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]

Financial Data and Key Metrics Changes - Consolidated net sales for the third quarter were $876 million, an increase from the previous year, with a slight organic growth of 1.8% [34] - Consolidated orders were $853 million, up 2.7% as reported and 4.1% organically [34] - Consolidated gross margin was 37.9%, down 70 basis points from the previous year [35] - Reported loss per share was $0.19, compared to diluted earnings per share of $0.30 in the prior year [35] - Adjusted earnings per share were $0.44, consistent with the midpoint of guidance [33][37] Business Line Data and Key Metrics Changes - North America Contract segment net sales were $468 million, up 1.4% reported and 1.7% organically [42] - New orders in North America Contract were $434 million, reflecting a 1.8% reported decrease [42] - International Contract segment net sales were $146 million, down 5% reported and 1.5% organically [44] - Retail segment net sales were $263 million, up 1.9% reported and 3.9% organically, with new orders up 14.7% reported and almost 17% organically [46] Market Data and Key Metrics Changes - Retail demand in North America saw a significant increase, with cyber-adjusted orders up 14% [17] - Orders in the first three weeks of March were up 10% year-over-year in the retail segment [47] - International Contract orders in the first three weeks of March trended up 2% compared to last year [45] Company Strategy and Development Direction - The company has re-segmented its operations into North America Contract, International Contract, and Global Retail to align better with long-term strategies [12][15] - The focus is on expanding the product assortment and increasing store footprint, with plans to open 10 to 15 new locations in fiscal 2026 [23][24] - A 4.5% list price increase is planned to mitigate tariff-related costs and other inflationary pressures [28][108] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the demand in the retail segment despite macroeconomic uncertainties [10][30] - The company is focused on maintaining cost control while investing in growth opportunities [30][31] - Management acknowledged the impact of tariffs and macroeconomic factors on sales and order pacing, emphasizing a prudent outlook for the fourth quarter [50][98] Other Important Information - The company reported a consolidated backlog of $686 million, up 7.4% from a year ago [34] - Special charges related to intangible amortization, impairment, and restructuring totaled $140 million, impacting the reported loss [36] Q&A Session Summary Question: About the impairment charges in global retail - Management explained that impairment charges were due to lagging profitability relative to internal expectations and the need for a full review following the re-segmentation of the business [59] Question: On new store locations and their distribution - Management confirmed that new store openings would be evenly distributed throughout the fiscal year [62] Question: Regarding tariffs and future offsetting strategies - Management indicated that while the tariff situation is fluid, they believe they can offset costs through pricing and other mitigation efforts [66] Question: On revenue guidance and backlog - Management acknowledged the cautious revenue guidance due to macroeconomic uncertainties, despite a positive backlog and order growth [72][98] Question: On pipeline activity metrics in North America - Management reported that leading indicators remain strong, with a year-over-year increase in awarded projects and contract activations [81] Question: Demand from consumers in the direct-to-consumer business - Management noted strong demand in the direct-to-consumer segment, with new product assortments contributing positively [88] Question: On restructuring goals and cost reductions - Management clarified that restructuring actions were aimed at aligning the cost structure with current demand, expecting annualized savings of approximately $4 million [115]

Financial Data and Key Metrics Changes - Consolidated net sales for the third quarter were $876 million, an increase from the previous year, with a slight organic growth of 1.8% [34] - Consolidated orders were $853 million, up 2.7% as reported and 4.1% organically [34] - Consolidated gross margin was 37.9%, down 70 basis points from the previous year [35] - The company reported a loss per share of $0.19 for the quarter, compared to diluted earnings per share of $0.30 in the prior year [35][36] - Adjusted earnings per share were $0.44, consistent with the midpoint of guidance [33][37] Business Line Data and Key Metrics Changes - **North America Contract Segment**: Net sales were $468 million, up 1.4% reported and 1.7% organically; new orders were $434 million, reflecting a 1.8% reported decrease [42] - **International Contract Segment**: Net sales were $146 million, down 5% reported and 1.5% organically; new orders were $159 million, a 1.6% decline reported but a 1.4% increase organically [44] - **Global Retail Segment**: Net sales were $263 million, up 1.9% reported and 3.9% organically; new orders were $260 million, up 14.7% reported and almost 17% organically [46] Market Data and Key Metrics Changes - Retail demand in North America saw a significant increase, with cyber-adjusted orders up 14% [17] - Orders in the first three weeks of March were up 10% year-over-year in the retail segment [47] - International contract orders in the first three weeks of March trended up 2% compared to last year [45] Company Strategy and Development Direction - The company has re-segmented its operations into North America Contract, International Contract, and Global Retail to better align with long-term strategies [12][15] - The focus remains on expanding the product assortment and store footprint, with plans to open 10 to 15 new locations in fiscal 2026 [23][24] - The company is navigating tariff-related uncertainties by implementing a 4.5% list price increase effective June 2nd [28] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the demand in the retail segment despite macroeconomic uncertainties [10][30] - The company remains focused on long-term strategies and growth levers while managing costs [30] - The outlook for the fourth quarter includes expected net sales between $910 million and $950 million, reflecting a 4.6% increase at the midpoint [50] Other Important Information - The company generated $62 million in cash flow from operations and reduced long-term debt by $61 million [39] - The consolidated backlog was $686 million, up 7.4% from a year ago [34] Q&A Session Summary Question: About the impairment charges in global retail - Management explained that impairment charges were due to lagging profitability relative to internal expectations and a re-segmentation of the business [59] Question: On new store locations - The company plans to open new locations evenly throughout the fiscal year, with two additional locations planned for the current quarter [62] Question: Regarding tariffs and future quarters - Management indicated that while the tariff situation is fluid, they believe they can offset costs through pricing and other mitigation efforts [66] Question: On revenue guidance and backlog - Management acknowledged the cautious outlook due to macroeconomic uncertainties, despite a positive start to Q4 and improved order growth [72][98] Question: On restructuring and cost reductions - The restructuring aimed at aligning the cost structure with current demand, with expected annualized savings of approximately $4 million [115]

Sales Performance - North America Contract segment net sales for the three months ended August 31, 2024, were $476.2 million, with a gross margin of 36.1%[2] - International Contract segment net sales for the three months ended August 31, 2024, were $146.4 million, with a gross margin of 36.8%[2] - Global Retail segment net sales for the three months ended August 31, 2024, were $238.9 million, with a gross margin of 46.3%[2] - Total net sales for MillerKnoll, Inc. for the three months ended August 31, 2024, were $861.5 million, with a gross margin of 39.0%[2] - North America Contract segment net sales for the twelve months ended June 1, 2024, were $1,922.3 million, with a gross margin of 36.3%[3] - Global Retail segment net sales for the twelve months ended June 1, 2024, were $1,060.5 million, with a gross margin of 46.1%[3] - Total net sales for MillerKnoll, Inc. for the twelve months ended June 1, 2024, were $3,628.4 million, with a gross margin of 39.1%[3] - North America Contract segment net sales reached $519.4 million, with a gross margin of 37.9% for the three months ended September 2, 2023[13] - International Contract segment net sales for the twelve months ended June 3, 2023, were $705.5 million, with a gross margin of 32.6%[14] - Global Retail segment net sales for the twelve months ended June 3, 2023, were $1,252.1 million, with a gross margin of 40.3%[14] - Total net sales for MillerKnoll, Inc. for the twelve months ended June 3, 2023, were $4,087.1 million, with a gross margin of 35.0%[14] Operating Earnings - Operating earnings for MillerKnoll, Inc. for the three months ended August 31, 2024, were $15.2 million, representing 1.8% of net sales[2] - Operating earnings for MillerKnoll, Inc. for the twelve months ended June 1, 2024, were $167.2 million, representing 4.6% of net sales[3] - Adjusted Operating Earnings for the North America Contract segment were $44.9 million, representing 9.4% of net sales for the three months ended August 31, 2024[12] - Adjusted Operating Earnings for the International Contract segment were $13.3 million, representing 9.1% of net sales for the three months ended August 31, 2024[12] - Adjusted Operating Earnings for the Global Retail segment were $7.4 million, representing 3.1% of net sales for the three months ended August 31, 2024[12] - Adjusted Operating Earnings for MillerKnoll, Inc. were $49.9 million, representing 5.8% of total net sales for the three months ended August 31, 2024[12] - Adjusted operating earnings for MillerKnoll, Inc. were $55.4 million, accounting for 6.0% of net sales for the three months ended September 2, 2023[13] - Adjusted operating earnings for the North America Contract segment for the twelve months ended June 3, 2023, were $174.0 million, representing 8.2% of net sales[14] - Adjusted operating earnings for the International Contract segment for the twelve months ended June 3, 2023, were $77.2 million, representing 10.9% of net sales[14] - Adjusted operating earnings for the Global Retail segment for the twelve months ended June 3, 2023, were $60.1 million, representing 4.8% of net sales[14] - Adjusted operating earnings for MillerKnoll, Inc. for the twelve months ended June 3, 2023, were $256.5 million, representing 6.3% of net sales[14] Year-over-Year Changes - North America Contract reported net sales of $476.2 million for the three months ended August 31, 2024, a decline of 8.3% from the prior year[15] - International Contract net sales were $146.4 million for the three months ended August 31, 2024, reflecting a decrease of 3.5% year-over-year[15] - Global Retail net sales reached $238.9 million for the three months ended August 31, 2024, down 3.1% compared to the previous year[15] - MillerKnoll, Inc. reported net sales of $861.5 million for the three months ended August 31, 2024, a decrease of 6.1% from the prior year[16] - North America Contract reported net sales of $519.4 million for the three months ended September 2, 2023, reflecting an 8.0% decline from the prior year[19] - International Contract net sales decreased by 19.4% year-over-year to $151.7 million for the three months ended September 2, 2023[19] - Global Retail net sales were reported at $246.6 million for the three months ended September 2, 2023, a decline of 24.4% compared to the previous year[20] - MillerKnoll, Inc. reported net sales of $917.7 million for the three months ended September 2, 2023, down 14.9% from the prior year[20] Organic Orders - North America Contract organic orders increased by 5.1% year-over-year, totaling $536.5 million for the three months ended August 31, 2024[17] - International Contract organic orders grew by 5.5% year-over-year, amounting to $168.0 million for the three months ended August 31, 2024[17] - Global Retail organic orders were $235.9 million for the three months ended August 31, 2024, reflecting a decline of 1.3% from the prior year[18] - MillerKnoll, Inc. reported organic orders of $940.4 million for the three months ended August 31, 2024, an increase of 3.5% year-over-year[18] - North America Contract organic sales showed a slight decline of 0.6% for the three months ended September 2, 2023, with net sales of $520.0 million[19] - International Contract organic sales decreased by 15.6% year-over-year for the three months ended September 2, 2023, totaling $147.7 million[19] - Global Retail organic sales were reported at $244.6 million for the three months ended September 2, 2023, reflecting a 13.0% decline from the prior year[20] - MillerKnoll, Inc. organic sales decreased by 6.9% year-over-year for the three months ended September 2, 2023, with net sales of $912.3 million[20] Charges and Expenses - Integration charges for the North America Contract segment amounted to $24.8 million for the three months ended August 31, 2024[12] - The company reported a total operating loss of $15.7 million for the Corporate segment for the three months ended August 31, 2024[12] - The total operating expenses for MillerKnoll, Inc. were $317.8 million, representing 34.6% of net sales for the three months ended September 2, 2023[13] - Restructuring charges for the North America Contract segment totaled $4.4 million, or 0.8% of net sales for the three months ended September 2, 2023[13] - The company reported impairment charges of $8.1 million, or 1.8% of net sales for the North America Contract segment for the three months ended June 1, 2024[13] - Restructuring charges for MillerKnoll, Inc. totaled $34.0 million for the twelve months ended June 3, 2023[14] Currency Effects - The currency translation effects had a minor impact, with adjustments of $2.8 million for the three months ended August 31, 2024, and $0.5 million for the six months ended November 30, 2024[16] - Currency translation effects negatively impacted reported orders by $7.3 million for MillerKnoll, Inc. in the three months ended September 2, 2023[22] Other Adjustments - The impact of an extra week in FY23 reduced orders by $20.6 million for the twelve months ended June 1, 2024[22] - Fully and HAY eCommerce adjustments accounted for a total reduction of $75.8 million in orders for the twelve months ended June 3, 2023[22] - Organic orders for the twelve months ended June 3, 2023, were $3,686.8 million, reflecting a decrease from the previous year[22]

Core Viewpoint - MillerKnoll, Inc. is set to release its fiscal 2025 third quarter financial results on March 26, 2025, after market close, followed by a conference call to discuss the results [1][2]. Financial Results Announcement - The financial results will be released on March 26, 2025, after the stock market closes [1]. - A conference call and webcast will take place at 5:00 p.m. Eastern time on the same day to discuss the financial and operational results [1][3]. Conference Call Details - The conference call is scheduled for March 26, 2025, at 5:00 p.m. Eastern Time [3]. - Participants can join the call via webcast on the Company's investor relations website [3]. - For those preferring to join by phone, the dial-in number is (888) 672-2415, with the conference identification number being 5515788 [4]. Company Overview - MillerKnoll is a collective of brands focused on designing sustainable and equitable environments, including well-known names like Herman Miller and Knoll [5]. - The company aims to redefine modern design for the 21st century, promoting a sustainable and beautiful future [5].

Financial Performance - Net earnings for the six months ended November 30, 2024, were $34.7 million, a decrease of 31.4% compared to $50.5 million for the same period in the previous year[9]. - For the six months ended December 2, 2023, total net sales were $1,831.9 million, a decrease of 1.9% compared to $1,867.2 million for the same period last year[27]. - Total revenue for the three months ended November 30, 2024, was $970.4 million, a 2.0% increase from $949.5 million for the same period in 2023[31]. - Operating earnings for the total reportable segments increased to $80.0 million for the three months ended November 30, 2024, from $73.6 million in the prior year[81]. - The company reported net earnings attributable to MillerKnoll, Inc. of $34.1 million for the three months ended November 30, 2024[45]. Cash Flow and Liquidity - Cash flows from operating activities decreased to $76.4 million for the six months ended November 30, 2024, down from $213.4 million in the prior year, representing a decline of approximately 64.2%[9]. - The total cash and cash equivalents at the end of the period were $221.1 million, down from $225.8 million, a decrease of 2.1%[9]. - The company experienced a net decrease in cash and cash equivalents of $9.3 million, contrasting with an increase of $2.3 million in the prior year[9]. - The net cash position as of November 30, 2024, was $0.8 million, a decrease from $3.6 million as of June 1, 2024[21]. Assets and Liabilities - Total current assets as of November 30, 2024, increased to $1,125.8 million from $1,069.6 million as of June 1, 2024, reflecting a growth of approximately 5.2%[8]. - Total liabilities increased to $2,652.0 million as of November 30, 2024, compared to $2,584.6 million as of June 1, 2024, indicating a rise of about 2.6%[8]. - The company reported a total stockholders' equity of $1,310.8 million as of November 30, 2024, down from $1,385.1 million as of June 1, 2024, reflecting a decrease of approximately 5.4%[8]. - The carrying value of the company's long-term debt as of November 30, 2024, was $1,402.8 million, with a fair value of $1,484.4 million[51]. Inventory and Sales - Inventories, net, remained relatively stable at $430.6 million as of November 30, 2024, compared to $428.6 million as of June 1, 2024[8]. - Product revenue from single performance obligations was $1,693.3 million, down from $1,716.8 million, reflecting a decline of 1.8%[27]. - The Americas Contract segment reported total revenue of $504.2 million for the three months ended November 30, 2024, up from $476.1 million in the same period last year[31]. - The Global Retail segment's total revenue decreased to $219.9 million for the three months ended November 30, 2024, from $232.2 million in the same period in 2023[31]. Dividends and Shareholder Returns - The company paid dividends of $26.2 million during the six months ended November 30, 2024, compared to $28.1 million in the same period last year, a decrease of approximately 6.8%[9]. - The company declared dividends of $0.1875 per share, totaling $13.7 million for the period[27]. Restructuring and Integration Costs - The company incurred restructuring expenses of $7.0 million in the previous year, which were not reported in the current period[9]. - The Company incurred $28.3 million in costs related to the Knoll Integration for the six months ended November 30, 2024, primarily for exit and disposal costs[87]. - The total restructuring charges related to the 2024 restructuring plan amounted to $30.8 million for the year ended June 1, 2024, with no future costs expected[92]. Tax and Compliance - The effective tax rate for the three months ended November 30, 2024, was 21.8%, slightly higher than the previous year's rate of 21.4% due to a mix of earnings in higher tax jurisdictions[47]. - The company recorded a liability for interest and penalties related to uncertain tax benefits of $0.9 million as of November 30, 2024[49]. Other Comprehensive Income - Other comprehensive loss for the six months ended November 30, 2024, was $5.8 million, compared to a loss of $29.8 million in the previous period, indicating an improvement[10]. - The Company recognized a gain of $3.6 million in other comprehensive loss for the three months ended November 30, 2024, compared to a loss of $7.9 million in the same period of 2023[63].