ZEELAND,
Mich., Sept. 26, 2023 /PRNewswire/ -- MillerKnoll
Inc. (NASDAQ: MLKN) today reported results for the first
quarter of fiscal year 2024 which ended September 2, 2023.
Business Highlights
- Full year adjusted earnings guidance increased to a range of
$1.85 to $2.15 per share.
- Gross margin improved 450 basis points on a consolidated basis
over the prior year, with expansion reported in all three
segments.
- Significant profit improvement in the Americas Contract segment
which delivered reported and adjusted year-over-year operating
margin expansion of 460 and 570 basis points respectively.
- Organic order growth of 2.1% for the Americas Contract segment
over the prior year.
First Quarter Fiscal 2024 Financial Results
|
(Unaudited)
|
|
Three Months
Ended
|
(Dollars in
millions, except per share data)(1)
|
September 2,
2023
|
September 3,
2022
|
% Chg.
|
|
(13 weeks)
|
(14 weeks)
|
|
Net sales
|
$
917.7
|
$ 1,078.8
|
(14.9) %
|
Gross margin
%
|
39.0 %
|
34.5 %
|
N/A
|
Operating
expenses
|
$
317.8
|
$
321.3
|
(1.1) %
|
Adjusted operating
expenses*
|
$
302.7
|
$
309.7
|
(2.3) %
|
Effective tax
rate
|
24.4 %
|
18.8 %
|
N/A
|
Adjusted effective tax
rate*
|
24.6 %
|
23.1 %
|
N/A
|
Earnings per share -
diluted
|
$
0.22
|
$
0.34
|
(35.3) %
|
Adjusted earnings per
share - diluted*
|
$
0.37
|
$
0.44
|
(15.9) %
|
*Items indicated
represent Non-GAAP measurements; see the reconciliations of
Non-GAAP financial measures and related explanations
below.
|
1 The
first quarter of fiscal 2023 included 14 weeks of operations as
compared to a standard 13-week period. The additional week is
required periodically in
order to more closely align MillerKnoll's fiscal year with the
calendar months.
|
To our shareholders:
Our teams around the world delivered great results for the first
quarter of the new fiscal year. We exceeded our July earnings
guidance for the quarter through a combination of strong sales, on
the high end of our guidance, and gross margin expansion in each of
our business segments. We are off to a very good start to our new
fiscal year and are encouraged by the momentum from our ongoing
integration efforts and the broader implementation of the
MillerKnoll strategic vision.
Having said this, as a global enterprise we are currently facing
challenges arising from specific macroeconomic factors impacting
certain sectors of our business. While the specter of economic
recession in North America appears
to be fading, the housing market remains under pressure.
Additionally, we are facing difficult macroeconomic conditions in
both China and Europe. However, we believe our first-quarter
financial results demonstrate the power of our diversified business
model in leveraging areas of strength as an offset to regional
challenges.
First Quarter Fiscal 2024 Consolidated Results
The first quarter of the prior year, fiscal year 2023, included
14 weeks of operations as compared to the first quarter of fiscal
year 2024, which has a standard 13-week period. The additional week
is required periodically to align the company's fiscal year more
closely with the calendar months. This difference should be
considered when comparing the company's first quarter financial
results to the prior year period and is also the main variance
between reported and organic calculations for the quarter.
Consolidated net sales for the first quarter were $917.7 million, reflecting a decrease of 14.9% on
a reported basis and a decrease of 6.9% organically compared to the
same period last year. Orders in the quarter of $913.7 million were 9.8% lower on a reported
basis and 1.3% lower organically year-over-year. The relative
decline in organic orders is, however, an improvement compared to
the 7.8% year-over year organic decline posted in the fourth
quarter of fiscal year 2023.
Gross margin in the quarter was 39.0%, which is 450 basis points
higher than the same time last year. The year-over-year increase in
gross margin was mainly driven by the realization of price
optimization strategies, moderating input costs and benefit from
our ongoing integration efforts. This is the third consecutive
quarter of consolidated year-over-year adjusted gross margin
expansion.
Consolidated operating expenses for the quarter were
$317.8 million, compared to
$321.3 million in the prior year.
Consolidated adjusted operating expenses were $302.7 million, down $7.0 million year-over-year, primarily
driven by a high comparable due to an extra operating week in
fiscal year 2023 plus the continued focus on cost optimization and
synergy capture which were partially offset by an increase in
variable compensation.
Operating margin for the quarter was 4.4% compared to 4.7% in
the same quarter last year. On an adjusted basis, consolidated
operating margin was 6.0% compared to 5.8% in the same quarter last
year.
Reported earnings per share were $0.22 for the quarter, compared to $0.34 for the same period last year. Adjusted
earnings per share were $0.37 for the
quarter, compared to $0.44 for the
same period last year. As a reminder, the first quarter of last
fiscal year included an extra week of operations, which accounted
for an estimated $77 million of net
sales.
As of September 2, 2023, our liquidity position reflected
cash on hand and availability on our revolving credit facility
totaling $561.3 million. During the
first quarter, the business generated $130.9
million of cash flow from operations and we repaid
$66.0 million of debt as part of
our capital deployment priority of maintaining a strong balance
sheet. We also took the opportunity to repurchase approximately 1.7
million shares for a total cash outlay of $31.7 million. We ended the first quarter
with a net debt-to-EBITDA ratio, as defined by our lending
agreement, of 2.5x. Our scheduled debt maturities (which exclude
the maturity of the revolver) for the remainder of fiscal year
2024, and for fiscal years 2025, 2026 and 2027 are $26.8 million, $41.3
million, $46.2 million and
$276.3, million respectively.
As of the end of the first quarter, we have achieved
$142 million in run-rate cost
synergies resulting from the acquisition of Knoll, Inc in the first
quarter of fiscal 2022. We continue to make meaningful
progress on our integration plans, and we now expect total run-rate
cost synergies to equal $160 million
per year by the end of the third year following the
acquisition.
First Quarter Fiscal 2024 Results by Segment
Americas Contract
For the first quarter, the Americas
Contract segment posted net sales totaling $490.4 million, down 8.7% year-over-year on a
reported basis and down 1.7% organically. New orders in the quarter
totaled $487.3 million, down 4.7%
year-over-year on a reported basis and up 2.1% organically. This
year-over-year growth in organic orders also represents a
sequential improvement when compared to the fourth quarter of
fiscal year 2023. While month-to-month demand patterns in this
segment of our business remain somewhat inconsistent, the general
trend over the past three quarters has been positive, and we remain
confident that improving macro-economic conditions will enhance
growth opportunities in the near-term. Our strategic focus on
bringing MillerKnoll to life by delivering on our synergy
commitments and successfully executing our integration plans,
coupled with the intensification of our reach in resilient
verticals and an increasing shift from North American companies
towards return-to-office practices, is yielding positive
results.
Adjusted operating margin for this segment was 10.6%, 570 basis
points higher than the same quarter last year, driven by
improvements from net pricing realization and incremental benefits
achieved from integration-related synergies.
International Contract and Specialty
The International
Contract and Specialty segment delivered net sales in the first
quarter of $228.3 million, down 16.2%
on a reported basis and down 10.9% organically on a year-over-year
basis. New orders totaled $227.9
million, representing a year-over-year decrease of 9.7% on a
reported basis and down 3.6% organically. During the quarter, lower
than expected demand from China
and Europe was partially offset by
growth in the Middle East. Despite
some market headwinds, our efforts to expand our MillerKnoll dealer
network in the international markets continues to gain traction.
Within the Specialty portion of this segment, while Holly Hunt and our textile brands experienced
lower demand, Spinneybeck Filzfelt delivered order growth for the
quarter. Looking ahead, we continue to see many opportunities to
introduce these design-focused brands to new markets.
Adjusted operating margin within this segment was 6.5% in the
first quarter, down year-over-year driven by lower volume partially
offset by price optimization, synergy benefits and geographic sales
mix.
Global Retail
Net sales in the first quarter for our
Global Retail segment totaled $199.0
million, a decline of 26.0% over the same quarter last year
on a reported basis and down 13.6% organically. New orders in the
quarter totaled $198.5 million, down
20.4% compared to the same period last year on a reported basis and
down 6.4% organically.
Adjusted operating margin was 1.6%, down year-over-year mainly
due to a combination of lower volume and product mix. The slowdown
in the North American housing market and the rise in interest rates
in Europe continue to have an
impact on the demand for the retail segment when compared to last
year. However, order trends in the North American market
outperformed other regions during the quarter, driven by
direct-to-consumer channels. We are allocating resources to enhance
our digital platforms and technology infrastructure, with the aim
of elevating the overall customer experience and satisfaction
levels, while also intensifying our efforts to bolster brand
awareness. Also, during the first quarter, we opened a Design
Within Reach store in Ardmore,
Pennsylvania, which has shown promising early results,
including strong foot traffic and order intake.
Second Quarter and Fiscal 2024 Outlook
While economic uncertainty persists in parts of our business, we
maintain a generally optimistic outlook. For full year fiscal 2024,
we are increasing our guidance and expect to generate adjusted
diluted earnings in the range of $1.85 and $2.15 per
share.
As it relates to the second quarter of fiscal year 2024, we
expect net sales to range between $950
million to $990 million and
adjusted diluted earnings to be between $0.52 to $0.58 per
share. This guidance takes into consideration the relative seasonal
increase that we normally experience from the first to the second
quarter.
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 first quarter of fiscal 2024 on Tuesday, September 26,
2023, 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 months ended
September 2, 2023 follow:
MillerKnoll,
Inc.
Condensed
Consolidated Statements of Operations
|
|
(Unaudited) (Dollars
in millions, except per share and common share data)
|
Three Months
Ended
|
September 2,
2023
|
|
September 3,
2022
|
Net sales
|
$ 917.7
|
100.0 %
|
|
$
1,078.8
|
100.0 %
|
Cost of
sales
|
559.6
|
61.0 %
|
|
706.7
|
65.5 %
|
Gross margin
|
358.1
|
39.0 %
|
|
372.1
|
34.5 %
|
Operating
expenses
|
317.8
|
34.6 %
|
|
321.3
|
29.8 %
|
Operating
earnings
|
40.3
|
4.4 %
|
|
50.8
|
4.7 %
|
Other expenses,
net
|
19.2
|
2.1 %
|
|
17.1
|
1.6 %
|
Earnings before income
taxes and equity income
|
21.1
|
2.3 %
|
|
33.7
|
3.1 %
|
Income tax
expense
|
5.1
|
0.6 %
|
|
6.3
|
0.6 %
|
Equity income, net of
tax
|
0.1
|
— %
|
|
—
|
— %
|
Net
earnings
|
16.1
|
1.8 %
|
|
27.4
|
2.5 %
|
Net (loss) earnings
attributable to redeemable noncontrolling interests
|
(0.6)
|
(0.1) %
|
|
1.6
|
0.1 %
|
Net earnings
attributable to MillerKnoll, Inc.
|
$
16.7
|
1.8 %
|
|
$
25.8
|
2.4 %
|
|
|
|
|
|
|
Amounts per common
share attributable to MillerKnoll, Inc.
|
Earnings per share -
basic
|
$0.22
|
|
$0.34
|
Weighted average basic
common shares
|
75,327,544
|
|
75,482,572
|
Earnings per share -
diluted
|
$0.22
|
|
$0.34
|
Weighted average
diluted common shares
|
75,707,536
|
|
76,266,966
|
|
MillerKnoll,
Inc.
Condensed
Consolidated Statements of Cash Flows
|
|
|
Three Months
Ended
|
(Unaudited) (Dollars
in millions)
|
September 2,
2023
|
|
September 3,
2022
|
Cash provided by (used
in):
|
|
|
|
Operating
activities
|
$
130.9
|
|
$
(64.8)
|
Investing
activities
|
(26.3)
|
|
(10.2)
|
Financing
activities
|
(111.1)
|
|
77.0
|
Effect of exchange rate
changes
|
0.5
|
|
(16.5)
|
Net change in cash
and cash equivalents
|
(6.0)
|
|
(14.5)
|
Cash and cash
equivalents, beginning of period
|
223.5
|
|
230.3
|
Cash and cash
equivalents, end of period
|
$
217.5
|
|
$
215.8
|
|
MillerKnoll,
Inc.
Condensed
Consolidated Balance Sheets
|
|
(Unaudited) (Dollars
in millions)
|
September 2,
2023
|
|
June 3, 2023
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
217.5
|
|
$
223.5
|
Accounts receivable,
net
|
298.0
|
|
334.1
|
Unbilled accounts
receivable
|
25.1
|
|
29.4
|
Inventories,
net
|
473.2
|
|
487.4
|
Prepaid expenses and
other
|
83.9
|
|
101.8
|
Total current
assets
|
1,097.7
|
|
1,176.2
|
Net property and
equipment
|
529.9
|
|
536.3
|
Right of use
assets
|
399.2
|
|
415.9
|
Other assets
|
2,156.4
|
|
2,146.4
|
Total
Assets
|
$
4,183.2
|
|
$
4,274.8
|
|
|
|
|
LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
252.0
|
|
$
269.5
|
Short-term borrowings
and current portion of long-term debt
|
36.3
|
|
33.4
|
Short-term lease
liability
|
75.5
|
|
77.1
|
Accrued
liabilities
|
340.7
|
|
322.8
|
Total current
liabilities
|
704.5
|
|
702.8
|
Long-term
debt
|
1,298.8
|
|
1,365.1
|
Lease
liabilities
|
377.0
|
|
393.7
|
Other
liabilities
|
273.0
|
|
273.0
|
Total
Liabilities
|
2,653.3
|
|
2,734.6
|
Redeemable
Noncontrolling Interests
|
107.6
|
|
107.6
|
Stockholders'
Equity
|
1,422.3
|
|
1,432.6
|
Total Liabilities,
Redeemable Noncontrolling Interests and Stockholders'
Equity
|
$
4,183.2
|
|
$
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 Operating Earnings (Loss),
Adjusted Earnings per Share, Adjusted Operating Expenses, Adjusted
EBITDA, Adjusted Bank Covenant EBITDA, and Organic Growth
(Decline).
Adjusted Operating Earnings (Loss) represents reported operating
earnings plus integration charges, amortization of Knoll purchased
intangibles, and restructuring expenses. These adjustments are
described further below.
Adjusted Earnings per Share represents reported diluted earnings
per share excluding the impact from amortization of Knoll purchased
intangibles, integration charges, restructuring expenses, and the
related tax effect of these adjustments. These adjustments are
described further below.
Adjusted Operating Expenses represents reported operating
expenses excluding integration charges, amortization of Knoll
purchased intangibles, and restructuring expenses. These
adjustments are described further below.
Adjusted EBITDA is calculated by excluding income tax expense,
interest income and expense, depreciation and amortization expense,
restructuring 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, and the impact of the closure of
the Fully business.
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.
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 ("Americas") segment includes the
operations associated with the design, manufacture and sale of
furniture products directly or indirectly through an independent
dealership network for office, healthcare, and educational
environments throughout North and South
America. The International Contract and Specialty
("International & Specialty") segment includes the operations
associated with the design, manufacture and sale of furniture
products, indirectly or directly through an independent dealership
network in Europe, the
Middle East, Africa and Asia-Pacific as well as the global operations
of the Specialty brands, which include Holly Hunt, Spinneybeck, Maharam, Edelman, and
Knoll Textiles. The Global Retail ("Retail") segment includes
global operations associated with the sale of modern design
furnishings and accessories to third party retailers, as well as
direct to consumer sales through eCommerce, direct-mail catalogs,
and physical retail stores. Corporate costs represent unallocated
expenses related to general corporate functions, including, but not
limited to, certain legal, executive, corporate finance,
information technology, administrative and integration-related
costs.
A. Reconciliation of
Operating Earnings (Loss) to Adjusted Operating Earnings (Loss) by
Segment
|
|
|
Three Months
Ended
|
|
September 2,
2023
|
September 3,
2022
|
Americas
|
|
|
|
|
Net sales
|
$ 490.4
|
100.0 %
|
$ 537.4
|
100.0 %
|
Gross margin
|
174.8
|
35.6 %
|
144.2
|
26.8 %
|
Total operating
expenses
|
133.4
|
27.2 %
|
123.8
|
23.0 %
|
Operating
earnings
|
$
41.4
|
8.4 %
|
$
20.4
|
3.8 %
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Restructuring
|
4.3
|
0.9 %
|
—
|
— %
|
Integration
charges
|
3.1
|
0.6 %
|
2.9
|
0.5 %
|
Amortization of Knoll
purchased intangibles
|
3.2
|
0.7 %
|
3.2
|
0.6 %
|
Adjusted operating
earnings
|
$
52.0
|
10.6 %
|
$
26.5
|
4.9 %
|
|
|
|
|
|
International &
Specialty
|
|
|
|
|
Net sales
|
$ 228.3
|
100.0 %
|
$ 272.5
|
100.0 %
|
Gross margin
|
96.9
|
42.4 %
|
113.4
|
41.6 %
|
Total operating
expenses
|
85.5
|
37.5 %
|
85.5
|
31.4 %
|
Operating
earnings
|
$
11.4
|
5.0 %
|
$
27.9
|
10.2 %
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Restructuring
|
0.7
|
0.3 %
|
—
|
— %
|
Integration
charges
|
0.7
|
0.3 %
|
0.5
|
0.2 %
|
Amortization of Knoll
purchased intangibles
|
2.1
|
0.9 %
|
2.0
|
0.7 %
|
Adjusted operating
earnings
|
$
14.9
|
6.5 %
|
$
30.4
|
11.2 %
|
|
|
|
|
|
Retail
|
|
|
|
|
Net sales
|
$ 199.0
|
100.0 %
|
$ 268.9
|
100.0 %
|
Gross margin
|
86.4
|
43.4 %
|
114.5
|
42.6 %
|
Total operating
expenses
|
84.2
|
42.3 %
|
96.7
|
36.0 %
|
Operating
earnings
|
$
2.2
|
1.1 %
|
$
17.8
|
6.6 %
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Restructuring
|
0.2
|
0.1 %
|
0.5
|
0.2 %
|
Integration
charges
|
—
|
— %
|
0.2
|
0.1 %
|
Amortization of Knoll
purchased intangibles
|
0.7
|
0.4 %
|
1.3
|
0.5 %
|
Adjusted operating
earnings
|
$
3.1
|
1.6 %
|
$
19.8
|
7.4 %
|
|
|
|
|
|
Corporate
|
|
|
|
|
Operating
expenses
|
$ 14.7
|
— %
|
$ 15.3
|
— %
|
Operating
(loss)
|
$ (14.7)
|
— %
|
$ (15.3)
|
— %
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Integration
charges
|
0.1
|
— %
|
1.0
|
— %
|
Adjusted operating
(loss)
|
$ (14.6)
|
— %
|
$ (14.3)
|
— %
|
|
|
|
|
|
MillerKnoll,
Inc.
|
|
|
|
|
Net sales
|
$ 917.7
|
100.0 %
|
$
1,078.8
|
100.0 %
|
Gross margin
|
358.1
|
39.0 %
|
372.1
|
34.5 %
|
Total operating
expenses
|
317.8
|
34.6 %
|
321.3
|
29.8 %
|
Operating
earnings
|
$
40.3
|
4.4 %
|
$
50.8
|
4.7 %
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Restructuring
|
5.2
|
0.6 %
|
0.5
|
— %
|
Integration
charges
|
3.9
|
0.4 %
|
4.6
|
0.4 %
|
Amortization of Knoll
purchased intangibles
|
6.0
|
0.7 %
|
6.5
|
0.6 %
|
Adjusted operating
earnings
|
$
55.4
|
6.0 %
|
$
62.4
|
5.8 %
|
B. Reconciliation of
Earnings (Loss) per Share to Adjusted Earnings per
Share
|
|
|
Three Months
Ended
|
|
September 2,
2023
|
September 3,
2022
|
Earnings per share -
diluted
|
$
0.22
|
$
0.34
|
|
|
|
Add: Amortization of
Knoll purchased intangibles
|
0.08
|
0.08
|
Add: Integration
charges
|
0.07
|
0.06
|
Add: Restructuring
charges
|
0.05
|
0.01
|
Tax impact on
adjustments
|
(0.05)
|
(0.05)
|
Adjusted earnings
per share - diluted
|
$
0.37
|
$
0.44
|
Weighted average shares
outstanding (used for calculating adjusted earnings per share) –
diluted
|
75,707,536
|
76,266,966
|
C. Reconciliation of
Operating Expenses to Adjusted Operating Expenses
|
|
|
Three Months
Ended
|
|
September 2,
2023
|
September 3,
2022
|
Operating
expenses
|
$ 317.8
|
34.6 %
|
$ 321.3
|
29.8 %
|
Restructuring
charges
|
5.2
|
0.6 %
|
0.5
|
— %
|
Integration
charges
|
3.9
|
0.4 %
|
4.6
|
0.4 %
|
Amortization of Knoll
purchased intangibles
|
6.0
|
0.7 %
|
6.5
|
0.6 %
|
Adjusted operating
expenses
|
$ 302.7
|
33.0 %
|
$ 309.7
|
28.7 %
|
D. Reconciliation of
Net Earnings to Adjusted EBITDA
|
|
|
Three Months
Ended
|
|
September 2,
2023
|
September 3,
2022
|
Net income
|
$
16.7
|
$
25.8
|
Income tax
expense
|
5.3
|
6.3
|
Interest income and
expense
|
16.9
|
16.2
|
Depreciation and
amortization expense
|
37.2
|
39.5
|
Restructuring and
integration charges
|
7.8
|
5.1
|
Adjusted
EBITDA
|
$
83.9
|
$
92.9
|
E. Reconciliation of
Net Earnings to Adjusted Bank Covenant EBITDA and Adjusted Bank
Covenant EBITDA Ratio (provided
on a trailing twelve month basis)
|
|
|
September 2,
2023
|
Net earnings
|
$
34.8
|
Income tax
expense
|
3.3
|
Depreciation
expense
|
114.0
|
Amortization
expense
|
39.1
|
Interest
expense
|
76.5
|
Other
adjustments(*)
|
178.1
|
Adjusted bank
covenant EBITDA
|
$
445.8
|
Total debt, less cash,
end of trailing period (includes outstanding LC's)
|
$
1,131.2
|
Net debt to adjusted
bank covenant EBITDA ratio
|
2.5
|
*Items indicated
represent Non-GAAP measurements; see the reconciliations of
Non-GAAP financial measures and related explanations
above.
|
F. Organic Sales
Growth by Segment
|
|
Three Months
Ended
|
|
September 2,
2023
|
|
Americas
|
International &
Specialty
|
Retail
|
Total
|
Net sales, as
reported
|
$
490.4
|
$
228.3
|
$
199.0
|
$
917.7
|
% change from
PY
|
(8.7) %
|
(16.2) %
|
(26.0) %
|
(14.9) %
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Currency translation
effects (1)
|
(0.4)
|
(3.0)
|
(2.0)
|
(5.4)
|
Net sales,
organic
|
$
490.0
|
$
225.3
|
$
197.0
|
$
912.3
|
% change from
PY
|
(1.7) %
|
(10.9) %
|
(13.6) %
|
(6.9) %
|
|
|
Three Months
Ended
|
|
September 3,
2022
|
|
Americas
|
International &
Specialty
|
Retail
|
Total
|
Net sales, as
reported
|
$
537.4
|
$
272.5
|
$
268.9
|
$
1,078.8
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Fully
closure
|
—
|
—
|
(22.8)
|
(22.8)
|
Impact of extra week in
FY23
|
(38.7)
|
(19.6)
|
(18.2)
|
(76.5)
|
Net sales,
organic
|
$
498.7
|
$
252.9
|
$
227.9
|
$
979.5
|
(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.
|
G. Organic Order
Growth by Segment
|
|
|
Three Months
Ended
|
|
September 2,
2023
|
|
Americas
|
International &
Specialty
|
Retail
|
Total
|
Orders, as
reported
|
$
487.3
|
$
227.9
|
$
198.5
|
$
913.7
|
% change from
PY
|
(4.7) %
|
(9.7) %
|
(20.4) %
|
(9.8) %
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Currency translation
effects (1)
|
(2.3)
|
(2.9)
|
(2.1)
|
(7.3)
|
Orders,
organic
|
$
485.0
|
$
225.0
|
$
196.4
|
$
906.4
|
% change from
PY
|
2.1 %
|
(3.6) %
|
(6.4) %
|
(1.3) %
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 3,
2022
|
|
Americas
|
International &
Specialty
|
Retail
|
Total
|
Orders, as
reported
|
$
511.3
|
$
252.4
|
$
249.4
|
$
1,013.1
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Fully
closure
|
—
|
—
|
(23.0)
|
(23.0)
|
Impact of extra week in
FY23
|
(36.2)
|
(18.9)
|
(16.6)
|
(71.7)
|
Orders,
organic
|
$
475.1
|
$
233.5
|
$
209.8
|
$
918.4
|
(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. Consolidated
MillerKnoll Backlog
|
|
|
Q1 FY2024
|
MillerKnoll
Backlog
|
694.0
|
|
|
I. Sales and
Earnings Guidance - Upcoming Quarter
|
|
|
Company
Guidance
|
|
Q2 FY2024
|
Net sales
|
$950 million to $990
million
|
Gross margin
%
|
38.4% to
39.4%
|
Operating
expenses
|
$298 million to $308
million
|
Interest and other
expense, net
|
$19.2 million to $20.2
million
|
Effective tax
rate
|
21.5% to
23.5%
|
Adjusted earnings per
share - diluted
|
$0.52 to
$0.58
|
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, Maars Living Walls,
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 announcement 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