Miller Knoll Reports Fourth Quarter and Fiscal 2025 Results

June 25, 2025  by Karen Parrish in Business Strategy, Industry   

Fourth Quarter

- Net sales of $961.8 million, up 8.2% as reported and up 7.8% organically, year-over-year

- Orders of $1,036.8 million, up 11.1% as reported and up 10.7% organically, year-over-year

- Gross margin decreased 40 basis points, primarily from approximately $7.0 million of tariff-related cost increases in the quarter, offset in part by the benefit of leverage on higher net sales

- Consolidated operating expenses decreased to $321.9 million 

- Consolidated adjusted operating expenses increased to $305.0 million, driven primarily by higher variable incentive compensation costs and higher selling expense from the higher sales volume 

- Special charges of $16.9 million:
                  $10.6 million of restructuring charges, primarily related to workforce reductions
                  $6.3 million of purchase accounting amortization

- Operating margin of 5.7%, compared to 2.7% in the prior year

- Adjusted operating margin of 7.5%, compared to 8.3% in the prior year

Fiscal 2025

- Net sales of $3.7 billion, up 1.1% as reported and up 1.6% organically, year-over-year

- Gross margin decreased 30 basis points

- Operating margin of 1.4%, compared to 4.6% in the prior year

- Adjusted operating margin of 6.8%, compared to 7.2% in the prior year

Fourth Quarter 2025 Cash Flow, Debt, and Liquidity

- Liquidity, as of May 31, 2025, of $575.9 million reflected cash on hand and Revolving Credit Facility availability

- Amended Revolving Credit Facility and Term Loan A during the quarter, extending maturity date to April 2030

- Cash flow from operations of $70.9 million

- Reduction in total outstanding debt of $4.8 million

- Net debt-to-EBITDA ratio, as defined by our Credit Facility, of 2.88x

- Near term scheduled debt maturities: 

                  - $16.0 million in fiscal 2026

                  - $24.1 million in fiscal 2027

                  - $26.6 million in fiscal 2028

"We are extremely proud of our results in the fourth quarter, significantly exceeding the expectations we set forth to the Street last quarter, and driven by outstanding, value-creating execution in all of our businesses and by our associates around the world. As we look ahead, we are encouraged by the positive underlying trends and solid order growth we are seeing across our businesses and geographies. While macroeconomic conditions continue to be incredibly dynamic, we have the operational and balance sheet strength to both navigate these conditions and continue investing in our exciting growth opportunities ahead," said Andi Owen, President and Chief Executive Officer. 

Fourth Quarter and Fiscal 2025 Results by Segment

North America Contract

- Q4 net sales of $496.1 million, up 12.5% as reported and up 12.6% organically, year-over-year

- Q4 orders of $567.6 million, up 15.8% as reported and up 15.9% organically, year-over-year  

- Q4 operating margin of 7.7% compared to 0% in the prior year

- Q4 adjusted operating margin of 10.0%, up 190 basis points compared to prior year, primarily from fixed expense leverage on higher net sales, partially offset by higher tariff-related cost increases

- Full year net sales of $1.97 billion, up 2.2% as reported and up 2.4% organically

- Full year operating margin of 6.2%, up 60 basis points compared to prior year

- Full year adjusted operating margin of 9.7%, up 50 basis points compared to prior year

 International Contract

- Q4 net sales of $185.7 million, up 6.9% as reported and up 5.5% organically, year-over-year

- Q4 orders of $189.5 million, up 3.6% as reported and up 2.1% organically, year-over-year

- Q4 operating margin of 11.7% compared to 10.9% in the prior year

- Q4 adjusted operating margin of 12.9%, down 230 basis points year-over-year, primarily from regional and product sales mix and higher variable incentive compensation in the quarter

- Full year net sales of $660 million, up 2.2% as reported and up 2.7% organically, year-over-year

- Full year operating margin of 9.6%, up 10 basis points to prior year

- Full year adjusted operating margin of 11.1%, flat to prior year

Global Retail

- Q4 net sales of $280.0 million, up 2.2% as reported and up 1.4% organically, year-over-year

- Q4 orders of $279.7 million, up 7.5% as reported and up 6.7% organically, year-over-year

- Q4 orders were up 8% in the North America region, year-over-year

- Q4 operating margin of 5.3% compared to 6.0% in the prior year 

- Q4 adjusted operating margin of 6.5%, down 210 basis points year-over-year, primarily from new store opening costs, lower sales in the international regions, deleverage on product mix and higher variable incentive compensation

- Full year net sales of $1.04 billion, down 1.5% as reported and down 0.3% organically, year-over-year

- Full year operating loss margin of 6.3%, down 1,110 basis points compared to prior year

- Full year adjusted operating margin of 5.0%, down 110 basis points compared to prior year

- Opened four new retail stores in Fiscal 2025: two DWR stores in Palm Springs, CA and Paramus, NJ and two Herman Miller stores in Fairfax, VA and Coral Gables, FL

- Above guidance ranges include estimated incremental costs related to tariffs (net of expected mitigation efforts) on our expected first quarter results, ranging between $9 million to $11 million before tax, and between $0.09 to $0.11 of net earnings per share.

- Our operating expense outlook reflects costs related to three new store openings in the first quarter of fiscal 2026.

- These estimates reflect the latest available information known to us as of the date of this release, including all known active tariffs.

Webcast and Conference Call Information
The Company will host a conference call and webcast to discuss the results of the fourth quarter of fiscal 2025 on Wednesday, June 25, 2025, 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 be available at https://www.millerknoll.com/investor-relations.