What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-07-21 compared with 2024-07-30 · 245 added, 234 removed, 415 unchanged (54% of the section changed)

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

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

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

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

DWR provides a channel to bring MillerKnoll's iconic and design-centric products across our brands such as Knoll, Muuto, and HAY, to retail customers, along with other proprietary and third-party products, with a focus on modern design.

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

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The Company has identified the following segments:

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

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

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

• North America Contract — Includes the operations associated with the design, sourcing, manufacture, and sale of furniture products directly or indirectly through an independent dealership network for office, healthcare, and educational environments throughout the United States and Canada as well as the global operations of the Spinneybeck|FilzFelt, Maharam, Edelman, and Knoll Textile brands.

• International Contract — Includes the operations associated with the design, sourcing, manufacture, and sale of furniture products, directly or indirectly through an independent dealership network for office, healthcare, and educational environments in Europe, the Middle East, Africa, Asia-Pacific, and Latin America.

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

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• 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).

• Retail Locations - As of May 31, 2025, the Company operated 75 retail studios (including 38 operating under the DWR brand, 1 under the HAY brand, 30 Herman Miller stores, 3 Muuto stores, 2 Knoll stores and a multi-brand Chicago store).

The business also operated 3 outlet studios.

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

We are expanding the retail f ootprint of both our DWR studios and Herman Miller stores into new geographic markets, with a primary focus on growth within the United States.

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.

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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.

Our collective of dynamic 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.

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

position the Americas Contract business to lead;

drive outsized growth in International Contract & Specialty;

position the North America Contract business to lead;

drive outsized growth in International Contract;

and continue transforming our Global Retail business.

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 $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.

The following is a summary of the significant events and items impacting the Company's operations for the year ended May 31, 2025:

• Net sales were $3,669.9 million, representing an increase of 1.1% when compared to the prior year.

Growth was primarily driven by increased sales volumes in the North America Contract and International Contract segments, along with the positive impact of pricing actions.

These drivers more than offset sales declines due to unfavorable foreign currency translation, the strategic closure of the HAY eCommerce channel in North America and sales volume declines in the Global Retail segment.

On an organic basis, net sales were $3,676.1 million(*), representing an increase of 1.6% when compared to the prior year.

• Gross margin was 38.8% as compared to 39.1% in the prior year.

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 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, 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 $1.11 compared to $0.55 in the prior year.

The decline in gross margin was driven by increases in material costs, some of which are related to increases in tariffs during the year, as well as from unfavorable channel and product mix.

These pressures were offset in part by gross margin benefit from favorable net pricing.

• Operating expenses increased by $119.8 million or 9.6% as compared to the prior year.

The increase was primarily related to an increase in non-cash intangible impairment charges of $113.2 million.

• The effective tax rate was negative 53.1% for fiscal 2025 compared to 14.8% for the prior year.

• Diluted loss per share for the full year totaled $0.54 compared to earnings per share of $1.11 in the prior year.

On an adjusted basis(*), diluted earnings per share totaled $1.95 in fiscal 2025 compared to $2.08 in fiscal 2024.

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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 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 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.

• The current global macroeconomic environment — which reflects higher interest rates, tepid housing-related demand trends, relatively low CEO and consumer confidence levels, as well as geopolitical and global trade uncertainty — continues to pose challenges for the industry.

While these factors are expected to continue in the near term, we are focused on prudent cost management and investment in targeted growth opportunities.

These opportunities include growth within the Global Retail segment through expansion of our North American store footprint and product assortment.

Within our North America Contract and International Contract segments, our strategy is focused on targeting economically resilient customer sectors, continued investment in product design and innovation leadership and expansion into geographies with opportunity to grow our market share.

• The Company's financial performance is sensitive to changes in material costs including changes related to tariffs or commodity cost changes.

During fiscal year 2025 there were changes in trade policies that have resulted and are expected to continue to result in added cost pressures.

The Company has implemented pricing actions together with other mitigation strategies that, over time, are expected to offset the net impact of tariff costs on the financial results.

• The North America Contract segment reported a net sales increase of 2.2% and an organic sales increase of 2.4%(*) year-over-year.

Operating margin increased 60 basis points year-over year and 50 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 increase was primarily driven by a reduction in restructuring charges as compared to the prior period

• The International Contract segment reported a net sales increase of 2.2% and an organic sales increase of 2.7%(*) year-over-year.

Operating margin increased 10 basis points year-over-year and decreased 10 basis points on an adjusted basis(*).

• The Global Retail segment reported a net sales decrease of 1.5% and an organic sales decrease of 0.3%(*) 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.

Operating margin decreased 1,110 basis points year-over year and 110 basis points on an adjusted basis(*).

The decrease on a reported basis was primarily driven by non-cash intangible asset impairment charges recorded in the current year.

The remaining sections of Item 7 include additional analysis of the fiscal year ended May 31, 2025, including discussion of significant variances compared to the prior year period.

A detailed review of our fiscal 2024 performance compared to our fiscal 2023 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended June 1, 2024.

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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.

Certain non-GAAP measures, including adjusted operating earnings, are used by the Company in its executive compensation program.

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

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 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 integration charges, amortization of Knoll purchased intangibles, restructuring expenses, and impairment charges.

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

These adjustments are described further below.

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.

Adjusted Operating Margin is calculated as Adjusted Operating Earnings (Loss) divided by Net Sales.

Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects and the impact of the closure of the North America HAY eCommerce channel in the Global Retail segment.

• Amortization of Knoll purchased intangibles:

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• 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.

Knoll integration-related costs include severance, 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 and non-cash charges for the impairment of assets associated with the decision to close certain showrooms.

Includes costs associated with actions involving targeted workforce reductions.

• Impairment charges:

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

Includes non-cash, pre-tax charges for the impairment of the Knoll and Muuto trade names as well as impairment of goodwill attributed to the Global Retail and Holly Hunt reporting units.

• Knoll pension plan termination charges:

Includes expenses incurred associated with the termination of the Knoll pension plan which was completed in the second quarter of fiscal year 2025

• Tax related items:

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Three Months Ended Twelve Months Ended

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

Americas Contract

May 31, 2025 June 1, 2024 May 31, 2025 June 1, 2024

North America Contract

Net sales $ 496.1 100.0 % $ 441.1 100.0 % $ 1,965.2 100.0 % $ 1,922.3 100.0 %

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Total operating expenses 141.4 28.5 % 158.0 35.8 % 581.4 29.6 % 591.1 30.7 %

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

Operating earnings $ 38.3 7.7 % $ 0.2 — % $ 120.9 6.2 % $ 106.7 5.6 %

Restructuring charges 7.4 1.5 % 19.2 4.4 % 9.8 0.5 % 25.3 1.3 %

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Impairment charges — — % 8.1 1.8 % 19.9 1.0 % 8.1 0.4 %

Knoll pension plan termination charges — — % — — % 1.0 0.1 % — — %

Adjusted operating earnings $ 49.7 10.0 % $ 35.6 8.1 % $ 191.0 9.7 % $ 177.2 9.2 %

International Contract & Specialty

International Contract

Net sales $ 185.7 100.0 % $ 173.7 100.0 % $ 660.0 100.0 % $ 645.6 100.0 %

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Impairment charges — — % 16.8 1.9 % 130.0 3.5 % 16.8 0.5 %

Knoll pension plan termination charges — — % — — % 1.0 — % — — %

Adjusted operating earnings $ 71.9 7.5 % $ 73.6 8.3 % $ 248.7 6.8 % $ 262.2 7.2 %

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Twelve Months Ended

Americas Contract International Contract & Specialty Global Retail Total

North America Contract International Contract Global Retail Total

Net sales, as reported $ 1,965.2 $ 660.0 $ 1,044.7 $ 3,669.9

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Twelve Months Ended

Americas Contract International Contract & Specialty Global Retail Total

North America Contract International Contract Global Retail Total

Net sales, as reported $ 1,922.3 $ 645.6 $ 1,060.5 $ 3,628.4

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

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

HAY eCommerce — — (11.8) (11.8)

Net sales, organic $ 1,922.3 $ 645.6 $ 1,048.7 $ 3,616.6

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Twelve Months Ended

Americas Contract International Contract & Specialty Global Retail Total

North America Contract International Contract Global Retail Total

Orders, as reported $ 2,021.0 $ 665.9 $ 1,060.8 $ 3,747.7

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Twelve Months Ended

Americas Contract International Contract & Specialty Global Retail Total

North America Contract International Contract Global Retail Total

Orders, as reported $ 1,903.3 $ 667.6 $ 1,050.1 $ 3,621.0

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

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

HAY eCommerce — — (11.4) (11.4)

Orders, organic $ 1,903.3 $ 667.6 $ 1,038.7 $ 3,609.6

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Twelve Months Ended

June 1, 2024 June 3, 2023

May 31, 2025 June 1, 2024

(Loss) Earnings per Share - Diluted $ (0.54) $ 1.11

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Impairment charges 1.88 0.24

Knoll pension plan termination charges 0.01 —

Tax impact on adjustments (0.38) (0.32)

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Income tax expense 11.6 14.7 (21.1) %

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

Equity income (loss) from nonconsolidated affiliates, net of tax 0.3 (0.4) (175.0) %

Net earnings (33.2) 84.6 (139.2) %

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Income tax expense 0.3 % 0.4 %

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

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

Net earnings (0.9) % 2.3 %

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Net earnings attributable to MillerKnoll, Inc.

(1.0) % 2.3 %

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

The following items primarily contributed to the change:

• 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.

Net sales for fiscal 2025 increased $42 million, or 1.1% compared to the prior year.

This increase was primarily driven by the following factors:

• Increased sales volume within the International Contract and North America Contract segments of approximately $28 million and $25 million, respectively.

• Net price increases, which contributed approximately $14 million to Net sales, reflecting our ability to maintain pricing discipline in a competitive environment.

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:

• 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.

• A $12 million reduction due to the strategic closure of the HAY eCommerce channel in North America that occurred in the prior year.

• Decreased sales volume within the Global Retail segment of approximately $7 million.

• Unfavorable foreign currency impact of approximately $6 million.

Gross margin for fiscal 2025 was 38.8%, compared to 39.1% in fiscal 2024.

The 30 basis point decline was primarily driven by the following factors:

• Tariff-related costs negatively impacted gross margin by 30 basis points in the year.

• Unfavorable channel and product mix negatively impacted gross margin by approximately 30 basis points.

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.

• Effective pricing strategies, net of incremental discounting, which contributed approximately 30 basis points of margin improvement.

Operating Expenses

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

Operating expenses decreased by $56 million or 4.3% compared to the prior year fiscal period.

The following factors contributed to the change:

• 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.

Operating expenses increased by $120 million or 9.6% compared to the prior year fiscal period.

The current period reflects the following key changes compared to the prior year:

• An increase of $113 million in non-cash intangible impairment charges;

• Selling and marketing expenses increased by $10 million, primarily due to higher selling and marketing costs within the Global Retail segment;

• Variable selling costs, which include sales-based commission and royalty expense, increased approximately $7 million;

• Increased acquisition-related integration costs as compared to the prior year, totaling approximately $4 million.

These increases were partially offset by:

• A $16 million reduction in restructuring charges as compared to the prior year.

Other Income/Expense

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

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.

Net other expenses for fiscal 2025 totaled $72.4 million, compared to $67.5 million in fiscal 2024.

The year-over-year increase of $4.9 million was primarily attributable to the following factors:

• A $2.3 million reduction in net periodic benefit income, resulting from the termination of the Knoll pension plan during the current fiscal year.

• A $3.1 million increase in foreign currency losses compared to the prior year, reflecting greater volatility in exchange rates.

See Note 10 of the Consolidated Financial Statements for additional information.

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

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

Effective as of March 1, 2025, the last day of the third quarter of fiscal 2025, 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.

Below is a description of each reportable segment.

The North America Contract segment includes the operations associated with the design, sourcing, manufacture and sale of furniture products directly or indirectly through an independent dealership network for office, healthcare, and educational environments throughout the United States and Canada as well as the global operations of the Spinneybeck|FilzFelt, Maharam, Edelman, and Knoll Textile brands.

The International Contract segment includes the operations associated with the design, sourcing, manufacture and sale of furniture products, indirectly or directly through an independent dealership network for office, healthcare, and educational environments in Europe, the Middle East, Africa, Asia-Pacific and Latin America.

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, along with the global operations of the Holly Hunt brand.

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.

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

Americas Contract

North America Contract

(Dollars in millions) Fiscal 2025 Fiscal 2024 Change

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Operating earnings % 6.2 % 5.6 % 0.6 %

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

Net sales increased 2.2%, or 2.4% (*) on an organic basis, from the prior year due to:

• Increased sales volume within the segment of approximately $25 million;

• Price increases, net of incremental discounting, of approximately $20 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;

◦ 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.

• Unfavorable foreign currency translation of approximately $2 million.

Operating earnings increased $14.2 million, or 13.3% compared to the same period of the prior year due to:

• Decreased operating expenses of $9.7 million.

The following factors contributed to the change:

◦ A decrease of approximately $16 million in restructuring charges related to reductions in the Company's workforce;

◦ A decrease of approximately $8 million in annual incentive compensation.

These decreases were offset in part by:

◦ An increase of $12 million in non-cash intangible impairment charges as compared to the prior year;

◦ Increased acquisition related integration costs of approximately $2 million.

• Gross margin increased by $4.5 million, primarily driven by the higher sales volume discussed above.

This increase was offset by a 60 basis point decline in gross margin percentage, which was mainly attributable to the following factors:

◦ Unfavorable product mix reduced margin by approximately 40 basis points;

◦ Higher tariff-related costs led to a 30 basis point decline in gross margin;

◦ Increased commodity and product distribution costs further reduced margin by 30 basis points;

◦ Higher labor costs and loss of fixed cost leverage due to reduced production volumes in the first part of the year contributed an additional 30 basis point decrease in gross margin.

These negative impacts were partially offset by:

◦ Incremental list price increases, net of contract price discounting, which improved gross margin by approximately 70 basis points.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations.

International Contract & Specialty

International Contract

(Dollars in millions) Fiscal 2025 Fiscal 2024 Change

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Operating earnings % 9.6 % 9.5 % 0.1 %

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;

Net sales increased 2.2%, or 2.7% (*) on an organic basis, from the prior year due to:

• Increased sales volume within the segment of approximately $28 million;

offset in part by

• 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.

• Incremental discounting, net of price increases, which negatively impacted sales by approximately $11 million;

• Unfavorable foreign currency translation of approximately $3 million.

Operating earnings increased $1.7 million, or 2.8%, compared to the prior year due to:

• Increased gross margin of $7.7 million due to the increase in sales explained above and an increase in gross margin percentage of 40 basis points.

The increase in gross margin percentage was due primarily to:

◦ Leverage on fixed costs on higher sales volumes which had a favorable impact on margin of approximately 70 basis points;

◦ Favorable product and business mix which increased margin by 60 basis points.

Offset in part by:

◦ Incremental discounting, net of price increases which had a negative impact on margin of 90 basis points.

• The increase in gross margin was partially offset by increased Operating expenses of $6 million which was largely due to increased variable selling costs in the current year.

(*) Non-GAAP measurements;

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Gross margin % 45.9 % 46.1 % (0.2) %

Operating earnings (loss) 42.4 (15.5) 57.9

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

Operating (loss) earnings (66.0) 51.0 (117.0)

Operating (loss) earnings % (6.3) % 4.8 % (11.1) %

Net sales decreased 1.5% as reported and 0.3% (*) 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.

• Decrease of approximately $12 million related to the closure of the HAY eCommerce channel in North America that occurred in the prior year;

• A decrease in sales volumes of approximately $7 million;

• Unfavorable foreign currency translation of approximately $1 million.

These decreases were offset in part by:

• Price increases, net of incre mental discounting, of approximately $4 million.

Operating earnings decreased $117.0 million, or 229.4% over the prior year due to:

• Decreased gross margin of $9.1 million due to the decrease in sales explained above and a decrease in gross margin percentage of 20 basis points.

The decrease in gross margin percentage was due primarily to:

◦ The impact of increased inventory costs as compared to the prior year which negatively impacted margin by approximately 110 basis points.

◦ Loss of leverage on fixed costs attributable to lower sales volumes as compared to the prior year which had an unfavorable impact on gross margin percentage of approximately 30 basis points.

These decreases were offset in part by:

◦ Reduced freight and product distribution costs, net of freight revenue, as compared to the same period of the prior year and favorable product mix which had a favorable impact on gross margin percentage of approximately 100 basis points;

◦ The impact of incremental price increases, net of promotional discounting, that increased gross margin percentage by approximately 20 basis points.

These increases were offset in part by:

• Increased Operating expenses of $108 million primarily driven by an increase of $105 million in non-cash intangible impairment charges as compared to the prior year as well as increased selling and marketing 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.

Corporate unallocated expenses totaled $67.7 million for fiscal 2025, an increase of $15.6 million from fiscal 2024.

The increase primarily related to higher stock based compensation expense.

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 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.

Net cash provided by operating activities for the twelve months ended May 31, 2025, totaled $209.3 million compared to $352.3 million in the twelve months ended June 1, 2024.

The decrease in cash inflow is due primarily to a net increase in working capital.

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

The following all affect these account balances:

• The timing of collection of our receivables;

• Effective inventory management resulting in reduced inventory levels;

• Fluctuations in inventory levels;

• Changes in accruals related to variable compensation.

Cash Flow — Investing Activities

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.

Cash used in investing activities for the twelve months ended May 31, 2025, was $100.9 million, as compared to $86.3 million in the twelve months ended June 1, 2024.

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.

• Increased capital expenditures 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.

• Cash proceeds of $6.0 million in the current period related to the sale of a manufacturing facility located in Wisconsin;

• A decrease in the total volume of notes receivable entered into with certain independently owned dealers in the current period as compared to the same period of the prior year.

Capital expenditures for the current year were $107.6 million a s compared to $78.4 million in the prior year.

At the end of the fiscal 2025, there were outstanding commitments for capital purchases of $69.2 million.

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Cash Flow — Financing Activities

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:

Cash used in financing activities for the twelve months ended May 31, 2025 was $150.3 million, compared to $258.8 million in the twelve months ended June 1, 2024.

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

• The Company repurchased 3,291,176 shares at a cost of $84.9 million in the current year as compared to 6,022,646 share repurchases totaling $138.2 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.

• The refinancing of Term Loan A which resulted in proceeds of $90.0 million in the current year.

Offset in part by:

• Net payments on the credit agreement of $61.7 million in the current year compared to net payments of $36.7 million in the prior year.

Sources of Liquidity

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For additional information, refer to Note 5 to the Consolidated Financial Statements.

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

(In millions) May 31, 2025 June 1, 2024

Cash and cash equivalents $ 193.7 $ 230.4

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Of the cash and cash equivalents noted above at the end of fiscal 2025, the Company had $182.7 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.

The Company’s syndicated revolving line of credit, which matures in April 2030, 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 June 1, 2024, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $390.0 million with available borrowings against this facility of $322.3 million.

As of May 31, 2025, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $330.8 million with available borrowings against this facility of $382.2 million.

The Company intends to repatriate $137.3 million of undistributed foreign earnings, all of which is held in cash in certain foreign jurisdictions.

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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 June 1, 2024.

which is estimated to be approximately $382.9 million on May 31, 2025.

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.

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

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.

The fiscal year ended May 31, 2025, and the fiscal year ended June 1, 2024, both contained 52 weeks, and the fiscal year ended June 3, 2023, contained 53 weeks.

Contractual Obligations

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

Contractual cash payments on long-term debt obligations are disclosed herein based on the amounts borrowed as of June 1, 2024 and the maturity date of the underlying debt.

Estimated future interest payments on our outstanding interest-bearing debt obligations are based on interest rates as of June 1, 2024.

Contractual cash payments on long-term debt obligations are disclosed herein based on the amounts borrowed as of May 31, 2025, and the maturity date of the underlying debt.

Estimated future interest payments on our outstanding interest-bearing debt obligations are based on interest rates as of May 31, 2025.

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

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

As of June 1, 2024, the total projected benefit obligation for our domestic and international employee pension benefit plans was $207.1 million.

(3) Represents the dividend payable as of June 1, 2024.

As of May 31, 2025, the total projected benefit obligation for our domestic and international employee pension benefit plans was $77.9 million.

(3) Represents the dividend payable as of May 31, 2025.

Future dividend payments are not considered contractual obligations until declared.

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The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is allocated to goodwill.

The allocation of the purchase consideration requires management to make significant estimates and assumptions, especially with respect to intangible assets.

The allocation of the purchase consideration requires management to make significant

estimates and assumptions, especially with respect to intangible assets.

These estimates are reviewed with our advisors and can include, but are not limited to:

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

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

There were no material acquisitions during fiscal 2024 or fiscal 2023.

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

There were no material acquisitions during fiscal 2025, fiscal 2024 or fiscal 2023.

Goodwill and Indefinite-lived Intangibles

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Certain business acquisitions have resulted in the recording of goodwill.

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.

At May 31, 2025, and June 1, 2024, we had goodwill recorded within the Consolidated Balance Sheets of $1,152.4 million and $1,226.3 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.

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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, 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.

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.

During the third quarter of fiscal year 2025, the Company identified indicators of a triggering event which could indicate the carrying amount of the reporting units may not be supported by the fair value.

Although our annual impairment test is performed during the fourth quarter, we perform a qualitative assessment each interim reporting period to determine whether there are indicators of a triggering event in the quarter.

Through this assessment management identified an impairment triggering event associated with lower-than-expected operating results.

This suggested that the fair value of one or more of our reporting units may have fallen below their carrying amount.

Accordingly, we performed a quantitative valuation of each reporting unit during the quarter.

The Company used the discounted cash flow method under a weighting of the income and market approach to estimate the fair value of our reporting units.

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

• actual and forecasted revenue growth rates and operating margins,

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

• revenue and EBITDA of comparable companies.

The Company selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, management’s long-term strategic plans, and guideline companies.

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.

We estimated the fair value of each 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.

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 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.

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 each reporting unit.

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

As a result of the third quarter fiscal year 2025 goodwill impairment test, the Company recognized a total non-cash impairment charge of $30.1 million and $62.2 million in its Global Retail and Holly Hunt reporting units, respectively.

The goodwill impairment charges were primarily caused by reduced sales and profitability projections as well as an increase in the discount rate.

After these impairment charges and before the changes in reporting units resulting from our third quarter fiscal year 2025 segment re-organization, the Global Retail and Holly Hunt reporting units had remaining goodwill of $357.0 million and $33.0 million, respectively.

The quantitative assessment in the third quarter of fiscal year 2025 resulted in the fair values of the Americas Contract, International Contract and Coverings reporting units exceeding their respective carrying values (the "cushion") by 32%, 63% and 10%, respectively.

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.

In completing the goodwill impairment test, the respective fair values were estimated using discount rates ranging from 12.0% to 15.0% and long-term growth rates ranging from 2.5% to 3.0%.

The Company evaluated the sensitivity of changes in projected growth rates, discount rates and long-term growth rates for the reporting units with goodwill remaining as of March 1, 2025.

• A decrease in the forecasted sales by 500 basis points in all years or an increase in the discount rate of 100 basis points, leaving all other assumptions static, would not result in impairment for the Americas Contract, International Contract or Coverings reporting units.

• A decrease in the operating margin of 100 basis points in all years, leaving all other assumptions static, would not result in impairment for the Americas Contract or International Contract reporting units.

For the Coverings reporting unit it would result in impairment of $3.0 million.

• A reduction in the projected sales growth rate, decline in operating margins, an increase in the discount rate or a decline in the long-term sales growth rate for the Holly Hunt or Global Retail reporting units may result in the need to record an additional impairment charge.

Additionally, in the third quarter of fiscal year 2025 the Company implemented an organizational change that resulted in a change in the reportable segments and reporting units.

As a result, the Company performed the required impairment assessments directly before and immediately after the change in reporting units.

As a result of this change, $26.1 million of goodwill was reassigned from the Americas Contract reporting unit to the International Contract reporting unit, based on the relative fair value approach.

Additionally, the $33.0 million of remaining goodwill for the Holly Hunt reporting unit was moved to the Global Retail reporting unit.

Subsequent to this change the Company has four reporting units, North America Contract, International Contract, Global Retail and Coverings.

Each of the reporting units was reviewed for impairment using a qualitative assessment as of March 31, 2025.

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.

Through the performance of this qualitative assessment we determined that there were no indicators of 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 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.

At May 31, 2025, and June 1, 2024, the Company held trade name assets with a carrying value of $432.5 million and $465.5 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.

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,

During the third quarter of fiscal year 2025 the Company identified indicators that impairment was more likely than not for certain of the indefinite-lived intangible assets.

Accordingly, the Company performed quantitative assessments during the third quarter of fiscal year 2025 to testing the indefinite-lived intangible assets which showed indicators that impairment was more likely than not.

This quantitative assessment resulted in the recognition of $37.7 million in non-cash impairment charges related to the Knoll and Muuto trade names.

The other indefinite-lived intangible assets were determined to have no impairment.

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

• actual and forecasted revenue growth rates,

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

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

The assumptions used reflect management’s best estimates;

however, actual results could differ from our estimates.

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.

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;

In completing the third quarter fiscal year 2025 assessment of indefinite-lived trade name impairment, the respective fair values were estimated using discount rates ranging from 12.00% to 13.00%, royalty rates ranging from 1.50% to 4.50% and long-term growth rates ranging from 2.5% to 3.0%.

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

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.

For the Knoll trade name, keeping all other assumptions constant, a 10% decrease in forecasted sales would have resulted in $12.0 million of additional pre-tax impairment charges;

a decrease in the royalty rate of 25 basis points would have resulted in an additional $15.0 million of impairment charges;

and a 100 basis point increase in the discount rate would have resulted in an additional $11.0 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;

For the Muuto trade name, keeping all other assumptions constant, a 10% decrease in forecasted sales would have resulted in $7.0 million of additional pre-tax impairment charges;

a decrease in the royalty rate of 25 basis points would have resulted in an additional $4.0 million of impairment charges;

and a 100 basis point increase in the discount rate would have resulted in an additional $6.0 million of impairment charges.

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

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.

Each indefinite-lived intangible asset was reviewed for impairment using a qualitative assessment as of March 31, 2025.

The Company elected to test each asset qualitatively, as is permitted under ASU 2011-08, Intangibles-Goodwill and Other (Topic 350):

Testing Goodwill for Impairment.

Through the performance of this qualitative assessment we determined that there were no indicators of impairment.

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 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.

In the first quarter of fiscal 2025, the decision was made to cease the use of certain leased locations resulting in impairment charges of $17.4 million related to the right of use assets associated with these locations.

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 related to the right of use assets associated with these locations.

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.

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

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

Forward-looking statements relate to future events and anticipated results of operations, business strategies, the anticipated benefits of our 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.

Forward-looking statements include those relating to future events, anticipated results of operations, our expectations regarding future market conditions, our business strategies, our assessment of risks we face, 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:

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;

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;

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 this report.

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.

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 our results of operations or financial condition or the price of our stock.

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

• Changes to U.S.

and international trade policies, including new or increased tariffs and changing import/export regulations, which impact both the cost and availability of materials and components used to manufacture our products as well as demand for our products;

• Challenges in implementing our growth strategy and the possibility that the assumptions on which that strategy was built prove inaccurate;

• Consumer spending levels, which have a significant impact on demand for our products within our Global Retail segment;

• Global and national economic conditions such as 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;

• Cybersecurity threats and risks;

• Public health crises, such as pandemics and epidemics, and governmental policies and actions to protect the health and safety of individuals or to maintain the functioning of national or global economies;

• Risks related to the additional debt incurred in connection with our acquisition of Knoll, including increased interest expense, our ability to comply with our debt covenants and obligations, and limitations on certain business activities imposed by our credit agreement;

• Availability and pricing of raw materials;

• Financial strength of our dealers and customers;

• Pace and level of government procurement;

• 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 our periodic reports and other filings with the SEC, including the risk factors identified in this report.

The forward-looking statements included in this report are made only as of the date of this report, and we do not undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis