MILLERKNOLL INC
For the period ended Mar 2, 2024. Filed Apr 10, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 2, 2024 · Filed Apr 10, 2024
MLKN$21.49-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-02; filed 2024-01-10.
0000066382-24-000004
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-02; filed 2024-04-10.
0000066382-24-000014
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 174 previous paragraphs and 182 current paragraphs.
63 unchanged; 83 reworded; 32 added; 25 removed; 3 previous and 4 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
•Gross margin in the third quarter was 38.6% as compared to 34.1% for the same quarter of the prior year. The increase in gross margin was driven primarily by the realization of price optimization strategies; improved freight, distribution and inventory management; an impairment charge in the same quarter of the prior year that did not reoccur; and benefits from our ongoing synergy efforts following the Knoll acquisition.
Current report
•Impairment charges: Includes non-cash, pre-tax charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand.
Current report
•Decrease of $61 million related to the closure of the Fully business that occurred in the prior year.
Current report
•Charges in the prior year for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand contributed to an increase in gross margin of approximately 170 basis points.
Current report
•Charges in the prior year for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand contributed to an increase in gross margin of approximately 60 basis points.
Current report
•Charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand contributed a decrease in Operating expenses as compared to the same period of the prior year of approximately $22 million; and
Current report
•Other costs decreased approximately $8 million as compared to the prior year, of which the largest category of decrease was product development costs which decreased $4 million. These decreases were offset in part by:
Current report
Operating expenses decreased by $41 million or 4.3% in the first nine months of fiscal 2024 compared to the first nine months of fiscal 2023. The following factors contributed to the change:
Current report
For the three month comparative period, Net sales decreased 9.0%, or 9.2%(*) on an organic basis, over the prior year period due to:
Current report
•Price increases, net of incremental discounting of $16 million; and
Current report
For the nine month comparative period, Net sales decreased 9.3%, or 7.1%(*) on an organic basis, over the prior year period due to:
Current report
•Price increases, net of incremental discounting of $76 million; and
Current report
For the three month comparative period, operating earnings decreased $7.2 million, or 22.2%, over the prior year period due to:
Current report
For the nine month comparative period, operating earnings increased $23.6 million, or 30.2%, over the prior year period due to:
Current report
•The improvement in operating earnings from Gross margin was offset in part by increased Operating expenses of $6 million. The following factors contributed to the change:
Current report
For the three month comparative period, Net sales decreased 10.4%, or 10.6%(*) on an organic basis, over the prior year period due to:
Current report
•Decreased sales volume of approximately $88 million; and
Current report
•Price increases, net of incremental discounting of $7 million.
Current report
For the three month comparative period, operating earnings decreased $7 million, or 27% over the prior year period due to:
Current report
For the nine month comparative period, operating earnings decreased $27.8 million, or 34.1%, over the prior year period due to:
Current report
For the three month comparative period, Net sales decreased 17.0%, and decreased 11.3%(*)on an organic basis, over the prior year period due to:
Current report
•A decrease in sales volume of approximately $25 million, driven by elevated interest rates in major markets around the world, ongoing geopolitical concerns, and a lagging housing market in the U.S.; and
Current report
•Decrease of $17 million related to the closure of the Fully business that occurred in the prior year; and
Current report
For the nine month comparative period, Net sales decreased 19.2%, and decreased 11.3%(*)on an organic basis, over the prior year period due to:
Current report
•Decrease of $61 million related to the closure of the Fully business that occurred in the prior year; and
Current report
•Favorable foreign currency translation of approximately $6 million.
Current report
For the three month comparative period, Operating earnings increased $36 million or 146.1% over the prior year period due to:
Current report
•Increased Gross margin of $9 million due to the gross margin percentage increase of 1,090 basis points which was attributable to:
Current report
◦Charges in the prior year for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand; and
Current report
For the nine month comparative period, Operating earnings increased $32.9 million, or 700% over the prior year period due to:
Current report
•An increase in notes receivable received from certain independently owned dealers in the current year;
Current report
•Proceeds of $3.5 million received in the nine months ended March 2, 2024 related to the sale of the Company's investment in Global Holdings Netherlands B.V.
Removed paragraphs (25)
Previous report
•Gross margin in the second quarter was 39.2% as compared to 34.5% for the same quarter of the prior year. The increase in Gross margin was driven primarily by the impact of price increase actions, reduced costs associated with commodities, inventory handling and freight, as well as the continued realization of synergies associated with the Knoll integration.
Previous report
•Decrease of $42 million related to the closure of the Fully business that occurred in the prior year.
Previous report
Operating expenses decreased by $21 million or 3.2% in the first six months of fiscal 2024 compared to the first six months of fiscal 2023. The following factors contributed to the change:
Previous report
For the three month comparative period, Net sales decreased 10.1%, or 10.3%(*) on an organic basis, over the prior year period due to:
Previous report
For the six month comparative period, Net sales decreased 9.4%, or 6.1%(*) on an organic basis, over the prior year period due to:
Previous report
•Price increases, net of incremental discounting of $61 million; and
Previous report
For the three month comparative period, operating earnings increased $9.8 million, or 38.7%, over the prior year period due to:
Previous report
For the six month comparative period, operating earnings increased $30.8 million, or 67.4%, over the prior year period due to:
Previous report
•Increased Operating expenses of $2 million. The following factors contributed to the change:
Previous report
For the three month comparative period, Net sales decreased 8.9%, or 10.4%(*) on an organic basis, over the prior year period due to:
Previous report
•Favorable foreign currency translation of approximately $4 million; and
Previous report
•Price increases, net of incremental discounting of $1 million.
Previous report
•Decreased sales volume of approximately $63 million; offset in part by
Previous report
•Price increases, net of incremental discounting of $8 million; and
Previous report
•Favorable foreign currency translation of approximately $7 million.
Previous report
For the three month comparative period, operating earnings decreased $4.5 million, or 15.9%, over the prior year period due to:
Previous report
For the six month comparative period, operating earnings decreased $21.0 million, or 37.4%, over the prior year period due to:
Previous report
For the three month comparative period, Net sales decreased 14.7%, and decreased 9.4%(*)on an organic basis, over the prior year period due to:
Previous report
•Decrease of $20 million related to the closure of the Fully business that occurred in the prior year; and
Previous report
•A decrease in sales volume of approximately $11 million, driven by a slowdown in our wholesale sales internationally due to high rates impacting customer demand and the continued softness in the North American housing market; offset by
Previous report
For the six month comparative period, Net sales decreased 20.3%, and decreased 11.4%(*)on an organic basis, over the prior year period due to:
Previous report
•Decrease of $42 million related to the closure of the Fully business that occurred in the prior year; and
Previous report
•Favorable foreign currency translation of approximately $5 million.
Previous report
For the three month comparative period, Operating earnings increased $13 million or 635.0% over the prior year period due to:
Previous report
For the six month comparative period, Operating earnings decreased $2.9 million, or 14.6%, over the prior year period due to:
Reworded paragraphs (83)
Previous wording
•Net sales were $949.5 million and orders were $944.0 million, representing a decrease of 11.0% and 6.8%, respectively, when compared to the same quarter of the prior year. On an organic basis, which excludes the impact of foreign currency translation and the impact of the closure of the Fully business, Net sales were $941.6 million()and orders were $934.0 million(), representing an organic decrease of 10.1% and 6.0%, respectively, when compared to the same quarter of the prior year.
Current wording
•Net sales were $872.3 million and orders were $830.3 million, representing a decrease of 11.4% and 6.2%, respectively, when compared to the same quarter of the prior year. On an organic basis, which excludes the impact of foreign currency translation and the impact of the closure of the Fully business, Net sales were $870.5 million()and orders were $826.9 million(), representing an organic decrease of 10.1% and 4.7%, respectively, when compared to the same quarter of the prior year.
Previous wording
•Operating expenses decreased by $17.3 million or 5.3% as compared to the same quarter of the prior year. The decrease was driven primarily by the realization of cost synergies as a result of optimization of our organizational structure, a reduction in restructuring costs as compared to the same prior of the prior year as well as lower variable costs due to decreased sales.
Current wording
•Operating expenses decreased by $20.2 million or 6.4% as compared to the same quarter of the prior year. The decrease was driven primarily by the continued realization of cost synergies as a result of optimization of our organizational structure, a reduction in restructuring costs as compared to the same prior of the prior year as well as lower variable costs due to decreased sales.
Previous wording
•As of the end of the second quarter, the Company has captured $147 million in annualized run rate synergies following the close of the Knoll acquisition in the first quarter of Fiscal 2022. The Company continues to make further progress on integration plans andexpects total run-rate cost synergies to equal $160 million per year by July 2024 (three years following the acquisition closing date).
Current wording
•As of the end of the third quarter, the Company has captured $153 million in annualized run rate synergies following the close of the Knoll acquisition in the first quarter of Fiscal 2022. The Company continues to make further progress on integration plans andexpects total run-rate cost synergies to equal $160 million per year by July 2024 (three years following the acquisition closing date).
Previous wording
•The effective tax rate was 21.4% compared to 19.8% for the same quarter of the prior year. The prior year tax rate benefited from favorable tax credit benefits which outpaced the current year benefit.
Current wording
•The effective tax rate was 16.0% compared to 31.2% for the same quarter of the prior year. The current quarter rate benefited from favorable discrete impacts from return to provision true-ups related to the United States research and development tax credit.
Previous wording
•Diluted earnings per share was $0.45 as compared to earnings per share of $0.21 in the prior year. Excluding integration related costs, restructuring costs, and the amortization of intangible assets purchased as part of the Knoll acquisition, adjusted diluted earnings per share was $0.59(), a 28.3%() increase as compared to prior year adjusted diluted earnings per share.
Current wording
•Diluted earnings per share was $0.30 as compared to $0.01 in the prior year. Excluding integration related costs, restructuring costs, impairment charges, and the amortization of intangible assets purchased as part of the Knoll acquisition, adjusted diluted earnings per share was $0.45(), a 16.7%() decrease as compared to prior year adjusted diluted earnings per share.
Previous wording
•During the second quarter, demand levels for the Company's products continued to be impacted by general economic uncertainty around the world driven by geopolitical concerns, persistent inflationary affects, and elevated market interest rates. The Company believes that our second quarter financial results reflect how our diversified business model, with brands across multiple channels, customer segments and geographies, provides risk diversification, and opportunities for long-term future growth.
Current wording
•During the third quarter, demand levels for the Company's products continued to be impacted by general economic uncertainty around the world driven by geopolitical concerns, persistent inflationary effects, and elevated market interest rates.
Previous wording
•The Americas Contract segment in the second quarter reported Net sales totaling $476.1 million, down 10.1% compared to the prior year period on a reported basis and down 10.3%() organically. Americas Contract had new orders of $437.4 million, which was a decrease of 7.7% from the prior year, and down 8.1%() on an organic basis.
Current wording
•The Americas Contract segment in the third quarter reported Net sales totaling $441.1 million, down 9.0% compared to the prior year period on a reported basis and down 9.2%() organically. Americas Contract had new orders of $420.1 million, which was a decrease of 9.0% from the prior year, and down 9.4%() on an organic basis.
Previous wording
•The International Contract & Specialty segment delivered Net sales in the second quarter of $241.2 million, a decrease of 8.9% from the year-ago period on a reported basis and a decrease of 10.4%() organically. New orders in this segment totaled $233.9 million, representing a year-over-year decrease of 3.2% on a reported basis and a decrease of 5.1%() organically.
Current wording
•The International Contract & Specialty segment delivered Net sales in the third quarter of $217.3 million, a decrease of 10.4% from the year-ago period on a reported basis and a decrease of 10.6%() organically. New orders in this segment totaled $227.6 million, representing a year-over-year increase of 8.3% on a reported basis and an increase of 7.9%() organically.
Previous wording
•Net sales in the second quarter for the Global Retail segment totaled $232.2 million, a decrease of 14.7% over the same quarter last year on a reported basis and a decrease of 9.4%() organically. Orders in the quarter totaled $272.7 million, down 8.4% compared to the same period last year on a reported basis and down 3.0%() organically.
Current wording
•Net sales in the third quarter for the Global Retail segment totaled $213.9 million, a decrease of 17.0% over the same quarter last year on a reported basis and a decrease of 11.3%() organically. Orders in the quarter totaled $182.6 million, down 14.6% compared to the same period last year on a reported basis and down 7.1%() organically.
Previous wording
The Company's fiscal year is the 52 or 53 week period ending on the Saturday closest to May 31. The fiscal year ending June 1, 2024 contains 52 weeks, while fiscal year ended June 3, 2023 ("fiscal 2023") contained 53 weeks. The first quarter of fiscal 2024 contained 13 weeks and the first quarter of fiscal 2023 contained 14 weeks. This is a factor that should be considered when comparing the Company's year to date financial results to the prior year period.
Current wording
The Company's fiscal year is the 52 or 53 week period ending on the Saturday closest to May 31. The fiscal year ending June 1, 2024 contains 52 weeks, while the fiscal year ended June 3, 2023 contained 53 weeks. The first quarter of fiscal 2024 contained 13 weeks and the first quarter of fiscal 2023 contained 14 weeks. This is a factor that should be considered when comparing the Company's year to date financial results to the prior year period.
Previous wording
The remaining sections within Item 2 include additional analysis of the three and six months ended December 2, 2023, including discussion of significant variances compared to the prior year periods.
Current wording
The remaining sections within Item 2 include additional analysis of the three and nine months ended March 2, 2024, including discussion of significant variances compared to the prior year periods.
Previous wording
Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, and the related tax effect of these adjustments. These adjustments are described further below.
Current wording
Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, and the related tax effect of these adjustments. These adjustments are described further below.
Previous wording
•Restructuring charges: Includes actions involving targeted workforce reductions.
Current wording
•Restructuring charges: Includes costs associated with actions involving targeted workforce reductions.
Previous wording
The following table presents certain key highlights from the results of operations for the three and six months ended:
Current wording
The following table presents certain key highlights from the results of operations for the three and nine months ended:
Previous wording
The following table presents select components of the Company's Condensed Consolidated Statements of Comprehensive (Loss) Income as a percentage of Net sales, for the three and six months ended:
Current wording
The following table presents select components of the Company's Condensed Consolidated Statements of Comprehensive (Loss) Income as a percentage of Net sales, for the three and nine months ended:
Previous wording
The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three and six months ended December 2, 2023. The amounts presented in the graph are expressed in millions and have been rounded.
Current wording
The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three and nine months ended March 2, 2024. The amounts presented in the graph are expressed in millions and have been rounded.
Previous wording
Net sales decreased $117 million or 11.0% in the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023. The following items contributed to the change:
Current wording
Net sales decreased $113 million or 11% in the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023. The following items contributed to the change:
Previous wording
•Decreased sales volume within the Global Retail, International Contract & Specialty, and Americas Contract segments of approximately $11 million, $29 million and $77 million, respectively.
Current wording
•Decreased sales volume within the International Contract & Specialty, Global Retail, and Americas Contract segments of approximately $25 million, $25 million and $61 million, respectively.
Previous wording
•Decrease of $20 million related to the closure of the Fully business that occurred in the prior year. Offset in part by:
Current wording
•Decrease of $17 million related to the closure of the Fully business that occurred in the prior year. Offset in part by:
Previous wording
•Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $12 million.
Current wording
•Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $13 million.
Previous wording
•Foreign currency translation increased Net sales by approximately $8 million.
Current wording
•Foreign currency translation increased Net sales by approximately $2 million.
Previous wording
Net sales decreased $279 million or 13.0% in the first six months of fiscal 2024 compared to the first six months of fiscal 2023. The following items contributed to the change:
Current wording
Net sales decreased $390 million or 12% in the first nine months of fiscal 2024 compared to the first nine months of fiscal 2023. The following items contributed to the change:
Previous wording
•Decreased sales volume within the Global Retail, International Contract & Specialty, and Americas Contract segments of approximately $37 million, $63 million and $124 million, respectively. Offset in part by:
Current wording
•Decreased sales volume within the Global Retail, International Contract & Specialty, and Americas Contract segments of approximately $60 million, $88 million and $183 million, respectively. Offset in part by:
Previous wording
•Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $51 million.
Current wording
•Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $64 million.
Previous wording
•Foreign currency translation increased Net sales by approximately $13 million.
Current wording
•Foreign currency translation increased Net sales by approximately $15 million.
Previous wording
Gross margin was 39.2% in the second quarter of fiscal 2024 as compared to 34.5% in the second quarter of fiscal 2023. The following factors summarize the major drivers of the year-over-year change in gross margin percentage:
Current wording
Gross margin was 38.6% in the third quarter of fiscal 2024 as compared to 34.1% in the third quarter of fiscal 2023. The following factors summarize the major drivers of the year-over-year change in gross margin percentage:
Previous wording
•Reduction in costs from commodities, storage and handling costs, freight and product distribution costs, as compared to the same period of the prior year which increased gross margin by approximately 460 basis points.
Current wording
•Reduction in costs from commodities, storage and handling costs, freight and product distribution costs, as compared to the same period of the prior year which increased gross margin by approximately 240 basis points.
Previous wording
•Loss of leverage on lower sales volumes, which negatively impacted margin by approximately 120 basis points.
Current wording
•Loss of leverage on lower sales volumes, which negatively impacted margin by approximately 70 basis points.
Previous wording
Gross margin was 39.1% in the six months ended December 2, 2023 as compared to 34.5% for the same period in the prior fiscal year. The following factors summarize the major drivers of the year-over-year change in gross margin percentage:
Current wording
Gross margin was 39.0% in the nine months ended March 2, 2024 as compared to 34.4% for the same period in the prior fiscal year. The following factors summarize the major drivers of the year-over-year change in gross margin percentage:
Previous wording
•Reduction in costs from commodities, storage and handling costs, freight and product distribution costs, as compared to the same period of the prior year which increased gross margin by approximately 370 basis points.
Current wording
•Reduction in costs from commodities, storage and handling costs, freight and product distribution costs, as compared to the same period of the prior year which increased gross margin by approximately 330 basis points.
Previous wording
•Price increases, net of incremental discounting, contributed to margin improvement of approximately 180 basis points.
Current wording
•Price increases, net of incremental discounting, contributed to margin improvement of approximately 150 basis points.
Previous wording
•Loss of leverage on lower sales volumes and unfavorable channel and product mix, which negatively impacted gross margin by approximately 110 basis points.
Current wording
•Loss of leverage on lower sales volumes and unfavorable channel and product mix, which negatively impacted gross margin by approximately 130 basis points.
Previous wording
The following chart presents graphically the primary drivers of the year-over-year change in Operating expenses for the three and six months ended December 2, 2023. The amounts presented in the graphs are expressed in millions and have been rounded.
Current wording
The following chart presents graphically the primary drivers of the year-over-year change in Operating expenses for the three and nine months ended March 2, 2024. The amounts presented in the graphs are expressed in millions and have been rounded.
Previous wording
Operating expenses decreased by $17 million or 5.3% in the second quarter of fiscal 2024 compared to the prior year period. The following factors contributed to the change:
Current wording
Operating expenses decreased by $20 million or 6.4% in the third quarter of fiscal 2024 compared to the prior year period. The following factors contributed to the change:
Previous wording
•Variable selling and marketing costs decreased by approximately $10 million, due in part to the closure of the Fully business that occurred in the prior year; and
Current wording
•Variable selling and marketing costs decreased by approximately $6 million, due in part to the closure of the Fully business that occurred in the prior year; and
Previous wording
•Restructuring charges related to reductions in the Company's workforce as well as acquisition related integration costs contributed to a decrease in Operating expenses as compared to the same period of the prior year of approximately $10 million; and
Current wording
•Charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand, restructuring charges related to reductions in the Company's workforce as well as acquisition related integration costs contributed a decrease in Operating expenses as compared to the same period of the prior year of approximately $27 million; and
Previous wording
•Variable selling and marketing costs decreased by approximately $9 million, due in part to the closure of the Fully business that occurred in the prior year; and
Current wording
•Variable selling and marketing costs decreased by approximately $16 million, due in part to the closure of the Fully business that occurred in the prior year; and
Previous wording
•Product development costs decreased approximately $8 million, primarily in the Americas Contract and Global Retail segments; and
Current wording
•Product development costs decreased approximately $13 million, primarily in the Americas Contract and Global Retail segments; and
Previous wording
•Compensation and benefit costs, which increased approximately $8 million, driven by changes in variable-based compensation and incentives;
Current wording
•Compensation and benefit costs, which increased approximately $32 million, driven by changes in variable-based compensation and incentives.
Previous wording
During the three months ended December 2, 2023, net Other expense was $16.1 million, representing a decrease of $1.0 million compared to the same period in the prior year, driven primarily by increased interest income as well as higher foreign currency gains recorded in the current fiscal year, offset in part by increased interest expense as compared to the same period of the prior year.
Current wording
During the three months ended March 2, 2024, net Other expense was $15.3 million, representing a decrease of $4.3 million compared to the same period in the prior year, driven primarily by increased interest income as well as reductions in foreign currency losses.
Showing the first 40 of 83 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
•Favorable foreign currency translation of approximately $2 million.
Current report — wording carried from elsewhere
•Favorable foreign currency translation of approximately $1 million.
Current report — wording carried from elsewhere
•The advancement of $13.5 million of cash against the value of company owned life insurance policies received in the nine months ended March 4, 2023 for which there was no activity in the current year. Offset in part by:
Current report — wording carried from elsewhere
•Net payments on the credit agreement of $48.8 million in the current year compared to net borrowings of $55.5 million in the same period of the prior year; and
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
•Other costs, primarily product development costs decreased approximately $5 million, primarily in the Americas Contract and Global Retail segments. These decreases were offset in part by:
Previous report — wording carried elsewhere
•Price increases, net of incremental discounting of $23 million.
Previous report — wording carried elsewhere
•Favorable foreign currency translation of approximately $3 million.