What changed in this filing

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Item 1A. Risk Factors

2025-07-21 compared with 2024-07-30 · 60 added, 40 removed, 161 unchanged (38% of the section changed)

19 unchanged sentences

In connection with the July 2021 acquisition of Knoll, we incurred significant additional indebtedness, which has increased our interest expense and could adversely affect us, including by decreasing our business flexibility.

The consolidated long-term debt of MillerKnoll as of June 1, 2024 was $1.29 billion.

As a result of our acquisition of Knoll, we substantially increased our indebtedness, which has increased our interest expense and could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions.

The consolidated long-term debt of MillerKnoll as of May 31, 2025, was $1.31 billion.

As a result of our acquisition of Knoll in July 2021, we substantially increased our indebtedness, which has increased our interest expense and could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions.

We have also incurred various costs and expenses associated with such indebtedness.

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The increased levels of indebtedness will also reduce funds available for working capital, capital expenditures, acquisitions, and other general corporate purposes and may create competitive disadvantages for MillerKnoll relative to other companies with lower debt levels.

If we do not achieve the expected benefits and cost savings from the acquisition, or if the financial performance of the combined company does not meet current expectations, then our ability to service our indebtedness may be adversely impacted.

The indebtedness incurred in connection with the acquisition of Knoll contains various covenants that impose restrictions on us that may affect our ability to operate our business.

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There is no assurance we will be able to obtain such additional financing on terms acceptable to us or at all.

We have incurred and may continue to incur significant costs in connection with the integration of Knoll, which may be in excess of those we anticipate.

We have incurred and expect to continue to incur a number of non-recurring fees and costs associated with combining the operations of Herman Miller and Knoll and achieving desired synergies.

These costs and expenses include those related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs.

Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

Macroeconomic and Workplace Trends Related Risks

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We compete with national and regional furniture retailers, mail order catalogs and online retailers focused on home furnishings.

We compete with these and other retailers for customers, suitable retail locations, vendors, qualified employees and management personnel.

We compete with these and other retailers for customers, suitable

retail locations, vendors, qualified employees and management personnel.

Some of our competitors have significantly greater financial, marketing and other resources than we possess.

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Our business presence outside the United States exposes us to certain risks that could negatively affect our results of operations and financial condition.

We have significant manufacturing and sales operations in the United Kingdom, which represents our largest single marketplace outside the United States.

Concerns exist relating to potential tariffs and customs regulations and the potential for short term logistics disruption as any such changes are implemented.

We have significant manufacturing and sales operations outside of the United States.

Concerns exist relating to imposed and potential tariffs and customs regulations and the potential for short term logistics disruption as any such changes are implemented.

This will impact both our suppliers and customers, including distributors, and could result in product delays and inventory issues.

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There also remains a risk for the value of the British Pound, Danish Krone, and/or the Euro to further deteriorate, reducing the purchasing power of customers in these regions and potentially undermining the financial health of the Company's suppliers and customers in other parts of the world.

We also have manufacturing operations in China, India, Italy, Canada, Mexico and Brazil.

Additionally, our products are sold internationally through controlled subsidiaries or branches in Canada, Denmark, Italy, Korea, Mexico, Australia, China (including Hong Kong), India, Brazil, and other European countries.

We have manufacturing operations in the United Kingdom, China, India, Italy, Canada, Mexico and Brazil.

Additionally, our products are sold internationally through controlled subsidiaries or branches in Canada, the United Kingdom, Denmark, Italy, Korea, Mexico, Australia, China (including Hong Kong), India, Brazil, and other European countries.

The Company's products are offered in Canada, Europe, the Middle East, Africa, Latin America and the Asia/Pacific region primarily through dealers and retail channels.

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Additionally, tariff and import regulations, international tax policies and rates, and changes in U.S.

and international monetary policies may have an adverse impact on results of operations and financial condition.

In connection with the ongoing war between Russia and Ukraine, the U.S.

government has imposed enhanced export controls on certain products and sanctions on certain industry sectors and parties in Russia.

MillerKnoll is not fulfilling any existing orders or accepting new orders from Russia or Belarus at this time.

As a safety measure, we have also stopped taking new orders and fulfilling orders in Ukraine.

This region represents a small portion of our International Contract & Specialty business, and we do not rely on any material goods from suppliers in these regions.

While we do not have manufacturing facilities or offices in the region, we have historically sold products to two dealers in Russia and two in Belarus.

None of the revenue recognized in fiscal year 2024 and 2023 was from dealers located in countries under sanction.

Further escalation of geopolitical tensions could have a broader impact that expands into other markets where we do business, which could adversely affect our business and/or our supply chain, business partners or customers in the broader region.

The continued conflict in that region, as well as the current and additional international sanctions against Russia, are likely to further increase the cost of various supplies, particularly for petroleum based products.

The impact from this conflict, as well as the international sanctions, cannot be predicted or anticipated with any reasonable degree of certainty, including the impact on the Company.

and international monetary policies have had, and are expected to continue to have an adverse impact on results of operations and financial condition.

Current and potential future geopolitical tensions, including the ongoing conflicts between Russia and Ukraine and the conflicts in the Middle East, have had and could continue to have a broader impact on the global markets in which we do business.

An increase in these tensions could adversely affect our business and/or our supply chain, business partners or customers.

Continued global conflicts are likely to further increase the cost of various supplies, particularly for petroleum based products.

The impact from these conflicts, as well as any actual or potential associated international sanctions, cannot be predicted or anticipated with any reasonable degree of certainty, including the impact on the Company.

A sustained downturn in the economy could adversely impact our access to capital.

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Although we believe none of these covenants is currently restrictive to our operations, our ability to meet the financial covenants can be affected by events beyond our control.

Changes in spending or budgetary policies of the U.S.

Federal Government may materially adversely affect our business.

Sales to the U.S.

federal government represented approximately 4% of total Company net sales in fiscal year 2025.

On January 20, 2025, President Trump signed an executive order creating an advisory commission, the “Department of Government Efficiency,” to reform federal government processes and reduce expenditures.

Pressures on and uncertainty surrounding the U.S.

federal government’s budget, and potential changes in budgetary priorities and spending levels, have adversely affected and could continue to affect staffing levels and funding for government agencies that purchase our products.

Manufacturing, Supply Chain and Distribution Related Risks

Tariffs imposed by the U.S.

government could have a material adverse effect on our results of operations.

The imposition of tariffs by the U.S.

government on various products imported from certain countries, as well as countering tariffs on the export of U.S.

goods, has had, and will likely continue to have, an adverse impact on our business, including as a result of increased costs for certain of our raw materials and increasing the costs for certain products that we export to other countries.

Accordingly, these tariffs and the possibility of broader trade conflicts stemming from the tariffs could negatively impact our business in the future.

We expect changes to U.S.

trade policy, including new or increased tariffs and changing import/export regulations, to continue to adversely affect our operating results, and the impacts have been material.

Although we have implemented a range of cost mitigation actions, there is risk that these actions will not be sufficient to fully mitigate increased costs or that regulations could further increase costs in the future.

Changes in U.S.

or international social, political, regulatory or economic conditions or in laws and policies governing foreign trade, and any potential negative sentiment toward the U.S.

as a result of such changes, have, and could continue to materially and adversely affect our business.

has instituted certain changes, and has proposed additional changes, in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., and other government regulations affecting trade between the U.S.

and other countries (such as Canada, Mexico, China, and the European Union) where we conduct our business.

Global trade disruption, significant introductions of trade barriers and bilateral trade frictions, together with any future downturns in the global economy resulting therefrom, have, and could further materially and adversely affect our financial performance.

The tariffs on imports, most notably imports from China, have impacted the cost of steel, a key commodity that we consume in producing products.

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The potential impact to our direct material costs due to tariffs on Chinese imports is somewhat limited, however, as purchases of direct materials (mainly component parts and products manufactured by third parties) from China represented an estimated 3% of our consolidated cost of sales for fiscal 2025.

Going forward, continued or increased tariffs could negatively impact our gross margin and operating performance.

These factors also have the potential to significantly impact global trade and economic conditions in many of the regions where we do business.

As a result of policy changes and government proposals, there may be greater restrictions and economic disincentives on international trade.

The new tariffs and other changes in U.S.

trade policy have triggered retaliatory actions by affected countries, and foreign governments have instituted or are considering imposing trade sanctions on U.S.

Such changes both have had and have the potential to continue to adversely impact the U.S.

economy, our industry and the global demand for our products, and as a result, have had a negative impact on our business, financial condition and results of operations.

We have taken actions to mitigate these cost increases, including price increases and tariff surcharges.

There is risk that these actions will not sufficiently offset the cost of tariffs and other trade policy actions.

Disruptions in the supply of raw and component materials could adversely affect our manufacturing and assembly operations.

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If dealers go out of business or restructure, we may suffer losses because they may not be able to pay for products already delivered to them.

Also, dealers may experience financial difficulties, creating the need for outside financial support, which may not be easily obtained.

Also, dealers may experience financial difficulties, creating the need for outside financial support, which

may not be easily obtained.

The Company has, on occasion, agreed to provide direct financial assistance through term loans, lines of credit, and/or loan guarantees to certain dealers.

Those activities increase our financial exposure.

A continued shortage of qualified labor could negatively affect our business and materially reduce earnings.

A shortage of qualified labor could negatively affect our business and materially reduce earnings.

The future success of our operations depends on our ability, and the ability of third parties on which we rely, to identify, recruit, develop and retain qualified and talented individuals in order to supply and deliver our products.

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Such a shortage would also likely lead to higher wages for employees (or higher costs to purchase the services of such third parties) and a corresponding reduction in our results of operations.

In the current operating environment, we are experiencing a shortage of qualified labor in certain geographies, particularly with plant production workers, resulting in increased costs from certain temporary wage actions, such as hiring and referral bonus programs.

A continuation of such shortages for a prolonged period of time could have a material adverse effect on our operating results.

Financial Related Risks

24 unchanged sentences

We collect certain customer-specific data, including credit card information, in connection with orders placed through our eCommerce websites, direct-mail catalog marketing program, and retail studios.

For these sales channels to function and develop successfully, we and other parties involved in processing customer transactions must be able to transmit confidential information, including credit card information and other personal information regarding our customers, securely over public and private networks.

and private networks.

Third parties may have or develop the technology or knowledge to breach, disable, disrupt or interfere with our systems or processes or those of our vendors.

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Due to the political uncertainty and military actions involving Russia, Ukraine, and surrounding regions, we and the third parties upon which we rely may be vulnerable to a currently heightened risk of information technology breaches, computer malware, or other cyber-attacks, including attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our products.

We are subject to risks and potential costs associated with disruption to our technology systems as well as our ability to adequately maintain and update those systems to support growth initiatives and increasing business complexity.

Our business is increasingly dependent on information technology systems that are complex and relied on extensively throughout our business operations.

If we were to experience difficulties maintaining or operating existing systems or implementing new systems, we could incur significant losses due to disruptions in our operations.

As we modernize legacy systems, if we are unable to successfully implement those systems in a coordinated manner across internal and external stakeholders, we could be subject to business interruption or reputational risk.

We have invested, and expect to continue to invest, in maintaining and updating our technology systems, however implementing changes increases the risk of system disruption.

We are unable to control the factors affecting consumer spending.

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Approximately 35% of the sales within our Global Retail segment are transacted within our retail stores.

Additionally, we believe our retail stores have a direct influence on the volume of business transacted through other channels, including our consumer eCommerce and direct-mail catalog platforms, as many customers utilize these physical spaces to view and experience products prior to placing an order online or through the catalog call center.

experience products prior to placing an order online or through the catalog call center.

Our ability to open additional stores or close existing stores successfully will depend upon a number of factors beyond our control, including, without limitation:

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• landlord financial stability.

We may incur significant increased costs and become subject to additional potential liabilities under environmental and other laws and regulations aimed at combating climate change.

Increased focus by the U.S.

We may incur significant increased costs and become subject to additional potential liabilities related to regulatory, market and or legal related measures to address climate change.

We have established and publicly announced sustainability goals.

These goals include science-based targets for the reduction of Scope 1, 2 and 3 greenhouse gas emissions.

Our ability to achieve any stated goal, target or objective is subject to numerous factors and conditions, many of which are outside of our control.

Examples of such factors include evolving regulatory requirements affecting sustainability standards or disclosures or imposing different requirements, the pace of changes in available materials and technology, as well as the availability of suppliers that can meet our sustainability and other standards.

We may incur significant costs as we work to implement our sustainability goals, which were announced fiscal year 2025, which include efforts to reduce our carbon footprint.

Furthermore, standards for tracking and reporting sustainability matters continue to evolve.

Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from other companies.

Methodologies for reporting these data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations, and other changes in circumstances, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

If we fail to achieve, or are perceived to have failed or been delayed in achieving, or improperly report our progress toward achieving these goals and commitments, it could negatively affect consumer or customer preference for our products as well as potentially expose us to enforcement actions and litigation.

Additionally, increased focus by the U.S.

and other governmental authorities on climate change and other environmental matters has led to enhanced regulation in these areas, which is expected to result in increased compliance costs and could subject us to additional potential liabilities.

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We operate and have manufacturing facilities in multiple regions across the globe, and the impact of additional regulations in this area is likely to vary by region.

It is expected the costs we incur to comply with any such final regulations and implement our own sustainability goals could be material.

It is expected the costs we incur to comply with any such final regulations and execute on our own sustainability goals could be material.

Government and other regulations could adversely affect our business.

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

What changed 10-K

Item 1A. Risk Factors