MillerKnoll, Inc. — First Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Net sales were $923.4 million, a 3.4% decrease year-over-year (down 3.3% organically).
• Gross margin increased to 41.7% from 38.5% in the prior year, an increase of 320 basis points.
• Adjusted gross margin increased to 41.8% from 38.5% in the prior year, an increase of 330 basis points.
• Operating expenses were $333.5 million, up 6.0% year-over-year; adjusted operating expenses were $320.1 million, up 3.9%.
• Operating earnings were $51.8 million with an operating margin of 5.6%, unchanged from the prior year.
• Adjusted operating earnings were $65.7 million with an adjusted operating margin of 7.1%, up from 6.3% in the prior year.
• Diluted earnings per share (EPS) were $0.38, up 31.0% from $0.29 in the prior year.
• Adjusted diluted EPS were $0.53, up 17.8% from $0.45 in the prior year.
• Cash flow from operations was $49.1 million, compared to $9.4 million in the prior year.
• Liquidity was $580.4 million as of August 29, 2026, comprising cash on hand and revolving credit facility availability.
• Net debt-to-EBITDA ratio was 2.75x.
• Total debt, less cash, was $1,071.4 million.
• A $10 million net increase in operating income was recognized from U.S. government refunds of previously paid IEEPA tariffs, providing a $0.11 per share benefit and 110 basis points of net improvement in operating margin.

Guidance and Future Outlook

• Second Quarter FY2027 net sales guidance is $972 million to $1.012 billion.
• Second Quarter FY2027 adjusted gross margin guidance is 38.3% to 39.3%.
• Second Quarter FY2027 adjusted operating expenses guidance is $321 million to $331 million.
• Second Quarter FY2027 interest and other expense, net, is expected to be $15.8 million to $16.8 million.
• Second Quarter FY2027 adjusted effective tax rate guidance is 21% to 23%.
• Second Quarter FY2027 adjusted diluted EPS guidance is $0.43 to $0.49.
• Full Year FY2027 net sales guidance is $3.88 billion to $4.03 billion (down from previous guidance of $3.93 billion to $4.13 billion).
• Full Year FY2027 adjusted diluted EPS guidance remains $1.85 to $2.15.
• Full year outlook includes an estimated $0.07 per share unfavorable impact from Canada-related tariff costs over the next three quarters.
• Company expects to open 14 to 18 new retail stores in FY2027, including 5 to 7 in Q2.
• Capital expenditures are estimated at $125 million to $135 million for the full year.
• Management expressed confidence in the earnings outlook for the second quarter and full fiscal year despite softer demand patterns in Q1.

Business Segments and Product Lines

• North America Contract: Net sales were $505.6 million (down 5.3% reported, 5.2% organic); orders were $483.7 million (down 1.7% reported, 1.6% organic); operating margin was 9.4% (down from 10.7%); adjusted operating margin was 10.7% (down 70 basis points).
• International Contract: Net sales were $156.8 million (down 6.4% reported, 6.2% organic); orders were $181.2 million (up 17.3% reported, 17.9% organic); operating margin was 2.4% (down from 8.1%); adjusted operating margin was 4.6% (down 390 basis points).
• Global Retail: Net sales were $261.0 million (up 2.6% reported, 2.8% organic); orders were $249.0 million (up 4.3% reported, 4.7% organic); operating margin was 6.1% (up from 0.6%); adjusted operating margin was 7.0% (up 580 basis points).
• Global Retail orders in the North America region were up 7.5% year-over-year.
• New retail store openings in Q1 included a DWR store in Raleigh, NC, and Herman Miller stores in Columbus, OH, St. Louis, MO, and San Antonio, TX.
• Total store count increased to 97 locations (586,806 sq. ft.) from 93 locations (577,366 sq. ft.) at the end of Q4 FY2026.
• Backlog was $669.2 million as of Q1 FY2027, down from $690.9 million in Q1 FY2026.

Market and Competitive Landscape

• The company noted softer than expected demand patterns in the first quarter.
• Inflationary cost pressures were a factor offsetting price realization and tariff refund benefits.
• Geopolitical instability and potential changes to U.S. and international trade policies, including tariffs, are identified as risks affecting supply chains and demand.

Risks and Challenges

• Operating expense special charges totaled $13.4 million, including $6.0 million in restructuring charges (workforce reductions and facility consolidations), $5.7 million in purchase accounting amortization, and $1.7 million in CEO transition costs.
• Risks include ongoing conflict in the Middle East, geopolitical instability, changes in trade policies, consumer spending levels, and executive leadership transition.
• Risks related to debt incurred from the Knoll acquisition, including interest expense and covenant compliance, are noted.

Management Commentary and Tone

• Jeff Stutz, Interim Chief Executive Officer, stated the company delivered strong first quarter earnings above expectations, reflecting solid execution.
• Management is directing efforts toward three key areas: focused priority setting, disciplined cost management, and strengthening the balance sheet for long-term value creation.
• Management remains confident in the earnings outlook for the second quarter and full fiscal year despite Q1 demand softness.

Other Key Points

• On July 14, 2026, the Board of Directors declared a quarterly cash dividend of $0.1875 per share, payable on October 15, 2026, to shareholders of record on August 29, 2026.
• Near-term scheduled debt maturities include $22.0 million in fiscal 2027, $25.8 million in fiscal 2028, and $89.8 million in fiscal 2029.
• The Q2 FY2027 outlook excludes an expected $5.7 million in operating expense charges related to amortization of Knoll purchased intangibles.
• The company operates 97 total store locations, including 46 DWR stores, 33 Herman Miller U.S. stores, 9 Herman Miller Int'l stores, and 6 other stores (Knoll, HAY, Muuto).