MLKN — MillerKnoll, Inc.

Summary of MillerKnoll (MLKN) Q4 2026 Earnings Call

1. Key Financial Results and Metrics:

• Q4 Revenue: $1 billion, up 4.4% year-over-year, exceeding guidance.
• Adjusted EPS: $0.55, at the top end of guidance; down from $0.60 in Q4 2025.
• Full Year Net Sales: Over $3.8 billion with adjusted EPS of $1.86.
• Orders: $972 million in Q4, down 6.3% year-over-year; adjusted for prior year pull-ahead, orders were down approximately 1%.
• Gross Margin: Increased 20 basis points to 39.4% in Q4.
• Cash Flow: Generated $65 million in Q4; $200 million for the full year.
• Debt Reduction: Reduced total debt by $15 million in Q4 and $41 million for the full year.
• Dividend: Quarterly cash dividend of $0.1875 declared.

2. Strategic Updates and Business Highlights:

• Leadership Transition: Jeff Stutz has stepped in as Interim CEO, emphasizing operational discipline, cost management, and balance sheet strengthening.
• North America Contract Segment: Solid sales growth with year-over-year gross margin and adjusted operating margin expansion; however, orders were down due to prior year pull-ahead.
• Global Retail Segment: Continued market share gains; opened 8 new Herman Miller stores in FY 2026, with plans for 9-11 in FY 2027. Focus on smaller store formats for better economics.
• Holly Hunt Brand: Facing challenges due to operational inefficiencies and lack of product development; restructuring efforts underway to improve performance.
• International Contract Segment: Mixed performance due to geopolitical concerns; however, growth noted in key Asian markets.

3. Forward Guidance and Outlook:

• Q1 FY 2027 Guidance: Expected net sales between $928 million and $968 million; adjusted EPS between $0.33 and $0.39.
• Full Year FY 2027 Guidance: Projected net sales of $3.93 billion to $4.13 billion (5% growth at midpoint); adjusted EPS expected between $1.85 and $2.15.
• Margin Expectations: Operating margin performance in Global Retail expected to expand year-over-year in all four quarters of FY 2027.

4. Bad News, Challenges, or Points of Concern:

• Order Declines: Notable decline in orders across segments, particularly in International Contract due to geopolitical issues and macroeconomic uncertainty.
• Holly Hunt Performance: Underperformance and operational challenges noted, requiring strategic restructuring.
• Debt Management: While debt was reduced, the net debt-to-EBITDA ratio remains at 2.8x, indicating a need for continued focus on balance sheet improvement.
• Macro Environment: Ongoing uncertainty in the macroeconomic landscape, particularly in Europe and the Middle East, could impact future demand.

5. Notable Q&A Insights:

• Segment Growth Expectations: Management refrained from providing detailed segment growth forecasts but indicated confidence in retail growth driven by new store openings.
• Middle East Orders: Orders from the Middle East exceeded expectations, but broader regional challenges remain due to energy inflation impacting demand.
• Pricing Strategy: Recent price increases were absorbed well by consumers, with a focus on maintaining pricing discipline while navigating inflationary pressures.
• Operational Efficiency: Management emphasized the need for improved operational discipline and prioritization of initiatives to enhance profitability across all segments.

Overall, while MillerKnoll demonstrated steady revenue growth and strategic initiatives aimed at improving operational efficiency, challenges remain in order volumes and specific brand performance, necessitating a cautious outlook amidst macroeconomic uncertainties.