MillerKnoll(MLKN) - 2025 Q1 - Quarterly Report

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