MillerKnoll, Inc. (NASDAQ: MLKN) Q4 2025 Earnings | 06/26/2025

Q4 2025 earnings call, MillerKnoll, Inc. reported a strong finish to fiscal year 2025, with Q4 results significantly exceeding expectations.

Q4 2025 Financial Highlights

• Adjusted earnings per share (EPS): $0.60, outperforming guidance.

• Consolidated net sales: $962 million, up 8.2% reported and 7.8% organically year-over-year.

• New orders: $1.04 billion, up 11.1% reported and 10.7% organically, increasing the backlog by $78 million to $761 million.

• Consolidated gross margin: 39.2%.

• Cash flow from operations: $71 million.

• Long-term debt: Reduced by $5 million.

• Liquidity: Ended the quarter with $576 million.

• North America Contract sales: $496 million (up nearly 13%), with new orders at $568 million (up almost 16%), including an estimated $55 million to $60 million in pull-forward demand due to tariff surcharges and price increases.

• International Contract sales: $186 million (up 6.9% reported, 5.5% organically), with new orders at $190 million (up 3.6% reported, 2.1% organically).

• Global Retail sales: $280 million (up 2.2% reported, 1.4% organically), with new orders at $280 million (up 7.5% reported, 6.7% organically).

Fiscal Year 2025 Highlights

• Consolidated net sales: $3.67 billion.

• Adjusted EPS: $1.95.

• Shareholder returns: Approximately $52 million in dividends and $85 million in share repurchases.

• Debt reduction: $10.8 million.

• Capital expenditures (CapEx): $107.6 million.

Strategic Initiatives and Market Observations

• Contract Business Growth: Made significant progress, aiming for increased market share in North America and internationally.

• New Flagship Locations: Opened in London and New York, and debuted a comprehensive design center in Chicago's Fulton Market, enhancing customer interactions and showcasing combined brand strength.

• Product Innovation: Introduced over 30 new products, including "Null Dividend Skyline" for open-plan offices and "GEMMA Healthcare Seating Family."

• Retail Expansion: Opened four new stores in FY25 (Palm Springs, Paramus, Fairfax, Coral Gables) and plans to open 10-15 more in FY26, including locations in Sarasota, Las Vegas, Philadelphia, Salt Lake City, Nashville, and El Segundo. This expansion aims to significantly increase the DWR and Herman Miller store footprint.

• E-commerce and Brand Awareness: New store openings create a "halo effect" of e-commerce growth and increased brand awareness.

• Retail Product Assortment: Expanded by over 50% in FY25, with further growth planned.

• Millennial Archives: Opened a new space at Michigan headquarters, celebrating over 100 years of design history.

• Market Outlook (Contract): Cautiously optimistic, with signs of recovery including increased office utilization (Fortune 100 companies up 68% since 2022), rising office leasing activity, and consistent year-over-year increases in BISMA industry orders.

• Market Outlook (Retail): Cautiously optimistic, with strategic investments planned to drive growth and strengthen the business for when the housing market recovers.

Q1 Fiscal Year 2026 Outlook

• Net Sales: Expected to range between $899 million and $939 million (midpoint $919 million), up 6.7% year-over-year.

• Gross Margin: Expected to range from 37.1% to 38.1%.

• Adjusted Operating Expenses: Expected to range from $290 million to $300 million.

• Adjusted Diluted EPS: Expected to range between $0.32 and $0.38, including an estimated $0.09 to $0.11 per share impact from tariffs.

• Tariff Impact: Expected to decrease over time as pricing actions take effect, with full offset anticipated by the second half of fiscal 2026.

• New Store Opening Costs: Estimated at $4 million to $7 million in Q1, and similar expenses expected each quarter due to planned openings.

• Capital Expenditures (FY26): Expected to range between $120 million and $130 million, primarily for retail expansion and debt repayment.

Q&A Insights

• Pull-forward Effect: While Q4 saw significant pull-forward demand, early Q1 orders are down mid-single digits year-over-year, which aligns with expectations. The underlying demand indicators remain strong.

• Retail Store Maturity: Herman Miller stores become profitable within the first year (2-4 months from possession to opening), and DWR stores slightly longer (3-6 months from possession to opening). The company is confident in its retail expansion due to white space in the market and conservative modeling.

• Profitability Impact of Pull-Forward and Tariffs: The negative impact on margins from tariffs, due to orders placed before price increases, is expected to be greatest in Q1, lessen in Q2, and be largely offset by Q3 and Q4.

• Balance Sheet and Cash Flow Focus: In FY26, MillerKnoll will prioritize CapEx for store build-outs and paying down debt, managing debt levels down in the current uncertain geopolitical environment.

• North American Contract Trends: Strong growth in public sector and healthcare verticals, with an increase in project sizes of $1 million to $5 million.

• Retail Promotional Environment: No significant demand pull-forward noted on the retail side, and while there has been some incremental discounting, it has been offset by price increases.