MillerKnoll, Inc. — Form 10-Q Summary
Reporting period: First quarter of fiscal 2027, three months ended August 29, 2026; comparisons are with the three months ended August 30, 2025. Amounts are in millions of dollars unless stated otherwise.
Business context and results
MillerKnoll designs, manufactures, and sells furnishings and related services through contract, retail, and direct-to-consumer channels. Its reportable segments are North America Contract, International Contract, and Global Retail.
| Metric | Q1 FY2027 | Prior year | Change |
|---|---|---|---|
| Net sales | $923.4 | $955.7 | (3.4%) |
| Gross margin | $385.3; 41.7% | $368.1; 38.5% | +320 bps margin |
| Operating earnings | $51.8; 5.6% margin | $53.5; 5.6% margin | (3.2%) |
| Net earnings attributable to MillerKnoll | $26.6 | $20.2 | +31.7% |
| Diluted EPS | $0.38 | $0.29 | +31.0% |
| Adjusted diluted EPS (non-GAAP) | $0.53 | $0.45 | +17.8% |
| Operating cash flow | $49.1 | $9.4 | +$39.7 |
| Capital expenditures | $32.5 | $30.7 | +$1.8 |
Gross margin benefited from pricing and $16.5 of received refunds for previously paid IEEPA tariffs. The refunds contributed approximately $0.11 to adjusted diluted EPS. Operating expenses rose 6.0% to $333.5, including higher compensation, restructuring costs, and new-store expenses. Other expense declined to $16.6 from $24.8, largely because the prior-year period included a $7.8 debt-extinguishment loss and had higher interest expense.
Segments, demand, and material changes
- North America Contract: Sales of $505.6, down 5.3%; orders of $483.7, down 1.7%. Operating earnings decreased to $47.5 from $56.9.
- International Contract: Sales of $156.8, down 6.4%; orders of $181.2, up 17.3%. Operating earnings fell to $3.7 from $13.5.
- Global Retail: Sales of $261.0, up 2.6%; orders of $249.0, up 4.3%. Operating earnings increased to $16.0 from $1.4.
- Company orders rose 3.2% to $913.9, while backlog decreased 3.1% to $669.2. Organic sales declined 3.3% and organic orders increased 3.5% (non-GAAP measures excluding currency effects).
Lower contract-segment sales volumes were the primary sales headwind. Pricing contributed approximately $23 to consolidated sales, partly offsetting the volume decline. The tariff refunds materially supported the year-over-year gross-margin improvement; without them, reported margin and earnings would have been lower.
Cash, debt, and liquidity
- Cash and cash equivalents were $178.6 at August 29, 2026, versus $167.7 at May 30, 2026. Cash increased $10.9 during the quarter.
- Operating activities provided $49.1; investing activities used $32.1; financing activities used $4.8. Working capital used $22.4 of cash in the quarter, improved from $63.0 used a year earlier.
- Total debt was $1,307.4, including $311.5 drawn on the revolving facility; long-term debt on the balance sheet was $1,270.4. Cash less total debt implies net debt of approximately $1,128.8.
- Reported total liquidity was $580.4, comprising cash and $401.8 of available revolving-credit capacity. The company was in compliance with debt covenants. Its revolving facility matures in April 2030; Term Loan B matures in August 2032.
- Quarterly dividends paid were $12.8. Share repurchases and related tax-withholding payments totaled $9.5; $155.3 remained available under the repurchase authorization.
Outlook, risks, and unusual items
The filing provides no specific sales, earnings, or margin guidance. Management expects fiscal 2027 capital purchases of $125–$135, primarily for facilities and equipment; $26.5 of capital-purchase commitments were outstanding at quarter-end. Management states that cash, operating cash flow, and borrowing capacity should fund foreseeable operating needs, capital requirements, debt maturities, dividends, and repurchases.
The company initiated a fiscal 2027 restructuring plan covering workforce reductions and facility consolidations; related charges were $6.5 in the quarter. It continues to pursue additional IEEPA tariff refunds, but unreceived or otherwise unrealizable claims have not been recognized. Management reported no interim impairment-testing trigger despite previously limited valuation headroom for certain reporting units and trade names.
Risks highlighted include geopolitical instability and supply-chain disruption; changing tariffs, tariff-refund reversals, and trade rules; inflation, interest and foreign-exchange movements; consumer demand; leadership transition; cybersecurity; raw-material availability; dealer and customer financial strength; and litigation or government investigations. Management said pending ordinary-course legal matters are not expected to have a material adverse effect. Disclosure controls were assessed as effective, and no material change in internal control was reported.
Important facts for investors to verify
- How much of the gross-margin and adjusted-EPS improvement depends on the $16.5 IEEPA refund, and the status and potential value of remaining refund claims.
- Whether higher orders—particularly International Contract—translate into sales and backlog recovery, given lower current-quarter contract sales and a lower company-wide backlog.
- Whether Global Retail’s earnings improvement is sustainable after separating tariff refunds, pricing, and new-store costs.
- Progress on the restructuring plan, its remaining expected costs, and whether operating-expense growth moderates.
- Debt levels, revolving-facility usage, interest-rate exposure, and liquidity as the company funds planned capital spending and shareholder returns.