024 (Millions USD) | Change (Millions USD) | | :----------------- | :------------------------- | :------------------------- | :-------------------- | | Net sales | $660.0 | $645.6 | $14.4 | | Gross margin | $240.8 | $233.1 | $7.7 | | Gross margin % | 36.5% | 36.1% | 0.4% | | Operating earnings | $63.3 | $61.6 | $1.7 | | Operating earnings % | 9.6% | 9.5% | 0.1% | - International Contract net sales increased **2.2% (2.7% organic)** due to increased sales volume (**$28 million**), partially offset by incremental discounting (**$11 million**) and unfavorable foreign currency translation (**$3 million**)[176](index=176&type=chunk) - Operating earnings increased **$1.7 million (2.8%)**, driven by increased gross margin (**$7.7 million**) due to higher sales volume and a **40 basis point increase in gross margin percentage**[180](index=180&type=chunk) - Gross margin percentage improved due to leverage on fixed costs (**70 bps**) and favorable product/business mix (**60 bps**), partially offset by incremental discounting (**90 bps**). Increased operating expenses (**$6 million**) partially offset the gross margin increase[180](index=180&type=chunk) Global Retail Segment Performance (Fiscal 2025 vs. 2024) | Metric | Fiscal 2025 (Millions USD) | Fiscal 2024 (Millions USD) | Change (Millions USD) | | :----------------- | :------------------------- | :------------------------- | :-------------------- | | Net sales | $1,044.7 | $1,060.5 | $(15.8) |\ | Gross margin | $479.5 | $488.6 | $(9.1) |\ | Gross margin % | 45.9% | 46.1% | (0.2)% |\ | Operating (loss) earnings | $(66.0) | $51.0 | $(117.0) |\ | Operating (loss) earnings % | (6.3)% | 4.8% | (11.1)% | - Global Retail net sales decreased **1.5% (0.3% organic)** due to the closure of the HAY eCommerce channel (**$12 million**), decreased sales volumes (**$7 million**), and unfavorable foreign currency translation (**$1 million**), partially offset by price increases (**$4 million**)[178](index=178&type=chunk) - Operating earnings decreased **$117.0 million (229.4%)**, primarily due to a **$9.1 million decrease in gross margin** and a **$108 million increase in operating expenses**[181](index=181&type=chunk) - The gross margin percentage declined by **20 basis points**, mainly due to increased inventory costs (**110 bps**) and loss of fixed cost leverage (**30 bps**), partially offset by reduced freight/distribution costs and favorable product mix (**100 bps**) and incremental price increases (**20 bps**)[181](index=181&type=chunk) - Increased operating expenses were driven by a **$105 million increase in non-cash intangible impairment charges** and higher selling and marketing costs[181](index=181&type=chunk) - Corporate unallocated expenses increased by **$15.6 million to $67.7 million** in fiscal 2025, primarily due to higher stock-based compensation expense[183](index=183&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) MillerKnoll's net cash from operating activities decreased in fiscal 2025, while investing activities increased due to higher capital expenditures, and financing activities saw fewer share repurchases and debt refinancing Net Change in Cash and Cash Equivalents (Fiscal 2025 vs. 2024) | (In millions) | Fiscal Year Ended 2025 | Fiscal Year Ended 2024 | | :---------------------------- | :--------------------- | :--------------------- | | Operating activities | $209.3 | $352.3 | | Investing activities | $(100.9) | $(86.3) | | Financing activities | $(150.3) | $(258.8) | | Effect of exchange rate changes | $5.2 | $(0.3) | | **Net change** | **$(36.7)** | **$6.9** | - Net cash provided by operating activities decreased to **$209.3 million** in fiscal 2025 from **$352.3 million** in fiscal 2024, primarily due to a net increase in working capital[186](index=186&type=chunk) - Cash used in investing activities increased to **$100.9 million** in fiscal 2025 from **$86.3 million** in fiscal 2024, mainly due to increased capital expenditures, partially offset by proceeds from the sale of a manufacturing facility and a decrease in notes receivable advances[187](index=187&type=chunk) - Capital expenditures for fiscal 2025 were **$107.6 million**, up from **$78.4 million** in fiscal 2024. Expected capital spending for fiscal 2026 is **$120 million to $130 million**[189](index=189&type=chunk) - Cash used in financing activities decreased to **$150.3 million** in fiscal 2025 from **$258.8 million** in fiscal 2024, primarily due to fewer share repurchases and the refinancing of Term Loan A, partially offset by higher net payments on the credit agreement[190](index=190&type=chunk) - Total liquidity as of May 31, 2025, was **$575.9 million**, comprising **$193.7 million in cash and cash equivalents** and **$382.2 million in available revolving lines of credit**[193](index=193&type=chunk) [Contingencies](index=41&type=section&id=Contingencies) MillerKnoll is involved in routine legal proceedings, but management anticipates no material impact on the company's consolidated financial statements - The Company is involved in legal proceedings and litigation arising in the ordinary course of business, but management believes the outcome will not materially affect the Consolidated Financial Statements[201](index=201&type=chunk) [Basis of Presentation](index=42&type=section&id=Basis%20of%20Presentation) MillerKnoll's fiscal year ends on the Saturday closest to May 31, with fiscal years 2025 and 2024 having 52 weeks, and fiscal year 2023 having 53 weeks - The Company's fiscal year ends on the Saturday closest to May 31. Fiscal years 2025 and 2024 both contained 52 weeks, while fiscal year 2023 contained 53 weeks[202](index=202&type=chunk) [Contractual Obligations](index=42&type=section&id=Contractual%20Obligations) As of May 31, 2025, MillerKnoll's total contractual obligations amounted to $2.25 billion, primarily consisting of short-term borrowings, long-term debt, estimated interest, and operating lease payments Summary of Contractual Obligations (as of May 31, 2025) | (In millions) | Total | 2026 | 2027-2028 | 2029-2030 | Thereafter | | :---------------------------------- | :-------- | :----- | :-------- | :-------- | :--------- | | Short-term borrowings and long-term debt | $1,337.0 | $16.0 | $50.7 | $1,270.3 | $— | | Estimated interest on debt obligations | $242.3 | $59.7 | $125.3 | $57.3 | $— | | Operating leases | $597.5 | $88.0 | $183.4 | $146.4 | $179.7 | | Purchase obligations | $52.8 | $52.8 | $— | $— | $— | | Pension and other post employment benefit plans funding | $5.8 | $1.8 | $1.1 | $1.0 | $1.9 | | Stockholder dividends | $12.7 | $12.7 | $— | $— | $— | | Other | $4.6 | $0.5 | $0.9 | $0.8 | $2.4 | | **Total** | **$2,252.7**| **$231.5**| **$361.4** | **$1,475.8**| **$184.0** | [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) MillerKnoll's critical accounting policies involve significant estimates for business combinations, particularly fair value allocation and useful lives, and annual impairment assessments for goodwill and indefinite-lived intangibles, which are sensitive to market conditions and financial performance - **Business Combinations:** Requires significant estimates and assumptions at acquisition date for fair values of tangible and intangible assets, liabilities, and useful lives of acquired intangibles. Allocation of purchase consideration involves judgment, especially for intangible assets, and actual results may differ from estimates[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - **Goodwill and Indefinite-lived Intangibles:** Annual impairment assessment (March 31) or more frequent if indicators arise. Fair value determinations are sensitive to uncertainties and changes in estimates for revenue growth, operating margins, discount rates, and royalty rates. Declines in market conditions or financial performance could lead to impairment charges[214](index=214&type=chunk)[215](index=215&type=chunk) [Goodwill and Indefinite-lived Intangibles](index=43&type=section&id=Goodwill%20and%20Indefinite-lived%20Intangibles) MillerKnoll's goodwill and indefinite-lived intangibles balances decreased in fiscal 2025 due to significant non-cash impairment charges in Global Retail, Holly Hunt, Knoll, and Muuto, driven by revised projections and increased discount rates - Goodwill balance was **$1,152.4 million** as of May 31, 2025, down from **$1,226.3 million** at June 1, 2024[216](index=216&type=chunk) - During Q3 fiscal 2025, the company recognized non-cash goodwill impairment charges of **$30.1 million** in Global Retail and **$62.2 million** in Holly Hunt reporting units, primarily due to reduced sales/profitability projections and an increased discount rate[223](index=223&type=chunk) - Indefinite-lived intangible assets (trade names) had a carrying value of **$432.5 million** at May 31, 2025, down from **$465.5 million** at June 1, 2024[230](index=230&type=chunk) - During Q3 fiscal 2025, the company recognized **$37.7 million in non-cash impairment charges** related to the Knoll and Muuto trade names[232](index=232&type=chunk) - Sensitivity analysis for the Knoll trade name indicates that a **10% decrease in forecasted sales** would result in **$12.0 million of additional pre-tax impairment charges**, a **25 basis point decrease in royalty rate** would result in **$15.0 million**, and a **100 basis point increase in discount rate** would result in **$11.0 million**[234](index=234&type=chunk) [Long-lived Assets](index=46&type=section&id=Long-lived%20Assets) MillerKnoll evaluates long-lived assets for impairment when carrying amounts may not be recoverable, recording charges if carrying value exceeds fair value, as seen with right-of-use assets and the Fully asset group - The company evaluates long-lived assets for impairment when events or changes indicate that the carrying amount may not be recoverable. An impairment charge is recorded if the carrying value exceeds the estimated fair value[240](index=240&type=chunk) - In Q1 fiscal 2025, impairment charges of **$17.4 million** were recorded related to right-of-use assets for ceased leased locations[241](index=241&type=chunk) - In fiscal 2023, impairment of **$21.5 million** was recorded for certain long-lived assets within the Fully asset group due to the decision to cease operating Fully as a stand-alone brand[242](index=242&type=chunk) [New Accounting Standards](index=46&type=section&id=New%20Accounting%20Standards) MillerKnoll adopted ASU 2023-07 retrospectively for fiscal 2025, modifying segment disclosures without material financial impact, and anticipates similar non-material impacts from other upcoming ASUs - The company adopted ASU 2023-07, Segment Reporting, retrospectively for fiscal year ended May 31, 2025, which modified annual disclosures but did not materially affect financial position, results of operations, or cash flows[351](index=351&type=chunk) - ASU 2023-09 (Income Taxes) and ASU 2024-03 (Income Statement Expenses) are issued but not yet adopted, expected to modify disclosures but not materially impact financial position, results of operations, or cash flows[352](index=352&type=chunk)[353](index=353&type=chunk) [Forward Looking Statements](index=46&type=section&id=Forward%20Looking%20Statements) Forward-looking statements are subject to risks including trade policies, growth strategy challenges, economic conditions, cybersecurity, debt, raw material costs, and litigation, which could cause actual results to differ materially - Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially[245](index=245&type=chunk) - Key risks include changes to U.S. and international trade policies (tariffs), challenges in growth strategy implementation, consumer spending levels, global economic conditions (inflation, interest rates, geopolitical tensions), cybersecurity threats, public health crises, risks related to increased debt from the Knoll acquisition, raw material availability and pricing, financial strength of dealers/customers, government procurement pace, and litigation outcomes[245](index=245&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=Item%207A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) MillerKnoll manages market risks from commodity prices, foreign exchange rates, and interest rates through hedging strategies, including foreign currency forward contracts and interest rate swap agreements - Changes in commodity prices decreased the Company's direct material costs by approximately **$5.7 million** during fiscal 2025 compared to the prior year, primarily due to decreased steel and aluminum costs, partially offset by increased plastic costs[248](index=248&type=chunk) - The company uses foreign currency forward contracts to offset risks from foreign currency exposures, with **21 outstanding contracts** as of May 31, 2025. These contracts are not designated as hedging instruments[252](index=252&type=chunk)[253](index=253&type=chunk) - Foreign currency hedges and remeasurement resulted in a net gain of **$6.1 million** in fiscal 2025, compared to **$3.0 million** in fiscal 2024[255](index=255&type=chunk) - The company uses interest rate swap agreements to manage interest rate risk, converting variable interest payments to fixed rates. As of May 31, 2025, the fair market value of these instruments was a net asset of **$26.1 million**[256](index=256&type=chunk)[262](index=262&type=chunk) Interest Rate Swap Agreements (as of May 31, 2025) | Notional Amount (Millions USD) | Forward Start Date | Termination Date | Effective Fixed Interest Rate | | :----------------------------- | :----------------- | :--------------- | :---------------------------- | | $150.0 | January 3, 2018 | January 3, 2028 | 1.910% | | $75.0 | January 3, 2018 | January 3, 2028 | 2.348% | | $575.0 | January 31, 2022 | January 29, 2027 | 1.650% | | $150.0 | March 3, 2023 | January 3, 2029 | 3.950% | [Financial Statements and Supplementary Data](index=51&type=section&id=Item%208%20Financial%20Statements%20and%20Supplementary%20Data) This section presents MillerKnoll's audited consolidated financial statements for fiscal years 2023-2025, including comprehensive income, balance sheets, cash flows, and detailed notes, reflecting a net loss of $(36.9) million in fiscal 2025 Consolidated Statements of Comprehensive Income (Fiscal 2025 vs. 2024) | (In millions, except per share data) | May 31, 2025 | June 1, 2024 | | :----------------------------------- | :----------- | :----------- | | Net sales | $3,669.9 | $3,628.4 | | Gross margin | $1,422.6 | $1,419.5 | | Operating earnings | $50.5 | $167.2 | | Net (loss) earnings attributable to MillerKnoll, Inc. | $(36.9) | $82.3 | | (Loss) earnings per share - diluted | $(0.54) | $1.11 | Consolidated Balance Sheets (May 31, 2025 vs. June 1, 2024) | (In millions) | May 31, 2025 | June 1, 2024 | | :-------------------------------- | :----------- | :----------- | | Total current assets | $1,108.7 | $1,069.6 | | Property and equipment, net | $496.1 | $492.0 | | Goodwill | $1,152.4 | $1,226.3 | | Indefinite-lived intangibles | $432.5 | $465.5 | | Total Assets | $3,950.2 | $4,043.6 | | Total current liabilities | $703.8 | $697.7 | | Long-term debt | $1,310.6 | $1,291.7 | | Total Liabilities | $2,615.1 | $2,584.6 | | Total Stockholders' Equity | $1,275.8 | $1,385.1 | Consolidated Statements of Cash Flows (Fiscal 2025 vs. 2024) | (In millions) | May 31, 2025 | June 1, 2024 | | :-------------------------------- | :----------- | :----------- | | Net Cash Provided by Operating Activities | $209.3 | $352.3 | | Net Cash (Used in) Investing Activities | $(100.9) | $(86.3) |\ | Net Cash (Used in) Financing Activities | $(150.3) | $(258.8) |\ | Net (Decrease) Increase In Cash and Cash Equivalents | $(36.7) | $6.9 | | Cash and Cash Equivalents, End of Year | $193.7 | $230.4 | [Note 1 Significant Accounting and Reporting Policies](index=57&type=section&id=Note%201%20Significant%20Accounting%20and%20Reporting%20Policies) This note details MillerKnoll's fiscal year end, foreign currency transaction impacts, and changes in goodwill and indefinite-lived intangible assets due to impairment charges, along with R&D and royalty expenses - The Company's fiscal year ends on the Saturday closest to May 31. Fiscal years 2025 and 2024 both contained 52 weeks, while fiscal year 2023 contained 53 weeks[274](index=274&type=chunk) - The financial statement impact of gains and losses from remeasuring foreign currency transactions resulted in a net loss of **$6.1 million** in fiscal 2025, compared to **$3.0 million** in fiscal 2024[276](index=276&type=chunk) - Goodwill balance decreased to **$1,152.4 million** at May 31, 2025, from **$1,226.3 million** at June 1, 2024, primarily due to impairment charges of **$92.3 million** in fiscal 2025[285](index=285&type=chunk) - Indefinite-lived intangible assets (trade names) decreased to **$432.5 million** at May 31, 2025, from **$465.5 million** at June 1, 2024, due to impairment charges of **$37.7 million** in fiscal 2025[286](index=286&type=chunk) - R&D costs included in Design and research expense were **$60.7 million** in fiscal 2025, **$62.0 million** in fiscal 2024, and **$67.6 million** in fiscal 2023[321](index=321&type=chunk) - Royalty payments to designers totaled **$33.1 million** in fiscal 2025, **$30.6 million** in fiscal 2024, and **$38.1 million** in fiscal 2023[322](index=322&type=chunk) [Note 2 Revenue from Contracts with Customers](index=68&type=section&id=Note%202%20Revenue%20from%20Contracts%20with%20Customers) Revenue is recognized upon transfer of control for goods and services, with disaggregated revenue showing product sales as the primary component, and the largest customer accounting for 5% of net sales in fiscal 2025 - Revenue is recognized when performance obligations are satisfied, typically upon transfer of control of goods and services to the customer. This includes single performance obligations (product sales) and multiple performance obligations (products plus installation services)[324](index=324&type=chunk)[355](index=355&type=chunk)[356](index=356&type=chunk) Disaggregated Revenue by Contract Type (Fiscal 2025 vs. 2024) | (In millions) | May 31, 2025 | June 1, 2024 | | :------------------------ | :----------- | :----------- | | Single performance obligation: Product revenue | $3,377.3 | $3,362.6 | | Multiple performance obligations: Product revenue | $277.9 | $251.9 | | Multiple performance obligations: Service revenue | $4.3 | $3.6 | | Other | $10.4 | $10.3 | | **Total Net sales** | **$3,669.9** | **$3,628.4** | Revenue by Product Type and Segment (Fiscal 2025) | Segment | Workplace (Millions USD) | Performance Seating (Millions USD) | Lifestyle (Millions USD) | Other (Millions USD) | Total (Millions USD) | | :----------------------- | :----------------------- | :--------------------------------- | :----------------------- | :------------------- | :------------------- | | North America Contract | $1,181.7 | $378.4 | $218.5 | $186.6 | $1,965.2 | | International Contract | $171.6 | $295.2 | $164.8 | $28.4 | $660.0 | | Global Retail | $9.5 | $203.3 | $830.4 | $1.5 | $1,044.7 | | **Total** | **$1,362.8** | **$876.9** | **$1,213.7** | **$216.5** | **$3,669.9** | - The largest single end-user customer accounted for **$197.4 million (5%) of net sales** in fiscal 2025, while the ten largest customers accounted for approximately **18% of net sales**[363](index=363&type=chunk) - During fiscal 2025, the Company recognized net sales of **$87.9 million** related to customer deposits from the prior year[366](index=366&type=chunk) [Note 3 Inventories](index=71&type=section&id=Note%203%20Inventories) MillerKnoll's inventories, primarily finished goods and work in process, are valued using the FIFO method at the lower of cost or net realizable value, totaling $447.5 million as of May 31, 2025 Inventories (May 31, 2025 vs. June 1, 2024) | (In millions) | May 31, 2025 | June 1, 2024 | | :---------------------------- | :----------- | :----------- | | Finished goods and work in process | $329.5 | $314.3 | | Raw materials | $118.0 | $114.3 | | **Total** | **$447.5** | **$428.6** | - Inventories are primarily valued using the first-in first-out (FIFO) method at the lower of cost or net realizable value[284](index=284&type=chunk)[367](index=367&type=chunk) [Note 4 Investments in Nonconsolidated Affiliates](index=71&type=section&id=Note%204%20Investments%20in%20Nonconsolidated%20Affiliates) MillerKnoll holds a 50% equity method investment in Kvadrat Maharam Pty Limited, with an investment balance of $2.5 million and equity earnings of $0.3 million for fiscal 2025, following the sale of its Maars Holding B.V. investment in fiscal 2024 - The Company holds an investment in Kvadrat Maharam Pty Limited, a distribution entity, with a **50.0% ownership interest**, accounted for using the equity method[369](index=369&type=chunk)[371](index=371&type=chunk) - The investment balance in nonconsolidated affiliates was **$2.5 million** at May 31, 2025, and equity earnings were **$0.3 million** for fiscal 2025[369](index=369&type=chunk) - The Company sold its **48.2% investment** in Maars Holding B.V. on October 30, 2023, for **$5.9 million**, resulting in a loss of **$0.4 million** in fiscal 2024[373](index=373&type=chunk) [Note 5 Short-Term Borrowings and Long-Term Debt](index=72&type=section&id=Note%205%20Short-Term%20Borrowings%20and%20Long-Term%20Debt) MillerKnoll's total debt was $1.34 billion as of May 31, 2025, primarily from syndicated revolving credit and term loans, with the Credit Agreement amended in April 2025 to extend maturities and increase Term Loan A Long-Term Debt Obligations (May 31, 2025 vs. June 1, 2024) | (In millions) | May 31, 2025 | June 1, 2024 | | :------------------------------------------ | :----------- | :----------- | | Syndicated revolving line of credit | $330.8 | $390.0 | | Term Loan A, 6.0768%, due April 2030 | $400.0 | $345.0 | | Term Loan B, 6.4413%, due July 2028 | $603.1 | $609.4 | | Supplier financing program | $2.0 | $2.0 | | Finance lease liability | $1.1 | $1.4 | | **Total debt** | **$1,337.0** | **$1,347.8** | | Less: Unamortized discount and issuance costs | $(10.4) | $(12.6) | | Less: Current debt | $(16.0) | $(43.5) | | **Long-term debt** | **$1,310.6** | **$1,291.7** | - In April 2025, the Credit Agreement was amended to extend the maturity of the Revolver and Term Loan A to April 2030 and increase Term Loan A to **$400.0 million**[378](index=378&type=chunk) - Available borrowings under the syndicated revolving line of credit were **$382.2 million** as of May 31, 2025[379](index=379&type=chunk) - The company was in compliance with all debt covenants and restrictions as of May 31, 2025[379](index=379&type=chunk) Annual Maturities of Debt (Subsequent to May 31, 2025) | Fiscal Year | Amount (Millions USD) | | :---------- | :-------------------- | | 2026 | $16.0 | | 2027 | $24.1 | | 2028 | $26.6 | | 2029 | $612.0 | | 2030 | $658.3 | | Thereafter | $— | | **Total** | **$1,337.0** | [Note 6 Leases](index=74&type=section&id=Note%206%20Leases) MillerKnoll leases various facilities with terms through 2042, incurring total lease costs of $112.6 million in fiscal 2025, and has total undiscounted future minimum lease payments of $597.5 million - The Company leases retail stores, showrooms, manufacturing facilities, warehouses, and vehicles, with terms expiring through 2042[384](index=384&type=chunk) Lease Costs (Fiscal 2025 vs. 2024) | (In millions) | May 31, 2025 | June 1, 2024 | | :------------------ | :----------- | :----------- | | Operating lease costs | $90.7 | $94.1 | | Short-term lease costs | $5.2 | $7.1 | | Variable lease costs | $16.7 | $15.9 | | **Total** | **$112.6** | **$117.1** | Undiscounted Annual Future Minimum Lease Payments (as of May 31, 2025) | Fiscal Year | Amount (Millions USD) | | :---------- | :-------------------- | | 2026 | $88.0 | | 2027 | $95.4 | | 2028 | $88.0 | | 2029 | $78.6 | | 2030 | $67.8 | | Thereafter | $179.7 | | **Total lease payments** | **$597.5** | - The weighted-average remaining lease term for operating leases was **6.6 years**, and the weighted-average discount rate for operating leases was **3.6%** as of May 31, 2025[386](index=386&type=chunk) [Note 7 Employee Benefit Plans](index=75&type=section&id=Note%207%20Employee%20Benefit%20Plans) MillerKnoll terminated Knoll's domestic defined-benefit pension plan in fiscal 2025, settling obligations and recognizing a termination gain, while continuing to contribute to other pension and 401(k) plans - The Knoll subsidiary's domestic defined-benefit pension plan was terminated in Q2 fiscal 2025, with obligations settled through lump-sum payments (**$39.9 million**) and an annuity purchase contract (**$84.7 million**), resulting in a **$1.5 million termination gain**[388](index=388&type=chunk) Pension Plan Funded Status (May 31, 2025) | (In millions) | Domestic | International | | :------------ | :------- | :------------ | | Benefit obligation at end of year | $— | $77.9 | | Fair value of plan assets at end of year | $— | $87.3 | | **Funded status (Over) under funded** | **$—** | **$9.4** | Net Periodic Benefit Cost (Fiscal 2025) | (In millions) | Domestic | International | | :------------------------ | :------- | :------------ | | Service cost | $0.9 | $— | | Interest cost | $2.7 | $4.3 | | Expected return on plan assets | $(2.0) | $(5.7) | | Pension plan termination gain | $(1.5) | $— | | Amortization of prior service cost | $— | $0.1 | | Amortization of net (gain) loss | $— | $0.6 | | **Net periodic benefit (income) cost** | **$0.1** | **$(0.7)** | - The Company expects to contribute approximately **$0.9 million** to its pension plan in fiscal 2026[399](index=399&type=chunk) - Expense for the Company's 401(k) matching and other discretionary contributions was **$23.1 million** in fiscal 2025, **$22.0 million** in fiscal 2024, and **$32.4 million** in fiscal 2023[402](index=402&type=chunk) [Note 8 Common Stock and Per Share Information](index=80&type=section&id=Note%208%20Common%20Stock%20and%20Per%20Share%20Information) MillerKnoll reported a diluted loss per share of $(0.54) in fiscal 2025, with 2.77 million anti-dilutive shares excluded, and repurchased 3.29 million shares under a plan increased by $200.0 million EPS Calculation (Fiscal 2025 vs. 2024) | (In millions, except shares) | 2025 | 2024 | | :--------------------------------------------------------------- | :----------- | :----------- | | Numerator for both basic and diluted EPS, Net (loss) earnings attributable to MillerKnoll, Inc. | $(36.9) | $82.3 | | Denominator for basic EPS, weighted-average common shares outstanding | 68,977,267 | 73,291,939 | | Potentially dilutive shares resulting from stock plans | — | 662,817 | | Denominator for diluted EPS | 68,977,267 | 73,954,756 | - Equity awards of **2,773,092 shares** were excluded from diluted EPS calculation for fiscal 2025 because they were anti-dilutive[403](index=403&type=chunk) - The share repurchase plan was increased by **$200.0 million** on July 16, 2024, with **$181.4 million available** as of May 31, 2025. Shares repurchased totaled **3,291,176** in fiscal 2025[404](index=404&type=chunk) [Note 9 Stock-Based Compensation](index=80&type=section&id=Note%209%20Stock-Based%20Compensation) MillerKnoll has 1.45 million shares available for ESPP and 4.88 million for LTIP, with total pre-tax stock-based compensation expense of $31.8 million in fiscal 2025, and $15.3 million in unrecognized costs - As of May 31, 2025, **1,451,373 shares remain available** for future purchases under the Employee Stock Purchase Plan (ESPP), and **4,875,202 shares are available** for issuance under the Long-Term Incentive Plan (LTIP)[406](index=406&type=chunk) Pre-Tax Stock-Based Compensation Expense (Fiscal 2025 vs. 2024) | (In millions) | May 31, 2025 | June 1, 2024 | | :------------------------ | :----------- | :----------- | | Employee stock purchase program | $0.5 | $0.5 | | Stock options | $3.5 | $7.7 | | Restricted stock units | $22.6 | $8.7 | | Performance share units | $5.2 | $3.4 | | Restricted stock awards | $— | $0.3 | | **Total** | **$31.8** | **$20.6** | | Tax benefit | $7.7 | $5.0 | - Total pre-tax stock-based

Financial Performance & Guidance - FY25 revenue reached $3.7 billion[10] - FY25 Adjusted EPS was $1.95[45] - FY25 Adjusted EBITDA was $360 million[45] - Q4 FY25 net sales increased by 8.2% and orders increased by 11.1% year-over-year[59] - Q1 FY26 revenue is projected to be between $899 million and $939 million[66] - Q1 FY26 Adjusted Earnings Per Share is guided to be $0.32 to $0.38[66] Cash Flow & Debt - FY25 Cash Flow from Operations was $209 million[47] - FY25 Free Cash Flow was $102 million[48] - Q4 FY25 cash balance was $194 million[52] - Q4 FY25 long-term debt was $1.311 billion[52] - Q4 FY25 Net Debt to EBITDA Ratio was 2.88x[52] Business Segments - North America Contract represented 54% of FY25 revenue[10] - Global Retail accounted for 28% of FY25 revenue[10] - International Contract contributed 18% to FY25 revenue[10]

Financial Data and Key Metrics Changes - The company reported adjusted earnings of $0.60 per share for Q4, significantly outperforming guidance, with consolidated net sales of $962 million, up 8.2% year-over-year [20][21] - Consolidated backlog increased by $78 million to $761 million, driven by improved demand [21] - Consolidated gross margin was 39.2%, slightly down from last year but up 130 basis points sequentially [21][22] Business Line Data and Key Metrics Changes - In the North America contract segment, net sales were $496 million, up nearly 13% year-over-year, with new orders at $568 million, reflecting growth of almost 16% [23] - The international contract segment saw net sales of $186 million, up 6.9% year-over-year, with new orders increasing by 3.6% [24] - The global retail segment reported net sales of $280 million, up 2.2% year-over-year, with new orders improving to $280 million, up 7.5% [25][26] Market Data and Key Metrics Changes - The North American contract market experienced a return to order growth in Q4 after a previous decline due to tariffs [14] - Strength was noted in European and UK markets, with significant customer engagement during design events [15] - Office leasing activity is rising, with a 68% increase in days in the office among Fortune 100 companies since 2022 [16] Company Strategy and Development Direction - The company is focused on expanding its retail footprint, planning to open 10 to 15 new stores in fiscal 2026 [10][11] - Investment in product assortment expansion and e-commerce penetration is a key growth lever [11][12] - The company aims to balance long-term growth with prudent cost management and innovation [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment, noting a dynamic landscape [14][17] - The company anticipates a return to growth in contract business as the industry recovers [17] - Future guidance for Q1 fiscal 2026 includes expected net sales between $899 million and $939 million, reflecting a 6.7% increase year-over-year [29] Other Important Information - The company paid approximately $52 million in dividends and returned about $85 million to shareholders through share repurchases in fiscal 2025 [27] - Capital expenditures for fiscal 2025 were $107.6 million, with expectations to increase to between $120 million and $130 million in fiscal 2026 [27] Q&A Session Summary Question: Insights on pull forward effect from pricing actions - Management noted a mid-single-digit decline in order entry year-over-year in the early part of the current quarter, aligning with expectations due to pull forward [34][35] Question: Confidence in retail store openings amid softer demand - Management expressed confidence in retail expansion, citing a need in the market and a strategy to open stores prudently [36][37] Question: Clarification on North American pull forward estimates - Management confirmed the estimated pull forward of $55 million to $60 million for the consolidated enterprise, with no significant pull ahead in international markets [48][49] Question: Profitability outlook amid tariffs and pull forward - Management indicated that the impact from pull forward and tariffs would likely affect Q1 and Q2, with expectations for recovery in Q3 and Q4 [55][56] Question: Balance sheet and cash flow considerations - Management highlighted a focus on managing debt levels and capital expenditures for store build-outs while maintaining a strong balance sheet [58]

Financial Data and Key Metrics Changes - In Q4 2025, the company generated adjusted earnings of $0.60 per share, significantly outperforming guidance, with consolidated net sales of $962 million, up 8.2% year over year [22][23] - Consolidated backlog increased by $78 million to $761 million, driven by improved demand [23] - Consolidated gross margin was 39.2%, slightly down from last year but up 130 basis points sequentially [23][24] Business Line Data and Key Metrics Changes - North America contract segment net sales were $496 million, up nearly 13% year over year, with new orders at $568 million, reflecting growth of almost 16% [25] - International contract segment net sales improved to $186 million, up 6.9% year over year, with new orders at $190 million, a 3.6% increase [26] - Global retail segment net sales were $280 million, up 2.2% on a reported basis, with new orders improving to $280 million, up 7.5% [27][28] Market Data and Key Metrics Changes - The company noted a return to order growth in the North American contract segment in Q4 after a dip due to tariffs [15][16] - Strength was observed in European and UK markets, with significant customer engagement during design events [17] - Office leasing activity is rising, with a 68% increase in days in the office among Fortune 100 companies since 2022 [18] Company Strategy and Development Direction - The company is focused on expanding its retail footprint, planning to open 10 to 15 new stores in fiscal 2026 [12][13] - Investment in product assortment expansion and e-commerce penetration is a priority to drive revenue growth [13][14] - The company aims to balance long-term growth with prudent cost management and innovation [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the macroeconomic environment, noting a dynamic landscape with potential for growth in contract markets [15][19] - The company anticipates that pricing actions will offset tariff-related cost impacts in the latter half of fiscal 2026 [30][31] - Management highlighted strong internal indicators for growth, including increased customer activity and order trends [19][57] Other Important Information - The company paid approximately $52 million in dividends and returned about $85 million to shareholders through share repurchases in fiscal 2025 [29] - Capital expenditures for fiscal 2025 were $107.6 million, with expectations to increase to between $120 million and $130 million in fiscal 2026 [29] Q&A Session Summary Question: Insights on pull forward effect from pricing actions - Management noted a mid-single-digit decline in order entry year over year in early Q1, aligning with expectations due to pull forward [35][37] Question: Confidence in retail store openings amid softer demand - Management expressed confidence in retail expansion, citing a need in the market and a strategy to open stores prudently [38][39] Question: Clarification on North American pull forward estimates - Management confirmed an estimated pull forward of $55 million to $60 million, with significant orders expected in Q1 and Q2 [51][59] Question: Profitability impact from pull forward and tariffs - Management indicated that the impact from pull forward would be most significant in Q1, with a gradual decrease in Q2 [58][59] Question: Balance sheet and cash flow considerations - Management highlighted a focus on managing debt levels while increasing capital expenditures for store openings [61]

Financial Performance - Net sales for Q4 2025 reached $961.8 million, an increase of 8.2% year-over-year, with organic growth of 7.8%[6] - Orders for Q4 2025 totaled $1,036.8 million, up 11.1% as reported and 10.7% organically compared to the previous year[6] - Full year net sales amounted to $3.67 billion, reflecting a 1.1% increase year-over-year, with an organic growth of 1.6%[6] - Total net sales for the three months ended May 31, 2025, were $961.8 million, a 8.2% increase from $888.9 million for the same period last year[34] - The North America Contract segment reported net sales of $496.1 million for the three months ended May 31, 2025, a 12.5% increase from $441.1 million in the same period last year[34] - The International Contract segment achieved net sales of $185.7 million, a 6.5% increase from $173.7 million year-over-year[34] - The Global Retail segment's net sales were $280.0 million, slightly up from $274.1 million in the prior year[34] - Organic sales growth in North America for the three months ended May 31, 2025, was 12.6%, while international contract sales grew by 5.5%[39] Profitability and Margins - The operating margin for Q4 2025 improved to 5.7%, compared to 2.7% in the prior year, while the adjusted operating margin was 7.5%, down from 8.3%[6] - Gross margin for the same period was $376.9 million, representing a gross margin percentage of 39.2%, compared to 39.6% in the prior year[34] - Operating earnings for the three months ended May 31, 2025, were $55.0 million, or 5.7% of net sales, up from $23.7 million, or 2.7% of net sales, in the same period last year[34] - Adjusted operating earnings for the twelve months ended May 31, 2025, were $248.7 million, or 6.8% of net sales, compared to $262.2 million, or 7.2% of net sales, in the prior year[35] - The gross margin for the three months ended May 31, 2025, was $376.9 million, representing a margin of 39.2%, compared to $352.4 million and 39.6% for the same period last year[37] - Operating expenses for the three months ended May 31, 2025, were $321.9 million, or 33.5% of sales, compared to $328.7 million and 37.0% last year, with adjusted operating expenses at $305.0 million[38] Losses and Charges - The company reported a net loss of $56.2 million for Q4 2025, resulting in a diluted loss per share of $0.84[17] - Special charges of $16.9 million were recorded in Q4 2025, primarily due to restructuring and purchase accounting amortization[6] - The diluted loss earnings per share for the three months ended May 31, 2025, was $(0.84), compared to $0.14 for the same period last year, while the adjusted earnings per share was $0.60, down from $0.67[36] - The company incurred restructuring charges of $10.6 million for the three months ended May 31, 2025, compared to $22.1 million in the same period last year[38] Liquidity and Debt - Liquidity as of May 31, 2025, was $575.9 million, including cash on hand and available credit[6] - The net debt-to-EBITDA ratio was reported at 2.88x, with scheduled debt maturities of $16.0 million in fiscal 2026[11] - Total current assets increased to $1,108.7 million as of May 31, 2025, compared to $1,069.6 million a year earlier[20] - Total liabilities rose to $2,615.1 million as of May 31, 2025, compared to $2,584.6 million in the previous year[20] - Stockholders' equity decreased to $1,275.8 million from $1,385.1 million year-over-year[20] - The total debt, less cash, at the end of the trailing period was $1,142.2 million[38] - The adjusted bank covenant EBITDA for the twelve months ended May 31, 2025, was $396.4 million, with a net debt to adjusted bank covenant EBITDA ratio of 2.88[38] Future Outlook - The company plans to open three new retail stores in Q1 FY2026, which will impact operating expenses[16] - The first quarter FY2026 outlook projects net sales between $899 million and $939 million, with an adjusted effective tax rate of 21.5% to 23.5%[13] - The company reported a backlog of $761.3 million as of Q4 FY2025, indicating strong future demand[44] Risks and Challenges - Risks associated with the Knoll acquisition include potential difficulties in retaining key personnel and maintaining customer relationships[47] - Economic factors such as supply chain challenges and tariff changes could materially impact MillerKnoll's operations and financial results[47] - The success of newly-introduced products will be critical for MillerKnoll's future performance[47] - MillerKnoll's ability to comply with debt covenants post-acquisition is a key concern[47] - The company faces risks from public health crises, which could affect its operational results[47] - Fluctuations in foreign currency exchange rates may impact financial performance[47] - The financial strength of dealers and customers is essential for MillerKnoll's business stability[47] - MillerKnoll does not commit to updating forward-looking statements unless legally required[47] Brand and Acquisition - MillerKnoll's brand portfolio includes notable names such as Herman Miller and Knoll, focusing on sustainable design for the 21st century[46] - The company anticipates significant synergies from the Knoll acquisition, although the exact amount and timing remain uncertain[47]

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) [Item 1 Financial Statements (Unaudited)](index=4&type=section&id=Item%201%20Financial%20Statements%20(Unaudited)) Unaudited financial statements reveal a net loss and decreased earnings, primarily due to impairment charges and increased operating expenses [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported a **$(12.7) million** net loss for the three months and decreased nine-month net earnings, driven by impairment charges | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $876.2 | $872.3 | $2,708.1 | $2,739.5 | | Operating (loss) earnings | $(82.2) | $42.8 | $(4.5) | $143.5 | | Net (loss) earnings attributable to MillerKnoll, Inc. | $(12.7) | $22.2 | $20.2 | $72.4 | | (Loss) earnings per share - diluted | $(0.19) | $0.30 | $0.29 | $0.97 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$3,895.4 million**, primarily due to reductions in goodwill and indefinite-lived intangibles | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Total Assets | $3,895.4 | $4,043.6 | | Goodwill | $1,118.5 | $1,226.3 | | Indefinite-lived intangibles | $422.6 | $465.5 | | Total Liabilities | $2,572.9 | $2,584.6 | | Total Stockholders' Equity | $1,254.1 | $1,385.1 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly decreased to **$138.4 million** for the nine months, mainly due to lower net earnings | Metric | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------ | :------------------------------ | | Net Cash Provided by Operating Activities | $138.4 | $273.9 | | Net Cash Used in Investing Activities | $(60.3) | $(61.0) | | Net Cash Used in Financing Activities | $(127.6) | $(213.1) | | Net (Decrease) Increase in Cash and Cash Equivalents | $(60.6) | $0.1 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased to **$1,254.1 million**, influenced by net losses, comprehensive losses, and share repurchases | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Total Stockholders' Equity | $1,254.1 | $1,385.1 | | Accumulated other comprehensive loss | $(149.5) | $(92.7) | - Net (loss) earnings attributable to MillerKnoll, Inc. for the nine months ended March 1, 2025, was **$20.2 million**, down from **$72.4 million** in the prior year[7](index=7&type=chunk) - Common stock repurchased and retired for the nine months ended March 1, 2025, totaled **$84.8 million**, compared to **$101.0 million** in the prior year[9](index=9&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures for financial statements cover business, accounting standards, revenue, inventories, goodwill, and other key financial notes [Note 1 - Description of Business and Basis of Presentation](index=9&type=section&id=Note%201%20-%20Description%20of%20Business%20and%20Basis%20of%20Presentation) MillerKnoll designs, manufactures, and distributes interior furnishings globally, recently reorganizing its reportable segments effective March 1, 2025 - MillerKnoll operates globally, designing, manufacturing, selling, and distributing interior furnishings for residential, office, healthcare, and educational settings[14](index=14&type=chunk) - Products are sold through independent contract office furniture dealers, direct customer sales, owned and independent retailers, and eCommerce platforms[14](index=14&type=chunk) - Effective March 1, 2025, the company reorganized its reportable segments into North America Contract, International Contract, and Global Retail, recasting historical results[19](index=19&type=chunk)[21](index=21&type=chunk) [Note 2 - Recently Issued Accounting Standards](index=10&type=section&id=Note%202%20-%20Recently%20Issued%20Accounting%20Standards) The company is evaluating new ASUs (Segment Reporting, Income Taxes, Expense Disaggregation) expected to modify disclosures but not materially affect financials - ASU 2023-07 (Segment Reporting) is effective for the annual period ending May 31, 2025, and interim periods beginning with the first quarter of fiscal 2026; expected to modify disclosures but not materially affect financials[28](index=28&type=chunk) - ASU 2023-09 (Income Taxes) is effective for annual periods beginning after December 15, 2024; expected to modify disclosures but not materially affect financials[29](index=29&type=chunk) - ASU 2024-03 (Expense Disaggregation) is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027; the impact on consolidated financial statements is currently under evaluation[30](index=30&type=chunk) [Note 3 - Revenue from Contracts with Customers](index=11&type=section&id=Note%203%20-%20Revenue%20from%20Contracts%20with%20Customers) Net sales for the three months ended March 1, 2025, increased to **$876.2 million**, while nine-month net sales decreased to **$2,708.1 million** | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net Sales | $876.2 | $872.3 | $2,708.1 | $2,739.5 | | Product revenue (single performance obligation) | $812.7 | $809.9 | $2,506.0 | $2,526.7 | | Segment | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | | North America Contract | $468.2 | $461.7 | | International Contract | $145.5 | $153.1 | | Global Retail | $262.5 | $257.5 | [Note 4 - Inventories](index=12&type=section&id=Note%204%20-%20Inventories) Total inventories slightly decreased to **$425.5 million** as of March 1, 2025, with stable finished goods and work in process | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Finished goods and work in process | $314.6 | $314.3 | | Raw materials | $110.9 | $114.3 | | Total Inventories | $425.5 | $428.6 | [Note 5 - Goodwill and Indefinite-Lived Intangibles](index=13&type=section&id=Note%205%20-%20Goodwill%20and%20Indefinite-Lived%20Intangibles) Goodwill decreased to **$1,118.5 million** due to **$92.3 million** impairment charges, with indefinite-lived intangibles also decreasing | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Goodwill | $1,118.5 | $1,226.3 | | Indefinite-lived Intangibles | $422.6 | $465.5 | - Goodwill impairment charges of **$92.3 million** were recognized in Q3 FY25, affecting Global Retail (**$30.1 million**) and Holly Hunt (**$62.2 million**), driven by reduced sales/profitability projections and increased discount rates[39](index=39&type=chunk)[44](index=44&type=chunk) - Indefinite-lived intangible impairment charges of **$37.7 million** were recognized in Q3 FY25, related to the Knoll and Muuto trade names[40](index=40&type=chunk)[50](index=50&type=chunk) - Segment reorganization resulted in reassignment of **$26.1 million** goodwill from Americas Contract to International Contract and **$33.0 million** from Holly Hunt to Global Retail[49](index=49&type=chunk) [Note 6 - Employee Benefit Plans](index=15&type=section&id=Note%206%20-%20Employee%20Benefit%20Plans) The company completed the Knoll pension plan termination in Q2 FY25, resulting in a **$1.5 million** gain, with minor net periodic benefit costs - Knoll domestic defined-benefit pension plan termination completed in Q2 FY25, resulting in a **$1.5 million** pension plan termination gain for the nine months ended March 1, 2025[55](index=55&type=chunk)[56](index=56&type=chunk) | Metric | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------ | :------------------------------ | | Net periodic benefit cost (Domestic) | $0.1 | $(1.8) | | Net periodic benefit cost (International) | $(0.5) | $(0.7) | [Note 7 - Earnings Per Share](index=16&type=section&id=Note%207%20-%20Earnings%20Per%20Share) Diluted loss per share for the three months was **$(0.19)**, a decrease from **$0.30** in the prior year, with reduced dilutive shares | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | (Loss) earnings per share - basic | $(0.19) | $0.31 | $0.29 | $0.98 | | (Loss) earnings per share - diluted | $(0.19) | $0.30 | $0.29 | $0.97 | | Potentially dilutive shares (3 months) | — | 1,426,092 | | | | Potentially dilutive shares (9 months) | | | 911,323 | 664,376 | [Note 8 - Stock-Based Compensation](index=16&type=section&id=Note%208%20-%20Stock-Based%20Compensation) Stock-based compensation expense increased to **$6.1 million** for the three months and **$24.0 million** for the nine months, with higher tax effects | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Stock-based compensation expense | $6.1 | $5.4 | $24.0 | $17.1 | | Related income tax effect | $1.5 | $1.3 | $5.9 | $4.1 | [Note 9 - Income Taxes](index=17&type=section&id=Note%209%20-%20Income%20Taxes) The effective tax rate significantly increased to **88.3%** for three months and **139.5%** for nine months, driven by intangible asset impairment | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Effective tax rate | 88.3% | 16.0% | 139.5% | 20.5% | - The significant increase in the effective tax rate was primarily due to the impact of the estimated annual effective tax rate on the pre-tax loss, driven by the impairment of indefinite-lived intangible assets[61](index=61&type=chunk)[62](index=62&type=chunk) | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Liability for interest and penalties | $1.0 | $0.8 | | Liability for uncertain tax positions, current | $1.6 | $1.5 | [Note 10 - Fair Value Measurements](index=17&type=section&id=Note%2010%20-%20Fair%20Value%20Measurements) Fair value of long-term debt increased to **$1,428.7 million**, with the company using interest rate swaps and foreign currency forward contracts | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Long-term debt carrying value | $1,341.8 | $1,347.8 | | Long-term debt fair value | $1,428.7 | $1,411.6 | - Interest rate swap agreements are designated as cash flow hedges, with fair value changes recorded in Accumulated other comprehensive loss[75](index=75&type=chunk) - Foreign currency forward contracts are not designated as hedging instruments; changes in fair value are recorded in net income[73](index=73&type=chunk) - Unrealized loss on interest rate swap agreement for the nine months ended March 1, 2025, was **$(22.1) million**, compared to **$(1.2) million** in the prior year[7](index=7&type=chunk) [Note 11 - Commitments and Contingencies](index=20&type=section&id=Note%2011%20-%20Commitments%20and%20Contingencies) The company maintains a **$69.3 million** warranty reserve and does not expect material adverse effects from current legal proceedings | Metric | March 1, 2025 | March 2, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Warranty Accrual Balance — ending | $69.3 | $70.6 | - Maximum financial exposure related to performance bonds was approximately **$8.9 million** as of March 1, 2025[82](index=82&type=chunk) - Maximum financial exposure from standby letters of credit was approximately **$12.6 million** as of March 1, 2025[83](index=83&type=chunk) - Management believes the outcome of current legal proceedings will not have a material adverse effect on the Company's Consolidated Financial Statements[84](index=84&type=chunk) [Note 12 - Short-Term Borrowings and Long-Term Debt](index=21&type=section&id=Note%2012%20-%20Short-Term%20Borrowings%20and%20Long-Term%20Debt) Total debt slightly decreased to **$1,341.8 million**, with **$414.0 million** outstanding on the revolving credit line | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Total debt | $1,341.8 | $1,347.8 | | Syndicated revolving line of credit borrowing capacity | $725.0 | $725.0 | | Borrowings under syndicated revolving line of credit | $414.0 | $390.0 | | Available borrowings under syndicated revolving line of credit | $298.4 | $322.3 | - During the nine months ended March 1, 2025, the company made principal payments of **$25.0 million** on Term Loan A and **$4.7 million** on Term Loan B[86](index=86&type=chunk) [Note 13 - Accumulated Other Comprehensive Loss](index=22&type=section&id=Note%2013%20-%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss increased to **$(149.5) million**, primarily due to foreign currency translation adjustments and interest rate swap losses | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Accumulated Other Comprehensive Loss | $(149.5) | $(92.7) | - Net current period other comprehensive loss for the nine months ended March 1, 2025, was **$(56.8) million**, compared to income of **$6.5 million** in the prior year[89](index=89&type=chunk) - Key drivers for the change include foreign currency translation adjustments and interest rate swap losses[89](index=89&type=chunk) [Note 14 - Operating Segments](index=22&type=section&id=Note%2014%20-%20Operating%20Segments) The company reorganized segments into North America Contract, International Contract, and Global Retail, with varying sales and operating earnings - Segment reorganization effective March 1, 2025, into North America Contract, International Contract, and Global Retail[90](index=90&type=chunk) | Segment | Net Sales (3 months) | Operating Earnings (Loss) (3 months) | | :----------------------- | :------------------- | :----------------------------------- | | North America Contract | $468.2 | $17.0 | | International Contract | $145.5 | $9.9 | | Global Retail | $262.5 | $(94.4) | | Corporate | | $(14.7) | | Total | $876.2 | $(82.2) | [Note 15 - Restructuring and Integration Expense](index=23&type=section&id=Note%2015%20-%20Restructuring%20and%20Integration%20Expense) The company incurred **$4.2 million** in restructuring charges and **$28.3 million** in Knoll Integration costs, with a **$2.8 million** gain from a facility sale | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Restructuring charges | $4.2 | $1.7 | $4.2 | $8.7 | | Knoll Integration costs | $0 | $7.6 | $28.3 | $18.4 | - The 2025 restructuring plan primarily involves involuntary workforce reductions[106](index=106&type=chunk) - The sale of a manufacturing facility in Q3 FY25 resulted in a gain of approximately **$2.8 million**[105](index=105&type=chunk) [Note 16 - Variable Interest Entities](index=25&type=section&id=Note%2016%20-%20Variable%20Interest%20Entities) The company holds **$14.1 million** in long-term notes receivable from dealers, representing its maximum exposure to loss in VIEs | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Carrying value of long-term notes receivable | $14.1 | $17.9 | - The carrying value of these notes represents the company's maximum exposure to loss[110](index=110&type=chunk) - The company is not deemed to be the primary beneficiary for any of these variable interest entities[110](index=110&type=chunk) [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q3 FY25 saw slight sales and orders increase, but gross margin decreased and operating expenses surged **40.9%** due to **$130.0 million** impairment charges - Net sales for the three months ended March 1, 2025, were **$876.2 million**, an increase of **0.4%** year-over-year. Organic net sales increased by **1.8%** to **$885.8 million**[115](index=115&type=chunk) - Orders for the three months ended March 1, 2025, were **$853.1 million**, an increase of **2.7%** year-over-year. Organic orders increased by **4.1%** to **$862.2 million**[115](index=115&type=chunk) - Gross margin in the third quarter was **37.9%**, a decrease of **70 basis points** year-over-year, primarily due to unfavorable channel and product mix, lower fixed cost leverage, and higher commodity costs[115](index=115&type=chunk) - Operating expenses increased by **$120.4 million** or **40.9%** year-over-year, primarily driven by **$130.0 million** of indefinite-lived intangible impairment charges[115](index=115&type=chunk) - Diluted loss per share was **$0.19** for the three months ended March 1, 2025, compared to diluted earnings per share of **$0.30** in the prior year. Adjusted diluted earnings per share was **$0.44**, a **2.2%** decrease[115](index=115&type=chunk) [Business Overview](index=26&type=section&id=Business%20Overview) MillerKnoll designs, manufactures, and distributes interior furnishings globally, with reporting segments reorganized effective March 1, 2025 - MillerKnoll designs, manufactures, sells, and distributes interior furnishings for various environments globally[112](index=112&type=chunk) - Effective March 1, 2025, reporting segments were modified to North America Contract, International Contract, and Global Retail[113](index=113&type=chunk)[114](index=114&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=27&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) The company provides non-GAAP measures like Adjusted EPS and Organic Growth, excluding specific items for better investor comparability - Non-GAAP financial measures include Adjusted Earnings per Share and Organic Growth (Decline)[119](index=119&type=chunk) - Adjusted Earnings per Share excludes amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, Knoll pension plan termination charges, and related tax effects[119](index=119&type=chunk)[123](index=123&type=chunk) - Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects and the impact of the closure of the North America HAY eCommerce channel[120](index=120&type=chunk) | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Adjusted earnings per share - diluted | $0.44 | $0.45 | $1.33 | $1.41 | [Key Highlights](index=32&type=section&id=Key%20Highlights) Net sales increased **0.4%** in Q3 FY25, but operating earnings turned into a **$(82.2) million** loss due to a **40.9%** surge in operating expenses | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | % Change | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | % Change | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------- | :------------------------------ | :------------------------------ | :------- | | Net sales | $876.2 | $872.3 | 0.4 % | $2,708.1 | $2,739.5 | (1.1)% | | Operating (loss) earnings | $(82.2) | $42.8 | (292.1)% | $(4.5) | $143.5 | (103.1)% | | Orders | $853.1 | $830.3 | 2.7 % | $2,710.9 | $2,688.0 | 0.9 % | | Backlog | $686.4 | $639.4 | 7.4 % | | | | - Operating expenses increased by **40.9%** for the three months ended March 1, 2025[128](index=128&type=chunk) [Net Sales Analysis](index=33&type=section&id=Net%20Sales%20Analysis) Q3 FY25 net sales increased **0.4%** due to volume and price, while nine-month net sales decreased **1.1%** due to volume and currency impacts - Net sales increased by **$3.9 million** (**0.4%**) in Q3 FY25, driven by increased sales volume in Global Retail (~**$9 million**) and North America Contract (~**$7 million**), and price increases (~**$1 million**)[132](index=132&type=chunk) - Q3 FY25 sales increase was partially offset by foreign currency translation (~**$10 million** decrease) and the closure of the HAY eCommerce channel (~**$2 million** decrease)[132](index=132&type=chunk) - Net sales decreased by **$31.4 million** (**1.1%**) for the first nine months of FY25, primarily due to decreased sales volume in North America Contract (~**$30 million**) and Global Retail (~**$12 million**), and the HAY eCommerce channel closure (~**$12 million**)[132](index=132&type=chunk) - The nine-month decrease was partially offset by increased sales volume in International Contract (~**$18 million**) and price increases (~**$14 million**)[132](index=132&type=chunk) [Gross Margin Analysis](index=34&type=section&id=Gross%20Margin%20Analysis) Gross margin decreased to **37.9%** in Q3 FY25 and **38.6%** for nine months, primarily due to increased commodity costs and unfavorable mix | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Gross margin | 37.9% | 38.6% | 38.6% | 39.0% | - Q3 FY25 gross margin decrease (**70 basis points**) was primarily due to increased commodity costs (~**40 basis points**), unfavorable channel and product mix (~**30 basis points**), and loss of leverage on lower sales volumes (~**30 basis points**), partially offset by reduced freight and product distribution costs (~**30 basis points**)[132](index=132&type=chunk) - Nine-month FY25 gross margin decrease (**40 basis points**) was primarily due to loss of leverage on lower sales volumes (~**40 basis points**), unfavorable channel and product mix (~**20 basis points**), and increased commodity costs (~**20 basis points**), partially offset by price increases (~**30 basis points**) and reduced freight costs[133](index=133&type=chunk) [Operating Expenses Analysis](index=35&type=section&id=Operating%20Expenses%20Analysis) Operating expenses surged **40.9%** in Q3 FY25 due to **$130 million** impairment charges, increasing **13.7%** for the nine-month period | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | % Change | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | % Change | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------- | :------------------------------ | :------------------------------ | :------- | | Operating expenses | $414.6 | $294.2 | 40.9 % | $1,050.2 | $923.6 | 13.7 % | - Q3 FY25 operating expenses increase was primarily driven by **$130 million** in impairment charges (goodwill and indefinite-lived intangibles) and increased restructuring charges (**$3 million**)[139](index=139&type=chunk) - Nine-month FY25 operating expenses increase was primarily driven by **$130 million** in impairment charges, Knoll acquisition integration charges (~**$10 million**), and increased selling and marketing costs (~**$4 million**)[147](index=147&type=chunk) - Offsetting factors for the nine-month period included decreased incentive compensation (~**$12 million**) and decreased restructuring charges (~**$5 million**)[147](index=147&type=chunk) [Other Income/Expense Analysis](index=37&type=section&id=Other%20Income%2FExpense%20Analysis) Net Other expense increased to **$18.6 million** in Q3 FY25 and **$53.1 million** for nine months, driven by reduced benefit income and interest expense | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | % Change | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | % Change | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------- | :------------------------------ | :------------------------------ | :------- | | Other expenses, net | $18.6 | $15.3 | 21.6 % | $53.1 | $50.6 | 4.9 % | - The increase in Other expense was primarily due to reduced net periodic benefit income (Knoll pension plan termination) and increased interest expense, partially offset by reduced foreign currency losses[147](index=147&type=chunk) [Income Taxes Analysis](index=37&type=section&id=Income%20Taxes%20Analysis) The effective tax rate significantly increased to **88.3%** for three months and **139.5%** for nine months, driven by intangible asset impairment | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Effective tax rate | 88.3% | 16.0% | 139.5% | 20.5% | - The substantial increase in the effective tax rate was primarily due to the impact of the estimated annual effective tax rate on the pre-tax loss, driven by the impairment of indefinite-lived intangible assets[61](index=61&type=chunk)[62](index=62&type=chunk) [Operating Segment Results](index=37&type=section&id=Operating%20Segment%20Results) Segments reorganized into North America Contract, International Contract, and Global Retail, showing varied sales and operating earnings, with Global Retail reporting a significant loss - Segment reorganization effective March 1, 2025, into North America Contract, International Contract, and Global Retail[143](index=143&type=chunk) | Segment | Net Sales (3 months) | Operating Earnings (Loss) (3 months) | | :----------------------- | :------------------- | :----------------------------------- | | North America Contract | $468.2 | $17.0 | | International Contract | $145.5 | $9.9 | | Global Retail | $262.5 | $(94.4) | | Corporate | | $(14.7) | | Total | $876.2 | $(82.2) | [North America Contract](index=39&type=section&id=North%20America%20Contract) Net sales increased **1.4%** to **$468.2 million**, but operating earnings decreased **33.3%** due to gross margin decline and increased operating expenses | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Change | | :----------------------- | :------------------------------- | :------------------------------- | :----- | | Net sales | $468.2 | $461.7 | $6.5 | | Operating earnings | $17.0 | $25.5 | $(8.5) | | Operating earnings % | 3.6 % | 5.5 % | (1.9)% | - Net sales increased **1.4%** (**1.7%** organically) due to increased sales volumes (~**$7 million**), offset by unfavorable foreign currency translation (~**$1 million**)[150](index=150&type=chunk) - Operating earnings decreased due to a **90 basis point** decrease in gross margin (increased commodity costs, loss of fixed cost leverage) and increased operating expenses (impairment and restructuring charges)[151](index=151&type=chunk) [International Contract](index=40&type=section&id=International%20Contract) Net sales decreased **5.0%** to **$145.5 million**, and operating earnings decreased **43.4%** due to gross margin decline and increased operating expenses | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Change | | :----------------------- | :------------------------------- | :------------------------------- | :----- | | Net sales | $145.5 | $153.1 | $(7.6) | | Operating earnings | $9.9 | $17.5 | $(7.6) | | Operating earnings % | 6.8 % | 11.4 % | (4.6)% | - Net sales decreased **5.0%** (**1.5%** organically) due to unfavorable foreign currency translation (~**$5 million**), incremental discounting (~**$1 million**), and decreased sales volume (~**$1 million**)[155](index=155&type=chunk) - Operating earnings decreased due to a **140 basis point** decrease in gross margin (discounting, unfavorable product/business mix, loss of fixed cost leverage) and increased operating expenses (restructuring and impairment charges)[155](index=155&type=chunk) [Global Retail](index=41&type=section&id=Global%20Retail) Net sales increased **1.9%** to **$262.5 million**, but operating earnings resulted in a **$(94.4) million** loss due to **$108.8 million** impairment charges | Metric | Three Months Ended March 1, 2025 | Three Months Ended March 2, 2024 | Change | | :----------------------- | :------------------------------- | :------------------------------- | :------- | | Net sales | $262.5 | $257.5 | $5.0 | | Operating (loss) earnings | $(94.4) | $12.1 | $(106.5) | | Operating earnings % | (36.0)% | 4.7 % | (40.7)% | - Net sales increased **1.9%** (**3.9%** organically) due to a shift in cyber week holiday timing (~**$9 million** increase) and price increases (~**$1 million** increase), partially offset by unfavorable foreign currency translation (~**$3 million** decrease) and HAY eCommerce channel closure (~**$2 million** decrease)[159](index=159&type=chunk) - Operating earnings decreased by **$106.5 million**, primarily due to **$108.8 million** in impairment charges incurred in the current quarter[158](index=158&type=chunk)[159](index=159&type=chunk) [Corporate](index=42&type=section&id=Corporate) Corporate unallocated expenses increased to **$14.7 million** for Q3 FY25 and **$47.9 million** for nine months, primarily due to higher stock-based compensation - Corporate unallocated expenses for Q3 FY25 were **$14.7 million**, an increase of **$2.4 million** YoY, primarily due to higher stock-based compensation expense[160](index=160&type=chunk) - For the first nine months of FY25, corporate unallocated expenses totaled **$47.9 million**, an increase of **$7.7 million** YoY, primarily due to higher stock-based compensation expense[160](index=160&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash from operating activities decreased to **$138.4 million**, with total liquidity at **$468.2 million** including cash and available credit | Metric | Nine Months Ended March 1, 2025 | Nine Months Ended March 2, 2024 | | :--------------------------------------- | :------------------------------ | :------------------------------ | | Cash provided by operating activities | $138.4 | $273.9 | | Cash used in financing activities | $(127.6) | $(213.1) | | Metric | March 1, 2025 | June 1, 2024 | | :--------------------------------------- | :-------------- | :------------- | | Cash and cash equivalents | $169.8 | $230.4 | | Availability under syndicated revolving line of credit | $298.4 | $322.3 | | Total liquidity | $468.2 | $552.7 | - Capital expenditures for the first nine months of fiscal 2025 were **$68.1 million**, compared to **$56.5 million** in the prior year[166](index=166&type=chunk) - The company repurchased **3,286,029 shares** at a cost of **$84.8 million** in the current year, compared to **4,594,116 shares** totaling **$101.0 million** in the prior year[174](index=174&type=chunk) - The company intends to repatriate **$104.3 million** of undistributed foreign earnings[172](index=172&type=chunk) [Contractual Obligations](index=43&type=section&id=Contractual%20Obligations) No material changes in contractual obligations have occurred since the Annual Report on Form 10-K for the year ended June 1, 2024 - No material changes in contractual obligations since the Annual Report on Form 10-K for the year ended June 1, 2024[175](index=175&type=chunk) [Guarantees](index=44&type=section&id=Guarantees) Refer to Note 11 of the Condensed Consolidated Financial Statements for detailed information on guarantees - Information on guarantees is provided in Note 11 to the Condensed Consolidated Financial Statements[176](index=176&type=chunk) [Variable Interest Entities](index=44&type=section&id=Variable%20Interest%20Entities) Refer to Note 16 of the Condensed Consolidated Financial Statements for detailed information on variable interest entities - Information on variable interest entities is provided in Note 16 to the Condensed Consolidated Financial Statements[177](index=177&type=chunk) [Contingencies](index=44&type=section&id=Contingencies) Refer to Note 11 of the Condensed Consolidated Financial Statements for detailed information on contingencies - Information on contingencies is provided in Note 11 to the Condensed Consolidated Financial Statements[178](index=178&type=chunk) [Critical Accounting Policies](index=44&type=section&id=Critical%20Accounting%20Policies) Critical accounting policies, especially for goodwill and intangibles, involve significant estimates, leading to **$130.0 million** in Q3 FY25 impairment charges - Goodwill is tested for impairment annually or more frequently if triggering events occur. A quantitative valuation was performed in Q3 FY25 due to lower-than-expected operating results[180](index=180&type=chunk)[181](index=181&type=chunk) - A non-cash goodwill impairment charge of **$92.3 million** was recognized in Q3 FY25 for Global Retail and Holly Hunt reporting units, primarily due to reduced sales/profitability projections and increased discount rates[183](index=183&type=chunk) - Indefinite-lived trade name intangible assets are evaluated for impairment annually. A non-cash impairment charge of **$37.7 million** was recognized in Q3 FY25 related to the Knoll and Muuto trade names[189](index=189&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=46&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section highlights forward-looking statements are subject to risks like economic conditions, government policies, and foreign currency fluctuations - The report contains forward-looking statements regarding future events, business strategies, acquisition benefits, and operating results[194](index=194&type=chunk) - These statements are subject to risks and uncertainties, including economic conditions, government policies, debt obligations, supply chain challenges, and foreign currency exchange fluctuations[194](index=194&type=chunk) - MillerKnoll does not undertake any obligation to update forward-looking statements, except as required by law[194](index=194&type=chunk) [Item 3 Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Market risks from interest rates and commodity prices remain unchanged, with foreign exchange risk managed through forward contracts - Market risks from interest rates and commodity prices have not materially changed during the first nine months of fiscal 2025[195](index=195&type=chunk) - Foreign exchange risk arises from sales and expenses transacted in currencies other than the U.S. dollar, impacting production costs and profit margins[196](index=196&type=chunk) - The company uses foreign currency forward contracts to reduce risks associated with foreign currency exposures[196](index=196&type=chunk)[197](index=197&type=chunk) [Item 4 Controls and Procedures](index=47&type=section&id=Item%204%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 1, 2025, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were evaluated and deemed effective as of March 1, 2025[198](index=198&type=chunk) - There were no material changes in the company's internal control over financial reporting during the quarterly period ended March 1, 2025[199](index=199&type=chunk) [PART II — OTHER INFORMATION](index=48&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) [Item 1 Legal Proceedings](index=48&type=section&id=Item%201%20Legal%20Proceedings) No material changes in the company's legal proceedings have occurred since the Annual Report on Form 10-K for the year ended June 1, 2024 - No material changes in the company's legal proceedings from those previously disclosed[200](index=200&type=chunk) [Item 1A Risk Factors](index=48&type=section&id=Item%201A%20Risk%20Factors) Updated risk factors highlight potential adverse effects from changes in U.S. trade policy and federal government spending - Changes to U.S. trade policy, including new or increased tariffs and changing import/export regulations, are expected to adversely affect operating results[202](index=202&type=chunk)[203](index=203&type=chunk) - Changes in spending or budgetary policies of the U.S. Federal Government may materially adversely affect the business, as sales to the U.S. federal government represented approximately **4%** of total net sales in fiscal year 2024[204](index=204&type=chunk) [Item 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The share repurchase plan was increased by **$200 million**, with **$181.5 million** remaining available, and **785,650 shares** repurchased in the quarter - The Board of Directors approved an increase of **$200 million** to the share repurchase plan on July 16, 2024, bringing the total authorization to **$250.0 million**[205](index=205&type=chunk) - Approximate dollar value of shares available for purchase under the plan was **$181.5 million** as of March 1, 2025[205](index=205&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------------- | :------------------------------- | :--------------------------- | | 12/1/2024 - 12/28/2024 | 226,598 | $24.27 | | 12/29/2024 - 1/25/2025 | 314,769 | $22.05 | | 1/26/2025 - 3/1/2025 | 244,283 | $22.29 | | Total | 785,650 | | - No shares of common stock were sold that were not registered under the Securities Act of 1933 during the period[208](index=208&type=chunk) [Item 5 Other Information](index=49&type=section&id=Item%205%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or Non-Rule 10b5-1 Trading Arrangement during the reporting period - No director or officer adopted or terminated a Rule 10b5-1 or Non-Rule 10b5-1 Trading Arrangement during the period[209](index=209&type=chunk) [Item 6 Exhibits](index=49&type=section&id=Item%206%20Exhibits) This section lists exhibits including CEO and CFO certifications (Sarbanes-Oxley Act Sections 302 and 906) and XBRL-related documents - Exhibits include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[210](index=210&type=chunk) - XBRL Taxonomy Extension documents (Schema, Calculation, Label, Presentation, Definition Linkbase) are filed[210](index=210&type=chunk) [Signatures](index=51&type=section&id=Signatures) The report was signed by Andrea R. Owen, President and CEO, and Jeffrey M. Stutz, CFO, on March 31, 2025 - The report was signed by Andrea R. Owen, President and Chief Executive Officer, and Jeffrey M. Stutz, Chief Financial Officer[212](index=212&type=chunk) - The signing date for the report was March 31, 2025[212](index=212&type=chunk)

Core Insights - MillerKnoll, Inc. reported third-quarter fiscal 2025 results with adjusted earnings meeting consensus estimates but declining year over year, while net sales missed consensus but grew slightly year over year [1][4] Financial Performance - Adjusted earnings were 44 cents per share, down 2.2% from 45 cents year over year [4] - Net sales reached $876.2 million, missing the consensus estimate of $922 million by 5%, but increased by 0.4% year over year [4] - Organic net sales grew by 1.8% year over year, with orders amounting to $853.1 million, up 2.7% reported and 4.1% organically [4] Segment Performance - North America Contract segment saw net sales grow by 1.4% reported and 1.7% organically to $468.2 million, with new orders down 1.8% year over year [5] - International Contract segment experienced a 5% decline in net sales to $145.5 million, with new orders down 1.6% reported but up 1.4% organically [6] - Global Retail segment's net sales increased by 1.9% reported and 3.9% organically to $262.5 million, with new orders up 14.7% reported and 16.9% organically [7] Operating Metrics - Gross margin declined by 70 basis points year over year to 37.9% due to unfavorable channel and product mix, lower fixed cost leverage, and higher commodity costs [9] - Adjusted operating expenses decreased by 1.6% year over year to $274.4 million, attributed to lower incentive compensation and cost control [10] Liquidity and Debt - As of March 1, 2025, the company had $468.2 million in liquidity, with cash and equivalents at $169.8 million, down from $230.4 million at the end of fiscal 2024 [11] - Long-term debt slightly decreased to $1.28 billion from $1.29 billion reported at the end of fiscal 2024 [11] Future Guidance - For fiscal Q4, net sales are expected to range from $910 million to $950 million, with adjusted EPS projected between 46 to 52 cents [13] - For fiscal 2025, net sales are anticipated to be between $3.618 billion and $3.658 billion, with adjusted EPS expected to be between $1.81 and $1.87, down from earlier estimates [15]