What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-07-26 compared with 2022-07-26 · 347 added, 304 removed, 325 unchanged (67% of the section changed)

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Our optimism leads us as we redefine modern for the 21st century, shaping a future that’s more sustainable, caring, and beautiful for all people and our planet.

In July 2021, the Company finalized the acquisition of Knoll, Inc.

(“Knoll”) in a cash and stock transaction valued at approximately $1.8 billion.

On November 1, 2021, Herman Miller, Inc.

changed its name to MillerKnoll, Inc., and the company began trading on the Nasdaq Global Select Market under the symbol MLKN.

MillerKnoll's products are sold internationally through controlled subsidiaries or branches in various countries including the United Kingdom, Denmark, Italy, France, the Netherlands, Canada, Japan, Mexico, Australia, Singapore, China, Hong Kong, India, and Brazil.

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The Company is globally positioned in terms of manufacturing operations.

In North America, manufacturing operations are in Connecticut, Illinois, Georgia, New York, North Carolina, Michigan, Pennsylvania, Texas, and Wisconsin in the United States, as well as Toronto and Mexico City.

In North America, manufacturing and distribution operations are in Georgia, New York, North Carolina, Michigan, Pennsylvania, and Texas in the United States, as well as Toronto and Mexico City.

In Europe, the Company's manufacturing presence is in the United Kingdom and Italy.

Manufacturing operations globally also include facilities located in Brazil, Mexico, China, and India.

Manufacturing operations globally also include facilities located in Brazil, China, and India.

The Company manufactures products using a system of lean manufacturing techniques collectively referred to as the MillerKnoll Performance System (MKPS).

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As a result of this strategy, the Company's manufacturing operations are largely assembly-based.

A key element of the Company's growth strategy is to scale the Global Retail business through the Company's Design Within Reach ("DWR"), HAY, and Herman Miller retail operations.

A key element of the Company's growth strategy is to scale the Global Retail business through the Company's Design Within Reach ("DWR"), HAY, Knoll, Muuto, and Herman Miller retail operations.

The Global Retail business provides a channel to bring MillerKnoll's iconic and design-centric products to retail customers, along with other proprietary and third-party products, with a focus on modern design.

The Company continues to transform its Global Retail business through store expansion & fleet optimization, which will be complemented by continued focus on assortment expansion (including proprietary and exclusive products), the launch of new eCommerce sites and ongoing digital optimization of existing eCommerce sites and marketing programs.

The Company is comprised of various operating segments as defined by generally accepted accounting principles in the United States (U.S.

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The Company has identified the following segments:

• Americas Contract — Includes the operations associated with the design, manufacture, and sale of furniture and textile products for work-related settings, including office, healthcare, and educational environments, throughout North America and South America.

In addition to the Herman Miller brand, naughtone brand, and the DWR Contract business, this segment includes the operations associated with the design, manufacture, and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles, and Herman Miller Healthcare.

• International Contract — Includes the operations associated with the design, manufacture, and sale of furniture products, primarily for work-related settings in Europe, the Middle East and Africa ("MEA") and Asia-Pacific including products from Colebrook Bosson Saunders (“CBS”), naughtone, and HAY.

• Global Retail — Includes the operations associated with the sale of modern design furnishings and accessories direct to consumer sales through eCommerce, DWR stores and outlets, Herman Miller stores, and HAY stores, as well as to third-party retailers.

• Knoll — Includes the global operations associated with the design, manufacture, and sale of furniture products within the legacy Knoll brands, which includes Knoll, Datesweiser, Edelman Leather, Fully, Holly Hunt, KnollTextiles, Muuto, and Spinneybeck|FilzFelt.

• Americas Contract — Includes the operations associated with the design, manufacture and sale of furniture products directly or indirectly through an independent dealership network for office, healthcare, and educational environments throughout North and South America.

• International Contract & Specialty — Includes the operations associated with the design, manufacture and sale of furniture products, directly or indirectly through an independent dealership network in Europe, the Middle East, Africa and Asia-Pacific as well as the global activities of the Specialty brands, which include Holly Hunt, Spinneybeck, Maharam, Edelman, and Knoll Textiles.

• Global Retail — Includes global operations associated with the sale of modern design furnishings and accessories to third party retailers, as well as direct to consumer sales through eCommerce, direct-mail catalogs, and physical retail stores.

The Company also reports a corporate category consisting primarily of unallocated corporate expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative, and acquisition-related costs.

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The Company relies on the following core strengths in delivering solutions to customers:

• Portfolio of Leading Brands and Products - MillerKnoll is a collective of globally recognized design brands known for working with some of the most well-known and respected designers in the world.

• Product Portfolio and Brand Collective - MillerKnoll is a collective of globally recognized design brands known for working with some of the most well-known and respected designers in the world.

Combined, the Company represents over 100 years of design research and exploration in service of humanity.

Within the industries in which the Company operates, Herman Miller and Knoll, along with Colebrook Bosson Saunders, DatesWeiser, Design Within Reach, Edelman Leather, Fully, Geiger, HAY, Holly Hunt, Maars Living Walls, Maharam, Muuto, naughtone, and Spinneybeck|FilzFelt are acknowledged as leading brands that inspire architects and designers to create their best design solutions.

Within the industries in which the Company operates, Herman Miller and Knoll, along with Colebrook Bosson Saunders, DatesWeiser, Design Within Reach, Edelman Leather, Geiger, HAY, Holly Hunt, Maars Living Walls, Maharam, Muuto, NaughtOne, and Spinneybeck|FilzFelt are acknowledged as leading brands that inspire architects and designers to create their best design solutions.

This portfolio has enabled MillerKnoll to connect with new audiences, channels, geographies, and product categories.

Leveraging the collective brand equity of MillerKnoll across the lines of business is an important element of the Company's business strategy.

• Problem-Solving Design and Innovation - The Company is committed to developing research-based functionality and aesthetically innovative new products and has a history of doing so, in collaboration with a global network of leading independent designers.

• Design Leadership - The Company is committed to developing research-based functionality and aesthetically innovative new products and has a history of doing so, in collaboration with a global network of leading independent designers.

The Company believes its skills and experience in matching problem-solving design with the workplace needs of customers provide the Company with a competitive advantage in the marketplace.

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The Company accomplishes this through the use of an internal research and engineering staff that engages with third party design resources generally compensated on a royalty basis.

• Operational Excellence - The Company was among the first in the industry to embrace the concepts of lean manufacturing.

• Unique Business Model - The Company has built a multi-channel distribution capability that it considers unique.

Through contract furniture dealers, direct customer sales, retail stores and studios, eCommerce, wholesalers, and independent retailers, the Company serves contract and residential customers across a range of channels and geographies.

As it pertains to is operations, the Company was among the first in the industry to embrace the concepts of lean manufacturing.

MKPS provides the foundation for all the Company's manufacturing operations.

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The Company believes these concepts hold significant promise for further gains in reliability, quality, and efficiency.

• Omni-ChannelReach - The Company has built a multi-channel distribution capability that it considers unique.

Through contract furniture dealers, direct customer sales, retail stores and studios, eCommerce, and independent retailers, the Company serves contract and residential customers across a range of channels and geographies.

• Global Scale - In addition to its global omni-channel distribution capability, the Company has a global network of designers, suppliers, manufacturing operations, and research and development centers that position the Company to serve contract and residential customers globally.

• Global Scale and Reach - In addition to its global omni-channel distribution capability, the Company has a global network of designers, suppliers, manufacturing operations, and research and development centers that position the Company to serve contract and residential customers globally.

The Company believes that leveraging this global scale will be an important enabler to executing its strategy.

• Extraordinary People - We believe that our employees are a critical success factor for our business.

We strive to identify, hire, develop, motivate and retain the best employees.

Our ability to attract, engage, and retain key employees has been and will remain critical to our success.

Channels of Distribution

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In most of these instances, the Company contracts separately with a dealer or third-party installation company to provide sales-related services.

• eCommerce - The Company sells products in its portfolio of brands across the globe, through localized Herman Miller, Knoll, DWR, HAY and Fully websites.

• eCommerce - The Company sells products in its portfolio of brands across the globe, through localized Herman Miller, Knoll, DWR, and HAY websites.

These sites complement the Company’s existing methods of distribution and extend the Company's brands' reach for new and existing customers and clients.

• Wholesale – Through both the Global Retail and Knoll segments, certain of the Company's products are sold on a wholesale basis to third-party retailers located in various markets around the world.

• Retail Locations - As of May 28, 2022, the Company operated 70 retail studios (including 35 operating under the DWR brand, 7 under the HAY brand, 22 Herman Miller stores, 2 Muuto stores, 3 Knoll stores and a multi-brand Chicago store).

The business also operates 3 outlet studios.

• Wholesale – Through the Company's Global Retail segment, certain products are sold on a wholesale basis to third-party retailers located in various markets around the world.

• Retail Locations - As of June 3, 2023, the Company operated 75 retail studios (including 38 operating under the DWR brand, 3 under the HAY brand, 27 Herman Miller stores, 3 Muuto stores, 3 Knoll stores and a multi-brand Chicago store).

The business also operated 4 outlet studios.

Challenges Ahead

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Bring MillerKnoll to Life

We are following a detailed and deliberate plan to bring the best of all our brands together to create MillerKnoll, enabling us to achieve our purpose of design for the good of humankind as we remake modern for the 21st century.

We are following a detailed and deliberate plan to bring the best of all our brands together, enabling us to achieve our purpose of design for the good of humankind as we remake modern for the 21st century.

Our priorities include establishing and building the MillerKnoll culture;

delivering on our synergy commitments of $100 million in annual run-rate savings by the end of year two post-acquisition and $120 million in run-rate savings by the end of year three;

delivering on our synergy commi tment of $145 millio n in run-rate savings by the end of year three of the Knoll acquisition;

successfully executing our integration plans and initiatives;

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Building a customer-centric and digitally enabled business model is foundational to bringing MillerKnoll to life and encompasses both our internal technology foundation and our digital go-to-market capabilities.

Our goals include integrating our MillerKnoll systems and processes, shifting to a simpler systems architecture, serving our customers around the world through global eCommerce capabilities, harnessing data to enable our teams to make effective and timely decisions, and accelerating global automation and manufacturing 4.0 initiatives to improve the employee experience and increase accuracy, quality, and performance.

With the launch of our MillerKnoll dealer network in North America, we expanded access to our proprietary end-to-end digital solution that makes it easier for our dealers to respond to customer requests faster with differentiated solutions, and we’re looking forward to bringing this to our international cross-selling dealers later this year.

Our goals include integrating our systems and processes, shifting to a simpler systems architecture, serving our customers around the world through global eCommerce capabilities, harnessing data to enable our teams to make effective and timely decisions, and accelerating global automation and manufacturing 4.0 initiatives to improve the employee experience and increase accuracy, quality, and performance.

Our launch of the combined North America MillerKnoll dealer network at the start of fiscal year 2023 expanded access to our proprietary end-to-end digital solution that makes it easier for our dealers to respond to customer requests faster with differentiated solutions.

Accelerate Profitable Growth

We believe there is opportunity for meaningful growth in each of our business segments and MillerKnoll is uniquely positioned to capitalize on these opportunities given the breadth of our Contract and Global Retail businesses and product portfolios, global reach, and omni-channel distribution and fulfillment capabilities.

We believe there is opportunity for meaningful long-term growth in each of our business segments and MillerKnoll is uniquely positioned to capitalize on these opportunities given the breadth of our Contract and Global Retail businesses and product portfolios, global reach, and omni-channel distribution and fulfillment capabilities.

To capitalize on the opportunity ahead, we will seek to lead the industry in product innovation and design excellence;

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position the Americas Contract business to lead;

drive outsized growth in International Contract;

drive outsized growth in International Contract & Specialty;

and continue transforming our Global Retail business.

Attract, Develop, and Retain World-Class Talent

In creating MillerKnoll, we created the most talented team in the industry.

In creating MillerKnoll, we created one of the most talented teams in the industry.

We are committed to nurturing this distinct competitive advantage and will create a premiere employee experience while continuing to invest in our people so they can do their best work every day.

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We will continue to reinforce our commitment to our people, planet, and communities in integrated and deliberate ways.

We intend to hold ourselves accountable for forward progress against our diversity, equity, and inclusion initiatives, building on the foundation of the 10 DEI actions we announced in 2020;

progress on our 2030 sustainability goals, which we introduced in April 2022;

be a force for good in our communities worldwide;

and elevate our Better World commitments by developing common metrics and regularly sharing our progress internally and externally.

We intend to hold ourselves accountable for forward progress against our diversity, equity, and inclusion initiatives, building on the foundation of the DEIB actions we announced in 2020;

our 2030 sustainability goals, which we introduced in April 2022;

being a force for good in our communities worldwide;

and elevating our Better World reporting by developing com mon metrics and regularly sharing our progress internally and externally.

The Company believes its strategy continues to respond well to current and future realities in its markets.

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Business Overview

The following is a summary of the significant events and items impacting the Company's operations for the year ended May 28, 2022:

• On July 19, 2021, the Company completed the acquisition of Knoll, Inc.

(“Knoll"), a leader in the design, manufacture, marketing, and sale of high-end furniture products and accessories for workplace and residential markets.

The acquisition date fair value of the consideration transferred for Knoll was approximately $1,887.3 million, which was comprised of cash of $1,176.6 million and $710.7 million of Knoll stock that was converted into Company awards.

The Company funded the acquisition through cash on-hand and debt proceeds.

The Company ended the fiscal year with total debt of $1,427.9 million.

The Company has included the financial results of Knoll in the consolidated financial statements from the date of acquisition.

The following is a summary of the significant events and items impacting the Company's operations for the year ended June 3, 2023:

• Net sales were $4,087.1 million, representing an increase of 3.6% when compared to the prior year.

The increase in net sales was driven primarily by the consolidation of Knoll results from the date of acquisition of July 19, 2021, as well as from growth in the Americas Contract, Global Retail and International Contract segments.

The increase in net sales was driven primarily by incremental price increases, the consolidation of Knoll results from the date of acquisition of July 19, 2021, as well as growth in the International Contract & Specialty segments.

Net sales in fiscal year 2023 also reflect the addition of an extra week of operations (within the fiscal first quarter) which is required periodically to re-align calendar months with our fiscal periods.

These increases were offset by a decrease in volume within the Americas Contract and Global Retail segments.

On an organic basis, net sales were $3,946.4 million(*), representing an increase of 0.4% when compared to the prior year.

• Gross margin was 35.0% as compared to 34.3% in the prior year.

The change in gross margin was primarily driven by inflationary pressures on commodities, freight, and production costs;

increased labor costs;

and charges related to the purchase accounting effects of the Company's acquisition of Knoll.

The decrease in margin was offset in part by price increases implemented at various points throughout the fiscal year.

• Operating expenses increased by $594.3 million or 82.7% as compared to the prior year.

Operating expenses in fiscal year 2022 included $125 million of transaction and integration related costs associated with the Knoll acquisition and $51 million of charges related to the amortization of purchased intangible assets in the acquisition.

After excluding the impact of purchase accounting amortization and the transaction and integration related costs, the addition of Knoll increased operating expenses by $348.4 million.

The change in gross margin was primarily driven by the realization of price optimization strategies and benefits from integration synergies.

These positive factors were partially offset by increased commodity, storage and handling costs, freight, product distribution costs, and labor costs.

• Operating expenses decreased by $5.2 million or 0.4% as compared to the prior year.

The decrease was primarily due to a reduction in variable expenses, including certain forms of employee compensation and benefits, and the continued focus on cost optimization and synergy capture.

These decreases were partially offset by $75.0 million of restructuring charges related to voluntary and involuntary reductions in the Company's workforce, charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand, charges related to the impairment of the Knoll trade name, and $50.0 million related to the consolidation of Knoll results for the entire first quarter of fiscal 2023 (versus a partial quarter of consolidation in fiscal 2022).

• The integration of the Knoll acquisition continues to progress as planned.

We made good progress implementing cost synergies throughout the fiscal year, having achieved total annualized run-rate savings of $131 million by the end of the fourth quarter.

This has us on track to deliver against our stated goal of achieving annualized cost synergies of $120 million within three years of closing.

• The effective tax rate was (130.1)% for fiscal 2022 compared to 21.2% for the prior year.

• Diluted earnings per share for the full year totaled a loss per share of $0.37 compared to an earnings per share of $2.94 last year.

This has us on track to deliver against our increased goal of achieving annualized cost synergies of $145 million within three years of closing.

• The effective tax rate was 8.8% for fiscal 2023 compared to negative 130.1% for the prior year.

• Diluted earnings per share for the full year totaled $0.55 compared to a loss per share of $0.37 in the prior year.

On an adjusted basis(*), diluted earnings per share totaled $1.85 in fiscal 2023 compared to $1.92 in fiscal 2022.

• The Company declared cash dividends of $0.75 per share compared to $0.56 per share in the prior year.

• The Company declared cash dividends of $0.75 per share in both fiscal 2023 and fiscal 2022.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations.

The following summary includes the Company's view on the economic environment in which it operates:

• The Company's Global Retail segment supports a range of furniture categories aimed at the home environment.

Several of these categories, including Seating and Dining, Upholstery, Storage, Gaming, and Accessories saw a ramp-up in sales during fiscal 2022.

The workspace category experienced a decline in sales volume within the Global Retail segment, driven by shifting consumer spending patterns.

• While customer demand was strong across segments throughout fiscal 2022, the Company’s results were impacted by global supply chain and labor shortages as well as inflationary pressures, especially steel, freight, fuel costs, and production labor.

The Company took a variety of actions to offset the impact of these pressures, including price increases, supplier diversification, shifting production across manufacturing facilities, and hiring and retention initiatives to increase production staffing.

These actions have helped mitigate some of the impact of these pressures.

As of May 28, 2022 lead times on the majority of new orders have returned to near normal levels and staffing levels have stabilized.

The Company is continuing to carefully monitor these macroeconomic indicators and will respond accordingly as circumstances warrant.

• The Company is monitoring the ongoing war in Ukraine.

The Company stopped fulfilling orders in Russia and Belarus in compliance with economic sanctions from the United States, European Union, and the United Kingdom.

• The Company continues to navigate the impact of global tariffs.

The Company believes, based upon existing circumstances, that pricing, strategic sourcing actions and profit optimization initiatives have fully offset the current level of tariffs imposed on imports from China.

• The current macroeconomic environment in North America — which includes higher interest rates, complications from a regional banking crisis and low CEO and consumer confidence levels — continues to pose challenges for the industry.

These factors are expected to persist, posing difficulties particularly for the luxury housing market and discretionary spending on goods.

However, when it comes to the overall dynamics of returning to the office, the Company maintains an optimistic outlook based on the project funnel and latest trends which suggest more structured return-to-office practices in the near-term.

• The Company's financial performance is sensitive to changes in certain input costs, including steel and steel component parts.

The market price of steel in the fourth quarter of fiscal 2022 was higher than the same period of the prior year and negatively impacted consolidated results on a year-over-year basis.

The price of steel unfavorably impacted consolidated gross margin in the fourth quarter of fiscal 2022.

However, ongoing cost reduction initiatives and price increases are expected to help offset these pressures over time.

The remaining sections of Item 7 include additional analysis of the fiscal year ended May 28, 2022, including discussion of significant variances compared to the prior year period.

Ongoing cost reduction initiatives and price increase actions have been implemented to help offset these cost pressures, and the benefit from these initiatives is expected to increase over time.

Additionally, the substantial inflationary pressures for certain key input costs, including goods and services tied to energy prices, are beginning to ease.

• The Americas Contract segment reported a net sales increase of 5.0% and an organic sales increase of 0.3%(*) year-over-year.

Operating margin increased 610 basis points year-over year and 620 basis points on an adjusted basis.(*) The increase was primarily driven by pricing optimization and benefits from synergies.

• International Contract and Specialty reported a net sales increase of 9.6% and an organic sales increase of 7.0%(*) year-over-year.

Operating margin increased 220 basis points year-over-year and 50 basis points on an adjusted basis.(*) The increase was primarily driven by pricing optimization strategies and product mix.

• Global Retail reported a net sales decrease of 4.1% and an organic sales decrease of 5.1%(*) year-over-year.

On a reported basis, operating margin as a percentage of sales was a loss of 1.5% in fiscal 2023 and earnings of 12.4% in fiscal 2022.

On an adjusted basis, operating margin as a percentage of sales was 3.8%(*) in fiscal 2023 and 13.1%(*) in fiscal 2022.

The decrease was primarily driven by a combination of lower volume, mix of product, and increased freight expenses.

The remaining sections of Item 7 include additional analysis of the fiscal year ended June 3, 2023, including discussion of significant variances compared to the prior year period.

A detailed review of our fiscal 2022 performance compared to our fiscal 2021 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended May 28, 2022.

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see accompanying reconciliations and explanations.

COVID-19 Update

The Company continues to respond to the challenges brought about by the COVID-19 pandemic.

Demand for certain of the Company's products and services, particularly in the Contract channel of the business, has been negatively impacted.

We believe the investments we’ve made in people, technology, and products have positioned us well to capitalize on emerging opportunities as our customers' needs have changed throughout the COVID-19 pandemic.

This has allowed our Retail business to take advantage of companies moving towards hybrid working arrangements as well as "home is my castle" trends as consumers are focusing on and upgrading their broader home environments.

Despite this, the duration of the pandemic, supply chain constraints, future demand for our products, and related impacts remain difficult to estimate.

Employee Safety and Health

The health and well-being of our employees remains top of mind.

We continue to take a regional approach to restrictions based on active COVID-19 case levels and recommendations from local health authorities.

Where needed, we employ a variety of other safety measures including domestic and international travel restrictions, extensive cleaning protocols, temperature and health screenings, personal protective equipment, and visitor safety guidelines that align with current recommendations.

We continue to encourage vaccinations with our employees.

Federal Contractor Vaccine Mandate

On September 9, 2021, President Biden signed Executive Order 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors (Order).

The Order directs various executive departments and agencies to contractually obligate federal contractors and their subcontractors to comply with certain workplace safety standards concerning COVID-19.

To implement the Order, the Safer Federal Workforce Task Force issued its COVID-19 Workplace Safety Guidance for federal contractors on September 24, 2021.

Through a series of subsequent orders and memoranda, the Federal Acquisition Regulation Council and other federal agencies published their own instructions for implementation of the Order by federal contractors and their subcontractors.

In December 2021, a federal court in Georgia enjoined requirements of the Order.

Since then, other courts have entered similar injunctions.

As such, the Order was not in effect as of the end of fiscal 2022.

MillerKnoll is a party to numerous federal government contracts.

We took prompt and appropriate steps in preparation for compliance with the Order and are actively monitoring the status of the pending litigation related to the Order, as well as the impact of such challenges on our obligations under the mandate.

Customer Focus

We remain uniquely positioned to serve our customers through multiple channels with a comprehensive portfolio of products.

As our customers develop their post-pandemic work plans, there is a notable shift to work being done from a number of places.

We are an advocate that work can happen anywhere.

The office is not going away;

rather, it is a re-imagined purposeful space.

We are taking a human-centered, people first approach to space.

We are uniquely equipped with the expertise to help customers build healthy and inspirational spaces in their offices and home.

We are committed to inclusive design and believe that a hybrid environment can deliver inclusive, flexible experiences.

Our focus and digital investments in our retail business continue to pay off as we meet customers where they are looking to do business with us.

We have begun to offer products from MillerKnoll brands across multiple websites.

Investments in our retail

operations and systems are making it easier for customers to do business with us, we are introducing new and enhanced eCommerce sites globally, and social media and email marketing continue to drive conversion.

We also are continuing to invest in brick-and-mortar retail spaces that allow our customers to experience our products firsthand.

Our global fleet of stores, studios, and showrooms continues to be a strong customer acquisition tool, bringing new customers to our brands around the world.

Manufacturing and Retail Operations

Current labor and supply chain constraints have put pressure on the ability of our manufacturing operations to increase capacity as order volume has increased;

however, we are making strong progress towards returning to previous lead times and reliability across MillerKnoll.

Following new guidance from the CDC, our U.S.-based operations recently lifted all COVID-19 restrictions due to low community levels of spread.

We are carefully monitoring and adapting to local guidance from government and health authorities in other regions around the world and will continue to adapt as conditions evolve.

Cost Reductions

In fiscal 2020, in response to the COVID-19 pandemic, the Company implemented a range of actions aimed at temporarily reducing costs and maintaining liquidity.

These actions included voluntary and involuntary workforce reductions, a 10% reduction in cash compensation for a majority of the Company's salaried workforce and an additional 15% salary deferral of the Company's executive leadership team.

Additionally the Company temporarily suspended the quarterly dividend payout and certain employer-paid retirement contributions, compensation increases and cash incentive bonus programs.

In fiscal 2021, the Company made the decision to move forward with several restorative actions.

This included eliminating the 10% reduction in compensation, the introduction of a modified bonus program and re-establishing a quarterly cash dividend program.

In addition, the Company reinstated the previously suspended employer-paid retirement plan contributions in the fourth quarter of fiscal 2021, and elected to make a catch-up contribution for the employer-paid retirement plan contributions that were suspended for a majority of fiscal 2021.

The Company will continue to evaluate further ways to manage costs in line with business performance.

Change in Accounting Principle

In the fourth quarter of fiscal 2022, we elected to change our method of accounting for the cost of certain inventories within our Americas segment from the last-in, first-out method (“LIFO”) to first-in, first-out method (“FIFO”).

With this change there are no longer any inventories accounted for under the LIFO method.

We have retrospectively adjusted the Consolidated Financial Statements for all periods presented to reflect this change.

See Note 1, Significant Accounting and Reporting Policies for the impact this retrospective change in the method of valuing inventories made on the Consolidated Balance Sheets for the periods presented.

Reconciliation of Non-GAAP Financial Measures

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The non-GAAP financial measures referenced within this presentation include:

Adjusted Earnings per Share, Adjusted Operating Earnings (Loss), and Organic Growth (Decline).

Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of purchased intangibles, acquisition and integration charges, debt extinguishment charges, restructuring expenses, other special charges or gains and the related tax effect of these adjustments.

Adjusted Earnings per Share, Adjusted Operating Earnings (Loss), Adjusted Operating Margin, and Organic Growth (Decline).

Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of purchased intangibles, acquisition and integration charges, debt extinguishment charges, restructuring expenses, impairment charges, other special charges or gains and the related tax effect of these adjustments.

These adjustments are described further below.

Adjusted Operating Earnings (Loss) represents reported operating earnings plus acquisition and integration charges, amortization of purchased intangibles, restructuring expenses and other special charges or gains.

These adjustments are described further below.

Organic Growth represents the change in sales and orders, excluding currency translation effects and the impact of acquisitions and divestitures.

Adjusted Operating Margin represents Adjusted Operating Earnings (Loss) for the Company or a business segment divided by the related net sales for the Company or a business segment.

Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects, the impact of an extra week in fiscal 2023, and the impact of acquisitions and divestitures.

• Amortization of purchased intangibles:

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Includes the gain recorded on the divestiture of an owned dealership.

• Legal settlement gain:

Includes the gain recorded on the settlement of a legal matter in fiscal 2021.

• Restructuring expenses:

Include actions involving facilities consolidation and optimization, targeted workforce reductions, and costs associated with an early retirement program.

• Restructuring charges:

Includes actions involving targeted workforce reductions as well as non-impairment charges related to the closure of the Fully business.

• Impairment charges:

Includes non-cash, pre-tax charges for the impairment of intangible assets, right of use assets, and other assets related to the closure of the Fully business as well as the impairment of the Knoll trade name.

• Special charges:

Includes certain costs arising as a direct result of the COVID-19 pandemic, and retroactive payments related to reinstated employee benefits made in the prior year.

Retroactive payments related to reinstated employee benefits were an adjustment to Operating Earnings and Earnings Per Share in the fourth quarter of fiscal 2021, but not for the full year.

Include certain costs arising as a direct result of COVID-19 pandemic.

• Tax related items:

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Tables below summarize select financial information, for the periods indicated, related to each of the Company’s reportable segments.

The Americas Contract segment includes the operations associated with the design, manufacture, and sale of furniture products for work-related settings, including office, education, and healthcare environments, throughout the United States, Canada and Latin America.

Americas Contract also includes the operations associated with the design, manufacture, and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles, naughtone and Herman Miller Healthcare products.

The International Contract segment includes the operations associated with the design, manufacture, and sale of furniture products, primarily for work-related settings, in the European, Middle East and Asia-Pacific geographic regions.

The Global Retail segment includes the global operations associated with the sale of modern design furnishings and accessories to third party retail distributors, as well as direct to consumer sales through eCommerce and Design Within Reach, HAY, and Herman Miller retail stores and studios.

The Knoll segment includes the global operations associated with the design, manufacture, and sale of furniture products within the Knoll constellation of brands.

The Americas Contract segment includes the operations associated with the design, manufacture and sale of furniture products directly or indirectly through an independent dealership network for office, healthcare, and educational environments throughout North and South America.

The International Contract & Specialty segment includes the operations associated with the design, manufacture and sale of furniture products, indirectly or directly through an independent dealership network in Europe, the Middle East, Africa and Asia-Pacific as well as the global activities of the Specialty brands, which include Holly Hunt, Spinneybeck, Maharam, Edelman, and Knoll Textiles.

The Global Retail segment includes global operations associated with the sale of modern design furnishings and accessories to third party retailers, as well as direct to consumer sales through eCommerce, direct-mail catalogs, and physical retail stores.

Corporate costs represent unallocated expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and acquisition-related costs.

The following table reconciles Operating Earnings (Loss) to Adjusted Operating Earnings (Loss) by Segment for the years ended as indicated below (in millions):

Three Months Ended Twelve Months Ended

June 3, 2023 May 28, 2022 June 3, 2023 May 28, 2022

Net sales $ 474.4 100.0 % $ 539.2 100.0 % $ 2,026.1 100.0 % $ 1,929.1 100.0 %

Gross margin 158.7 33.5 % 137.6 25.5 % 611.2 30.2 % 493.1 25.6 %

Total operating expenses 137.3 28.9 % 131.6 24.4 % 511.6 25.3 % 517.1 26.8 %

Operating earnings (loss) $ 21.4 4.5 % $ 6.0 1.1 % $ 99.6 4.9 % $ (24.0) (1.2) %

Restructuring 5.2 1.1 % — — % 22.8 1.1 % — — %

Acquisition and integration charges 3.5 0.7 % 3.7 0.7 % 9.7 0.5 % 29.9 1.5 %

Amortization of purchased intangibles 3.2 0.7 % 3.1 0.6 % 12.9 0.6 % 28.7 1.5 %

Gain on Sale of Dealer — — % — — % — — % (2.0) (0.1) %

Impairment charges 14.4 3.0 % — — % 14.4 0.7 % — — %

Adjusted operating earnings $ 47.7 10.1 % $ 12.8 2.4 % $ 159.4 7.9 % $ 32.6 1.7 %

International & Specialty

Net sales $ 237.4 100.0 % $ 273.3 100.0 % $ 1,017.3 100.0 % $ 928.5 100.0 %

Gross margin 101.3 42.7 % 113.0 41.3 % 424.3 41.7 % 372.6 40.1 %

Total operating expenses 84.2 35.5 % 81.4 29.8 % 325.7 32.0 % 302.7 32.6 %

Operating earnings $ 17.1 7.2 % $ 31.6 11.6 % $ 98.6 9.7 % $ 69.9 7.5 %

Restructuring 0.6 0.3 % — — % 1.3 0.1 % — — %

Acquisition and integration charges 0.5 0.2 % 0.1 — % 2.5 0.2 % 1.2 0.1 %

Amortization of purchased intangibles 2.1 0.9 % 2.3 0.8 % 8.3 0.8 % 26.9 2.9 %

Impairment charges 1.8 0.8 % — — % 1.8 0.2 % — — %

Adjusted operating earnings $ 22.1 9.3 % $ 34.0 12.4 % $ 112.5 11.1 % $ 98.0 10.6 %

Net sales $ 244.9 100.0 % $ 288.0 100.0 % $ 1,043.7 100.0 % $ 1,088.4 100.0 %

Gross margin 94.7 38.7 % 131.9 45.8 % 394.5 37.8 % 487.0 44.7 %

Total operating expenses 105.5 43.1 % 94.5 32.8 % 410.0 39.3 % 352.5 32.4 %

Operating (loss) earnings $ (10.8) (4.4) % $ 37.4 13.0 % $ (15.5) (1.5) % $ 134.5 12.4 %

Restructuring Charges 8.4 3.4 % — — % 9.9 0.9 % — — %

Acquisition and integration charges — — % — — % 0.2 — % 0.3 — %

Amortization of purchased intangibles 0.6 0.2 % 1.3 0.5 % 4.1 0.4 % 7.8 0.7 %

Impairment charges 3.5 1.4 % — — % 40.7 3.9 % — — %

Adjusted operating earnings $ 1.7 0.7 % $ 38.7 13.4 % $ 39.4 3.8 % $ 142.6 13.1 %

Operating expenses $ 16.1 — % $ 18.0 — % $ 60.4 — % $ 140.6 — %

Operating (loss) $ (16.1) — % $ (18.0) — % $ (60.4) — % $ (140.6) — %

Acquisition and integration charges 1.3 — % 3.7 — % 5.6 — % 93.1 — %

Adjusted operating (loss) $ (14.8) — % $ (14.3) — % $ (54.8) — % $ (47.5) — %

MillerKnoll, Inc.

Net sales $ 956.7 100.0 % $ 1,100.5 100.0 % $ 4,087.1 100.0 % $ 3,946.0 100.0 %

Gross margin 354.7 37.1 % 382.5 34.8 % 1,430.0 35.0 % 1,352.7 34.3 %

Total operating expenses 343.1 35.9 % 325.5 29.6 % 1,307.7 32.0 % 1,312.9 33.3 %

Operating earnings $ 11.6 1.2 % $ 57.0 5.2 % $ 122.3 3.0 % $ 39.8 1.0 %

Restructuring Charges 14.2 1.5 % — — % 34.0 0.8 % — — %

Acquisition and integration charges 5.3 0.6 % 7.5 0.7 % 18.0 0.4 % 124.5 3.2 %

Amortization of purchased intangibles 5.9 0.6 % 6.7 0.6 % 25.3 0.6 % 63.4 1.6 %

Gain on Sale of Dealer — — % — — % — — % (2.0) (0.1) %

Impairment charges 19.7 2.1 % — — % 56.9 1.4 % — — %

Adjusted operating earnings $ 56.7 5.9 % $ 71.2 6.5 % $ 256.5 6.3 % $ 225.7 5.7 %

The following table reconciles net sales to organic net sales for the years ended as indicated below (in millions):

Americas Contract International Contract Global Retail Knoll Intersegment Elimination Total

Twelve Months Ended

Americas International & Specialty Retail Total

Net sales, as reported $ 2,026.1 $ 1,017.3 $ 1,043.7 $ 4,087.1

% change from PY 11.0 % 21.0 % 12.1 % N/A N/A 60.1 %

Acquisitions — — — (1,188.5) 27.4 (1,161.1)

% change from PY 5.0 % 9.6 % (4.1) % 3.6 %

Acquisition (77.2) (55.5) (31.1) (163.8)

Currency translation effects (1)

6.1 42.9 26.8 75.8

Organic net sales $ 1,443.9 $ 491.6 $ 863.8 $ — $ — $ 2,799.3

% change from PY 11.1 % 23.1 % 13.0 % N/A N/A 13.6 %

Americas Contract International Contract Global Retail Knoll Intersegment Elimination Total

Impact of extra week in FY23 (27.4) (11.6) (13.7) (52.7)

Net sales, organic $ 1,927.6 $ 993.1 $ 1,025.7 $ 3,946.4

% change from PY 0.3 % 7.0 % (5.1) % 0.4 %

Twelve Months Ended

Americas International & Specialty Retail Total

Net sales, as reported $ 1,929.1 $ 928.5 $ 1,088.4 $ 3,946.0

Acquisitions — — — — — —

Dealer Divestitures (1.9) — — — — (1.9)

Organic net sales $ 1,299.4 $ 399.5 $ 764.3 $ — $ — $ 2,463.2

(1) Currency translation effects represent the estimated net impact of translating current period sales using the average exchange rates applicable to the comparable prior year period

Divestitures (6.7) — (7.9) (14.6)

Net sales, organic $ 1,922.4 $ 928.5 $ 1,080.5 $ 3,931.4

(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period.

The following tables reconcile orders as reported to organic orders for the periods ended as indicated below (in millions):

Twelve Months Ended

Americas International & Specialty Retail Total

Orders, as reported $ 1,901.3 $ 944.0 $ 989.0 $ 3,834.3

% change from PY (9.1) % (4.1) % (10.7) % (8.3) %

Acquisition (80.3) (57.5) (32.3) (170.1)

Currency translation effects (1)

3.9 39.8 25.2 68.9

Impact of extra week in FY23 (24.0) (10.3) (12.4) (46.7)

Orders, organic $ 1,800.9 $ 916.0 $ 969.5 $ 3,686.4

% change from PY (13.4) % (7.0) % (11.8) % (11.5) %

Twelve Months Ended

Americas International & Specialty Retail Total

Orders, as reported $ 2,091.5 $ 984.7 $ 1,107.3 $ 4,183.5

Divestitures (11.4) — (8.5) (19.9)

Orders, organic $ 2,080.1 $ 984.7 $ 1,098.8 $ 4,163.6

(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period.

The following table reconciles EPS to Adjusted EPS for the years ended as of indicated below:

May 28, 2022 May 29, 2021

Twelve Months Ended

June 3, 2023 May 28, 2022

(Loss) Earnings per Share - Diluted $ 0.55 $ (0.37)

1 unchanged sentence

Acquisition and integration charges 0.24 1.71

Special Charges (0.01) 0.02

Restructuring charges 0.45 —

Impairment charges 0.76 —

Special charges — (0.01)

Debt extinguishment — 0.18

Gain on legal settlement — (0.08)

Gain on sale of dealer — (0.03)

11 unchanged sentences

Other expenses, net 70.9 48.4 46.5 %

(Loss) earnings before income taxes and equity income (8.6) 228.3 (103.8) %

Earnings (loss) before income taxes and equity income 51.4 (8.6) 697.7 %

Income tax expense 4.5 11.1 (59.5) %

Equity income from nonconsolidated affiliates, net of tax — 0.3 (100.0) %

Net (loss) earnings (19.7) 180.3 (110.9) %

Equity (loss) from nonconsolidated affiliates, net of tax (0.8) — — %

Net earnings (loss) 46.1 (19.7) 334.0 %

Net earnings attributable to redeemable noncontrolling interests 4.0 7.4 (45.9)

Net (loss) earnings attributable to MillerKnoll, Inc.

Net earnings (loss) attributable to MillerKnoll, Inc.

$ 42.1 $ (27.1) 255.4 %

7 unchanged sentences

Other expenses, net 1.7 % 1.2 %

(Loss) earnings before income taxes and equity income (0.2) 9.3

Earnings (loss) before income taxes and equity income 1.3 % (0.2) %

Income tax expense 0.1 % 0.3 %

Equity income from nonconsolidated affiliates, net of tax — % — %

Net (loss) earnings (0.5) 7.3

Net earnings (loss) 1.1 % (0.5) %

Net earnings attributable to redeemable noncontrolling interests 0.1 % 0.2 %

Net (loss) earnings attributable to MillerKnoll, Inc.

Net earnings (loss) attributable to MillerKnoll, Inc.

1.0 % (0.7) %

The following chart presents graphically the primary drivers of the year-over-year change in Net sales.

2 unchanged sentences

The following items primarily contributed to the change:

• Increase of $1,161.1 million due to the acquisition of Knoll.

• List price increases, net of incremental discounting, of approximately $55 million.

• Increased sales volume within the Americas Contract segment of approximately $101 million, driven by continued improvement in the demand environment as organizations accelerated their return to the workplace.

• Increased sales volume within the International Contract segment of approximately $100 million, which was driven by growth from both local customers and global corporate accounts.

• Increased sales volume within the Global Retail segment of approximately $78 million, driven by investments made to strengthen operational foundations, efforts to drive new customer acquisition, and actions to increase sales channels, brands, price points, and overall assortment available for customers.

• Foreign currency translation had a negative impact on Net sales of approximately $14 million.

• Incremental price increases, net of price discounting drove an increase in net sales of approximately $246 million.

• Increase of $161 million due to the Knoll acquisition that was completed on July 19, 2021 of the prior year, net of a decrease in sales related to the divestiture of an owned dealership in the prior year and a decrease related to the closure of Fully of $8 million.

• The additional week during the first quarter of the current year contributed approximately $53 million of the Net sales increase.

• Increased sales volumes within the International Contract & Specialty segment contributed to sales growth in the year by approximately $43 million.

The International Contract & Specialty segment's growth was driven, in part, by a strong backlog of orders in the first half of the year.

• Foreign currency translation decreased Net sales by approximately $76 million.

• Decreased sales volume within the Global Retail and Americas segments also offset these increases by approximately $79 million and $199 million, respectively.

Gross margin was 35.0% for fiscal 2023 as compared to 34.3% for fiscal 2022.

The following factors summarize the major drivers of the year-over-year change in gross margin percentage:

• Cost pressures from commodities, freight, and product distribution costs had a negative impact on gross margin of approximately 330 basis points.

• Increased labor costs, including the impact of benefits reinstated at the end of the last fiscal year, had a negative impact on margin of approximately 70 basis points.

• Amortization of purchased intangibles related to the Knoll acquisition had a negative impact on gross margin of approximately 30 basis points.

• Price increases offset by discounting helped offset some of these pressures by approximately 90 basis points.

• Unfavorable channel and product mix contributed to the remaining decrease in gross margin.

In the prior year, our business benefited from a relatively high mix of office seating sales as individuals purchased products for home office use during the pandemic.

While we continue to realize strong demand for these products in our Retail segment, the mix of these products sold in the current fiscal year was not as high as in the comparable period.

• The positive impact of price increases, net of incremental discount, contributed to margin improvement by approximately 360 basis points.

• The impact of amortization of purchased intangibles related to the Knoll acquisition recorded in the prior year that did not occur in the current period had a favorable impact on gross margin of approximately 30 basis points.

• Cost pressures from commodities, storage and handling costs, freight, and product distribution costs decreased gross margin by approximately 190 basis points.

These costs offset savings from the realization of incremental synergies associated with the Knoll acquisition as compared to the same period in the prior year.

• Increased labor costs as well as loss of labor and overhead leverage due to reduced production volumes had a negative impact on margin as compared to the same period in the prior year of approximately 80 basis points.

• Unfavorable channel and product mix, as well as charges related to the recording of obsolete inventory along with the closure of the Fully business contributed to the remaining decrease in gross margin.

Operating Expenses

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The amounts presented in the bar graph are expressed in millions and have been rounded.

Operating expenses increased by $594.3 million or 82.7% compared to the prior year fiscal period.

Operating expenses decreased by $5 million or 0.4% compared to the prior year fiscal period.

The following factors contributed to the change:

• The acquisition of Knoll during the year had the following impact on operating expenses as compared to the prior year.

◦ $125 million of acquisition and integration related charges, which include severance and related charges for employee separations, asset impairment charges and professional fees, and other incremental third-party expenses directly related to the transaction and subsequent integration.

◦ $51 million of expenses related to the amortization of purchased intangibles from the Knoll acquisition.

◦ Knoll operating expenses, excluding integration related costs incurred by Knoll and amortization of purchased intangibles, contributed $349 million to the increase as compared to the prior year.

• Compensation and benefit costs increased approximately $26 million as compared to the prior year due primarily to the return of certain employee benefits and compensation that were temporarily suspended during portions of the prior year to mitigate the financial impacts of the COVID-19 pandemic as well as from increases in variable-based compensation.

• An increase of $18 million related to the expansion of physical store locations within the Global Retail segment.

• Increased spending in technology and digital tools across the segments, representing an increase of $15 million.

• Increased marketing and selling costs of approximately $10 million, driven by both the Global Retail and Americas segments.

• Knoll deal and integration related costs and amortization expense decreased $132 million from the prior year period;

• Compensation and benefit costs decreased approximately $14 million, driven primarily by a decrease in variable-based compensation, decreases in discretionary employee benefits, and realization of synergies associated with the Knoll acquisition;

• Favorable foreign currency translation of approximately $11 million primarily related to the International and Specialty segment.

These factors were offset in part by;

• Restructuring charges related to voluntary and involuntary reductions in the Company's workforce, charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand and charges related to the impairment of the Knoll trade name contributed to an increase in Operating expenses of approximately $75 million;

• The consolidation of Knoll results for the entirety of the first quarter of fiscal 2023, which increased Operating expenses by $50 million;

• The impact of an extra week in the first quarter of fiscal 2023, which increased Operating expenses by approximately $13 million;

• Studio costs, which increased by approximately $10 million, related to the expansion of physical store locations within the Global Retail segment;

• Warranty costs, which increased by approximately $8 million in the year driven primarily by a favorable adjustment to the general accrual in the prior year that did not re-occur in the current period and increased warranty expenses in the current year within the Americas segment.

Other Income/Expense

Net other expenses for fiscal 2023 were $70.9 million compared to $48.4 million in fiscal 2022.

Other income/expense in the twelve months ended May 28, 2022 included a loss on extinguishment of debt of approximately $13.4 million, which represented the premium on early debt redemption as well as an increase in interest expense of $23.8 million, related to higher levels of debt required to finance the acquisition of Knoll.

The impact of net foreign currency transaction losses resulted in an increase in expense of $4.1 million.

Each of these items contributed to the increased expense as compared to the same period in the prior year.

Other income/expense in the twelve months ended May 28, 2022 included a loss on extinguishment of debt of approximately $13.4 million which represented the premium on early debt redemption.

This was offset by increased Interest expense of $36.2 million as compared to the same period of the prior year, driven by higher levels of debt and increased interest rates as compared to the same period of the prior year.

See Note 11 of the Consolidated Financial Statements for additional information.

2 unchanged sentences

These operating segments are determined on the basis of how the Company internally reports and evaluates financial information used to make operating decisions.

The segments identified by the Company include Americas Contract, International Contract, Global Retail, and Knoll.

The segments identified by the Company include Americas Contract, International Contract & Specialty, and Global Retail.

The Company also reports a “Corporate” category consisting primarily of unallocated expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and acquisition-related costs.

Effective as of May 30, 2021, the beginning of fiscal year 2022, the Company implemented an organizational change that resulted in a change in the reportable segments.

The Company has recast historical results to reflect this change.

Effective as of May 29, 2022, the start of fiscal year 2023, the Company implemented an organizational change that resulted in a change in the reportable segments.The Company has recast historical results to reflect this change.

For descriptions of each segment, refer to Note 14 of the Consolidated Financial Statements.

9 unchanged sentences

Net sales increased 5.0%, or 0.3% (*) on an organic basis, over the prior year due to:

• Increased sales volume of approximately $101 million, due primarily to increased demand as customers implemented return to workplace plans after reduced order volume during the COVID-19 pandemic;

• The favorable impact of price increases, net of incremental discounting, of approximately $42 million and the favorable impact of foreign currency translation which increased sales by approximately $1 million.

Operating earnings decreased $49.1 million, or 52.5%, over the prior year due to:

• Decreased gross margin of $28.1 million due to a decrease in gross margin percentage of 540 basis points, offset in part by increased sales volumes.

The decrease in gross margin percentage was due primarily to the impact of higher commodity, labor, freight, and product distribution costs;

• Increased operating expenses of $21.0 million driven primarily by increased marketing and selling expenses of approximately $2 million, increased product development expenses of approximately $5 million, increased compensation and benefit expenses of $7 million, and increased expense from digital and technology programs of approximately $9 million.

International Contract ("International")

• Price increases, net of incremental discounting, of approximately $200 million;

• An increase in sales of $74 million due to the Knoll acquisition that was completed on July 19, 2021.

The increase represents the impact of consolidating Knoll results for the entirety of the first quarter of fiscal 2023.

• An increase of approximately $27 million related to the additional week in the first quarter;

offset in part by

• The unfavorable impact of foreign currency translation which decreased sales by approximately $6 million;

• Decreased sales volume of approximately $199 million, which was driven by the impact of a challenging macro-economic environment compounded by pandemic-driven pent-up demand at the start of the prior year.

Operating earnings increased $123.6 million compared to the same period of the prior year due to:

• Increased gross margin of $118.1 million due to the increase in net sales discussed above and an increase in gross margin percentage of 460 basis points.

The increase in gross margin percentage was due primarily to:

◦ The impact of incremental list price increases, net of contract price discounting, that increased gross margin percentage by 800 basis points;

◦ Amortization of purchased intangibles related to the Knoll acquisition recorded in the prior year that did not occur in the current period.

These increases were offset in part by higher commodity and labor costs that decreased gross margin percentage by 320 basis points.

◦ Realization of incremental synergies realized in fiscal year 2023 associated with the Knoll acquisition.

Partially offset by;

• Decreased operating expenses of $5.5 million.

The following factors contributed to the change:

◦ Lower amortization and deal and integration charges of $36 million.

◦ A decrease in variable based compensation and benefits of $18 million.

◦ A decrease in technology program costs of approximately $10 million, Partially offset by;

◦ Increased restructuring expenses of approximately $23 million related to voluntary and involuntary reductions in the Company's workforces.

◦ An increase of approximately $20 million from consolidating Knoll results for the entirety of the first quarter of fiscal 2023.

◦ An increase of approximately $14 million related to the impairment of the Knoll Product trade name.

◦ An increase of approximately $6 million related to the additional week in the first quarter of fiscal 2023.

◦ The remaining difference is due to a decrease in marketing spend and costs related to product development, incremental savings realized through synergies associated with the Knoll acquisition, offset in part by increased warranty expense in the current year.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations.

International Contract and Specialty ("International & Specialty")

(Dollars in millions) Fiscal 2023 Fiscal 2022 Change

5 unchanged sentences

Net sales increased 9.6%, or 7.0% (*) on an organic basis, over the prior year due to:

• Increased sales volume of approximately $100 million, driven by growth across all geographies within the segment;

partially offset by

• Incremental discounting, which reduced sales by $8 million, and the impact of foreign currency translation, which reduced sales by approximately $8 million.

The impact of discounting was driven by larger than average project sizes across the business, as well as increased sales volume, as a percentage of total mix, from geographies with generally higher levels of discounting.

• An increase in sales of $56 million due to the Knoll acquisition that was completed on July 19, 2021.

The increase represents the impact of consolidating Knoll results for the entirety of the first quarter of fiscal 2023;

• Increased sales volume of approximately $43 million;

• Price increases, net of incremental discounting of $22 million;

• The positive impact of the additional sales from the additional week in the first quarter of $12 million.

Offset in part by;

• Unfavorable foreign currency translation, which reduced sales by approximately $43 million.

Operating earnings increased $28.7 million, or 41.1%, compared to the prior year due to:

• Increased gross margin of $21.6 million due to the increase in sales explained above, offset in part by decreased gross margin percentage of 140 basis points due primarily to increased material, freight and distribution costs, increased levels of discounting, and the unfavorable impact from foreign currency translation;

• Increased operating expenses of $10.8 million driven primarily by increased compensation and benefit costs as well as increased costs associated with product development.

• Increased gross margin of $51.7 million due to the increase in sales explained above as well as increased gross margin percentage of 160 basis points due primarily to the leverage of fixed costs on higher sales volume as well as from the impact of amortization of purchased intangibles related to the Knoll acquisition recorded in the prior year that did not occur in the current period;

offset in part by

• Increased operating expenses of $23.0 million driven primarily from consolidating Knoll results for the entirety of the first quarter of fiscal 2023, the impact of the additional week in the current period as compared to the prior year, partially offset by the favorable impact of foreign currency translation of $7.7 million and lower amortization and acquisition related deal and integration charges as compared to the same period of the prior year.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations.

Global Retail

3 unchanged sentences

Gross margin % 37.8 % 44.7 % (6.9) %

Operating earnings (loss) 96.2 143.0 (46.8)

Operating (loss) earnings (15.5) 134.5 (150.0)

Operating earnings % (1.5) % 12.4 % (13.9) %

Net sales increased 12.1% as reported and 13.0% (*) on an organic basis, over the prior year due to:

• Increased sales volumes of approximately $78 million which were driven primarily by broad growth across the brands and geographies within the segment;

• Incremental price increases, net of discounting, of approximately $21 million;

offset in part by

Net sales decreased 4.1% as reported and 5.1% (*) on an organic basis, over the prior year due to:

• Decreased sales volumes of approximately $79 million which were driven primarily by changes in customer spending trends;

• Decreased sales in the Fully business of $8 million year over year due to changing demand patterns for Fully product which led to the closure of Fully in the third quarter of fiscal 2023;

• The unfavorable impact of foreign currency translation, which decreased sales by approximately $27 million.

Partially offset by;

• An increase in sales of $31 million due to the Knoll acquisition that was completed on July 19, 2021.

The increase represents the impact of consolidating Knoll results for the entirety of the first quarter of fiscal 2023;

• Incremental price increases, net of discounting, of approximately $24 million;

• The positive impact of additional sales from the extra week in fiscal 2023 of $14 million.

Operating earnings decreased $150.0 million over the prior year due to:

• Increased operating expenses of $53.2 million driven primarily by increased studio costs associated with the opening of new locations, increased compensation and benefit costs as certain compensation and benefits suspended in the prior year were returned and higher IT costs driven by increased investments within the Company's digital and eCommerce platforms;

offset in part by

• Increased gross margin of $6.4 million due to the increase in sales explained above, offset in part by a decreased gross margin percentage of 450 basis points due primarily to the unfavorable impact of increased freight and product distribution costs, pressure from increased product material costs and unfavorable changes in product mix.

(Dollars in millions) Fiscal 2022 Fiscal 2021 Change

Net sales $ 1,188.5 $ — $ 1,188.5

Gross margin 401.7 — 401.7

Gross margin % 33.8 % N/A N/A

Operating (loss) earnings (57.6) — (57.6)

Operating earnings % (4.8) % N/A N/A

The Company acquired Knoll on July 19, 2021 and has consolidated the financial results of Knoll from the acquisition date through the period ended May 28, 2022.

Knoll contributed $1,161.1 million (net of intersegment elimination) in sales for the year and $401.7 million of gross margin.

Knoll operating loss of $57.6 million for the fiscal year includes the following items:

• $63.4 million related to the impact of amortization of acquisition-related intangible assets;

• $60.3 million related to integration related costs, which include severance and related charges for employee separations and asset impairment charges.

Corporate unallocated expenses totaled $102.6 million for fiscal 2022, an increase of $50.0 million from fiscal 2021.

The increase was driven primarily by $57.6 million of integration and transaction costs related to the Knoll acquisition, compared to $11.0 million of integration and transaction costs recorded in the prior year.

• Decreased gross margin of $92.5 million driven by:

◦ Decrease in net sales discussed above as well as decreased gross margin percentage of 690 basis points attributable to the impact of impairment of inventory associated with the decision to cease operating Fully as a stand-alone brand;

◦ The unfavorable impact of higher commodity and inventory storage costs;

◦ Unfavorable changes in product mix, partially offset in part by the favorable impact of pricing;

• Increased operating expenses of $57.5 million driven primarily by:

◦ Consolidating Knoll results for the entirety of the first quarter of fiscal 2023;

◦ Charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand;

◦ The impact of the additional week in the current period as compared to the prior year;

◦ Increased costs associated with retail studio locations and digital and technology program costs.

These expenses were offset in part by reduced costs associated with variable based compensation and the realization of incremental synergies in fiscal year 2023 associated with the Knoll acquisition.

Corporate unallocated expenses totaled $60.4 million for fiscal 2023, a decrease of $80.2 million from fiscal 2022.

The decrease was driven primarily by a decrease in deal and integration costs related to the Knoll acquisition of $87.5 million.

(*) Non-GAAP measurements;

4 unchanged sentences

(In millions) 2023 2022

Cash (used in) provided by:

Cash provided by (used in):

Operating activities $ 162.9 $ (11.9)

4 unchanged sentences

Cash Flow — Operating Activities

Cash used in operating activities in fiscal 2022 was $11.9 million, as compared to cash provided of $332.3 million in the prior year.

The change in cash from operating activities as compared to the prior year, was primarily due to:

• A decrease in net earnings of $201.7 million largely driven by acquisition and integration related charges of $124.5 million as well as cost pressures from commodities, labor, and freight and product distribution resulting in a lower gross margin percentage;

• An increase in current assets primarily driven by an increase in accounts receivable of $92.4 million in fiscal 2022 compared to an increase of $14.8 million in fiscal 2021.

The increase in accounts receivable is primarily due to timing and increase in sales at the end of fiscal 2022 compared to fiscal 2021;

• An increase of inventory of $166.4 million in fiscal 2022 compared to an increase of $10.4 million in fiscal 2021 due to increased order volumes from the end of fiscal 2021 as well as higher investments in retail inventories made in the current year due to extended supplier and delivery lead times;

• An increase in prepaid taxes of $21.6 million in fiscal 2022 driven by an expected tax benefit for the current year;

• An increase in accounts payable of $51.5 million in fiscal 2022 compared to an increase of $43.2 million in fiscal 2021 which was a result of timing and increased inventory purchases in fiscal 2022 compared to fiscal 2021.

The increases above were offset by an increase of depreciation and amortization in fiscal 2022 of $40.0 million and $63.4 million, respectively, primarily related to assets purchased as part of the Knoll acquisition as well as an increase in stock based compensation of $22.4 million.

The increase in stock based compensation included the impact of accelerated vesting for employee separations associated with the Knoll acquisition.

The principal source of our operating cash flow is net earnings, meaning cash receipts from the sale of our products, net of costs to manufacture, distribute, and market our products.

Net cash provided by operating activities for the twelve months ended June 3, 2023 totaled $162.9 million, as compared to cash used of $11.9 million in the twelve months ended May 28, 2022.

The increase in cash inflow is due primarily to an increase in earnings of $65.8 million in the current year compared to the prior year as well as a reduction in working capital.

Our working capital consists primarily of receivables from customers, inventory, prepaid expenses, accounts payable, accrued compensation, and accrued other expenses.

The following all affect these account balances:

• The timing of collection of our receivables;

• The timing of of planned promotional events in the Retail segment;

• Customer demand trends for in-stock products;

• Changes in supply chain lead times;

• Timing of spending commitments and payments of our accounts payable, accrued expenses, accrued compensation and related benefits.

Cash Flow — Investing Activities

Cash used in investing activities in fiscal 2022 totaled $1,172.4 million compared to $59.9 million in the prior year.

The increase in cash outflow in the current year, compared to the prior year, was primarily a result of the following:

• The acquisition of Knoll, which drove a cash outflow, net of cash acquired, of $1,088.5 million;

Cash used in investing activities for the twelve months ended June 3, 2023 was $76.5 million, as compared to $1,172.4 million in the twelve months ended May 28, 2022.

The decrease in cash outflow in the current year, compared to the prior year, was primarily due to the acquisition of Knoll, which drove a cash outflow, net of cash acquired, of $1,088.5 million in the prior year period.

Capital expenditures for the current year were $83.3 million as compared to $94.7 million in the prior year.

These increases were offset by a cash inflow of $7.7 million from the liquidation of previously held short-term investments, as well as proceeds of $2.8 million from the sale of an owned dealership during fiscal year 2022.

In the twelve months ended June 3, 2023, we were advanced $13.5 million of cash against the value of company owned life insurance policies.

At the end of the fiscal 2023, there were outstanding commitments for capital purchases of $44.8 million.

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Cash Flow — Financing Activities

Cash provided from financing activities was $1,039.9 million in fiscal 2022 as compared to cash used in financing activities of $347.7 million in fiscal 2021.

The increase in cash provided in the current year, compared to the prior year, was primarily due

to net borrowings of $1,007.0 million from the credit agreement the Company entered into during Q1 and proceeds of $1,026.5 million on the Company's credit facility.

These increases were offset by:

• Payments of $63.4 million related to the extinguishment of the Company's former debt agreement;

• Payments of $13.1 million related to the Company's term loans;

• Payments of $838.5 million on the Company's credit facility compared to $265.0 million in the prior year;

• Dividends paid of $54.5 million in the current year compared to $34.5 million in the prior year;

• Common stock repurchased of $16.2 million compared to $0.9 million in the prior year.

Cash used in financing activities for the twelve months ended June 3, 2023 was $86.8 million, compared to cash provided by financing activities of $1,039.9 million in the twelve months ended May 28, 2022.

The primary driver of the use of cash in fiscal 2023 was net payments on the revolving credit facility and long term debt of $12.6 million.

In fiscal 2022, the net source of cash related to net borrowings of $1,007.0 million under the credit agreement the Company entered into in connection with the acquisition of Knoll as well as net proceeds from the credit facility and long term debt of $124.9 million.

Sources of Liquidity

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The Company is closely managing spending levels, capital investments, and working capital.

In the fourth quarter of fiscal 2020, we temporarily suspended open market share repurchase activity as part of managing cash flows associated with uncertainty caused by the pandemic.

Going forward, we are re-establishing our open market share repurchase program under our existing share repurchase authorization and may repurchase shares from time to time based on management’s evaluation of market conditions, share price and other factors.

At the end of fiscal 2022, the Company has access to liquidity through credit facilities, cash and cash equivalents and short-term investments.

The Company maintains an open market share repurchase program under our existing share repurchase authorization and may repurchase shares from time to time based on management’s evaluation of market conditions, share price and other factors.

At the end of fiscal 2023, the Company has a well-positioned balance sheet and liquidity profile.

The Company has access to liquidity through credit facilities, cash and cash equivalents and short-term investments.

These sources have been summarized below.

For additional information, refer to Note 6 to the Consolidated Financial Statements.

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Cash and cash equivalents $ 223.5 $ 230.3

Marketable securities — 7.7

Availability under revolving lines of credit (1)

Total liquidity $ 507.7 $ 526.9

(1) Available access to our revolving line of credit is subject to covenant restrictions outlined in our credit agreement.

Of the cash and cash equivalents noted above at the end of fiscal 2023, the Company had $202.5 million of cash and cash equivalents held outside the United States.

The Company’s revolving line of credit, which matures in July, 2026, provides the Company with up to $725 million in revolving variable interest borrowing capacity and allows the Company to borrow incremental amounts, at its option, subject to negotiated terms as outlined in the agreement.

Outstanding borrowings bear interest at rates based on the prime rate, federal funds rate, London Interbank Offered Rate ("LIBOR"), or negotiated terms as outlined in the agreement.

See Note 6 for information on the replacement of LIBOR with the Secured Overnight Financing Rate ("SOFR") in our credit agreement.

As of May 28, 2022, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $413.0 million with available borrowings against this facility of $296.6 million.

The Company intends to repatriate $111.1 million in cash held in certain foreign jurisdictions and as such has recorded a deferred tax liability related to foreign withholding taxes on these future dividends received in the U.S.

from foreign subsidiaries of $8.3 million.

A significant portion of this cash was previously taxed under the U.S.

Tax Cut and Jobs Act (TCJA) one-time U.S.

tax liability on undistributed foreign earnings.

The Company intends to remain indefinitely reinvested in the remaining undistributed earnings outside the U.S., which was $331.3 million on May 28, 2022.

The Company believes that its financial resources will allow it to manage the impact of COVID-19 on business operations for the foreseeable future which could include materially reduced revenue and profits.

The Company will continue to evaluate its financial position in light of future developments, particularly those relating to COVID-19.

Outstanding borrowings bear interest at rates based on the prime rate, federal funds rate, SOFR or negotiated terms as outlined in the agreement.

As of June 3, 2023, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $426.7 million with available borrowings against this facility of $284.2 million.

The Company intends to repatriate $169.4 million of undistributed foreign earnings, all of which is held in cash in certain foreign jurisdictions.

The Company has recorded a $5.8 million deferred tax liability related to foreign withholding taxes on these future dividends received in the U.S.

from foreign subsidiaries.

A significant portion of the $169.4 million of undistributed foreign earnings was previously taxed under the U.S.

Tax Cut and Jobs Act (TCJA).

The Company intends to remain indefinitely reinvested in the remaining undistributed earnings outside the U.S.

which is estimated to be approximately $282.2 million on June 3, 2023.

The Company believes cash on hand, cash generated from operations, and borrowing capacity will provide adequate liquidity to fund near term and foreseeable future business operations, capital needs, future dividends and share repurchases, subject to financing availability in the marketplace.

Contingencies

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The Company's fiscal year ends on the Saturday closest to May 31.

The fiscal years ended May 28, 2022, May 29, 2021 and May 30, 2020 contained 52 weeks.

The fiscal year ended June 3, 2023, contained 53 weeks and the fiscal years ended May 28, 2022 and May 29, 2021 contained 52 weeks.

The first quarter of fiscal 2023 contained 14 weeks while the first quarter of fiscal year 2022 and 2021 contained 13 weeks.

Contractual Obligations

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(1) Includes the current portion of long-term debt.

Contractual cash payments on long-term debt obligations are disclosed herein based on the amounts borrowed as of May 28, 2022 and the maturity date of the underlying debt.

Estimated future interest payments on our outstanding interest-bearing debt obligations are based on interest rates as of May 28, 2022.

Contractual cash payments on long-term debt obligations are disclosed herein based on the amounts borrowed as of June 3, 2023 and the maturity date of the underlying debt.

Estimated future interest payments on our outstanding interest-bearing debt obligations are based on interest rates as of June 3, 2023.

Actual cash outflows may differ significantly due to changes in borrowings or interest rates.

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unfunded pension and post-retirement plan funding amounts are equal to the estimated benefit payments .

As of May 28, 2022, the total projected benefit obligation for our domestic and international employee pension benefit plans was $257.1 million.

(3) Represents the dividend payable as of May 28, 2022.

As of June 3, 2023, the total projected benefit obligation for our domestic and international employee pension benefit plans was $199.8 million.

(3) Represents the dividend payable as of June 3, 2023.

Future dividend payments are not considered contractual obligations until declared.

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Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

During fiscal 2022 and fiscal 2020, management considered the acquisition of Knoll and HAY material acquisitions, respectively.

There were no material acquisitions during fiscal 2021.

During fiscal 2022, management considered the acquisition of Knoll a material acquisition.

There were no material acquisitions during fiscal 2023 or fiscal 2021.

See Note 3 to the Consolidated Financial Statements for more information.

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Certain business acquisitions have resulted in the recording of goodwill.

At May 28, 2022 and May 29, 2021, we had goodwill recorded within the Consolidated Balance Sheets of $1,226.2 million and $364.2 million, respectively.

Each of the reporting units were reviewed for impairment using a qualitative assessment as of March 31, 2022.

At June 3, 2023 and May 28, 2022, we had goodwill recorded within the Consolidated Balance Sheets of $1,221.7 million and $1,226.2 million, respectively.

During the third quarter of fiscal year 2023, the Company assessed changes in circumstances that occurred during the quarter to determine if it was more likely than not that the fair values of any reporting units were below their carrying amounts.

Although our annual impairment test is performed during the fourth quarter, we perform this qualitative assessment each interim reporting period.

While there was no single determinate event, the consideration in totality of several factors that developed during the third quarter of fiscal year 2023 led us to conclude that it was more likely than not that the fair value of the Global Retail reporting unit was below its carrying amount.

These factors included:

(i) the decision to discontinue stand-alone operations of the Fully brand and (ii) the assessment of our third quarter results, for which the performance of the Global Retail reporting unit was below management's expectations.

Accordingly, the Company performed an interim quantitative impairment analysis as of March 4, 2023 to determine the fair value of the Global Retail reporting unit as compared to the carrying value.

In performing the quantitative impairment test, the Company determined that the fair value of the Global Retail reporting unit exceeded the carrying amount and, as such, the reporting unit was not impaired.

The Company determined that the Global Retail reporting unit exceeded its carrying value by 1% and therefore has a heightened risk of future impairments if any assumptions, estimates or market factors change in the future.

In completing the quantitative analysis the fair value was estimated using a discount rate of 11.0% and long-term growth rate of 2.5%.

Generally, changes in estimates of expected future cash flows would have a similar effect on the estimated fair value of the reporting unit.

For example, a 1.0% decrease in estimated annual future cash flows would decrease the estimated fair value of the reporting unit by approximately 1.0%.

The estimated long-term growth rate can have a significant impact on the estimated future cash flows, and therefore, the fair value of each reporting unit.

Of the other key assumptions that impact the estimated fair values, most reporting units have the greatest sensitivity to changes in the estimated discount rate.

The Company evaluated the sensitivity of changes in forecasted sales, operating margin and the discount rate for the Global Retail reporting unit.

Reducing the Global Retail reporting unit's forecasted sales by 5% in all years, and leaving all other assumptions static, would result in an impairment of $26.0 million.

A decrease in the operating margin of 100 basis points would result in an impairment of $60.0 million.

An increase in the discount rate of 100 basis points would result in an impairment of $46.0 million.

Each of the reporting units was reviewed for impairment using a qualitative assessment as of March 31, 2023.

The Company elected to test each reporting unit qualitatively, as is permitted under ASU 2011-08, Intangibles-Goodwill and Other (Topic

Testing Goodwill for Impairment, as the Company concluded it to be more likely than not that their estimated fair values are greater than their respective carrying values.

In fiscal 2020, the Company recorded $125.5 million in goodwill impairment charges related to both the Global Retail and Maharam reporting units.

No impairment charges were recorded in fiscal 2021 or 2022.

In years where a quantitative assessment is performed, the Company utilizes a weighting of the income approach and the market method to estimate the fair value of each reporting unit.

No goodwill impairment charges were recorded in fiscal 2023, 2022, or 2021.

In instances in which a quantitative assessment is performed, the Company utilizes a weighting of the income approach and the market method to estimate the fair value of each reporting unit.

These approaches are based on a discounted cash flow analysis and observable comparable company information that use several inputs, including:

• actual and forecasted revenue growth rates and operating margins,

• forecasted sales growth rates and operating margins,

• discount rates based on the reporting unit's weighted average cost of capital, and

• revenue and EBITDA of comparable companies

The Company corroborates the reasonableness of the inputs and outcomes of our discounted cash flow analysis through a market capitalization reconciliation to determine whether the implied control premium is reasonable.

Generally, changes in estimates of expected future cash flows would have a similar effect on the estimated fair value of the reporting unit.

For example, a 1.0% decrease in estimated annual future cash flows would decrease the estimated fair value of the reporting unit by approximately 1.0%.

The estimated long-term growth rate can have a significant impact on the estimated future cash flows, and therefore, the fair value of each reporting unit.

Of the other key assumptions that impact the estimated fair values, most reporting units have the greatest sensitivity to changes in the estimated discount rate.

Indefinite-lived Intangible Assets

Certain business acquisitions have resulted in the recording of trade names as indefinite-lived intangible assets, which are not amortized.

At May 28, 2022 and May 29, 2021, we had trade name assets with a carrying value of $501.0 million and $97.6 million, respectively.

The Company evaluates indefinite-lived trade name intangible assets for impairment annually.

The Company also tests for impairment if events and circumstances indicate that it is more likely than not t hat the fair value of an indefinite-lived intangible asset is below its carrying amount.

At June 3, 2023 and May 28, 2022, the Company held trade name assets with a carrying value of $480.7 million and $501.0 million, respectively.

The Company evaluates indefinite-lived trade name intangible assets for impairment using a qualitative assessment annually.

The Company also tests for impairment using a quantitative assessment if events and circumstances indicate that it is more likely than not that the fair value of an indefinite-lived intangible asset is below its carrying amount.

An impairment charge is recorded if the carrying amount of an indefinite-lived intangible asset exceeds the estimated fair value on the measurement date.

During fiscal 2020, the Company adjusted the carrying value of all its trade names to fair value, and as a result recognized $53.3 million in non-cash impairment charges on its indefinite-lived trade names.

No impairment charges were recorded in fiscal 2021 or 2022.

In fiscal 2022, the Company performed a qualitative assessment to test indefinite-lived intangible assets for impairment for all trade names with the exception of the Company's HAY trade name.

A quantitative assessment was p erformed for the HAY trade name to test the indefinite-lived intangible asset for impairment.

Through the performance of this assessment management determined that the fair value of the HAY indefinite-lived trade name was 41% above its carrying value.

In performing this quantitative assessment, we estimate the fair value of this intangible asset using the relief-from-royalty method which requires assumptions related to:

• forecasted revenue growth rates,

During fiscal 2023, the Company determined through a qualitative assessment that the Knoll trade name carrying value was more then likely above its fair value.

As a result, the Company performed a quantitative assessment to determine the fair value and as a result recognized a $19.7 million non-cash impairment charge to the indefinite-lived trade name.

In performing this quantitative assessment, we estimated the fair value using the relief-from-royalty method which requires assumptions related to:

• forecasted sales growth rates,

• assumed royalty rates that could be payable if we did not own the trademark, and

• a market participant discount rate based on a weighted-average cost of capital.

The assumptions above reflect management’s best estimate;

The assumptions used reflect management’s best estimate;

however, actual results could differ from our estimates.

If the estimated fair value of the indefinite-lived intangible asset is less than its carrying value, we would recognize an impairment charge.

In completing our annual indefinite-lived trade name impairment test, fair value of the Knoll trade name was estimated using a discount rate of 12.0%, royalty rate of 2.00% and long-term growth rate of 2.5%.

The Company’s estimates of the fair value of its Knoll indefinite-lived intangible asset is sensitive to changes in the key assumptions above as well as projected financial performance.

Therefore, a sensitivity analysis was performed on certain key assumptions.

Keeping all other assumptions constant, a 10% decrease in forecasted sales at June 3, 2023 would have resulted in $15.3 million of additional pre-tax impairment charges.

Keeping all other assumptions constant, a 100 basis point increase in the discount rate would have resulted in an additional $15.0 million of impairment charges.

A decrease in the royalty rate of 25 basis points would result in an additional $20.0 million of impairment charges.

If the estimated cash flows related to the Company's indefinite-lived intangibles were to decline in future periods, the Company may need to record an impairment charge.

Long-lived Assets

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If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded to adjust the asset to its estimated fair value.

In the third quarter of fiscal 2023 the decision was made to cease operating Fully as a stand-alone brand and sales channel and instead sell certain Fully products through other channels already existing within the Global Retail business.

Management identified this decision as a indicator of impairment, and accordingly recorded impairment of certain long-lived assets within the Fully asset group.

Impairment charges of long-lived assets within the Fully business were $21.5 million in fiscal 2023 and

are recorded within "Impairment charges" within the Consolidated Statements of Comprehensive Income.

No other asset groups were identified as having indicators of impairment.

The table below provides information related to the impairment of long-lived assets within the Fully asset group during fiscal 2023.

(In millions) Fully Long-Lived Asset Impairment

Property and equipment $ 3.8

Right of use assets 6.1

Definite lived trade name 11.6

In fiscal 2022 the Company recorded a non-cash impairment charge of $15.5 million related to the discontinued use of a long-lived asset that was a direct result of integration activities associated with the Knoll acquisition.

No impairment charges were recorded in fiscal 2021 for long-lived assets.

During fiscal 2020, the Company adjusted the carrying value of certain right of use assets and other long-lived assets and recognized a non-cash impairment charge of $19.6 million.

The Company believes its assumptions for assessing the impairment of its long-lived assets, goodwill and indefinite-lived trade names are reasonable, but if actual results are not consistent with management's estimates and assumptions, a material impairment charge could occur, which could have a material adverse effect on our consolidated financial statements.

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This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Forward-looking statements relate to future events and anticipated results of operations, business strategies, the anticipated benefits of our 2021 acquisition of Knoll, the anticipated impact of the acquisition on the combined Company’s business and future financial and operating results, the expected amount and timing of synergies from the acquisition, and other aspects of our operations or operating results.

Forward-looking statements relate to future events and anticipated results of operations, business strategies, the anticipated benefits of our acquisition of Knoll, the anticipated impact of the Knoll acquisition on the combined company’s business and future financial and operating results, the expected amount and timing of synergies from the Knoll acquisition, and other aspects of our operations or operating results.

These forward-looking statements generally can be identified by phrases such as “will,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import.

It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of

MillerKnoll or the price of MillerKnoll’s stock.

These forward-looking statements involve certain risks and uncertainties, many of which are beyond MillerKnoll’s control, that could cause actual results to differ materially from those indicated in such forward-looking statements, including but not limited to:

the impact of public health crises, such as pandemics (including COVID-19) and epidemics, and any related company or government policies and actions to protect the health and safety of individuals or government policies or actions to maintain the functioning of national or global economies and markets;

challenges related to supply chain disruptions and fluctuations in the cost of raw materials, labor, and other production inputs;

risks related to the additional debt incurred in connection with our acquisition of Knoll and our ability to comply with our debt covenants and obligations;

the risk that the anticipated benefits of the acquisition will be more costly to realize than expected;

the effect of the announcement of the acquisition on the ability of MillerKnoll to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom MillerKnoll does business, or on MillerKnoll’s operating results and business generally;

the ability to successfully integrate Knoll’s operations;

the ability of MillerKnoll to implement its plans, forecasts and other expectations with respect to MillerKnoll’s business after the completion of the acquisition and realize expected synergies;

business disruption following the acquisition;

general economic conditions;

the impact of and any related company or government policies and actions to protect the health and safety of individuals or government policies or actions to maintain the functioning of national or global economies, and the impact of public health crises, such as pandemics and epidemics;

risks related to the additional debt incurred in connection with the Knoll acquisition;

MillerKnoll’s ability to comply with its debt covenants and obligations;

the risk that the anticipated benefits of the Knoll acquisition will be more costly to realize than expected;

the effect of the announcement of the Knoll acquisition on the ability of MillerKnoll to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom MillerKnoll does business, or on MillerKnoll’s operating results and business generally;

the ability to successfully integrate Knoll’s operations;

the ability of MillerKnoll to implement its plans, forecasts and other expectations with respect to MillerKnoll’s business after the completion of the Knoll acquisition and realize expected synergies;

business disruption following the Knoll acquisition;

the availability and pricing of raw materials;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis