MillerKnoll(MLKN) - 2025 Q4 - Annual Results

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]