MillerKnoll, Inc. Reports Third Quarter Fiscal 2025 Results
ZEELAND, Mich., March 26, 2025 /PRNewswire/ -- MillerKnoll Inc. (NASDAQ:MLKN) today reported results for the third quarter of fiscal year 2025 ended March 1, 2025.
Financial Highlights
Consolidated net sales in the third quarter were up 0.4% year-over-year, driven by North America Contract and Global Retail.
Strong order growth in Global Retail led by impressive performance in North America.
New reporting segment structure aligns with long-term strategies.
Third Quarter Fiscal 2025 Financial Results
(Unaudited)
(Unaudited)
Three Months Ended
Nine Months Ended
(Dollars in millions, except per share data)
March 1, 2025
March 2, 2024
% Chg.
March 1, 2025
March 2, 2024
% Chg.
(13 weeks)
(13 weeks)
(13 weeks)
(13 weeks)
Net sales
$ 876.2
$ 872.3
0.4 %
$ 2,708.1
$ 2,739.5
(1.1) %
Gross margin %
37.9 %
38.6 %
N/A
38.6 %
39.0 %
N/A
Operating expenses
$ 414.6
$ 294.2
40.9 %
$ 1,050.2
$ 923.6
13.7 %
Adjusted operating expenses*
$ 274.4
$ 278.9
(1.6) %
$ 869.4
$ 878.5
(1.0) %
Effective tax rate
88.3 %
16.0 %
N/A
139.5 %
20.5 %
N/A
Adjusted effective tax rate*
22.0 %
20.3 %
N/A
22.0 %
22.7 %
N/A
Earnings (loss) per share - diluted
$ (0.19)
$ 0.30
(163.3) %
$ 0.29
$ 0.97
(70.1) %
Adjusted earnings per share - diluted*
$ 0.44
$ 0.45
(2.2) %
$ 1.33
$ 1.41
(5.7) %
*Items indicated represent Non-GAAP measurements; see the reconciliations of Non-GAAP financial measures and related explanations below.
To our shareholders:
Our results in the third quarter of fiscal 2025 reflect the advantage of our diversified business model, with strong performance in certain markets and channels mitigating softness in others, along with a disciplined focus on our cost structure amidst very dynamic macroeconomic conditions.
During the quarter we saw a notable difference in demand in our retail businesses compared to most of our contract businesses. Leading indicators within our contract businesses are mixed, and overall demand in most geographies was sluggish during the quarter amid uncertainty related to tariff policy and other macroeconomic factors.
At the same time, we are buoyed by the strong demand in our Global Retail business where reported orders were up nearly 15%, organic orders were up nearly 17%, and organic orders adjusted for the year-over-year timing differences in the Black Friday/Cyber Monday period ("cyber adjusted") were up over 4% in the third quarter. We were particularly pleased with Retail demand in North America where cyber adjusted orders were up 14% in the quarter. Our ability to offer both iconic brands and renewed assortments with a common design language is resonating with our customers and gives us confidence in the investments we are making to grow our store footprint and expand our product offerings.
Our earnings in the quarter met our expectations despite these challenges. Given the near-term economic uncertainty around tariffs and global supply chain, we took proactive steps to improve our near-term profitability. Our teams have done a great job balancing costs across the Company while preserving our investments in growth.
We announced today changes in our organizational structure and reporting segments to improve visibility into our performance in key end markets and better align with our long-term growth strategies.
Third Quarter Fiscal 2025 Consolidated ResultsEffective March 1, 2025, we changed our reporting segments in accordance with changes in our organizational structure. The reportable segments now consist of three segments: North America Contract, International Contract, and Global Retail. Details concerning the makeup of the new segments and three years of recast financials can be found in our Form 8-K filed today.
Consolidated net sales for the third quarter were $876.2 million, up 0.4% on a reported basis and up 1.8% organically. Orders in the quarter of $853.1 million were up 2.7% as reported and 4.1% higher on an organic basis compared to the prior year.
Gross margin in the quarter was 37.9%, down 70 basis points from the same quarter last year, primarily from unfavorable channel and product mix, lower fixed cost leverage, and higher commodity costs.
Consolidated operating expenses for the quarter were $414.6 million, compared to $294.2 million in the prior year. Consolidated adjusted operating expenses were $274.4 million, a decrease of $4.5 million year-over-year, driven primarily by lower incentive compensation and focused cost control in a challenged macroeconomic environment.
During the third quarter, the Company recorded special charges of $140.2 million. Of these charges, $4.2 million was associated with recent restructuring actions which included a workforce reduction. In addition, the Company recognized non-cash, pre-tax charges totaling $130.0 million related to the impairment of goodwill attributed to the Holly Hunt and Global Retail reporting units as well as to the Knoll and Muuto trade names. These charges were determined based on the Company's quarterly impairment review process.
Operating loss margin for the quarter was 9.4% compared to an operating income margin of 4.9% in the same quarter last year. On an adjusted basis, consolidated operating margin for the quarter was 6.6% compared to 6.7% in the same quarter last year.
Reported diluted loss per share was $0.19 for the quarter, compared to diluted earnings per share of $0.30 in the prior year. Adjusted diluted earnings per share were $0.44 for the quarter compared to $0.45 for the same period last year.
As of March 1, 2025, our liquidity position reflected cash on hand and availability on our revolving credit facility totaling $468.2 million. During the third quarter, the business generated $62.1 million of cash flow from operations. We repurchased approximately 0.8 million shares for a total cash outlay of $17.9 million.
During the third quarter, we reduced our long-term debt by $60.7 million and ended the quarter with a net debt-to-EBITDA ratio, as defined by our lending agreement, of 2.93x. Our scheduled debt maturities (which exclude the maturity of the revolver) for the remainder of fiscal year 2025 and for fiscal years 2026 and 2027 are $13.6 million, $46.8 million and $276.4 million respectively.
Third Quarter Fiscal 2025 Results by Segment
North America ContractFor the third quarter, North America Contract net sales of $468.2 million were up 1.4% on a reported basis and up 1.7% organically compared to the same period last year. New orders totaled $434.0 million and were down 1.8% from the previous year and down 1.5% organically.
Operating margin in the quarter was 3.6% compared to 5.5% in the prior year. Adjusted operating margin for the segment was 9.1% in the quarter, which is up 80 basis points compared to the same quarter last year primarily due to lower variable incentive compensation and focused cost control.
International ContractInternational Contract segment net sales in the third quarter of $145.5 million were down 5.0% on a reported basis and down 1.5% on an organic basis year-over-year. Orders during the quarter were $159.2 million, a year-over-year decrease of 1.6% on a reported basis and up 1.4% organically. Order growth in the APMEA region continued, with particular strength in the Middle East, India and Japan, Mexico, Brazil, and portions of mainland Europe. These areas of growth were partially offset by lower orders in other regions during the quarter.
Operating margin for the third quarter was 6.8% compared to 11.4% in the prior year. Adjusted operating margin for the quarter was 9.3%, down 260 basis points year-over-year primarily from deleverage on lower sales.
Global RetailIn the third quarter, our Global Retail segment net sales were $262.5 million, up 1.9% year-over-year on a reported basis, and up 3.9% on an organic basis. New orders in the quarter of $259.9 million were up 14.7% compared to the same period last year on a reported basis and up 16.9% on an organic basis. Although sales and orders in the quarter benefited from the shift in the timing of this year's holiday/cyber promotional period versus the prior year, orders were up over 4% in the segment and up 14% in the North America region, after adjusting for this timing difference.
Operating loss margin in the quarter was 36.0% compared to an operating income margin of 4.7% in the prior year. Adjusted operating margin was 6.2%, 80 basis points higher year-over-year, primarily from higher shipping revenue and increased leverage on higher year-over-year sales.
We are very pleased with the strength of this business and continue to be encouraged by customer enthusiasm for our new product launches, targeted promotions, growing brand awareness and new retail locations.
Fourth Quarter and Fiscal 2025 OutlookThe table below presents our expectations for fourth quarter and selected full year fiscal 2025 financial operating results:
Q4 FY2025
Full Year FY2025
Net sales
$910 million to $950 million
$3,618 to $3,658 million
Gross margin %
37.5% to 38.5%
38.3% to 38.6%
Adjusted operating expenses*
$287 million to $297 million
$1,167 million to $1,177 million
Interest and other expense, net
$16 million to $17 million
Adjusted effective tax rate*
21.5% to 23.5%
Adjusted earnings per share - diluted*
$0.46 to $0.52
$1.81 to $1.87
*Items indicated represent Non-GAAP measures. The Q4 FY2025 outlook excludes an expected $6 million in operating expense charges related to amortization of Knoll purchased intangibles, restructuring charges expected for the fourth quarter as well as the related tax and earnings per share impact.
Included in the above guidance ranges are estimated incremental costs related to tariffs (net of expected mitigation efforts) on our fourth quarter results. We expect these costs to range between $5 million to $7 million before tax, and between $0.05 to $0.07 of net earnings per share. Importantly, these estimates reflect the latest available information known to us as of the date of this release, including all known active tariffs. Given its fluid nature, as the tariff situation changes, we will provide further updates in future quarters.
Andi Owen
Jeff Stutz
President and Chief Executive Officer
Chief Financial Officer
Webcast and Conference Call InformationThe Company will host a conference call and webcast to discuss the results of the third quarter of fiscal 2025 on Wednesday, March 26, 2025, 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 be available at https://www.millerknoll.com/investor-relations.
Financial highlights for the three and nine months ended March 1, 2025 follow:
MillerKnoll, Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Dollars in millions, except per share and common share data)
Three Months Ended
Nine Months Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Net sales
$ 876.2
100.0 %
$ 872.3
100.0 %
$ 2,708.1
100.0 %
$ 2,739.5
100.0 %
Cost of sales
543.8
62.1 %
535.3
61.4 %
1,662.4
61.4 %
1,672.4
61.0 %
Gross margin
332.4
37.9 %
337.0
38.6 %
1,045.7
38.6 %
1,067.1
39.0 %
Operating expenses
414.6
47.3 %
294.2
33.7 %
1,050.2
38.8 %
923.6
33.7 %
Operating (loss) earnings
(82.2)
(9.4) %
42.8
4.9 %
(4.5)
(0.2) %
143.5
5.2 %
Other expenses, net
18.6
2.1 %
15.3
1.8 %
53.1
2.0 %
50.6
1.8 %
(Loss) earnings before income taxes and equity income
(100.8)
(11.5) %
27.5
3.2 %
(57.6)
(2.1) %
92.9
3.4 %
Income tax (benefit) expense
(89.0)
(10.2) %
4.4
0.5 %
(80.3)
(3.0) %
19.0
0.7 %
Equity income, net of tax
0.1
— %
—
— %
0.3
— %
(0.3)
— %
Net (loss) earnings
(11.7)
(1.3) %
23.1
2.6 %
23.0
0.8 %
73.6
2.7 %
Net earnings attributable to redeemable noncontrolling interests
1.0
0.1 %
0.9
0.1 %
2.8
0.1 %
1.2
— %
Net (loss) earnings attributable to MillerKnoll, Inc.
$ (12.7)
(1.4) %
$ 22.2
2.5 %
$ 20.2
0.7 %
$ 72.4
2.6 %
Amounts per common share attributable to MillerKnoll, Inc.
(Loss) earnings per share - basic
($0.19)
$0.31
$0.29
$0.98
Weighted average basic common shares
68,353,906
72,720,734
69,269,956
73,952,015
(Loss) earnings per share - diluted
($0.19)
$0.30
$0.29
$0.97
Weighted average diluted common shares
68,353,906
74,146,826
70,181,279
74,616,391
MillerKnoll, Inc.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended
(Unaudited) (Dollars in millions)
March 1, 2025
March 2, 2024
Cash provided by (used in):
Operating activities
$ 138.4
$ 273.9
Investing activities
(60.3)
(61.0)
Financing activities
(127.6)
(213.1)
Effect of exchange rate changes
(11.1)
0.3
Net change in cash and cash equivalents
(60.6)
0.1
Cash and cash equivalents, beginning of period
230.4
223.5
Cash and cash equivalents, end of period
$ 169.8
$ 223.6
MillerKnoll, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in millions)
March 1, 2025
June 1, 2024
ASSETS
Current Assets:
Cash and cash equivalents
$ 169.8
$ 230.4
Accounts receivable, net
321.7
308.3
Unbilled accounts receivable
24.3
22.2
Inventories, net
425.5
428.6
Prepaid expenses and other
199.3
80.1
Total current assets
1,140.6
1,069.6
Net property and equipment
475.2
492.0
Right of use assets
389.9
375.6
Other assets
1,889.7
2,106.4
Total Assets
$ 3,895.4
$ 4,043.6
