What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-07-30 compared with 2023-07-26 · 267 added, 290 removed, 382 unchanged (59% of the section changed)

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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, 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, Geiger, HAY, Holly Hunt, 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.

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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.

As it pertains to its 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's products and services are sold through the following distribution channels:

• Independent Contract Furniture Dealers - Most of the Company's product sales are made to a network of independently owned and operated contract furniture dealerships doing business in many countries around the world.

• Independent Contract Furniture Dealers - Most of the Company's product sales are made to a global network of independently owned and operated contract furniture dealerships.

These dealers purchase the Company's products and distribute them to end customers.

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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, and HAY websites.

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

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

• Retail Locations - As of June 1, 2024, the Company operated 75 retail studios (including 37 operating under the DWR brand, 1 under the HAY brand, 29 Herman Miller stores, 3 Muuto stores, 4 Knoll stores and a multi-brand Chicago store).

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We will capitalize on global trends including hybrid and flexible work, consumers’ focus on investing in their homes, a focus on health and well-being, and an expectation of corporate social responsibility.

Our strategy includes five key focus areas:

Bring MillerKnoll to Life

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 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;

cultivating and enabling a strong global dealer network;

and establishing worldwide supply chain and manufacturing capabilities to effectively serve our customers across all our channels.

Build a Customer-Centric, Digitally Enabled Business Model

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 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 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;

Our strategy includes three key focus areas:

Drive Customer Demand and Order Growth

We are prioritizing programs to deliver world class experiences with every client interaction.

We have a global, go-to-market framework for contract sellers, Design With Impact, that is organized around well-being, connection and change, and we are investing in MillerKnoll showrooms that bring our brands closer together to show the breadth of our offerings.

As part of this work, we are enhancing and opening MillerKnoll showrooms in select markets including, Atlanta, Chicago, Dallas, London, Los Angeles, New York, Toronto and San Francisco.

In addition, we will continue to leverage the wide reach of our dealers’ showrooms around the globe.

In retail, we are working to evolve and enhance the Design Within Reach experience.

We are testing new store formats, expanding our product assortment and offering design services both in store and online to enhance the customer experience, attract new customers and grow existing customers.

In addition, we continue to launch new online tools to support our trade customers making it easier for them to incorporate our products in their client projects.

Foster a Culture of Highly Engaged Associates

As MillerKnoll, we have created one of the most talented teams in the industry.

We are committed to nurturing this distinct competitive advantage by fostering a culture of highly engaged associates and inspiring belief in our shared future.

We empower our associates to be agile and hold our teams accountable for living our actions and delivering high performance.

Our priorities include offering a seamless MillerKnoll employee experience via a global Human Resources technology platform;

delivering an externally competitive and internally equitable compensation and benefits program;

growing internal capabilities through development opportunities for all career levels;

and investing to make MillerKnoll an employer of choice around the world.

Deliver Value to our Associates and Shareholders

We believe there is opportunity for meaningful long-term growth in each of our business segments.

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.

Our collective of dynamic brands includes Herman Miller, Knoll, DatesWeiser, Design Within Reach, Edelman Leather, Geiger, HAY, Holly Hunt, Knoll Textiles, Maharam, Muuto, and Spinneybeck Filzfelt.

These brands are united in their commitment to our purpose, design for the good of humankind, and they offer a complementary set of design solutions.

By leveraging our global operations footprint, we are able to fuel our brands and build solutions in market closer to our customers, and we are creating centers of excellence in our operations facilities to support all brands in each region.

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

fortify the flagship Knoll and Herman Miller brands while nurturing and growing each of the brands within MillerKnoll;

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and continue transforming our Global Retail business.

Attract, Develop, and Retain World-Class Talent

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.

Our priorities include enabling a seamless MillerKnoll employee experience via a global Human Resources technology platform ;

delivering an externally competitive and internally equitable compensation and benefits program;

growing internal capabilities through development opportunities for all career levels;

and investing to make MillerKnoll an employer of choice around the world.

Reinforce Our Commitment to Our People, Our Planet, and Our Communities

Our legacy of corporate social responsibility is deeply ingrained in our culture and is shared across all our brands.

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 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.

The Company's strategic priorities are aimed at creating a sustainable and diverse revenue model that puts the customer at the center of everything we do and leverages enabling digital capabilities to fully realize that vision.

Business Overview

The following is a summary of the significant events and items impacting the Company's operations for the year ended June 1, 2024:

• 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 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.

• Net sales were $3,628.4 million, representing a decrease of 11.2% when compared to the prior year.

The decrease in net sales was primarily driven by decreased sales volumes in all segments, the closure of the Fully business that occurred in the prior year, the closure of the HAY eCommerce channel in North America, as well as the additional week of operations in the prior fiscal year which is required periodically to re-align calendar months with our fiscal periods.

These decreases were offset by increased sales resulting from price increases, net of incremental discounting as well as favorable foreign currency translation.

On an organic basis, net sales were $3,615.4 million(*), representing a decrease of 8.1% when compared to the prior year.

• Gross margin was 39.1% as compared to 35.0% in the prior year.

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.

The change in gross margin was primarily driven by the realization of price and channel optimization strategies, the realization of cost synergies associated with the Knoll acquisition, and reductions in commodities, storage and handling costs and freight and product distribution expenses.

• Operating expenses decreased by $55.4 million or 4.2% 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 decrease was primarily due to lower variable selling expenses, the continued focus on cost optimization and synergy capture, and restructuring actions announced and implemented during fiscal year 2024.

These decreases were partially offset by compensation and benefit costs, which increased approximately $33.0 million driven by changes in variable-based compensation and incentives.

• 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 increased goal of achieving annualized cost synergies of $145 million within three years of closing.

We made good progress implementing cost synergies, having achieved an annualized run-rate cost synergies of $160 million related to the integration of Knoll.

• The effective tax rate was 14.8% for fiscal 2024 compared to negative 8.8% 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.

• Diluted earnings per share for the full year totaled $1.11 compared to $0.55 in the prior year.

On an adjusted basis(*), diluted earnings per share totaled $2.08 in fiscal 2024 compared to $1.85 in fiscal 2023.

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

• 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 current macroeconomic environment in North America — which reflects higher interest rates, tepid housing-related demand trends, and relatively low CEO and consumer confidence levels — continues to pose challenges for the industry.

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

However, within the contract furniture industry, the business is beginning to see improving demand indicators such as increased contract activations and increases in the number and size of new project opportunities entering our sales funnel.

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

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.

Ongoing cost reduction initiatives and price increase actions have been implemented and have been effective in offsetting these cost pressures.

Additionally, we began to benefit from relative decreases in steel and other key input costs as fiscal 2024 progressed.

• The Americas Contract segment reported a net sales decrease of 10.0% and an organic sales decrease of 8.3%(*) year-over-year.

Operating margin increased 50 basis points year-over year and 100 basis points on an adjusted basis(*).

The increase was primarily driven by the combination of gross margin expansion and well managed operating expenses.

• The International Contract & Specialty segment reported a net sales decrease of 8.4% and an organic sales decrease of 7.2%(*) year-over-year.

Operating margin decreased 130 basis points year-over-year and 30 basis points on an adjusted basis(*).

The decrease was primarily driven by the loss of leverage on lower demand and production levels in the European contract channel and within our Specialty businesses.

• The Global Retail segment reported a net sales decrease of 16.4% and an organic sales decrease of 8.6%(*) year-over-year.

Operating margin increased 640 basis points year-over year and 210 basis points on an adjusted basis(*).

The increase was primarily driven by pricing actions as well as improvements in inventory management and increased shipping revenues.

The remaining sections of Item 7 include additional analysis of the fiscal year ended June 1, 2024, 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.

A detailed review of our fiscal 2023 performance compared to our fiscal 2022 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended June 3, 2023.

(*) Non-GAAP measurements;

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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.

Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, and the related tax effect of these adjustments.

These adjustments are described further below.

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

Adjusted Operating Earnings (Loss) represents reported operating earnings plus integration charges, amortization of Knoll purchased intangibles, restructuring expenses, and impairment charges.

These adjustments are described further below.

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:

Includes expenses associated with the amortization of inventory step-up and amortization of acquisition related intangibles acquired as part of the Knoll acquisition.

Adjusted Operating Margin represents Adjusted Operating Earnings (Loss) divided by net sales.

Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects, the impact of an extra week in fiscal 2023, the impact of the closure of the Hay eCommerce channel in North America, and the impact of the closure of the Fully business.

• Amortization of Knoll purchased intangibles:

Includes expenses associated with the amortization of acquisition related intangibles acquired as part of the Knoll acquisition.

The revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure.

We exclude the impact of the amortization of purchased intangibles, including the fair value adjustment to inventory, as such non-cash amounts were significantly impacted by the size of the Knoll acquisition.

Furthermore, we believe that this adjustment enables better comparison of our results as Amortization of Purchased Intangibles will not recur in future periods once such intangible assets have been fully amortized.

We exclude the impact of the amortization of Knoll purchased intangibles as such non-cash amounts were significantly impacted by the size of the Knoll acquisition.

Furthermore, we believe that this adjustment enables better comparison of our results as Amortization of Knoll Purchased Intangibles will not recur in future periods once such intangible assets have been fully amortized.

Any future acquisitions may result in the amortization of additional intangible assets.

Although we exclude the Amortization of Purchased Intangibles in these non-GAAP measures, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

• Acquisition and integration charges:

Includes costs related directly to the Knoll acquisition including legal, accounting and other professional fees as well as integration-related costs.

Integration-related costs include severance, accelerated stock-based compensation expenses, asset impairment charges, and other cost reduction efforts or reorganization initiatives.

• Debt extinguishment charges:

Includes expenses associated with the extinguishment of debt as part of financing the Knoll acquisition.

We excluded these items from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.

• Gain on sale of dealer:

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

Although we exclude the Amortization of Knoll Purchased Intangibles in these non-GAAP measures, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

• Integration charges:

Knoll integration-related costs include severance, accelerated stock-based compensation expenses, asset impairment charges, and expenses related to synergy realization efforts and reorganization initiatives.

• Restructuring charges:

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

Includes costs associated with actions involving targeted workforce reductions and non-cash charges for the impairment of assets associated with the decision to close certain showrooms.

• 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:

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

Includes non-cash, pre-tax charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand as well as impairment of the Knoll and Muuto trade names.

• Tax related items:

We excluded the income tax benefit/provision effect of the tax related items from our non-GAAP measures because they are not associated with the tax expense on our ongoing operating results.

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 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

June 1, 2024 June 3, 2023 June 1, 2024 June 3, 2023

Americas Contract

Net sales $ 416.6 100.0 % $ 474.4 100.0 % $ 1,824.2 100.0 % $ 2,026.1 100.0 %

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Total operating expenses 141.6 34.0 % 137.3 28.9 % 521.5 28.6 % 511.6 25.3 %

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) %

Operating (loss) earnings $ (3.1) (0.7) % $ 21.4 4.5 % $ 98.7 5.4 % $ 99.6 4.9 %

Restructuring charges 18.8 4.5 % 5.2 1.1 % 24.6 1.3 % 22.8 1.1 %

Integration charges 3.3 0.8 % 3.5 0.7 % 18.6 1.0 % 9.7 0.5 %

Amortization of Knoll purchased intangibles 3.2 0.8 % 3.2 0.7 % 12.9 0.7 % 12.9 0.6 %

Impairment charges 8.1 1.9 % 14.4 3.0 % 8.1 0.4 % 14.4 0.7 %

Adjusted operating earnings $ 30.3 7.3 % $ 47.7 10.1 % $ 162.9 8.9 % $ 159.4 7.9 %

International & Specialty

International Contract & Specialty

Net sales $ 245.0 100.0 % $ 237.4 100.0 % $ 931.8 100.0 % $ 1,017.3 100.0 %

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Operating earnings $ 24.5 10.0 % $ 17.1 7.2 % $ 78.2 8.4 % $ 98.6 9.7 %

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 %

Restructuring charges 2.5 1.0 % 0.6 0.3 % 4.1 0.4 % 1.3 0.1 %

Integration charges 1.8 0.7 % 0.5 0.2 % 4.8 0.5 % 2.5 0.2 %

Amortization of Knoll purchased intangibles 2.1 0.9 % 2.1 0.9 % 8.4 0.9 % 8.3 0.8 %

Impairment charges 4.7 1.9 % 1.8 0.8 % 4.7 0.5 % 1.8 0.2 %

Adjusted operating earnings $ 35.6 14.5 % $ 20.3 8.6 % $ 100.2 10.8 % $ 112.5 11.1 %

Global Retail

Net sales $ 227.3 100.0 % $ 244.9 100.0 % $ 872.4 100.0 % $ 1,043.7 100.0 %

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Total operating expenses 89.8 39.5 % 105.5 43.1 % 347.3 39.8 % 410.0 39.3 %

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

Operating earnings (loss) $ 14.2 6.2 % $ (10.8) (4.4) % $ 42.4 4.9 % $ (15.5) (1.5) %

Restructuring charges 0.8 0.4 % 8.4 3.4 % 2.1 0.2 % 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 %

Integration charges — — % — — % — — % 0.2 — %

Amortization of Knoll purchased intangibles 0.6 0.3 % 0.6 0.2 % 2.6 0.3 % 4.1 0.4 %

Impairment charges 4.0 1.8 % 3.5 1.4 % 4.0 0.5 % 40.7 10.3 %

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Operating (loss) $ (11.9) — % $ (16.1) — % $ (52.1) — % $ (60.4) — %

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

Integration charges — — % 1.3 — % 0.1 — % 5.6 — %

Adjusted operating (loss) $ (11.9) — % $ (14.8) — % $ (52.0) — % $ (54.8) — %

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Restructuring charges 22.1 2.5 % 14.2 1.5 % 30.8 0.8 % 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) %

Integration charges 5.1 0.6 % 5.3 0.6 % 23.5 0.6 % 18.0 0.4 %

Amortization of Knoll purchased intangibles 5.9 0.7 % 5.9 0.6 % 23.9 0.7 % 25.3 0.6 %

Impairment charges 16.8 1.9 % 19.7 2.1 % 16.8 0.5 % 56.9 1.4 %

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Twelve Months Ended

Americas International & Specialty Retail Total

Americas Contract International Contract & Specialty Global Retail Total

Net sales, as reported $ 1,824.2 $ 931.8 $ 872.4 $ 3,628.4

% change from PY (10.0) % (8.4) % (16.4) % (11.2) %

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

Currency translation effects (1)

(2.6) (6.3) (4.1) (13.0)

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

Net sales, organic $ 1,821.6 $ 925.5 $ 868.3 $ 3,615.4

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Twelve Months Ended

Americas International & Specialty Retail Total

Americas Contract International Contract & Specialty Global Retail Total

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

Divestitures (6.7) — (7.9) (14.6)

Fully and HAY eCommerce — — (76.0) (76.0)

Impact of extra week in FY23 (38.7) (19.6) (18.2) (76.5)

Net sales, organic $ 1,987.4 $ 997.7 $ 949.5 $ 3,934.6

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Twelve Months Ended

Americas International & Specialty Retail Total

Americas Contract International Contract & Specialty Global Retail Total

Orders, as reported $ 1,824.9 $ 928.1 $ 868.0 $ 3,621.0

% change from PY (4.0) % (1.7) % (12.2) % (5.6) %

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

Currency translation effects (1)

(7.7) (7.4) (5.0) (20.1)

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

Orders, organic $ 1,817.2 $ 920.7 $ 863.0 $ 3,600.9

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Twelve Months Ended

Americas International & Specialty Retail Total

Americas Contract International Contract & Specialty Global Retail Total

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

Divestitures (11.4) — (8.5) (19.9)

Fully and HAY eCommerce — — (75.8) (75.8)

Impact of extra week in FY23 (36.2) (18.9) (16.6) (71.7)

Orders, organic $ 1,865.1 $ 925.1 $ 896.6 $ 3,686.8

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Twelve Months Ended

June 3, 2023 May 28, 2022

June 1, 2024 June 3, 2023

(Loss) Earnings per Share - Diluted $ 1.11 $ 0.55

Amortization of purchased intangibles 0.33 0.87

Acquisition and integration charges 0.24 1.71

Amortization of Knoll purchased intangibles 0.32 0.33

Integration charges 0.31 0.24

Restructuring charges 0.42 0.45

Impairment charges 0.24 0.76

Special charges — (0.01)

Debt extinguishment — 0.18

Gain on sale of dealer — (0.03)

Tax impact on adjustments (0.32) (0.48)

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Other expenses, net 67.5 70.9 (4.8) %

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

Earnings before income taxes and equity income 99.7 51.4 94.0 %

Income tax expense 14.7 4.5 226.7 %

Equity (loss) from nonconsolidated affiliates, net of tax (0.4) (0.8) (50.0) %

Net earnings (loss) 46.1 (19.7) 334.0 %

Net earnings 84.6 46.1 83.5 %

Net earnings attributable to redeemable noncontrolling interests 2.3 4.0 (42.5) %

Net earnings (loss) attributable to MillerKnoll, Inc.

Net earnings attributable to MillerKnoll, Inc.

$ 82.3 $ 42.1 95.5 %

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Other expenses, net 1.9 % 1.7 %

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

Earnings before income taxes and equity income 2.7 % 1.3 %

Income tax expense 0.4 % 0.1 %

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

Net earnings (loss) 1.1 % (0.5) %

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

Net earnings 2.3 % 1.1 %

Net earnings attributable to redeemable noncontrolling interests 0.1 % 0.1 %

Net earnings (loss) attributable to MillerKnoll, Inc.

1.0 % (0.7) %

Net earnings attributable to MillerKnoll, Inc.

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

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

Net sales increased $141 million or 3.6% compared to the prior year fiscal period.

Net sales decreased $459 million or 11.2% compared to the prior year fiscal period.

The following items primarily contributed to the change:

• 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.

• Decreased sales volume within the Americas Contract, International Contract & Specialty and Global Retail segments of approximately $262 million, $76 million and $61 million, respectively.

• The additional week during the first quarter of the prior year contributed to approximately $77 million of the Net sales decrease.

• Decrease of $76 million related to the closure of the Fully business that occurred in the prior year and the closure of the Hay eCommerce channel in North America.

Offset in part by:

• Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $80 million.

• Foreign currency translation increased Net sales by approximately $13 million.

Gross margin was 39.1% for fiscal 2024 as compared to 35.0% for fiscal 2023.

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

• 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.

• Reduction in costs from commodities, storage and handling costs, freight and product distribution costs, as compared to the prior year which increased gross margin by approximately 260 basis points.

• The positive impact of price increases, net of incremental discounting, contributed to margin improvement by approximately 140 basis points.

• Charges in the prior year for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand contributed to an increase in gross margin of approximately 40 basis points.

• Benefit to margin from the realization of incremental synergies associated with the Knoll acquisition as compared to the same period in the prior year.

These factors were offset in part by;

• Loss of leverage on lower sales volumes and unfavorable channel and product mix, which negatively impacted gross margin by approximately 70 basis points.

Operating Expenses

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The following factors contributed to the change:

• 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.

• Variable selling and marketing costs decreased by approximately $34 million, due in part to the closure of the Fully business that occurred in the prior year;

• Decrease in asset impairment charges recorded in the current year as compared to the prior year contributed a net decrease in Operating expenses of approximately $24 million;

• The impact of an extra week in the first quarter of fiscal 2023 decreased Operating expenses by approximately $10 million;

• Product development costs decreased approximately $3 million, primarily in the Americas Contract segment;

• Savings from the realization of incremental synergies associated with the Knoll acquisition as compared to the prior year as well as reduced expenses attributable to the recently implemented restructuring actions.

These decreases were offset in part by:

• Compensation and benefit costs, which increased approximately $33 million driven by changes in variable-based compensation and incentives.

Other Income/Expense

Net other expenses for fiscal 2024 were $67.5 million compared to $70.9 million in fiscal 2023.

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.

This change is driven primarily by increased interest income in the current year of $3.3 million, the impact of net foreign currency transaction gains of $1.8 million as well as favorable net periodic benefit income from our pension plans.

These favorable changes were offset by increased Interest expense of $2.2 million as compared to the same period of the prior year, driven by increased interest rates as compared to the same period of the prior year.

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

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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 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.

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This is followed by a discussion of the Company's results, by segment.

Americas Contract ("Americas")

Americas Contract

(Dollars in millions) Fiscal 2024 Fiscal 2023 Change

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Gross margin % 34.0 % 30.2 % 3.8 %

Operating earnings (loss) 99.6 (24.0) 123.6

Operating earnings 98.7 99.6 (0.9)

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

• 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;

Operating earnings % 5.4 % 4.9 % 0.5 %

Net sales decreased 10.0%, or 8.3% (*) on an organic basis, from the prior year due to:

• Decreased sales volume within the segment of approximately $262 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;

• The impact of an additional week in the prior year, which reduced sales approximately $39 million;

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.

• Price increases, net of incremental discounting, of approximately $97 million;

• Favorable foreign currency translation of approximately $3 million.

Operating earnings decreased $0.9 million, or 0.9% compared to the same period of the prior year due to:

• Increased operating expenses of $9.9 million.

The following factors contributed to the change:

◦ An increase in variable based compensation of approximately $19 million;

◦ Increased Knoll acquisition integration costs of $9 million;

◦ Increased restructuring expenses of approximately $2 million related to a workforce reduction as well as showroom consolidations.

These increases were offset in part by:

◦ Decreased product development costs of $3 million as well as a decrease of $5 million due to the additional week in the prior year;

◦ A decrease of $6 million in non-cash intangible impairment charges as compared to the prior year;

◦ Decreased variable marketing and selling costs.

• The increase in operating expenses was offset in part by improved gross margin of $9.0 million due to the increased gross margin percentage of 380 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 370 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.

◦ Decreased commodity and product distribution costs that increased gross margin percentage by 200 basis points.

These increases were offset in part by:

◦ Unfavorable product mix which had a negative impact on margin of 170 basis points and increased labor costs as well as loss of fixed cost leverage due to reduced production volumes that decreased gross margin percentage by 20 basis points.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations.

International Contract and Specialty ("International & Specialty")

International Contract & Specialty

(Dollars in millions) Fiscal 2024 Fiscal 2023 Change

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Operating earnings % 8.4 % 9.7 % (1.3) %

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

• 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 $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;

Net sales decreased 8.4%, or 7.2% (*) on an organic basis, from the prior year due to:

• Decline in sales volume of approximately $76 million driven mainly by challenging macroeconomic conditions in Europe and parts of Asia-Pacific;

• Impact of the extra week in the prior year period, which drove a decrease of $20 million;

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.

• Favorable foreign currency translation of approximately $6 million;

• Price increases, net of incremental discounting of $4 million.

Operating earnings decreased $20.4 million, or 20.7%, compared to the prior year due to:

• Decreased Gross margin of $14.7 million due to the decrease in sales explained above, offset in part by an increase in gross margin percentage of 230 basis points due primarily to favorable product mix.

• Increased Operating expenses of $5.7 million which was largely due to an:

◦ Increased variable compensation costs in the current year of $10 million;

◦ Increased restructuring, integration and impairment charges of $8 million in the current year.

Restructuring charges were related to workforce reductions and the increase in impairment charges was primarily related to the impairment of the Muuto trade name in the current year.

These increases were offset in part by:

◦ Decrease of $4 million due to the additional week in the prior year as well as a decrease of $8 million primarily related to a reduction in variable selling costs.

(*) Non-GAAP measurements;

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Gross margin % 44.7 % 37.8 % 6.9 %

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

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

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:

• 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.

Operating earnings (loss) 42.4 (15.5) 57.9

Operating earnings (loss) % 4.9 % (1.5) % 6.4 %

Net sales decreased 16.4% as reported and 8.6% (*) on an organic basis, from the prior year due to:

• Decreased sales of $76 million primarily related to the closure of the Fully business that occurred in the prior year as well as the closure of the Hay eCommerce channel in North America;

• Decreased sales volumes of approximately $61 million driven by a slowdown in the North American housing market and a continuation of general economic uncertainty;

• Incremental promotional discounting, net of price increases, which decreased sales by $21 million;

• The additional week during the first quarter of the prior year contributed to approximately $18 million of the net sales decrease;

• Favorable foreign currency translation of approximately $4 million.

Operating earnings increased $57.9 million, or 373.5% over the prior year due to:

• An increase in gross margin percentage of 690 basis points attributable to the favorable impact of reduced costs as compared to the prior year associated with product distribution and inventory handling as well as charges in the prior year for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand.

These increases were offset in part by promotional discounting, net of price increases.

• Decreased Operating expenses of $63 million driven by:

◦ Decreased selling and marketing costs including the reduction in costs associated with no longer operating Fully as a stand alone brand, which contributed an approximate decrease of $28 million;

◦ Decrease of $21 million in expenses primarily related to charges in the prior year for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand;

◦ Decreased restructuring charges of approximately $8 million relating to the decision to cease operating Fully as a stand-alone brand in fiscal year 2023;

◦ Decrease of $4 million due to the additional week in the prior year, as well as a general decrease in operating expenses associated with the closure of the Fully business in the prior year.

These decreases were offset by:

◦ Increase of $3 million in variable compensation costs in the current year.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations.

Corporate unallocated expenses totaled $52.1 million for fiscal 2024, a decrease of $8.3 million from fiscal 2023.

The decrease was driven primarily by a decrease in integration costs related to the Knoll acquisition of $5.5 million.

Liquidity and Capital Resources

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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.

Net cash provided by operating activities for the twelve months ended June 1, 2024 totaled $352.3 million compared to $162.9 million in the twelve months ended June 3, 2023.

The increase in cash inflow is due primarily to an increase in earnings of $38.5 million in the current year compared to the prior year, a reduction in contributions to our pension plans, 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.

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• 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.

• Effective inventory management resulting in reduced inventory levels;

• Changes in accruals related to variable compensation.

Cash Flow — Investing Activities

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.

Cash used in investing activities for the twelve months ended June 1, 2024 was $86.3 million, as compared to $76.5 million in the twelve months ended June 3, 2023.

The increase in cash outflow in the current year was primarily due to:

• An increase in notes receivable received from certain independently owned dealers in the current year;

• The advancement of $13.5 million of cash against the value of company owned life insurance policies received in the twelve months ended June 3, 2023 for which there was no activity in the current year.

Offset in part by:

• Proceeds of $3.5 million received in the twelve months ended June 1, 2024 related to the sale of the Company's investment in Global Holdings Netherlands B.V.

Capital expenditures for the current year were $78.4 million as compared to $83.3 million in the prior year.

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 2024, there were outstanding commitments for capital purchases of $53.7 million.

The Company plans to fund these commitments with cash on hand and/or cash generated from operations.

The Company expects capital spending in fiscal 2024 to be between $80 million and $100 million, which will be primarily related to investments in the Company's facilities and equipment, investments to achieve costs synergies related to the Knoll acquisition, and investments associated with achieving the Company's sustainability goals.

The Company expects capital spending in fiscal 2025 to be between $100 million and $125 million, which will be primarily related to investments in the Company's facilities, (including manufacturing, showrooms, and retail stores) and equipment as well as investments associated with achieving the Company's sustainability goals.

Cash Flow — Financing Activities

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.

Cash used in financing activities for the twelve months ended June 1, 2024 was $258.8 million, compared to $86.8 million in the twelve months ended June 3, 2023.

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

• The Company repurchased 6,022,646 shares at a cost of $138.2 million in the current year as compared to 575,207 share repurchases totaling $16.0 million in the prior year;

• Net payments on the credit agreement of $36.7 million in the current year compared to net borrowings of $13.7 million in the prior year;

• Repayments of long-term debt of $31.3 million in the current year compared to $26.3 million in the prior year.

Sources of Liquidity

In addition to steps taken to protect its workforce and manage business operations, the Company has taken actions to safeguard its capital position in the current environment.

The Company has taken actions to safeguard its capital position in the current environment.

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

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At the end of fiscal 2024, 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.

The Company has access to liquidity through credit facilities as well as cash and cash equivalents.

These sources have been summarized below.

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

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

(In millions) June 1, 2024 June 3, 2023

Cash and cash equivalents $ 230.4 $ 223.5

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Of the cash and cash equivalents noted above at the end of fiscal 2024, the Company had $218.5 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.

The Company’s syndicated 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, SOFR or negotiated terms as outlined in the agreement.

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which is estimated to be approximately $347.5 million on June 1, 2024.

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.

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, upcoming debt maturities, 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 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.

The fiscal year ended June 1, 2024 contained 52 weeks, the fiscal year ended June 3, 2023 contained 53 weeks, and the fiscal year ended May 28, 2022 contained 52 weeks.

Contractual Obligations

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Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed and pre-acquisition contingencies.

We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets.

We use our best estimates and assumptions to accurately assign fair values to the tangible and intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets.

We allocate the fair value of purchase consideration to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values.

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Our estimates of fair value are based upon reasonable assumptions but are inherently uncertain and unpredictable, and as a result, actual results may differ from these estimates.

During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the values of assets acquired and liabilities assumed with the corresponding offset to goodwill.

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

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We may also elect to bypass the qualitative assessment and perform a quantitative assessment.

When the Company performs a quantitative assessment, the Company makes estimates about fair value by using a weighting of the income and the market approach.

When the Company performs a quantitative assessment, the Company makes estimates about fair value by using a weighting of the income approach and the market approach.

The income approach is based on projected discounted cash flows using a market participant discount rate.

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Certain business acquisitions have resulted in the recording of goodwill.

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.

At June 1, 2024 and June 3, 2023, we had goodwill recorded within the Consolidated Balance Sheets of $1,226.3 million and $1,221.7 million, respectively.

Goodwill is tested for impairment at the reporting unit level annually, or more frequently, when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value.

When testing goodwill for impairment, the Company may first assess qualitative factors.

If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is performed.

The Company may also elect to bypass the qualitative testing and proceed directly to the quantitative testing.

If the quantitative testing indicates that goodwill is impaired, the carrying value of goodwill is written down to fair value.

Each of the reporting units was reviewed for impairment using a qualitative assessment as of March 31, 2024.

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.

The Company elected to test each reporting unit, with the exception of the Global Retail reporting unit, qualitatively, as is permitted under ASU 2011-08, Intangibles-Goodwill and Other (Topic 350):

Testing Goodwill for Impairment.

For the Global Retail reporting unit, the Company elected to proceed directly to the quantitative test.

No goodwill impairment charges were recorded in fiscal 2024, 2023, or 2022.

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:

• 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 performed the quantitative impairment analysis of the Global Retail reporting unit as of March 31, 2024 to determine the fair value of the Global Retail reporting unit as compared to the carrying value.

The Company utilized a weighting of the income approach and the market approach to estimate the fair value of the Global Retail reporting unit.

The test for impairment requires the Company to make several estimates about fair value, most of which are based on projected future cash flows and market valuation multiples.

We estimated the fair value of the Global Retail reporting unit using a discounted cash flow analysis.

The discounted cash flow analysis used the present value of projected cash flows and a residual value.

The Company employed a market-based approach in selecting the discount rate used in our analysis.

The discount rate selected represents the market rate of return equal to what the Company believes a reasonable investor would expect to achieve on investments of similar size to the Global Retail reporting unit.

The Company believes the discount rate selected in the quantitative assessment is appropriate in that it exceeds the estimated weighted average cost of capital for our business as a whole.

The results of the impairment test are sensitive to changes in the discount rates and changes in the discount rate may result in future impairment.

The Company determined that the Global Retail reporting unit exceeded its carrying value by 37% and therefore does not have a heightened risk of future impairments if any assumptions, estimates or market factors change in the future.

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 not result in impairment.

A decrease in the operating margin of 100 basis points in all years would not result in impairment.

An increase in the discount rate of 100 basis points would not result in impairment.

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 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.

At June 1, 2024 and June 3, 2023, the Company held trade name assets with a carrying value of $465.5 million and $480.7 million, respectively.

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

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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 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,

In fiscal 2024, the Company performed quantitative assessments in testing the Knoll product brand and Muuto brand indefinite-lived intangible assets for impairment, which resulted in the carrying values of the trade names exceeding their fair values by $8.9 million and $7.9 million, respectively.

Accordingly, impairment charges of $16.8 million in total were recognized.

The carrying value of the Knoll trade name as of the measurement date was $153.3 million and the fair value of the Knoll trade name as of the measurement date was $144.4 million.

The carrying value of the Muuto trade name as of the measurement date was $88.4 million and the fair value of the Muuto trade name as of the measurement date was $80.5 million.

If the residual cash flows related to these trade names were to decline in future periods, the Company may need to record additional impairment charges.

In completing our annual indefinite-lived trade name impairment test, the respective fair values were estimated using a relief-from-royalty approach, which requires assumptions related to the following:

• forecasted revenue growth rate,

• 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 used reflect management’s best estimate;

The assumptions used reflect management’s best estimates;

however, actual results could differ from our estimates.

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.

In completing our annual indefinite-lived trade name impairment test, the fair values of the Knoll and Muuto trade names were both estimated using a discount rate of 12.0%.

The royalty rates used for the Knoll and Muuto trade names were 2.0% and 4.5%, respectively.

The long-term growth rates in the valuation of the Knoll and Muuto trade names were 2.5% and 3.0%, respectively.

The Company’s estimates of the fair value of its Knoll and Muuto indefinite-lived intangible assets are 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.

For the Knoll trade name, keeping all other assumptions constant, a 10% decrease in forecasted sales at March 31, 2024 would have resulted in $14.0 million of additional pre-tax impairment charges;

a decrease in the royalty rate of 25 basis points would have resulted in an additional $18.0 million of impairment charges;

and a 100 basis point increase in the discount rate would have resulted in an additional $14.0 million of impairment charges.

For the Muuto trade name, keeping all other assumptions constant, a 10% decrease in forecasted sales at March 31, 2024 would have resulted in $8.0 million of additional pre-tax impairment charges;

a decrease in the royalty rate of 25 basis points would have resulted in an additional $4.5 million of impairment charges;

and a 100 basis point increase in the discount rate would have resulted in an additional $8.0 million of impairment charges.

During fiscal 2023, the Company determined through a qualitative assessment that the Knoll trade name carrying value was more than 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.

The carrying value of the Knoll trade name as of the measurement date was $173.0 million.

The fair value of the Knoll trade name as of the measurement date was $153.3 million.

The assumptions used reflect management’s best estimates;

however, actual results could differ from our estimates.

In completing our annual indefinite-lived trade name impairment tests, the fair value of the Knoll trade name was estimated using a discount rate of 12.0%, royalty rate of 2.0% and long-term growth rate of 2.5%.

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

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

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 additional impairment charges.

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 the fourth quarter of fiscal 2024, the decision was made to cease the use of certain leased locations resulting in impairment charges of $5.5 million recognized for the right of use assets associated with these locations.

In the second quarter of fiscal 2024, a manufacturing facility located in Wisconsin met the criteria to be classified as an asset held for sale.

The decision to sell this facility was made as a result of facility integration activities performed in connection with the integration of Knoll.

In the fourth quarter of fiscal 2024, it was determined that the carrying value of these assets exceeded their fair value and an impairment charge of $1.0 million was recognized.

The carrying amount of these assets held for sale was $3.5 million and is classified as current assets within "Assets held for sale" in the Condensed Consolidated Balance Sheets as of June 1, 2024.

During 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 an indicator of impairment, and accordingly recorded impairment of certain long-lived assets within the Fully asset group of $21.5 million.

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.

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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:

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;

global and national economic conditions including heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, escalating tensions in the Middle East, the continuation of the Russia-Ukraine war, and potential governmental responses to these events;

the impact of any government policies and actions to protect the health and safety of individuals or to maintain the functioning of national or global economies, and the Company's response to any such policies and actions;

the impact of public health crises, such as pandemics and epidemics;

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

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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 effect 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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What changed 10-K

Item 7. Management’s Discussion and Analysis