MillerKnoll(MLKN) - 2026 Q1 - Quarterly Results

First Quarter Fiscal 2026 Results Overview MillerKnoll Inc. achieved strong Q1 FY2026 results, driven by robust execution, improving market conditions, and strategic growth initiatives Executive Summary MillerKnoll Inc. reported strong Q1 FY2026 results, exceeding expectations through robust execution and strategic growth - MillerKnoll Inc. reported strong Q1 FY2026 results, exceeding expectations[1][5] - Performance driven by strong execution, improving conditions in key markets, and strategic growth initiatives[5] - The business model delivered revenue and earnings growth while maintaining balance sheet strength[5] Consolidated Financial Highlights MillerKnoll reported significant Q1 FY2026 increases in net sales and operating earnings, with adjusted diluted EPS growth despite a slight gross margin decrease Consolidated Financial Highlights (Dollars in millions, except per share data) | (Dollars in millions, except per share data) | August 30, 2025 | August 31, 2024 | % Chg. | | :------------------------------------------ | :-------------- | :-------------- | :----- | | Net sales | $955.7 | $861.5 | 10.9 % | | Gross margin % | 38.5 % | 39.0 % | (1.3)% | | Operating expenses | $314.6 | $321.1 | (2.0)% | | * Adjusted operating expenses | $308.0 | $286.9 | 7.4 % | | Operating earnings % | 5.6 % | 1.8 % | 211.1 %| | * Adjusted operating earnings % | 6.3 % | 5.8 % | 8.6 % | | (1) Earnings (loss) per share - diluted | $0.29 | $(0.02) | N/A | | (1) Adjusted earnings per share - diluted | $0.45 | $0.36 | 25.0 % | - Net sales of $955.7 million, up 10.9% as reported and 10.0% organically, year-over-year[3] - Orders of $885.4 million, down 5.4% as reported and 6.2% organically, year-over-year, primarily due to order pull-forward in North America Contract segment in Q4 FY2025[3] - Gross margin decreased 50 basis points, mainly from $8.0 million net tariff-related impact, partially offset by leverage on higher net sales[3] Cash Flow, Debt, and Liquidity MillerKnoll maintained strong liquidity, refinanced its Term Loan B to 2032, and reported $9.4 million in operating cash flow with a 2.92x net debt-to-EBITDA ratio - Liquidity as of August 30, 2025, was $480.5 million, including cash on hand and Revolving Credit Facility availability[8] - Issued $550 million Term Loan B, replacing existing debt and extending maturity to 2032[8] - Cash flow from operations was $9.4 million[8] - Net debt-to-EBITDA ratio was 2.92x[8] Near Term Scheduled Debt Maturities (millions) | Fiscal Year | Amount (millions) | | :---------- | :---------------- | | 2026 | $12.4 | | 2027 | $23.3 | | 2028 | $25.8 | Results by Segment All MillerKnoll segments reported Q1 FY2026 net sales growth, with varied order trends and operating margins influenced by market dynamics North America Contract North America Contract achieved significant net sales growth and increased operating margin, despite an order decline due to prior quarter pull-ahead - Q1 net sales of $533.9 million, up 12.1% on both reported and organic basis, year-over-year[9] - Q1 orders of $492.2 million, down 8.2% as reported and organically, year-over-year, primarily due to an estimated $55 million to $60 million order pull-ahead from Q4 FY2025 pricing actions[9] - Q1 operating margin of 10.7% compared to 3.4% in the prior year; adjusted operating margin of 11.4%, up 200 basis points, driven by fixed expense leverage on higher net sales, partially offset by higher net tariff-related impact[9] International Contract International Contract saw strong net sales growth but declining orders, with improved operating margin and a slight adjusted margin decrease - Q1 net sales of $167.5 million, up 14.4% as reported and 11.3% organically, year-over-year[9] - Q1 orders of $154.5 million, down 6.5% as reported and 9.2% organically, year-over-year[9] - Q1 operating margin of 8.1% compared to 6.5% in the prior year; adjusted operating margin of 8.5%, down 60 basis points year-over-year, primarily from regional and product sales mix[9] Global Retail Global Retail reported net sales and order growth, but operating margin declined due to increased freight, tariffs, and new store opening costs - Q1 net sales of $254.3 million, up 6.4% as reported and 4.9% organically, year-over-year[13] - Q1 orders of $238.7 million, up 1.7% as reported and 0.3% organically, year-over-year, with North America region orders up 8%[13] - Q1 operating margin of 0.6% compared to 2.2% in the prior year; adjusted operating margin of 1.2%, down 190 basis points year-over-year, primarily from increased freight costs, higher net tariff-related impact, and new retail store opening costs[13] - Opened two DWR stores (Sarasota, FL, and Las Vegas, NV) and two Herman Miller stores (Chicago, IL, and Philadelphia, PA) in Q1[13] Second Quarter Fiscal 2026 Outlook MillerKnoll projects Q2 FY2026 net sales between $926 million and $966 million, with adjusted diluted EPS of $0.38 to $0.44, including tariff and new store costs Q2 FY2026 Financial Operating Results Expectations | Q2 FY2026 | Range | | :------------------------------ | :------------------------- | | Net sales | $926 million to $966 million | | Gross margin % | 37.6% to 38.6% | | Adjusted operating expenses | $300 million to $310 million | | Interest and other expense, net | $16.2 million to $17.2 million | | Adjusted effective tax rate* | 22.0% to 24.0% | | Adjusted earnings per share - diluted* | $0.38 to $0.44 | - Guidance ranges include estimated incremental costs related to tariffs (net of expected mitigation efforts) between $2 million to $4 million before tax, and $0.02 to $0.04 of net earnings per share[14] - Operating expense outlook reflects costs related to four new retail store openings in Q2 FY2026[14] Condensed Consolidated Financial Statements This section presents MillerKnoll's unaudited condensed consolidated financial statements, including statements of operations, cash flows, and balance sheets Statements of Operations The statements of operations highlight MillerKnoll's Q1 FY2026 financial performance, showing significant increases in net sales and operating earnings Condensed Consolidated Statements of Operations (Three Months Ended) | (Unaudited) (Dollars in millions, except per share and common share data) | August 30, 2025 | % | August 31, 2024 | % | | :---------------------------------------------------------------------- | :-------------- | :----- | :-------------- | :----- | | Net sales | $955.7 | 100.0 %| $861.5 | 100.0 %| | Cost of sales | 587.6 | 61.5 % | 525.2 | 61.0 % | | Gross margin | 368.1 | 38.5 % | 336.3 | 39.0 % | | Operating expenses | 314.6 | 32.9 % | 321.1 | 37.3 % | | Operating earnings | 53.5 | 5.6 % | 15.2 | 1.8 % | | Other expenses, net | 24.8 | 2.6 % | 16.9 | 2.0 % | | Earnings (loss) before income taxes and equity income | 28.7 | 3.0 % | (1.7) | (0.2)% | | Income tax expense (benefit) | 7.6 | 0.8 % | (1.1) | (0.1)% | | Equity income (loss), net of tax | — | — % | 0.1 | — % | | Net earnings (loss) | 21.1 | 2.2 % | (0.5) | (0.1)% | | Net earnings attributable to redeemable noncontrolling interests | 0.9 | 0.1 % | 0.7 | 0.1 % | | Net earnings (loss) attributable to MillerKnoll, Inc. | $20.2 | 2.1 % | $(1.2) | (0.1)% | | Earnings (loss) per share - basic | $0.29 | | ($0.02) | |\ | Weighted average basic common shares | 68,519,141 | | 70,206,373 | | | Earnings (loss) per share - diluted | $0.29 | | ($0.02) | | | Weighted average diluted common shares | 69,194,506 | | 70,206,373 | | Statements of Cash Flows The statements of cash flows show decreased operating cash flow, increased investing cash use, and reduced financing cash use for Q1 FY2026 Condensed Consolidated Statements of Cash Flows (Three Months Ended, Dollars in millions) | (Unaudited) (Dollars in millions) | August 30, 2025 | August 31, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Cash provided by (used in): | | | | Operating activities | $9.4 | $21.1 | | Investing activities | (30.5) | (22.3) | | Financing activities | (9.2) | (20.3) | | Effect of exchange rate changes | 3.8 | 0.8 | | Net change in cash and cash equivalents | (26.5) | (20.7) | | Cash and cash equivalents, beginning of period | 193.7 | 230.4 | | Cash and cash equivalents, end of period | $167.2 | $209.7 | Balance Sheets The balance sheets indicate a slight decrease in total assets and liabilities, with decreased cash and increased inventories from May to August 2025 Condensed Consolidated Balance Sheets (Dollars in millions) | (Unaudited) (Dollars in millions) | August 30, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | ASSETS | | | | Current Assets: | | | | Cash and cash equivalents | $167.2 | $193.7 | | Accounts receivable, net | 332.1 | 350.2 | | Unbilled accounts receivable | 33.2 | 26.9 | | Inventories, net | 465.8 | 447.5 | | Prepaid expenses and other | 91.5 | 90.4 | | Total current assets | 1,089.8 | 1,108.7 | | Net property and equipment | 502.6 | 496.1 | | Right of use assets | 412.1 | 411.2 | | Other assets | 1,936.5 | 1,934.2 | | Total Assets | $3,941.0 | $3,950.2 | | LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY | | | | Current Liabilities: | | | | Accounts payable | $253.6 | $271.3 | | Short-term borrowings and current portion of long-term debt | 16.4 | 16.0 | | Short-term lease liability | 75.7 | 72.0 | | Accrued liabilities | 306.3 | 344.5 | | Total current liabilities | 652.0 | 703.8 | | Long-term debt | 1,327.5 | 1,310.6 | | Lease liabilities | 409.0 | 413.4 | | Other liabilities | 190.1 | 187.3 | | Total Liabilities | 2,578.6 | 2,615.1 | | Redeemable Noncontrolling Interests | 62.9 | 59.3 | | Stockholders' Equity | 1,299.5 | 1,275.8 | | Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity | $3,941.0 | $3,950.2 | Non-GAAP Financial Measures and Other Supplemental Data This section provides definitions, adjustments, and reconciliations for non-GAAP financial measures, along with segment descriptions Non-GAAP Definitions This section defines key non-GAAP financial measures, presented to offer a comparative basis for investors alongside GAAP results - Non-GAAP measures are presented to provide financial information on a more comparative basis for investors, not as alternatives to GAAP[19] - Definitions provided for: Adjusted Effective Tax Rate, Adjusted Operating Earnings (Loss), Adjusted Operating Margin, Adjusted Earnings per Share, Adjusted Gross Margin, Adjusted Operating Expenses, Adjusted Bank Covenant EBITDA, and Organic Growth (Decline)[20][21][22][23][24][25] Non-GAAP Adjustments and Segment Descriptions This section details specific adjustments for non-GAAP measures and describes MillerKnoll's reportable segments - Adjustments include Amortization of Knoll purchased intangibles, Integration charges, Restructuring charges, Knoll pension plan termination charges, Debt extinguishment charges, Impairment charges, and Tax related items[26][27][28][29] - Segment descriptions: North America Contract (furniture for office, healthcare, education in US/Canada, plus specific brands), International Contract (furniture in Europe, MEA, APAC, LatAm), Global Retail (modern design furnishings to third-party retailers and D2C, plus Holly Hunt brand), and Corporate (unallocated general corporate expenses)[30] Non-GAAP Reconciliations This section provides detailed reconciliations from GAAP to non-GAAP financial measures for various metrics on a consolidated and segment basis Operating Earnings to Adjusted Operating Earnings by Segment This reconciliation details adjustments from GAAP to adjusted operating earnings for each segment and consolidated MillerKnoll, highlighting specific charges Reconciliation of Operating Earnings (Loss) to Adjusted Operating Earnings (Loss) by Segment (millions) | Segment / Metric | August 30, 2025 (millions) | August 31, 2024 (millions) | | :-------------------------------- | :------------------------- | :------------------------- | | North America Contract | | | | Operating earnings | $56.9 | $16.1 | | Adjustments | 4.2 | 28.8 | | Adjusted operating earnings | $61.1 | $44.9 | | International Contract | | | | Operating earnings | $13.5 | $9.5 | | Adjustments | 0.8 | 3.8 | | Adjusted operating earnings | $14.3 | $13.3 | | Global Retail | | | | Operating earnings | $1.4 | $5.3 | | Adjustments | 1.6 | 2.1 | | Adjusted operating earnings | $3.0 | $7.4 | | Corporate | | | | Operating (loss) | $(18.3) | $(15.7) | | Adjusted operating (loss) | $(18.3) | $(15.7) | | MillerKnoll, Inc. (Consolidated) | | | | Operating earnings | $53.5 | $15.2 | | Adjustments | 6.6 | 34.7 | | Adjusted operating earnings | $60.1 | $49.9 | Earnings per Share to Adjusted Earnings per Share This reconciliation details adjustments from diluted EPS to adjusted diluted EPS, including amortization, integration, restructuring, and debt extinguishment charges Reconciliation of Earnings (Loss) per Share to Adjusted Earnings per Share (Three Months Ended) | Metric | August 30, 2025 | August 31, 2024 | | :------------------------------------------ | :-------------- | :-------------- | | Earnings (loss) per share - diluted | $0.29 | $(0.02) | | Add: Amortization of Knoll purchased intangibles | 0.09 | 0.08 | | Add: Integration charges | — | 0.40 | | Add: Restructuring charges | 0.01 | — | | Add: Debt extinguishment charges | 0.11 | — | | Add: Knoll pension plan termination charges | — | 0.01 | | Tax impact on adjustments | (0.05) | (0.11) | | Adjusted earnings per share - diluted | $0.45 | $0.36 | | Weighted average shares outstanding (used for calculating adjusted earnings per share) – diluted | 69,194,506 | 70,206,373 | Gross Margin to Adjusted Gross Margin This reconciliation illustrates the adjustment from GAAP gross margin to adjusted gross margin, accounting for integration charges Reconciliation of Gross Margin to Adjusted Gross Margin (Three Months Ended, Dollars in millions) | Metric | August 30, 2025 | % | August 31, 2024 | % | | :------------------ | :-------------- | :----- | :-------------- | :----- | | Gross margin | $368.1 | 38.5 % | $336.3 | 39.0 % | | Integration charges | — | — % | 0.5 | 0.1 % | | Adjusted gross margin | $368.1 | 38.5 % | $336.8 | 39.1 % | Operating Expenses to Adjusted Operating Expenses & Adjusted Bank Covenant EBITDA This section reconciles operating expenses to adjusted operating expenses and presents the calculation of Adjusted Bank Covenant EBITDA and its ratio Reconciliation of Operating Expenses to Adjusted Operating Expenses (Three Months Ended, Dollars in millions) | Metric | August 30, 2025 | % | August 31, 2024 | % | | :------------------------------------------ | :-------------- | :----- | :-------------- | :----- | | Operating expenses | $314.6 | 32.9 % | $321.1 | 37.3 % | | Restructuring charges | 0.5 | 0.1 % | — | — % | | Integration charges | — | — % | 27.8 | 3.2 % | | Amortization of Knoll purchased intangibles | 6.1 | 0.6 % | 5.9 | 0.7 % | | Knoll pension plan termination charges | — | — % | 0.5 | 0.1 % | | Adjusted operating expenses | $308.0 | 32.2 % | $286.9 | 33.3 % | Reconciliation of Net Loss to Adjusted Bank Covenant EBITDA and Adjusted Bank Covenant EBITDA Ratio (Trailing Twelve Month Basis, Dollars in millions) | Metric | August 30, 2025 | | :-------------------------------------- | :-------------- | | Net loss | $(15.6) | | Income tax expense | 20.3 | | Depreciation expense | 102.9 | | Amortization expense | 38.5 | | Interest expense | 75.2 | | (*) Other adjustments | 183.7 | | Adjusted bank covenant EBITDA | $405.0 | | Total debt, less cash, end of trailing period | $1,184.5 | | Net debt to adjusted bank covenant EBITDA ratio | 2.92 | Organic Sales Growth by Segment This table presents organic sales growth for each segment and consolidated MillerKnoll, adjusted for currency translation effects Organic Sales Growth by Segment (Three Months Ended August 30, 2025, Dollars in millions) | Metric | North America Contract | International Contract | Global Retail | Total | | :---------------------- | :--------------------- | :--------------------- | :------------ | :------ | | Net sales, as reported | $533.9 | $167.5 | $254.3 | $955.7 | | % change from PY | 12.1 % | 14.4 % | 6.4 % | 10.9 % | | Adjustments | | | | | | (1) Currency translation effects | (0.1) | (4.6) | (3.6) | (8.3) | | Net sales, organic | $533.8 | $162.9 | $250.7 | $947.4 | | % change from PY | 12.1 % | 11.3 % | 4.9 % | 10.0 % | Organic Order Growth by Segment This table details organic order growth for each segment and consolidated MillerKnoll, adjusted for currency translation effects Organic Order Growth by Segment (Three Months Ended August 30, 2025, Dollars in millions) | Metric | North America Contract | International Contract | Global Retail | Total | | :---------------------- | :--------------------- | :--------------------- | :------------ | :------ | | Orders, as reported | $492.2 | $154.5 | $238.7 | $885.4 | | % change from PY | (8.2)% | (6.5)% | 1.7 % | (5.4)% | | Adjustments | | | | | | (1) Currency translation effects | (0.1) | (4.5) | (3.3) | (7.9) | | Orders, organic | $492.1 | $150.0 | $235.4 | $877.5 | | % change from PY | (8.2)% | (9.2)% | 0.3 % | (6.2)% | Effective Tax Rate to Adjusted Effective Tax Rate This reconciliation shows adjustments from the GAAP effective tax rate to the adjusted effective tax rate, accounting for non-GAAP impacts Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate (Three Months Ended, Dollars in millions) | Metric | August 30, 2025 | August 31, 2024 | | :------------------------------------------ | :-------------- | :-------------- | | Income tax expense (benefit), as reported (GAAP) | $7.6 | $(1.1) |\ | Effective Tax Rate | 26.5 % | 66.2 % | | Adjustments | | | | Restructuring charges | $0.1 | — | | Integration charges | — | 6.7 | | Amortization of Knoll purchased intangibles | 1.5 | 1.4 | | Knoll pension plan termination charges | — | 0.1 | | Debt extinguishment charges | 2.0 | — | | Income tax expense (benefit), adjusted | $11.2 | $7.1 | | * Adjusted Effective Tax Rate | 26.0 % | 21.5 % | Consolidated Backlog MillerKnoll's consolidated backlog decreased to $690.9 million in Q1 FY2026 from $758.0 million in Q1 FY2025 Consolidated MillerKnoll Backlog (Dollars in millions) | Metric | Q1 FY2026 | Q1 FY2025 | | :---------------- | :-------- | :-------- | | MillerKnoll backlog | $690.9 | $758.0 | Company Information This section provides an overview of MillerKnoll, its brands, forward-looking statements, risk factors, and webcast information About MillerKnoll MillerKnoll is a collective of dynamic brands focused on designing and building a sustainable, equitable, and beautiful future - MillerKnoll is a collective of dynamic brands, including Herman Miller, Knoll, Colebrook Bosson Saunders, DatesWeiser, Design Within Reach, Edelman, Geiger, HAY, Holly Hunt, Knoll Textiles, Maharam, Muuto, NaughtOne, and Spinneybeck|FilzFelt[43] - The company aims to redefine modern for the 21st century by building a more sustainable, equitable, and beautiful future[43] Forward-Looking Statements and Risk Factors This section outlines forward-looking statements and key risk factors, including trade policies, growth strategy, economic conditions, and cybersecurity threats - The communication includes forward-looking statements about future events, anticipated results, market conditions, business strategies, and risks[44] - Actual results could differ materially due to various risks and uncertainties, many beyond the company's control[44] - Key risk factors include changes to U.S. and international trade policies (tariffs), challenges in implementing growth strategy, consumer spending levels, global and national economic conditions (inflation, interest rates, geopolitical tensions), cybersecurity threats, public health crises, risks related to Knoll acquisition debt, availability and pricing of raw materials, financial strength of dealers/customers, pace of government procurement, and outcome of litigation/audits[46] Webcast and Conference Call Information MillerKnoll hosted a conference call and webcast on September 23, 2025, to discuss Q1 FY2026 results, with an online archive available - Conference call and webcast held on Tuesday, September 23, 2025, at 5:00 PM ET to discuss Q1 FY2026 results[12] - Details and online archive available on the company's investor relations website: https://www.millerknoll.com/investor-relations/news-events/events-and-presentations[12](index=12&type=chunk)