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Miller Knoll, Inc. Reports Quarter Two Results for Fiscal Year 2024

December 20, 2023  by HFBusiness Staff in Business Strategy, Industry   

~  Fiscal 2024 full year adjusted earnings guidance increased to a range of $2.00 to $2.16 per share.

~  Consolidated Gross margin improved 470 basis points over the prior year, with expansion reported in all three segments.

~  Significant overall profit growth. US GAAP and Adjusted EPS growth of 114.3% and 28.3% ~. respectively year-over-year.

Second Quarter Fiscal 2024 Consolidated Results

Consolidated net sales for the second quarter were $949.5 million, reflecting a decrease of 11.0% on a reported basis and a decrease of 10.1% organically compared to the same period last year. The overall year-over-year organic decline in net sales was driven by lower beginning backlog, partially offset by faster fulfillment patterns. Orders in the quarter of $944.0 million were 6.8% lower on a reported basis and 6.0% lower organically compared to the prior year. Although our order intake for the full quarter was lower year-over-year, it improved sequentially as we progressed through the period.

Gross margin in the quarter was 39.2%, which is 470 basis points higher than the same period last year. The year-over-year increase in gross margin was mainly driven by strategic inventory management, moderating input costs, the realization of price optimization strategies, and benefits from our ongoing synergy efforts. This is the fourth consecutive quarter of consolidated year-over-year adjusted gross margin expansion.

Consolidated operating expenses for the quarter were $311.6 million, compared to $328.9 million in the prior year. Consolidated adjusted operating expenses were $296.9 million, down $7.0 million year-over-year, primarily driven by the continued focus on cost optimization and synergy capture.

Operating margin for the quarter was 6.4% compared to 3.6% in the same quarter last year. On an adjusted basis, consolidated operating margin for the quarter was 7.9% , a record high level since the acquisition of Knoll, Inc.

Reported diluted earnings per share were $0.45 for the quarter, compared to $0.21 for the same period last year. Adjusted diluted earnings per share were $0.59 for the quarter, compared to $0.46 for the same period last year, up 28.3% year-over-year despite a 10.1% decline in organic net sales.

As of December 2, 2023, our liquidity position reflected cash on hand and availability on our revolving credit facility totaling $583.1 million. During the second quarter, the business generated $82.4 million of cash flow from operations, and we reduced our total outstanding debt by $18.9 million as part of our capital deployment priority of maintaining a strong balance sheet. We also repurchased approximately 1.4 million shares for a total cash outlay of $27.9 million. We ended the second 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 $20.4 million, $41.3 million, $46.2 million and $276.3 million respectively.

As of the end of the second quarter, we have achieved $147 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 expecting total run-rate cost synergies of $160 million per year by July 2024, which is the third year anniversary of the Knoll, Inc. acquisition.

Third Quarter and Fiscal 2024 Outlook

While economic uncertainty persists in parts of our business, we maintain a generally optimistic outlook driven by the margin improvements that we are driving across each of our business segments and early signs of demand stabilization across North America. For full year fiscal 2024, we are increasing our guidance and expect to generate adjusted diluted earnings in the range of $2.00 and $2.16 per share.

As it relates to the third quarter of fiscal year 2024, we expect net sales to range between $890 million to $930 million and adjusted diluted earnings to be between $0.40 to $0.48 per share. Consolidated orders through the first two weeks of the third quarter of fiscal 2024 grew 4% organically compared to the prior year. Our revenue guidance considers this as well as the size and scheduling of the beginning backlog. It also takes into consideration the relative seasonal decrease that we normally experience from the second to the third quarter which is characterized by lower demand and shipping activity in the contract segments during the holiday season.

Webcast Archive

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.