MILLERKNOLL, INC. 10-Q

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except share data) The following is management's discussion and analysis of certain significant factors that affected the Company's financial condition, earnings, and cash flows during the periods included in the accompanying Condensed Consolidated Financial Statements and should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended June 1, 2024. References to “Notes” are to the footnotes included in the accompanying Condensed Consolidated Financial Statements. Business Overview The Company researches, designs, manufactures, sells, and distributes interior furnishings for use in various environments including residential, office, healthcare, and educational settings and provides related services that support organizations and individuals all over the world. The Company's products are sold primarily through independent contract office furniture dealers, direct customer sales, owned and independent retailers and the Company’s eCommerce platforms. The following is a summary of results for the three months ended August 31, 2024: • Net sales were $861.5 million and orders were $935.9 million, representing a decrease of 6.1% and increase of 2.4%, respectively, when compared to the same quarter of the prior year. On an organic basis, which excludes the impact of foreign currency translation and the impact of the closure of the HAY eCommerce channel in North America, Net sales were $864.3 million (*) and orders were $940.4 million (*) , representing an organic decrease of 5.3% (*) and increase of 3.5% (*) , respectively, when compared to the same quarter of the prior year. • Gross margin in the first quarter was 39.0% which is flat when compared to the same quarter of the prior year. Benefits from pricing actions, favorable business and product mix and the realization of synergies associated with the Knoll acquisition offset the loss of leverage of fixed operating costs on lower sales volumes. • Operating expenses increased by $3.3 million or 1.0% as compared to the same quarter of the prior year. The increase was driven primarily by higher Knoll integration costs as compared to the same period in the prior year, offset in part by a reduction in restructuring costs, reduced variable-selling costs on lower sales volume and the realization of savings related to integration and restructuring actions. • The effective tax rate was 66.2% compared to 24.4% for the same quarter of the prior year. The current quarter rate resulted from the current quarter reflecting a pre-tax loss along with return to provision true-ups recorded in the current period compared to the prior year. • Diluted loss per share was $0.02 as compared to diluted earnings per share of $0.22 in the prior year. Adjusted diluted earnings per share was $0.36 (*) , a 2.7% (*) decrease as compared to prior year adjusted diluted earnings per share. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." The following summary includes the Company's view of the economic environment in which it operates: • MillerKnoll finished the first quarter of fiscal year 2025 with demand improvement within the Americas Contract and International Contract & Specialty segments. This improvement in order volume was driven by a general increase in day-to-day and project activity, including a ramp-up in larger project opportunities in the Americas and Asia. Demand in the Global Retail segment continues to reflect the impact of a tepid housing market, though the segment saw margin improvement in the quarter driven by investments in strengthening operational capabilities. • The Americas Contract segment in the first quarter reported Net sales totaling $454.6 million, down 7.3% compared to the prior year period on a reported basis and down 7.0% (*) organically. Americas Contract had new orders of $512.7 million, which was an increase of 5.2% from the prior year and and increase of 5.7% (*) on an organic basis. • The International Contract & Specialty segment delivered Net sales in the first quarter of $213.5 million, a decrease of 6.5% from the year-ago period on a reported basis and a decrease of 6.3% (*) organically. New orders in this segment totaled $234.1 million, representing a year-over-year increase of 2.7% on a reported basis and an increase of 3.1% (*) organically. 22 • Net sales in the first quarter for the Global Retail segment totaled $193.4 million, a decrease of 2.8% over the same quarter last year on a reported basis and an increase of 0.4% (*) organically. Orders in the quarter totaled $189.1 million, down 4.7% compared to the same period last year on a reported basis and down 1.6% (*) organically. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." The Company's fiscal year is the 52 or 53 week period ending on the Saturday closest to May 31. The fiscal year ending May 31, 2025 ("fiscal 2025") and the fiscal year ended June 1, 2024 ("fiscal 2024") both contain 52 weeks. The remaining sections within Item 2 include additional analysis of the three months ended August 31, 2024, including discussion of significant variances compared to the prior year periods. Reconciliation of Non-GAAP Financial Measures This report contains non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. These non-GAAP financial measures are not measurements of our financial performance under GAAP and should not be considered an alternative to the related GAAP measurement. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of non-GAAP measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included within this report. The Company believes these non-GAAP measures are useful for investors as they provide financial information on a more comparative basis for the periods presented. The non-GAAP financial measures referenced within this report include: Adjusted Earnings per Share and Organic Growth (Decline). Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, Knoll pension plan termination charges and the related tax effect of these adjustments. These adjustments are described further below. Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects and the impact of the closure of the HAY eCommerce channel in North America. The adjustments made to arrive at these non-GAAP financial measures are as follows: • 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 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 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 associated with lease and operations facility consolidation activity, and expenses related to synergy realization efforts and reorganization initiatives. • Restructuring charges: Includes costs associated with actions involving targeted workforce reductions. • Knoll pension plan termination charges: Includes expenses incurred associated with the termination of the Knoll pension plan. • 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. 23 The following tables reconciles Net sales to Net sales, organic for the periods ended as indicated below: Three Months Ended August 31, 2024 Americas Contract International Contract & Specialty Global Retail Total Net sales, as reported $ 454.6 $ 213.5 $ 193.4 $ 861.5 % change from PY (7.3) % (6.5) % (2.8) % (6.1) % Adjustments Currency translation effects (1) 1.4 0.5 0.9 2.8 Net sales, organic $ 456.0 $ 214.0 $ 194.3 $ 864.3 % change from PY (7.0) % (6.3) % 0.4 % (5.3) % Three Months Ended September 2, 2023 Americas Contract International Contract & Specialty Global Retail Total Net sales, as reported $ 490.4 $ 228.3 $ 199.0 $ 917.7 Adjustments HAY eCommerce — — (5.5) (5.5) Net sales, organic $ 490.4 $ 228.3 $ 193.5 $ 912.2 (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. 24 The following tables reconcile orders as reported to organic orders for the periods ended as indicated below: Three Months Ended August 31, 2024 Americas Contract International Contract & Specialty Global Retail Total Orders, as reported $ 512.7 $ 234.1 $ 189.1 $ 935.9 % change from PY 5.2 % 2.7 % (4.7) % 2.4 % Adjustments Currency translation effects (1) 2.4 0.9 1.2 4.5 Orders, organic $ 515.1 $ 235.0 $ 190.3 $ 940.4 % change from PY 5.7 % 3.1 % (1.6) % 3.5 % Three Months Ended September 2, 2023 Americas Contract International Contract & Specialty Global Retail Total Orders, as reported $ 487.3 $ 227.9 $ 198.5 $ 913.7 Adjustments HAY eCommerce — — (5.1) (5.1) Orders, organic $ 487.3 $ 227.9 $ 193.4 $ 908.6 (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 earnings per share - diluted to adjusted earnings per share - diluted for the periods ended as indicated below: Three Months Ended August 31, 2024 September 2, 2023 (Loss) earnings per share - diluted $ (0.02) $ 0.22 Add: Amortization of Knoll purchased intangibles 0.08 0.08 Add: Integration charges 0.40 0.07 Add: Restructuring charges — 0.05 Add: Knoll pension plan termination charges 0.01 — Tax impact on adjustments (0.11) (0.05) Adjusted earnings per share - diluted $ 0.36 $ 0.37 Weighted average shares outstanding (used for calculating adjusted earnings per share) – diluted 70,206,373 75,707,536 25 Key Highlights The following table presents certain key highlights from the results of operations for the three months ended: Three Months Ended (In millions, except share data) August 31, 2024 September 2, 2023 % Change Net sales $ 861.5 $ 917.7 (6.1) % Cost of sales 525.2 559.6 (6.1) % Gross margin 336.3 358.1 (6.1) % Operating expenses 321.1 317.8 1.0 % Operating earnings 15.2 40.3 (62.3) % Other expenses, net 16.9 19.2 (12.0) % (Loss) earnings before income taxes and equity income (1.7) 21.1 N/A Income tax (benefit) expense (1.1) 5.1 N/A Equity income from nonconsolidated affiliates, net of tax 0.1 0.1 — % Net (loss) earnings (0.5) 16.1 N/A Net earnings (loss) attributable to redeemable noncontrolling interests 0.7 (0.6) N/A Net (loss) earnings attributable to MillerKnoll, Inc. $ (1.2) $ 16.7 N/A (Loss) earnings per share - basic $ (0.02) $ 0.22 N/A Orders $ 935.9 $ 913.7 2.4 % Backlog $ 758.0 $ 694.0 9.2 % The following table presents select components of the Company's Condensed Consolidated Statements of Comprehensive (Loss) Income as a percentage of Net sales, for the three months ended: Three Months Ended August 31, 2024 September 2, 2023 Net sales 100.0 % 100.0 % Cost of sales 61.0 % 61.0 % Gross margin 39.0 % 39.0 % Operating expenses 37.3 % 34.6 % Operating earnings 1.8 % 4.4 % Other expenses, net 2.0 % 2.1 % (Loss) earnings before income taxes and equity income (0.2) % 2.3 % Income tax (benefit) expense (0.1) % 0.6 % Equity income from nonconsolidated affiliates, net of tax — % — % Net (loss) earnings (0.1) % 1.8 % Net earnings (loss) attributable to redeemable noncontrolling interests 0.1 % (0.1) % Net (loss) earnings attributable to MillerKnoll, Inc. (0.1) % 1.8 % 26 Net Sales The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three months ended August 31, 2024. The amounts presented in the graph are expressed in millions and have been rounded. Net sales decreased $56.2 million or 6.1% in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. The following items contributed to the change: • Decreased sales volume within the Americas Contract and International Contract & Specialty segments of approximately $50 million and $10 million, respectively. • Decrease of $6 million related to the closure of the HAY eCommerce channel in North America that occurred in the prior year. • Foreign currency translation decreased Net sales by approximately $3 million. Offset in part by: • Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $10 million. • Increased sales volume within the Global Retail segment of approximately $3 million. Gross Margin Gross margin was 39.0% in both the first quarter of fiscal 2025 and the first quarter of fiscal 2024. Although Gross margin was flat to the prior year, summarized below are factors that most significantly impacted gross margin during the quarter: • Price increases, net of incremental discounting, contributed to margin improvement of approximately 60 basis points. • Favorable business and product mix contributed to margin improvement of approximately 60 basis points. • Loss of leverage on lower sales volumes negatively impacted margin by approximately 120 basis points. 27 Operating Expenses The following chart presents graphically the primary drivers of the year-over-year change in Operating expenses for the three months ended August 31, 2024. The amounts presented in the graphs are expressed in millions and have been rounded. Operating expenses increased by $3.3 million or 1.0% in the first quarter of fiscal 2025 compared to the prior year period. The following factors contributed to the change: • Acquisition related integration charges contributed an increase in Operating expenses as compared to the same period of the prior year of approximately $24 million; This was offset in part by: • Variable selling and marketing costs decreased by approximately $13 million driven by variability on lower net sales and the impact of cost synergies achieved through the acquisition of Knoll and restructuring actions taken in the prior year ; • Restructuring charges related to reductions in the Company's workforce in the prior year of approximately $5 million that did not occur in the current year; and • Compensation and benefit costs, which decreased approximately $3 million, driven by changes in variable-based compensation and incentives. Other Income/Expense During the three months ended August 31, 2024, net Other expense was $16.9 million, representing a decrease of $2.3 million compared to the same period in the prior year, driven primarily by reductions in foreign currency losses. Income Taxes See Note 9 of the Condensed Consolidated Financial Statements for additional information. 28 Operating Segment Results The business is comprised of various operating segments as defined by generally accepted accounting principles in the United States. 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 are Americas Contract, International Contract & Specialty, and Global Retail. Unallocated expenses are reported within the Corporate category. For descriptions of each segment, refer to Note 14 of the Condensed Consolidated Financial Statements. The charts below present the relative mix of Net sales and Operating earnings across each of the Company's segments during the three month period ended August 31, 2024. This is followed by a discussion of the Company's results, by reportable segment. The amounts presented in the charts are in millions and have been rounded. 29 Americas Contract Three Months Ended (Dollars in millions) August 31, 2024 September 2, 2023 Change Net sales $ 454.6 $ 490.4 $ (35.8) Gross margin 154.1 174.8 (20.7) Gross margin % 33.9 % 35.6 % (1.7) % Operating earnings 17.1 41.4 (24.3) Operating earnings % 3.8 % 8.4 % (4.6) % For the three month comparative period, Net sales decreased 7.3%, or 7.0% (*) on an organic basis, over the prior year period due to: • Decreased sales volumes within the segment of approximately $50 million. Although the segment experienced growth in order volume during the quarter, the timing of orders during the quarter and customer requests to ship product further out from order entry drove a year over year decrease in sales; and • Unfavorable foreign currency translation of approximately $2 million; offset in part by • Price increases, net of incremental discounting of $16 million. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." For the three month comparative period, operating earnings decreased $24.3 million, or 58.7%, over the prior year period due to: • Decreased Gross margin of $20.7 million due to the decrease in net sales discussed above and a decrease in gross margin percentage of 170 basis points. The decrease in gross margin percentage was due primarily to: ◦ Loss of leverage of fixed costs due to reduced production volumes w hich had a negative impact on margin of approximately 270 basis points; and ◦ Increased commodity and product distribution costs which had a negative impact on margin of 130 basis points. These increases were offset by: ◦ The impact of incremental list price increases, net of contract price discounting which provided an approximately 230 basis point improvement over the prior year; as well as ◦ The favorable impact of realization of synergies associated with the Knoll acquisition. • Increased Operating expenses of $3.6 million driven primarily by: ◦ Increase acquisition related integration costs of approximately $19 million in the current period. This increase was offset by: ◦ Decreased variable selling and marketing costs of $7 million; ◦ Decreased restructuring charges of $4 million; and ◦ Decreased variable compensation and benefit costs of $4 million. International Contract & Specialty Three Months Ended (Dollars in millions) August 31, 2024 September 2, 2023 Change Net sales $ 213.5 $ 228.3 $ (14.8) Gross margin 95.1 96.9 (1.8) Gross margin % 44.5 % 42.4 % 2.1 % Operating earnings 9.3 11.4 (2.1) Operating earnings % 4.4 % 5.0 % (0.6) % 30 For the three month comparative period, Net sales decreased 6.5%, or 6.3% (*) on an organic basis, over the prior year period due to: • Decline in sales volume of approximately $10 million; • Incremental promotional discounting, net of price increases, which decreased sales by $4 million; and • Unfavorable foreign currency translation of approximately $1 million. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." For the three month comparative period, operating earnings decreased $2.1 million, or 18.4% over the prior year period due to: • Decreased Gross margin of $1.8 million due to the decrease in net sales discussed above, offset by an increase in gross margin percentage of 210 basis points due primarily to favorable product mix. • Operating expenses remained relatively flat to the prior year. The factors that most significantly impacted operating expenses during the quarter were: ◦ Increase in integration related charges in the current year of $5 million. This increase was offset by: ◦ Decreased variable compensation and benefit costs and cost synergies achieved through the acquisition of Knoll . Global Retail Three Months Ended (Dollars in millions) August 31, 2024 September 2, 2023 Change Net sales $ 193.4 $ 199.0 $ (5.6) Gross margin 87.1 86.4 0.7 Gross margin % 45.0 % 43.4 % 1.6 % Operating earnings 4.5 2.2 2.3 Operating earnings % 2.3 % 1.1 % 1.2 % For the three month comparative period, Net sales decreased 2.8%, and increased 0.4% (*) on an organic basis, over the prior year period due to: • Decrease of $6 million related to the closure of the HAY eCommerce channel in North America that occurred in the prior year; • Incremental discounting, net of price increases which decreased sales by $2 million; and • Unfavorable foreign currency translation of approximately $1 million; offset in part by • An increase in sales volume of approximately $3 million. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." For the three month comparative period, Operating earnings increased $2.3 million or 104.5% over the prior year period due to: • Increased Gross margin of $0.7 million due to the gross margin percentage increase of 160 basis points which was attributable to: ◦ The impact of reduced costs as compared to the prior year associated with product distribution and inventory paired with operational efficiencies . • Decreased Operating expenses of $1.6 million primarily related to lower variable selling and marketing costs driven by the impact of cost synergies achieved through the acquisition of Knoll. Corporate Corporate unallocated expenses totaled $15.7 million for the first quarter of fiscal 2025, an increase of $1.0 million from the first quarter of fiscal 2024. 31 Liquidity and Capital Resources The table below summarizes the net change in Cash and cash equivalents for the three months ended as indicated. (In millions) August 31, 2024 September 2, 2023 Cash provided by (used in): Operating activities $ 21.1 $ 130.9 Investing activities (22.3) (26.3) Financing activities (20.3) (111.1) Effect of exchange rate changes 0.8 0.5 Net change in Cash and cash equivalents $ (20.7) $ (6.0) Cash Flows - Operating Activities Net cash provided by operating activities for the three months ended August 31, 2024, totaled $21.1 million compared to $130.9 million in the same period of the prior year. The decrease in cash inflow is due primarily to lower net income and changes in working capital. Our working capital consists primarily of receivables from customers, inventory, prepaid expenses, accounts payable, accrued compensation, and accrued other expenses. Working capital changes were primarily affected by payment of variable compensation in the current quarter as well as timing of collection of our receivables. Cash Flows - Investing Activities Cash used in investing activities for the three months ended August 31, 2024, was $22.3 million, as compared to $26.3 million in the same period of the prior year. The decrease in cash outflow in the current year, compared to the prior year, was primarily due to a decrease in the total volume of notes receivable entered into with certain independently owned dealers in the current quarter as compared to the same period of the prior year, offset in part by increased capital expenditures in the quarter. At the end of the first quarter of fiscal 2025, there were outstanding commitments for capital purchases of $14.5 million. The Company plans to fund these commitments through a combination of cash on hand and cash flows from operations. The Company expects full-year capital purchases to be between $100 million and $125 million, which will be primarily related to investments in the Company's facilities and equipment. This compares to full-year capital spending of $78.4 million in fiscal 2024. Capital expenditures for the first three months of fiscal 2025 were $22.6 million compared to $19.9 million for the three months ended September 2, 2023. Cash Flows - Financing Activities Cash used in financing activities for the three months ended August 31, 2024, was $20.3 million, as compared to $111.1 million in the same period of the prior year. The decrease in cash used in the current quarter, compared to the prior year, was primarily due to: • Net borrowings on the credit agreement of $43.1 million in the current year compared to net payments of $59.4 million in the same period of the prior year. • The Company repurchased 1,544,733 shares at a cost of $43.7 million in the current year as compared to 1,670,135 share repurchases totaling $32.0 million in the same period of the prior year. Sources of Liquidity The Company has taken actions to safeguard its cash flow and liquidity position in the current environment. The Company is closely managing spending levels, capital investments, and working capital. 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. 32 At the end of the first quarter of fiscal 2025, the Company had a well-positioned balance sheet and liquidity profile. 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 12 to the Condensed Consolidated Financial Statements. (In millions) August 31, 2024 June 1, 2024 Cash and cash equivalents $ 209.7 $ 230.4 Availability under syndicated revolving line of credit 278.7 322.3 Total liquidity $ 488.4 $ 552.7 Of the Cash and cash equivalents noted above at the end of the first quarter of fiscal 2025, the Company had $201.3 million of Cash and cash equivalents held outside the United States. 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. As of August 31, 2024, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $433.1 million with available borrowings on this facility of $278.7 million. The Company intends to repatriate $104.3 million of undistributed foreign earnings all of which is held in cash in certain foreign jurisdictions with the remainder of undistributed earnings outside the U.S. recorded in working capital. The Company has recorded a $3.7 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 $104.3 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 $347.5 million on August 31, 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, upcoming debt maturities, future dividends and share repurchases, subject to financing availability in the marketplace. Contractual Obligations Contractual obligations associated with ongoing business and financing activities will require cash payments in future periods. A table summarizing the amounts and estimated timing of these future cash payments as of June 1, 2024, was provided in the Company's Annual Report on Form 10-K for the year ended June 1, 2024. There have been no material changes in such obligations since that date. Guarantees See Note 11 to the Condensed Consolidated Financial Statements. Variable Interest Entities See Note 16 to the Condensed Consolidated Financial Statements. Contingencies See Note 11 to the Condensed Consolidated Financial Statements. Critical Accounting Policies The Company strives to report financial results clearly and understandably. The Company follows accounting principles generally accepted in the United States in preparing its consolidated financial statements, which require certain estimates and judgments that affect the financial position and results of operations for the Company. The Company continually reviews the accounting policies and financial information disclosures. A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Company's Annual Report on Form 10-K for the year ended June 1, 2024. New Accounting Standards See Note 2 to the Condensed Consolidated Financial Statements. 33 Cautionary Note Regarding Forward-Looking Statements 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 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: general economic conditions; 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; 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 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; the financial strength of our dealers and the financial strength of our customers; the success of newly-introduced products; the pace and level of government procurement; and the outcome of pending litigation or governmental audits or investigations. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to MillerKnoll’s periodic reports and other filings with the SEC, including the risk factors identified in our most recent Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for the year ended June 1, 2024 . The forward-looking statements included in this report are made only as of the date hereof. MillerKnoll does not undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.