MLKN · MillerKnoll, Inc.

Period Performance

Period Performance

For the three months ended August 30, 2025 (Q1 FY2026), MillerKnoll reported net sales of $955.7 million, a 10.9% increase from $861.5 million in the prior year quarter. The growth was driven by higher sales volumes across all segments ($84 million combined), favorable foreign currency translation ($8 million), and net price increases ($2 million). Gross margin decreased 50 basis points to 38.5% from 39.0%, as tariff-related costs, net of pricing actions, negatively impacted margin by approximately 110 basis points, partially offset by favorable fixed-cost leverage on higher volumes. Operating expenses fell 2.0% to $314.6 million, primarily due to a $27.8 million reduction in acquisition-related integration charges, partially offset by higher compensation and variable selling costs. Operating earnings surged to $53.5 million from $15.2 million, a 252% increase, reflecting margin expansion in North America Contract and lower integration costs. Net earnings attributable to MillerKnoll were $20.2 million, or $0.29 per diluted share, compared to a net loss of $1.2 million, or $(0.02) per share, in the prior year. Adjusted diluted EPS rose 25% to $0.45 from $0.36, excluding amortization of Knoll intangibles, integration charges, restructuring, debt extinguishment, and pension termination costs.

Segment Dynamics

• North America Contract: Net sales increased 12.1% to $533.9 million, driven by higher volumes (~$54M) and price increases. Gross margin improved 60 bps to 36.7%, aided by favorable leverage on fixed costs and lower freight costs, partially offset by net tariff headwinds of 130 bps. Operating earnings rose 253% to $56.9 million as integration charges dropped significantly. Operating margin expanded to 10.7% from 3.4%.
• International Contract: Net sales grew 14.4% (11.3% organic) to $167.5 million, led by higher volumes (~$21M) and favorable FX ($5M), partly offset by incremental discounting. Gross margin fell 150 bps to 35.3% due to discounting and tariff costs, though operating leverage on fixed costs added 170 bps. Operating earnings increased 42% to $13.5 million, with margin up to 8.1%.
• Global Retail: Net sales rose 6.4% (4.9% organic) to $254.3 million, with higher volumes (~$9M), price increases, and favorable FX. Gross margin declined 190 bps to 44.4%, pressured by increased freight costs and tariffs. Operating earnings fell 73.6% to $1.4 million, reflecting higher compensation and retail store expansion costs. Operating margin contracted to 0.6%.
• Corporate: Unallocated expenses were $18.3 million, up $2.6 million from the prior year, driven by higher compensation costs.

Forward View

Management did not provide explicit revenue or earnings guidance for upcoming quarters. However, the company noted capital expenditure expectations of $120-$130 million for fiscal 2026, up from $107.6 million in fiscal 2025, with $30.7 million spent in Q1. The company highlighted a well-positioned balance sheet with $167.2 million in cash and $313.3 million available under its revolving credit facility, providing total liquidity of $480.5 million. Management believes cash on hand, operating cash flows, and borrowing capacity will be adequate to fund operations, capital needs, and shareholder returns. The MD&A cautioned about forward-looking risks including tariff policies, inflation, interest rates, and global economic conditions, but no specific quantitative outlook was provided.

Notes & Operating Detail

Balance Sheet & Liquidity

Cash and cash equivalents decreased to $167.2M from $193.7M at fiscal year-end, primarily due to capital expenditures and debt repayments. Total debt stood at $1,352.7M, up slightly from $1,337.0M at May 31, 2025, reflecting the net effect of new borrowings and repayments. The company had $313.3M available under its $725.0M revolving credit facility after considering $399.7M borrowings and $12.0M in outstanding letters of credit. Shareholders' equity increased to $1,299.5M from $1,275.8M, driven by net earnings and OCI.

Commitments & Contractual Obligations

No material purchase commitments were disclosed beyond routine guarantees. The company has performance bonds of $11.7M and standby letters of credit of $12.0M, both off-balance sheet. Product warranty reserves were $69.8M. A subsequent event notes a new $90.0M accounts receivable securitization facility entered into after quarter end.

Capital Allocation (buybacks, dividends, debt, capex)

During the quarter, the company repurchased $7.2M of common stock (0.38M shares) and paid $12.7M in dividends ($0.1875 per share). Capital expenditures totaled $30.7M. Debt activity included $886.0M in new borrowings (Term Loan B refinancing and revolver draws) and $875.8M in repayments, resulting in a net increase of $10.2M. The August 2025 amendment extended Term Loan B maturity to August 2032 and reduced outstanding to $550.0M.

Segment / Geographic Mix (if disclosed at note level)

Segment net sales: North America Contract $533.9M (+12.1% YoY), International Contract $167.5M (+14.4%), Global Retail $254.3M (+6.4%). Adjusted operating earnings: North America $61.1M (11.4% margin), International $14.3M (8.5% margin), Global Retail $3.0M (1.2% margin). Geographically, U.S. sales were $694.4M (72.7% of total) and international $261.3M (27.3%).