MillerKnoll, Inc. Reports Fourth Quarter and Fiscal 2024 Results
MillerKnoll (NASDAQ: MLKN) reported its fourth quarter and fiscal 2024 results, showing mixed performance. Orders in Q4 increased by 1.1% on a reported basis and 2.9% organically, while gross margin improved by 250 basis points YoY. However, net sales for Q4 were down 7.1% YoY to $888.9 million, and full-year net sales decreased by 11.2% to $3.6 billion. Despite these declines, the company achieved annualized cost synergies of $160 million through integrating Knoll and improved EPS metrics, with GAAP EPS up 101.8% for the year.
The company's Q4 operating margin increased to 2.7%, and adjusted diluted EPS grew 63.4% to $0.67. For the entire fiscal year, adjusted diluted EPS rose 12.4% to $2.08. The company is optimistic for fiscal 2025, expecting a sales increase and adjusted diluted EPS between $2.10 and $2.30. Investments in showrooms and digital platforms aim to boost the business amid challenging retail conditions.
- Orders in Q4 up 1.1% reported and 2.9% organically.
- Gross margin improved by 250 basis points in Q4 YoY.
- Achieved $160 million in cost synergies.
- GAAP EPS improved 101.8% YoY.
- Adjusted diluted EPS grew 63.4% to $0.67 in Q4.
- Operating margin increased to 2.7% in Q4.
- Q4 net sales down 7.1% YoY to $888.9 million.
- Full-year net sales decreased 11.2% to $3.6 billion.
- Recorded special charges of $22.1 million for restructuring.
- Recognized $16.8 million in impairment charges for trade names.
Insights
MillerKnoll Inc.'s fiscal 2024 results reveal a nuanced financial performance. Net sales for the quarter and full year were down
The operating margin also saw an uptick, reaching
Earnings per share (EPS) demonstrated notable growth: Q4 reported diluted EPS was
Short-term liquidity remains robust with
In summary, MillerKnoll's focus on margin expansion and cost management translates to improved profitability metrics, though revenue headwinds persist.
The market dynamics for MillerKnoll show a complex picture. The Americas Contract segment saw mixed results; while net sales were down
Conversely, the International Contract and Specialty segment exhibited stronger performance with
The Global Retail segment remains challenged by softer housing market conditions, though operational efficiencies have driven a substantial improvement in adjusted operating margin by
Overall, the geographical and segment diversification provides a balanced risk-reward profile, with emerging markets and operational efficiencies offering upside potential amidst headwinds.
MillerKnoll's recent financial disclosures also highlight specific regulatory and compliance considerations. The company experienced non-cash, pre-tax impairment charges totaling
The company's restructuring actions, including workforce reductions and showroom consolidations, incurred special charges of
Moreover, the reduction in the effective tax rate to negative
Such comprehensive disclosure and adherence to GAAP principles underscore a transparent and compliant financial approach, offering a degree of reassurance to stakeholders about governance and fiscal responsibility.
Business Highlights
- Orders in the fourth quarter were up
1.1% on a reported basis and up2.9% organically from last year. - Fourth quarter and full year gross margin improved 250 basis points and 410 basis points, respectively year-over-year.
- Achieved annualized run-rate cost synergy target of
related to the integration of Knoll.$160 million - Full year GAAP and adjusted diluted earnings per share improved
101.8% and12.4% respectively, from the prior year.
Fourth Quarter Fiscal 2024 Financial Results
(Unaudited) | (Unaudited) | |||||
Three Months Ended | Twelve Months Ended | |||||
(Dollars in millions, except per share data) | June 1, 2024 | June 3, 2023 | % Chg. | June 1, 2024 | June 3, 2023 | % Chg. |
(13 weeks) | (13 weeks) | (39 weeks) | (40 weeks) | |||
Net sales | $ 888.9 | $ 956.7 | (7.1) % | $ 3,628.4 | $ 4,087.1 | (11.2) % |
Gross margin % | 39.6 % | 37.1 % | N/A | 39.1 % | 35.0 % | N/A |
Operating expenses | $ 328.7 | $ 343.1 | (4.2) % | $ 1,252.3 | $ 1,307.7 | (4.2) % |
Adjusted operating expenses* | $ 278.8 | $ 297.6 | (6.3) % | $ 1,157.3 | $ 1,188.8 | (2.6) % |
Effective tax rate | (63.2) % | 119.9 % | N/A | 14.8 % | 8.8 % | N/A |
Adjusted effective tax rate* | 12.0 % | 21.7 % | N/A | 19.6 % | 22.3 % | N/A |
Earnings per share - diluted(1) | $ 0.14 | $ 0.00 | N/A | $ 1.11 | $ 0.55 | 101.8 % |
Adjusted earnings per share - diluted*(1) | $ 0.67 | $ 0.41 | 63.4 % | $ 2.08 | $ 1.85 | 12.4 % |
*Items indicated represent Non-GAAP measurements; see the reconciliations of Non-GAAP financial measures and related explanations below. (1)Due to the anti-dilutive effect resulting from periods where the Company reports a net loss, the impact of potentially dilutive securities on the per share amounts has been omitted from the calculation of weighted-average common shares outstanding for diluted net loss per common share. |
To our shareholders:
MillerKnoll finished fiscal year 2024 strong with significant year-over-year earnings per share growth in the fourth quarter. By leveraging the advantage and scale of MillerKnoll's collective of brands, diversified business channels and global operations, our teams continued to drive substantial margin expansion while protecting strategic investments for growth. The improving internal demand indicators we have been monitoring throughout the year were validated in the fourth quarter by a return to year-over-year order growth within our America's Contract segment. This drove a
There is accelerated activity in our contract business. Earlier this month, we met with dealers and customers at Design Days, an annual large trade show in
We are investing in MillerKnoll showrooms, our digital platforms, and enhanced tools to fuel our contract business and support our MillerKnoll dealers. We are also finding new ways to bring our brand collective together in both our dealers showrooms and our own showrooms. Work is underway to open newly enhanced MillerKnoll spaces in
While our retail business and the industry continue to navigate tough conditions in the short-term, we are making investments for long-term growth by enhancing the store and online experience for customers. We continued to optimize our product assortment through the introduction of complementary categories and additional materials. To optimize foot traffic, we are densifying floor arrangements to show more options and offering design services that help drive larger sales with less returns. In addition, we are testing store formats such as the beautiful new Design Within Reach studio in
Fourth Quarter and Fiscal 2024 Consolidated Results
Consolidated net sales for the fourth quarter were
Gross margin in the quarter was
Consolidated operating expenses for the quarter were
During the fourth quarter, the Company recorded special charges of
Operating margin for the quarter was
Reported diluted earnings per share were
As of June 1, 2024, our liquidity position reflected cash on hand and availability on our revolving credit facility totaling
For fiscal 2024, net sales were
For fiscal 2024, gross margin and operating margin both improved year-over-year. Reported and adjusted gross margin increased 410 and 370 basis points, respectively. Reported operating margins were 160 basis points higher than last year, while adjusted operating margin increased 90 basis points year-over-year.
Diluted earnings per share for the full year totaled
Fourth Quarter and Fiscal 2024 Results by Segment
Americas Contract
For the fourth quarter, Americas Contract net sales of
Operating margin loss in the quarter was
For the full fiscal year, net sales decreased by
International Contract and Specialty
The International Contract and Specialty segment net sales in the fourth quarter of
Operating margin for the fourth quarter was
For the full fiscal year, net sales decreased
Global Retail
Net sales in the fourth quarter of our Global Retail segment totaled
Operating margin for the fourth quarter was
For the full fiscal year, net sales decreased
Reported operating margin was
First Quarter and Fiscal 2025 Outlook
Overall, we are optimistic about fiscal year 2025 as there is increased activity and interest in the contract space. Traffic at recent trade shows around the globe, including NeoCon in the
We believe these indicators signal an active year ahead. Accordingly, for fiscal year 2025 we expect net sales to be above fiscal year 2024 and adjusted diluted earnings per share to be in the range of
As it relates to the first quarter of fiscal year 2025, we expect net sales of
Andi Owen | Jeff Stutz | ||
President and Chief Executive Officer | Chief Financial Officer |
Webcast and Conference Call Information
The Company will host a conference call and webcast to discuss the results of the fourth quarter of fiscal 2024 on Wednesday, June 26, 2024, at 5:00 PM ET. To ensure participation, allow extra time to visit the Company's website at https://www.millerknoll.com/investor-relations/news-events/events-and-presentations to download the streaming software necessary to participate. An online archive of the webcast will also be available on the Company's investor relations website. Additional links to materials supporting the release will also be available at https://www.millerknoll.com/investor-relations.
Financial highlights for the three and twelve months ended June 1, 2024 follow:
MillerKnoll, Inc. Condensed Consolidated Statements of Operations | |||||||||||
(Unaudited) (Dollars in millions, except per share and common share data) | Three Months Ended | Twelve Months Ended | |||||||||
June 1, 2024 | June 3, 2023 | June 1, 2024 | June 3, 2023 | ||||||||
Net sales | $ 888.9 | 100.0 % | $ 956.7 | 100.0 % | $ 3,628.4 | 100.0 % | $ 4,087.1 | 100.0 % | |||
Cost of sales | 536.5 | 60.4 % | 602.0 | 62.9 % | 2,208.9 | 60.9 % | 2,657.1 | 65.0 % | |||
Gross margin | 352.4 | 39.6 % | 354.7 | 37.1 % | 1,419.5 | 39.1 % | 1,430.0 | 35.0 % | |||
Operating expenses | 328.7 | 37.0 % | 343.1 | 35.9 % | 1,252.3 | 34.5 % | 1,307.7 | 32.0 % | |||
Operating earnings | 23.7 | 2.7 % | 11.6 | 1.2 % | 167.2 | 4.6 % | 122.3 | 3.0 % | |||
Other expenses, net | 16.9 | 1.9 % | 17.1 | 1.8 % | 67.5 | 1.9 % | 70.9 | 1.7 % | |||
Earnings before income taxes and equity income | 6.8 | 0.8 % | (5.5) | (0.6) % | 99.7 | 2.7 % | 51.4 | 1.3 % | |||
Income tax (benefit) expense | (4.3) | (0.5) % | (6.6) | (0.7) % | 14.7 | 0.4 % | 4.5 | 0.1 % | |||
Equity (loss) income, net of tax | (0.1) | — % | (1.0) | (0.1) % | (0.4) | — % | (0.8) | — % | |||
Net earnings | 11.0 | 1.2 % | 0.1 | — % | 84.6 | 2.3 % | 46.1 | 1.1 % | |||
Net earnings attributable to redeemable noncontrolling interests | 1.1 | 0.1 % | 0.2 | — % | 2.3 | 0.1 % | 4.0 | 0.1 % | |||
Net earnings attributable to MillerKnoll, Inc. | $ 9.9 | 1.1 % | $ (0.1) | — % | $ 82.3 | 2.3 % | $ 42.1 | 1.0 % | |||
Amounts per common share attributable to MillerKnoll, Inc. | |||||||||||
Earnings (loss) per share - basic | |||||||||||
Weighted average basic common shares | 71,383,146 | 75,586,370 | 73,291,939 | 75,478,000 | |||||||
Earnings (loss) per share - diluted | |||||||||||
Weighted average diluted common shares | 72,658,582 | 75,586,370 | 73,954,756 | 76,024,368 | |||||||
MillerKnoll, Inc. Condensed Consolidated Statements of Cash Flows | |||
Twelve Months Ended | |||
(Unaudited) (Dollars in millions) | June 1, 2024 | June 3, 2023 | |
Cash provided by (used in): | |||
Operating activities | $ 352.3 | $ 162.9 | |
Investing activities | (86.3) | (76.5) | |
Financing activities | (258.8) | (86.8) | |
Effect of exchange rate changes | (0.3) | (6.4) | |
Net change in cash and cash equivalents | 6.9 | (6.8) | |
Cash and cash equivalents, beginning of period | 223.5 | 230.3 | |
Cash and cash equivalents, end of period | $ 230.4 | $ 223.5 | |
MillerKnoll, Inc. Condensed Consolidated Balance Sheets | |||
(Unaudited) (Dollars in millions) | June 1, 2024 | June 3, 2023 | |
ASSETS | |||
Current Assets: | |||
Cash and cash equivalents | $ 230.4 | $ 223.5 | |
Accounts receivable, net | 306.9 | 334.1 | |
Unbilled accounts receivable | 22.2 | 29.4 | |
Inventories, net | 425.0 | 487.4 | |
Prepaid expenses and other | 79.7 | 101.8 | |
Total current assets | 1,064.2 | 1,176.2 | |
Net property and equipment | 492.0 | 536.3 | |
Right of use assets | 364.0 | 415.9 | |
Other assets | 2,106.4 | 2,146.4 | |
Total Assets | $ 4,026.6 | $ 4,274.8 | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Accounts payable | $ 236.0 | $ 269.5 | |
Short-term borrowings and current portion of long-term debt | 43.5 | 33.4 | |
Short-term lease liability | 67.2 | 77.1 | |
Accrued liabilities | 345.6 | 322.8 | |
Total current liabilities | 692.3 | 702.8 | |
Long-term debt | 1,291.7 | 1,365.1 | |
Lease liabilities | 348.8 | 393.7 | |
Other liabilities | 234.8 | 273.0 | |
Total Liabilities | 2,567.6 | 2,734.6 | |
Redeemable Noncontrolling Interests | 74.3 | 107.6 | |
Stockholders' Equity | 1,384.7 | 1,432.6 | |
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity | $ 4,026.6 | $ 4,274.8 | |
Non-GAAP Financial Measures and Other Supplemental Data
This presentation contains non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. These non-GAAP financial measures are not measurements of our financial performance under GAAP and should not be considered an alternative to the related GAAP measurement. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of non-GAAP measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included within this presentation. The Company believes these non-GAAP measures are useful for investors as they provide financial information on a more comparative basis for the periods presented.
The non-GAAP financial measures referenced within this presentation include: Adjusted Effective Tax Rate, Adjusted Operating Earnings (Loss), Adjusted Operating Margin, Adjusted Earnings per Share, Adjusted Gross Margin, Adjusted Operating Expenses, Adjusted EBITDA, Adjusted Bank Covenant EBITDA, and Organic Growth (Decline).
Adjusted Effective Tax Rate refers to the projected full-year GAAP tax rate, adjusted to exclude certain unusual or infrequent events that are expected to significantly impact that rate as well as impacts related to enactments of comprehensive tax law changes.
Adjusted Operating Earnings (Loss) represents reported operating earnings plus integration charges, amortization of Knoll purchased intangibles, restructuring expenses, and impairment charges. These adjustments are described further below.
Adjusted Operating Margin is calculated as adjusted operating earnings (loss) divided by net sales.
Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, and the related tax effect of these adjustments. These adjustments are described further below.
Adjusted Gross Margin represents gross margin plus restructuring and impairment charges. These adjustments are described further below.
Adjusted Operating Expenses represents reported operating expenses excluding restructuring charges, integration charges, amortization of Knoll purchased intangibles, and impairment charges. These adjustments are described further below.
Adjusted EBITDA is calculated by excluding income tax expense, interest income and expense, depreciation and amortization expense, restructuring, impairment, and integration charges from net income.
Adjusted Bank Covenant EBITDA is calculated by excluding depreciation, amortization, interest expense, taxes from net income, and certain other adjustments. Other adjustments include, as applicable in the period, charges associated with business restructuring actions, integration charges, impairment expenses, non-cash stock-based compensation, future synergies, and other items as described in our lending agreements.
Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects, the impact of the additional week in fiscal 2023, the impact of the closure of the Hay eCommerce channel in
The adjustments to arrive at these non-GAAP financial measures are as follows:
Amortization of Knoll purchased intangibles: Includes expenses associated with the amortization of acquisition related intangibles acquired as part of the Knoll acquisition. The revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. We exclude the impact of the amortization of Knoll purchased intangibles as such non-cash amounts were significantly impacted by the size of the Knoll acquisition. Furthermore, we believe that this adjustment enables better comparison of our results as Amortization of Knoll Purchased Intangibles will not recur in future periods once such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets. Although we exclude the Amortization of Knoll Purchased Intangibles in these non-GAAP measures, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.
Integration charges: Knoll integration-related costs include severance, accelerated stock-based compensation expenses, asset impairment charges, and expenses related to synergy realization efforts and reorganization initiatives.
Restructuring charges: Includes costs associated with actions involving targeted workforce reductions and non-cash charges for the impairment of assets associated with the decision to close certain showrooms.
Impairment charges: Includes non-cash, pre-tax charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand as well as impairment of the Knoll and Muuto trade names.
Tax related items: We excluded the income tax benefit/provision effect of the tax related items from our non-GAAP measures because they are not associated with the tax expense on our ongoing operating results.
Certain tables below summarize select financial information, for the periods indicated, related to each of the Company's reportable segments. The Americas Contract ("
A. Reconciliation of Operating Earnings (Loss) to Adjusted Operating Earnings (Loss) by Segment | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
June 1, 2024 | June 3, 2023 | June 1, 2024 | June 3, 2023 | |||||
Americas Contract | ||||||||
Net sales | $ 416.6 | 100.0 % | $ 474.4 | 100.0 % | $ 1,824.2 | 100.0 % | $ 2,026.1 | 100.0 % |
Gross margin | 138.5 | 33.2 % | 158.7 | 33.5 % | 620.2 | 34.0 % | 611.2 | 30.2 % |
Total operating expenses | 141.6 | 34.0 % | 137.3 | 28.9 % | 521.5 | 28.6 % | 511.6 | 25.3 % |
Operating (loss) earnings | $ (3.1) | (0.7) % | $ 21.4 | 4.5 % | $ 98.7 | 5.4 % | $ 99.6 | 4.9 % |
Adjustments | ||||||||
Restructuring | 18.8 | 4.5 % | 5.2 | 1.1 % | 24.6 | 1.3 % | 22.8 | 1.1 % |
Integration charges | 3.3 | 0.8 % | 3.5 | 0.7 % | 18.6 | 1.0 % | 9.7 | 0.5 % |
Impairment charges | 8.1 | 1.9 % | 14.4 | 3.0 % | 8.1 | 0.4 % | 14.4 | 0.7 % |
Amortization of Knoll purchased intangibles | 3.2 | 0.8 % | 3.2 | 0.7 % | 12.9 | 0.7 % | 12.9 | 0.6 % |
Adjusted operating earnings | $ 30.3 | 7.3 % | $ 47.7 | 10.1 % | $ 162.9 | 8.9 % | $ 159.4 | 7.9 % |
International Contract & Specialty | ||||||||
Net sales | $ 245.0 | 100.0 % | $ 237.4 | 100.0 % | $ 931.8 | 100.0 % | $ 1,017.3 | 100.0 % |
Gross margin | 109.9 | 44.9 % | 101.3 | 42.7 % | 409.6 | 44.0 % | 424.3 | 41.7 % |
Total operating expenses | 85.4 | 34.9 % | 84.2 | 35.5 % | 331.4 | 35.6 % | 325.7 | 32.0 % |
Operating earnings | $ 24.5 | 10.0 % | $ 17.1 | 7.2 % | $ 78.2 | 8.4 % | $ 98.6 | 9.7 % |
Adjustments | ||||||||
Restructuring | 2.5 | 1.0 % | 0.6 | 0.3 % | 4.1 | 0.4 % | 1.3 | 0.1 % |
Integration charges | 1.8 | 0.7 % | 0.5 | 0.2 % | 4.8 | 0.5 % | 2.5 | 0.2 % |
Impairment charges | 4.7 | 1.9 % | 1.8 | 0.8 % | 4.7 | 0.5 % | 1.8 | 0.2 % |
Amortization of Knoll purchased intangibles | 2.1 | 0.9 % | 2.1 | 0.9 % | 8.4 | 0.9 % | 8.3 | 0.8 % |
Adjusted operating earnings | $ 35.6 | 14.5 % | $ 22.1 | 9.3 % | $ 100.2 | 10.8 % | $ 112.5 | 11.1 % |
Global Retail | ||||||||
Net sales | $ 227.3 | 100.0 % | $ 244.9 | 100.0 % | $ 872.4 | 100.0 % | $ 1,043.7 | 100.0 % |
Gross margin | 104.0 | 45.8 % | 94.7 | 38.7 % | 389.7 | 44.7 % | 394.5 | 37.8 % |
Total operating expenses | 89.8 | 39.5 % | 105.5 | 43.1 % | 347.3 | 39.8 % | 410.0 | 39.3 % |
Operating earnings (loss) | $ 14.2 | 6.2 % | $ (10.8) | (4.4) % | $ 42.4 | 4.9 % | $ (15.5) | (1.5) % |
Adjustments | ||||||||
Restructuring | 0.8 | 0.4 % | 8.4 | 3.4 % | 2.1 | 0.2 % | 9.9 | 0.9 % |
Integration charges | — | — % | — | — % | — | — % | 0.2 | — % |
Impairment charges | 4.0 | 1.8 % | 3.5 | 1.4 % | 4.0 | 0.5 % | 40.7 | 3.9 % |
Amortization of Knoll purchased intangibles | 0.6 | 0.3 % | 0.6 | 0.2 % | 2.6 | 0.3 % | 4.1 | 0.4 % |
Adjusted operating earnings | $ 19.6 | 8.6 % | $ 1.7 | 0.7 % | $ 51.1 | 5.9 % | $ 39.4 | 3.8 % |
Corporate | ||||||||
Operating expenses | $ 11.9 | — % | $ 16.1 | — % | $ 52.1 | — % | $ 60.4 | — % |
Operating (loss) | $ (11.9) | — % | $ (16.1) | — % | $ (52.1) | — % | $ (60.4) | — % |
Adjustments | ||||||||
Integration charges | — | — % | 1.3 | — % | 0.1 | — % | 5.6 | — % |
Adjusted operating (loss) | $ (11.9) | — % | $ (14.8) | — % | $ (52.0) | — % | $ (54.8) | — % |
MillerKnoll, Inc. | ||||||||
Net sales | $ 888.9 | 100.0 % | $ 956.7 | 100.0 % | $ 3,628.4 | 100.0 % | $ 4,087.1 | 100.0 % |
Gross margin | 352.4 | 39.6 % | 354.7 | 37.1 % | 1,419.5 | 39.1 % | 1,430.0 | 35.0 % |
Total operating expenses | 328.7 | 37.0 % | 343.1 | 35.9 % | 1,252.3 | 34.5 % | 1,307.7 | 32.0 % |
Operating earnings | $ 23.7 | 2.7 % | $ 11.6 | 1.2 % | $ 167.2 | 4.6 % | $ 122.3 | 3.0 % |
Adjustments | ||||||||
Restructuring | 22.1 | 2.5 % | 14.2 | 1.5 % | 30.8 | 0.8 % | 34.0 | 0.8 % |
Integration charges | 5.1 | 0.6 % | 5.3 | 0.6 % | 23.5 | 0.6 % | 18.0 | 0.4 % |
Impairment charges | 16.8 | 1.9 % | 19.7 | 2.1 % | 16.8 | 0.5 % | 56.9 | 1.4 % |
Amortization of Knoll purchased intangibles | 5.9 | 0.7 % | 5.9 | 0.6 % | 23.9 | 0.7 % | 25.3 | 0.6 % |
Adjusted operating earnings | $ 73.6 | 8.3 % | $ 56.7 | 5.9 % | $ 262.2 | 7.2 % | $ 256.5 | 6.3 % |
B. Reconciliation of Earnings per Share to Adjusted Earnings per Share | ||||
Three Months Ended | Twelve Months Ended | |||
June 1, 2024 | June 3, 2023 | June 1, 2024 | June 3, 2023 | |
Earnings per share - diluted | $ 0.14 | $ — | $ 1.11 | $ 0.55 |
Add: Amortization of Knoll purchased intangibles | 0.08 | 0.08 | 0.32 | 0.33 |
Add: Integration charges | 0.07 | 0.07 | 0.31 | 0.24 |
Add: Restructuring charges | 0.30 | 0.19 | 0.42 | 0.45 |
Add: Impairment charges | 0.23 | 0.27 | 0.24 | 0.76 |
Tax impact on adjustments | (0.15) | (0.20) | (0.32) | (0.48) |
Adjusted earnings per share - diluted | $ 0.67 | $ 0.41 | $ 2.08 | $ 1.85 |
Weighted average shares outstanding (used for calculating adjusted earnings per share) – diluted | 72,658,582 | 75,586,370 | 73,954,756 | 76,024,368 |
C. Reconciliation of Gross Margin to Adjusted Gross Margin | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
June 1, 2024 | June 3, 2023 | June 1, 2024 | June 3, 2023 | |||||
Gross margin | $ 352.4 | 39.6 % | $ 354.7 | 37.1 % | $ 1,419.5 | 39.1 % | $ 1,430.0 | 35.0 % |
Restructuring charges | — | — % | (0.4) | — % | — | — % | (0.4) | — % |
Impairment charges | — | — % | — | — % | — | — % | 15.7 | 0.4 % |
Adjusted gross margin | $ 352.4 | 39.6 % | $ 354.3 | 37.0 % | $ 1,419.5 | 39.1 % | $ 1,445.3 | 35.4 % |
D. Reconciliation of Operating Expenses to Adjusted Operating Expenses | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
June 1, 2024 | June 3, 2023 | June 1, 2024 | June 3, 2023 | |||||
Operating expenses | $ 328.7 | 37.0 % | $ 343.1 | 35.9 % | $ 1,252.3 | 34.5 % | $ 1,307.7 | 32.0 % |
Restructuring charges | 22.1 | 2.5 % | 14.6 | 1.5 % | 30.8 | 0.8 % | 34.4 | 0.8 % |
Integration charges | 5.1 | 0.6 % | 5.3 | 0.6 % | 23.5 | 0.6 % | 18.0 | 0.4 % |
Amortization of Knoll purchased intangibles | 5.9 | 0.7 % | 5.9 | 0.6 % | 23.9 | 0.6 % | 25.3 | 0.6 % |
Impairment charges | 16.8 | 1.9 % | 19.7 | 2.1 % | 16.8 | 0.5 % | 41.2 | 1.0 % |
Adjusted operating expenses | $ 278.8 | 31.4 % | $ 297.6 | 31.1 % | $ 1,157.3 | 31.9 % | $ 1,188.8 | 29.1 % |
E. Reconciliation of Net Earnings to Adjusted EBITDA | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
June 1, 2024 | June 3, 2023 | June 1, 2024 | June 3, 2023 | |||||
Net income | $ 9.9 | 1.1 % | $ (0.1) | — % | $ 82.3 | 2.3 % | $ 42.1 | 1.0 % |
Income tax (benefit) expense | (4.3) | (0.5) % | (6.6) | (0.7) % | 14.7 | 0.4 % | 4.5 | 0.1 % |
Interest income and expense | 17.5 | 2.0 % | 19.1 | 2.0 % | 70.0 | 1.9 % | 71.2 | 1.7 % |
Depreciation and amortization expense | 43.5 | 4.9 % | 60.0 | 6.3 % | 155.1 | 4.3 % | 175.9 | 4.3 % |
Restructuring and integration charges | 37.5 | 4.2 % | 17.4 | 1.8 % | 60.7 | 1.7 % | 71.3 | 1.7 % |
Adjusted EBITDA | $ 104.1 | 11.7 % | $ 89.8 | 9.4 % | $ 382.8 | 10.6 % | $ 365.0 | 8.9 % |
F. Reconciliation of Net Earnings to Adjusted Bank Covenant EBITDA and Adjusted Bank Covenant EBITDA Ratio (provided on a trailing twelve month basis) | |
June 1, 2024 | |
Net earnings | $ 82.3 |
Income tax expense | 14.7 |
Depreciation expense | 117.5 |
Amortization expense | 37.6 |
Interest expense | 76.2 |
Other adjustments(*) | 95.8 |
Adjusted bank covenant EBITDA | $ 424.1 |
Total debt, less cash, end of trailing period (includes outstanding LC's) | $ 1,115.9 |
Net debt to adjusted bank covenant EBITDA ratio | 2.63 |
*Items indicated represent Non-GAAP measurements; see the reconciliations of Non-GAAP financial measures and related explanations above. |
G. Organic Sales Growth by Segment | ||||
Three Months Ended | ||||
June 1, 2024 | ||||
Americas Contract | International | Global Retail | Total | |
Net sales, as reported | $ 416.6 | $ 245.0 | $ 227.3 | $ 888.9 |
% change from PY | (12.2) % | 3.2 % | (7.2) % | (7.1) % |
Adjustments | ||||
Currency translation effects (1) | (0.4) | 1.5 | 1.4 | 2.5 |
Net sales, organic | $ 416.2 | $ 246.5 | $ 228.7 | $ 891.4 |
% change from PY | (12.3) % | 3.8 % | 0.2 % | (5.2) % |
Three Months Ended | ||||
June 3, 2023 | ||||
Americas Contract | International | Global Retail | Total | |
Net sales, as reported | $ 474.4 | $ 237.4 | $ 244.9 | $ 956.7 |
Adjustments | ||||
Fully and HAY eCommerce | — | — | (16.7) | (16.7) |
Net sales, organic | $ 474.4 | $ 237.4 | $ 228.2 | $ 940.0 |
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period. | ||||
Twelve Months Ended | ||||
June 1, 2024 | ||||
Americas Contract | International | Global Retail | Total | |
Net Sales, as reported | $ 1,824.2 | $ 931.8 | $ 872.4 | $ 3,628.4 |
% change from PY | (10.0) % | (8.4) % | (16.4) % | (11.2) % |
Adjustments | ||||
Currency Translation Effects (1) | (2.6) | (6.3) | (4.1) | (13.0) |
Net Sales, organic | $ 1,821.6 | $ 925.5 | $ 868.3 | $ 3,615.4 |
% change from PY | (8.3) % | (7.2) % | (8.6) % | (8.1) % |
Twelve Months Ended | ||||
June 3, 2023 | ||||
Americas Contract | International | Global Retail | Total | |
Net Sales, as reported | $ 2,026.1 | $ 1,017.3 | $ 1,043.7 | $ 4,087.1 |
% change from PY | ||||
Adjustments | ||||
Fully and HAY eCommerce | — | — | (76.0) | (76.0) |
Impact of extra week in FY23 | (38.7) | (19.6) | (18.2) | (76.5) |
Net Sales, organic | $ 1,987.4 | $ 997.7 | $ 949.5 | $ 3,934.6 |
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period. |
H. Organic Order Growth by Segment | ||||
Three Months Ended | ||||
June 1, 2024 | ||||
Americas Contract | International | Global Retail | Total | |
Orders, as reported | $ 480.1 | $ 238.7 | $ 214.2 | $ 933.0 |
% change from PY | 5.7 % | (0.5) % | (6.2) % | 1.1 % |
Adjustments | ||||
Currency translation effects (1) | (1.7) | 1.0 | 1.3 | 0.6 |
Orders, organic | $ 478.4 | $ 239.7 | $ 215.5 | $ 933.6 |
% change from PY | 5.3 % | — % | 0.9 % | 2.9 % |
Three Months Ended | ||||
June 3, 2023 | ||||
Americas Contract | International | Global Retail | Total | |
Orders, as reported | $ 454.3 | $ 239.8 | $ 228.3 | $ 922.4 |
Adjustments | ||||
Fully and HAY eCommerce | — | — | (14.7) | (14.7) |
Orders, organic | $ 454.3 | $ 239.8 | $ 213.6 | $ 907.7 |
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period. | ||||
Twelve Months Ended | ||||
June 1, 2024 | ||||
Americas Contract | International | Global Retail | Total | |
Orders, as reported | $ 1,824.9 | $ 928.1 | $ 868.0 | $ 3,621.0 |
% change from PY | (4.0) % | (1.7) % | (12.2) % | (5.6) % |
Adjustments | ||||
Currency translation effects (1) | (7.7) | (7.4) | (5.0) | (20.1) |
Orders, organic | $ 1,817.2 | $ 920.7 | $ 863.0 | $ 3,600.9 |
% change from PY | (2.6) % | (0.5) % | (3.7) % | (2.3) % |
Twelve Months Ended | ||||
June 3, 2023 | ||||
Americas Contract | International | Global Retail | Total | |
Orders, as reported | $ 1,901.3 | $ 944.0 | $ 989.0 | $ 3,834.3 |
Adjustments | ||||
Impact of extra week in FY23 | (36.2) | (18.9) | (16.6) | (71.7) |
Fully and HAY eCommerce | — | — | (75.8) | (75.8) |
Orders, organic | $ 1,865.1 | $ 925.1 | $ 896.6 | $ 3,686.8 |
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period. |
I. Consolidated MillerKnoll Backlog | |
Q4 FY2024 | |
MillerKnoll backlog | |
J. Sales and Earnings Guidance - Upcoming Quarter | |
Company Guidance | |
Q1 FY2025 | |
Net sales | |
Gross margin % | |
Operating expenses | |
Interest and other expense, net | |
Effective tax rate | |
Adjusted earnings per share - diluted |
About MillerKnoll
MillerKnoll is a collective of dynamic brands that comes together to design the world we live in. MillerKnoll brand portfolio includes Herman Miller, Knoll, Colebrook Bosson Saunders, DatesWeiser, Design Within Reach, Edelman, Geiger, HAY, Holly Hunt, Knoll Textiles, Maharam, Muuto, NaughtOne, and Spinneybeck|FilzFelt. MillerKnoll is an unparalleled platform that redefines modern for the 21st century by building a more sustainable, equitable and beautiful future for all.
Forward-Looking Statements
This communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to future events and anticipated results of operations, business strategies, the anticipated benefits of our acquisition of Knoll, the anticipated impact of the Knoll acquisition on the combined Company's business and future financial and operating results, the expected amount and timing of synergies from the Knoll acquisition, and other aspects of our operations or operating results. These forward-looking statements generally can be identified by phrases such as "will," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of MillerKnoll or the price of MillerKnoll's stock. These forward-looking statements involve certain risks and uncertainties, many of which are beyond MillerKnoll's control, that could cause actual results to differ materially from those indicated in such forward-looking statements, including but not limited to: general economic conditions; the impact of any government policies and actions to protect the health and safety of individuals or to maintain the functioning of national or global economies, and the Company's response to any such policies and actions; the impact of public health crises, such as pandemics and epidemics; risks related to the additional debt incurred in connection with the Knoll acquisition; MillerKnoll's ability to comply with its debt covenants and obligations; the risk that the anticipated benefits of the Knoll acquisition will be more costly to realize than expected; the effect of the Knoll acquisition on the ability of MillerKnoll to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom MillerKnoll does business, or on MillerKnoll's operating results and business generally; the ability to successfully integrate Knoll's operations; the ability of MillerKnoll to implement its plans, forecasts and other expectations with respect to MillerKnoll's business after the completion of the Knoll acquisition and realize expected synergies; business disruption following the Knoll acquisition; the availability and pricing of raw materials; the financial strength of our dealers and the financial strength of our customers; the success of newly-introduced products; the pace and level of government procurement; and the outcome of pending litigation or governmental audits or investigations. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to MillerKnoll's periodic reports and other filings with the SEC, including the risk factors identified in MillerKnoll's most recent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. The forward-looking statements included in this communication are made only as of the date hereof. MillerKnoll does not undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.
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SOURCE MillerKnoll
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