What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-09-29 compared with 2025-03-31 · 174 added, 350 removed, 183 unchanged (74% of the section changed)

1 unchanged sentence

(Dollars in millions, except share data)

The following is management's discussion and analysis of certain significant factors that affected the Company's financial condition, earnings, and cash flows during the periods included in the accompanying Condensed Consolidated Financial Statements and should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended June 1, 2024.

References to “Notes” are to the footnotes included in the accompanying Condensed Consolidated Financial Statements.

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The Company's products are sold primarily through independent contract office furniture dealers, direct customer sales, owned and independent retailers and the Company’s eCommerce platforms.

The Company has modified its reporting segments in accordance with changes in the organizational structure effective March 1, 2025, the last day of the third quarter of fiscal year 2025.

The Company has aligned internal management reporting to correspond to this new structure, resulting in the following changes to reporting segments.

• The activities related to the Maharam, Spinneybeck|FilzFelt, Knoll Textiles, and Edelman brands, which were previously reported within the International Contract & Specialty segment, have been moved to the North America Contract segment.

• The activities related to the Holly Hunt brand, which were previously reported within the International Contract & Specialty segment, have been moved to the Global Retail segment.

• The activities related to Latin America Contract, which were previously reported within the Americas Contract segment, have been moved to the International Contract segment.

Following these modifications, the Company's three reportable segments are North America Contract (formerly Americas Contract), International Contract (formerly International Contract & Specialty), and Global Retail.

The following is a summary of results for the three months ended March 1, 2025:

• Net sales were $876.2 million and orders were $853.1 million, representing an increase of 0.4% and 2.7%, respectively, when compared to the same quarter of the prior year.

On an organic basis, which excludes the impact of foreign currency translation and the impact of the closure of the North American HAY eCommerce channel within the Global Retail segment, Net sales were $885.8 million (*) and orders were $862.2 million (*) , representing an organic increase of 1.8% (*) and 4.1% (*) , respectively, when compared to the same quarter of the prior year.

• Gross margin in the third quarter was 37.9%, a decrease of 70 basis points when compared to the same quarter of the prior year, related primarily to unfavorable channel and product mix, lower fixed cost leverage, and higher commodity costs.

• Operating expenses increased by $120.4 million or 40.9% as compared to the same quarter of the prior year.

The increase was driven primarily by $130.0 million of indefinite-lived intangible impairment charges in the quarter, offset in part by lower incentive compensation expense as compared to the same quarter of the prior year.

The following is a summary of results for the three months ended August 30, 2025:

• Net sales were $955.7 million and orders were $885.4 million, representing an increase of 10.9% and a decrease of 5.4%, respectively, when compared to the same quarter of the prior year.

On an organic basis, which excludes the impact of foreign currency translation, Net sales were $947.4 million (*) and orders were $877.5 million (*) , representing an organic increase of 10.0% (*) and an organic decrease of 6.2% (*) , respectively, when compared to the same quarter of the prior year.

• Gross margin in the first quarter was 38.5%, a decrease of 50 basis points when compared to the same quarter of the prior year, related primarily to the impact of increased net tariff-related costs in the period, which were offset in part by benefit from leverage on higher sales volume.

• Operating expenses decreased $6.5 million or 2.0% as compared to the same quarter of the prior year.

The decrease was driven primarily by a $27.8 million decrease in integration charges as compared to the same period of the prior year.

This decrease was offset in part by an increase in variable sales expenses, compensation and benefit costs and costs associated with the opening of additional retail stores.

• The effective tax rate was 26.5% compared to 66.2% for the same quarter of the prior year.

The change as compared to the prior year resulted primarily from the impact of the estimated annual effective tax rate on the current quarter pre-tax loss driven by the impairment of indefinite-lived intangible assets during the quarter.

• Diluted loss per share was $0.19 as compared to diluted earnings per share of $0.30 in the prior year.

Adjusted diluted earnings per share was $0.44 (*) , a 2.2% (*) decrease as compared to the prior year quarter adjusted diluted earnings per share.

The change as compared to the prior year resulted primarily from the level of net income or net loss in the periods as well as the impact of discrete items in each of the periods.

• Diluted earnings per share in the quarter was $0.29 as compared to diluted loss per share of $0.02 in the prior year.

Adjusted diluted earnings per share was $0.45 (*) , a 25.0% (*) increase as compared to the prior year quarter.

(*) Non-GAAP measurements;

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

• MillerKnoll's results in the third quarter of fiscal year 2025 reflect the advantage of our diversified business model, with relative strength in certain markets and channels mitigating softness in others, along with a disciplined focus on our cost structure amidst very dynamic macroeconomic conditions.

• The North America Contract segment in the third quarter reported Net sales totaling $468.2 million, up 1.4% compared to the prior year period on a reported basis and up 1.7% (*) organically.

North America Contract had new orders of $434.0 million, which was a decrease of 1.8% from the prior year and a decrease of 1.5% (*) on an organic basis.

• The International Contract segment delivered Net sales in the third quarter of $145.5 million, a decrease of 5.0% from the year-ago period on a reported basis and a decrease of 1.5% (*) organically.

New orders in this segment totaled $159.2 million, representing a year-over-year decrease of 1.6% on a reported basis and an increase of 1.4% (*) organically.

• Net sales in the third quarter for the Global Retail segment totaled $262.5 million, an increase of 1.9% over the same quarter last year on a reported basis and an increase of 3.9% (*) organically.

• The North America Contract segment in the first quarter reported Net sales totaling $533.9 million, up 12.1% compared to the prior year period on a reported and organic basis.

North America Contract had new orders of $492.2 million, which represents a decrease of 8.2% from the prior year on both a reported and organic basis.

• The International Contract segment delivered Net sales in the first quarter of $167.5 million, an increase of 14.4% from the year-ago period on a reported basis and an increase of 11.3% (*) organically.

New orders in this segment totaled $154.5 million, representing a year-over-year decrease of 6.5% on a reported basis and a decrease of 9.2% (*) organically.

• Net sales in the first quarter for the Global Retail segment totaled $254.3 million, an increase of 6.4% over the same quarter last year on a reported basis and an increase of 4.9% (*) organically.

Orders in the quarter totaled $238.7 million, up 1.7% compared to the same period last year on a reported basis and up 0.3% (*) organically.

Both sales and orders were positively impacted by a shift in timing of the cyber week holiday promotion period, which fell into both the second and third quarters of fiscal year 2025 and fell entirely within the second quarter last fiscal year.

Although sales and orders in the quarter benefited from the shift in the timing of this year's holiday/cyber promotional period versus the prior year, orders were up over 4% in the segment and up 14% in the North America region, even after adjusting for this timing difference.

(*) Non-GAAP measurements;

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The Company's fiscal year is the 52 or 53 week period ending on the Saturday closest to May 31.

The fiscal year ending May 31, 2025 ("fiscal 2025") and the fiscal year ended June 1, 2024 ("fiscal 2024") both contain 52 weeks.

The remaining sections within Item 2 include additional analysis of the three and nine months ended March 1, 2025, including discussion of significant variances compared to the prior year periods.

The fiscal year ending May 30, 2026 ("fiscal 2026") and the fiscal year ended May 31, 2025 ("fiscal 2025") both contain 52 weeks.

The remaining sections within Item 2 include additional analysis of the three months ended August 30, 2025, including discussion of significant variances compared to the prior year periods.

Reconciliation of Non-GAAP Financial Measures

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Adjusted Earnings per Share and Organic Growth (Decline).

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

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

These adjustments are described further below.

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

Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects.

The adjustments made to arrive at these non-GAAP financial measures are as follows:

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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.

• Impairment charges:

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.

• Restructuring charges:

Includes costs associated with actions involving targeted workforce reductions.

Includes costs associated with actions involving targeted workforce reductions, facility consolidation charges, and accelerated depreciation of fixed assets.

• Knoll pension plan termination charges:

Includes expenses incurred associated with the termination of the Knoll pension plan.

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

• Debt extinguishment charges:

Includes expenses associated with the extinguishment of debt.

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

• Tax related items:

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Three Months Ended

March 1, 2025

August 30, 2025

North America Contract International Contract Global Retail Total

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Three Months Ended

March 2, 2024

North America Contract International Contract Global Retail Total

Net sales, as reported $ 461.7 $ 153.1 $ 257.5 $ 872.3

HAY eCommerce — — (1.8) (1.8)

Net sales, organic $ 461.7 $ 153.1 $ 255.7 $ 870.5

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

Nine Months Ended

March 1, 2025

North America Contract International Contract Global Retail Total

Net sales, as reported $ 1,469.1 $ 474.3 $ 764.7 $ 2,708.1

% change from PY (0.8) % 0.5 % (2.8) % (1.1) %

Currency translation effects (1)

1.8 5.5 2.8 10.1

Net sales, organic $ 1,470.9 $ 479.8 $ 767.5 $ 2,718.2

% change from PY (0.7) % 1.7 % (0.9) % (0.3) %

Nine Months Ended

March 2, 2024

August 31, 2024

North America Contract International Contract Global Retail Total

Net sales, as reported $ 476.2 $ 146.4 $ 238.9 $ 861.5

HAY eCommerce — — (11.8) (11.8)

Net sales, organic $ 1,481.2 $ 471.9 $ 774.6 $ 2,727.7

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

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Three Months Ended

March 1, 2025

August 30, 2025

North America Contract International Contract Global Retail Total

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Three Months Ended

March 2, 2024

North America Contract International Contract Global Retail Total

Orders, as reported $ 441.9 $ 161.8 $ 226.6 $ 830.3

HAY eCommerce — — (1.8) (1.8)

Orders, organic $ 441.9 $ 161.8 $ 224.8 $ 828.5

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

Nine Months Ended

March 1, 2025

North America Contract International Contract Global Retail Total

Orders, as reported $ 1,453.4 $ 476.4 $ 781.1 $ 2,710.9

% change from PY 2.8 % (1.7) % (1.1) % 0.9 %

Currency translation effects (1)

1.8 8.2 3.2 13.2

Orders, organic $ 1,455.2 $ 484.6 $ 784.3 $ 2,724.1

% change from PY 3.0 % — % 0.7 % 1.8 %

Nine Months Ended

March 2, 2024

August 31, 2024

North America Contract International Contract Global Retail Total

Orders, as reported $ 536.0 $ 165.2 $ 234.7 $ 935.9

HAY eCommerce — — (11.4) (11.4)

Orders, organic $ 1,413.3 $ 484.7 $ 778.6 $ 2,676.6

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

The following table reconciles earnings per share - diluted to adjusted earnings per share - diluted for the periods ended as indicated below:

Three Months Ended Nine Months Ended

March 1, 2025 March 2, 2024 March 1, 2025 March 2, 2024

(Loss) earnings per share - diluted $ (0.19) $ 0.30 $ 0.29 $ 0.97

Three Months Ended

August 30, 2025 August 31, 2024

Earnings (loss) per share - diluted $ 0.29 $ (0.02)

Amortization of Knoll purchased intangibles 0.09 0.08

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Restructuring charges 0.01 —

Impairment charges 1.91 — 1.85 —

Debt extinguishment charges 0.11 —

Knoll pension plan termination charges — 0.01

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Key Highlights

The following table presents certain key highlights from the results of operations for the three and nine months ended:

Three Months Ended Nine Months Ended

(In millions, except share data) March 1, 2025 March 2, 2024 % Change March 1, 2025 March 2, 2024 % Change

The following table presents certain key highlights from the results of operations for the three months ended:

Three Months Ended

(In millions, except share data) August 30, 2025 August 31, 2024 % Change

Net sales $ 955.7 $ 861.5 10.9 %

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Operating expenses 314.6 321.1 (2.0) %

Operating (loss) earnings (82.2) 42.8 (292.1) % (4.5) 143.5 (103.1) %

Operating earnings 53.5 15.2 252.0 %

Other expenses, net 24.8 16.9 46.7 %

(Loss) earnings before income taxes and equity income (100.8) 27.5 (466.5) % (57.6) 92.9 (162.0) %

Income tax (benefit) expense (89.0) 4.4 (2,122.7) % (80.3) 19.0 (522.6) %

Equity income (loss) from nonconsolidated affiliates, net of tax 0.1 — N/A 0.3 (0.3) (200.0) %

Net (loss) earnings (11.7) 23.1 (150.6) % 23.0 73.6 (68.8) %

Earnings (loss) before income taxes and equity income 28.7 (1.7) N/A

Income tax expense (benefit) 7.6 (1.1) N/A

Equity earnings (loss) from nonconsolidated affiliates, net of tax — 0.1 N/A

Net earnings (loss) 21.1 (0.5) N/A

Net earnings attributable to redeemable noncontrolling interests 0.9 0.7 28.6 %

Net (loss) earnings attributable to MillerKnoll, Inc.

$ (12.7) $ 22.2 (157.2) % $ 20.2 $ 72.4 (72.1) %

(Loss) earnings per share - basic $ (0.19) $ 0.31 (161.3) % $ 0.29 $ 0.98 (70.4) %

Net earnings (loss) attributable to MillerKnoll, Inc.

$ 20.2 $ (1.2) N/A

Earnings (loss) per share - basic $ 0.29 $ (0.02) N/A

Orders $ 885.4 $ 935.9 (5.4) %

Backlog $ 690.9 $ 758.0 (8.9) %

The following table presents select components of the Company's Condensed Consolidated Statements of Comprehensive (Loss) Income as a percentage of Net sales, for the three and nine months ended:

Three Months Ended Nine Months Ended

March 1, 2025 March 2, 2024 March 1, 2025 March 2, 2024

The following table presents select components of the Company's Condensed Consolidated Statements of Comprehensive Income (Loss) as a percentage of Net sales, for the three months ended:

Three Months Ended

August 30, 2025 August 31, 2024

Net sales 100.0 % 100.0 %

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Operating expenses 32.9 % 37.3 %

Operating (loss) earnings (9.4) % 4.9 % (0.2) % 5.2 %

Operating earnings 5.6 % 1.8 %

Other expenses, net 2.6 % 2.0 %

(Loss) earnings before income taxes and equity income (11.5) % 3.2 % (2.1) % 3.4 %

Income tax (benefit) expense (10.2) % 0.5 % (3.0) % 0.7 %

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

Net (loss) earnings (1.3) % 2.6 % 0.8 % 2.7 %

Earnings (loss) before income taxes and equity income 3.0 % (0.2) %

Income tax expense (benefit) 0.8 % (0.1) %

Net earnings (loss) 2.2 % (0.1) %

Net earnings attributable to redeemable noncontrolling interests 0.1 % 0.1 %

Net (loss) earnings attributable to MillerKnoll, Inc.

Net earnings (loss) attributable to MillerKnoll, Inc.

2.1 % (0.1) %

The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three and nine months ended March 1, 2025.

The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three months ended August 30, 2025.

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

Net sales increased $3.9 million or 0.4% in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024.

The following items contributed to the change:

• Increased sales volume within the Global Retail and North America Contract segments of approximately $9 million and $7 million, respectively;

• Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $1 million.

Offset in part by:

• Foreign currency translation decreased Net sales by approximately $10 million.

• Decrease of $2 million related to the closure of the HAY eCommerce channel in North America that occurred in the prior year.

• Decreased sales volume within the International Contract segment of approximately $1 million.

Net sales decreased $31.4 million or 1.1% in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024.

The following items contributed to the change:

• Decreased sales volume within the North America Contract and Global Retail segments of approximately $30 million and $12 million, respectively.

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

• Foreign currency translation decreased Net sales by approximately $10 million.

Offset in part by:

• Increased sales volume within the International Contract segment of approximately $18 million.

• Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $14 million.

Gross margin was 37.9% in the third quarter of fiscal 2025 as compared to 38.6% in the third quarter of fiscal 2024.

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

• Increased commodity costs negatively impacted margin by approximately 40 basis points.

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

• Loss of leverage on lower sales volumes negatively impacted margin by approximately 30 basis points.

These factors 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 which increased gross margin by approximately 30 basis points.

Gross margin was 38.6% in the nine months ended March 1, 2025, as compared to 39.0% for the same period in the prior fiscal year.

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

• Loss of leverage on lower sales volumes negatively impacted margin by approximately 40 basis points.

• Unfavorable channel and product mix negatively impacted margin by approximately 20 basis points.

• Increased commodity costs negatively impacted margin by approximately 20 basis points.

These factors were offset in part by:

• Price increases, net of incremental discounting, contributed to margin improvement of approximately 30 basis points.

• Reduced freight and product distribution costs, net of freight revenue, as compared to the same period of the prior year.

Net sales increased $94.2 million or 10.9% in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

The increase was primarily driven by:

• Higher sales volumes in the North America Contract, International Contract, and Global Retail segments, contributed approximately $54 million, $21 million, $9 million, respectively.

• Favorable foreign currency translation, which increased net sales by approximately $8 million.

• Price increases, net of incremental discounting, positively impacted net sales by approximately $2 million.

This includes the favorable impact of pricing actions taken to help offset tariff cost pressures.

Gross margin was 38.5% in the first quarter of fiscal 2026 as compared to 39.0% in the first quarter of fiscal 2025.

The year-over-year change in gross margin percentage was primarily driven by the following factors:

• Tariff-related costs, net of pricing actions taken to help offset costs, adversely impacted gross margin by approximately 110 basis points.

• These impacts were partially offset by favorable leverage on fixed costs due to higher sales volumes.

Operating Expenses

The following chart presents graphically the primary drivers of the year-over-year change in Operating expenses for the three and nine months ended March 1, 2025.

The following chart presents graphically the primary drivers of the year-over-year change in Operating expenses for the three months ended August 30, 2025.

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

Operating expenses increased by $120.4 million or 40.9% in the third quarter of fiscal 2025 compared to the prior year period.

The following factors contributed to the change:

• Impairment charges of $130 million related to goodwill attributed to the Holly Hunt and Global Retail reporting units as well as related to the Knoll and Muuto indefinite-lived trade name intangible assets in the current year period.

• Increased restructuring charges related primarily to workforce reduction actions of $3 million as compared to the prior year period.

Offset in part by:

• Incentive compensation which decreased approximately $12 million;

• Decreased foreign currency translation, acquisition related integration charges, and variable selling and marketing costs as compared to the prior year period.

Operating expenses increased by $126.6 million or 13.7% in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024.

Operating expenses decreased by $6.5 million or 2.0% in the first quarter of fiscal 2026 compared to the prior year period.

The following factors contributed to the change:

• Knoll acquisition related integration charges contributed an increase in Operating expenses as compared to the same period of the prior year of approximately $10 million.

• Selling and marketing costs, which increased by approximately $4 million.

These increases were offset in part by:

• Incentive compensation which decreased by approximately $12 million.

• Decreased restructuring charges related to workforce reduction actions taken as compared to the prior year period of approximately $5 million.

• A reduction in acquisition-related integration charges, which totaled approximately $28 million .

This benefit was partially offset by:

• Increased fixed and variable compensation costs of approximately $9 million.

• Variable selling costs, including sales-based commissions and royalty expenses which rose by approximately $8 million compared to the prior year period.

• Incremental costs of $3 million associated with the expansion of our retail store footprint.

• Foreign currency translation also contributed an unfavorable impact of approximately $2 million relative to the prior year.

Other Income/Expense

During the three months ended March 1, 2025, net Other expense was $18.6 million, representing an increase of $3.3 million compared to the same period in the prior year.

The change is driven primarily by:

• Reduced net periodic benefit income due to the termination of the Knoll pension plan in the current year.

• Reduced interest income in the current year.

These factors were offset in part by a reduction in foreign currency losses as compared to the same period of the prior year.

During the nine months ended March 1, 2025, net Other expense was $53.1 million, representing an increase of $2.5 million compared to the same period in the prior year.

This change is driven primarily by:

• Increased interest expense in the current year as compared to the prior year;

• Reduced net periodic benefit income due to the termination of the Knoll pension plan in the current year.

These factors were offset in part by a reduction in foreign currency losses as compared to the same period of the prior year.

During the three months ended August 30, 2025, net Other expense was $24.8 million, representing an increase of $7.9 million compared to the same period in the prior year.

The change was primarily driven by a loss on extinguishment of debt of approximately $7.8 million incurred in connection with the refinancing of term loan debt during the current period.

See Note 8 of the Condensed Consolidated Financial Statements for additional information.

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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 in Europe, the Middle East, Africa, Asia-Pacific and Latin America.

The International Contract segment includes the operations associated with the design, sourcing, manufacture, and sale of furniture products directly or indirectly through an independent dealership network 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.

Unallocated expenses are reported within the Corporate category.

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.

For descriptions of each segment, refer to Note 13 of the Condensed Consolidated Financial Statements.

The charts below present the relative mix of Net sales and Operating earnings across each of the Company's segments during the three and nine month periods ended March 1, 2025.

The charts below present the relative mix of net sales and operating earnings across each of the Company's segments during the three month period ended August 30, 2025.

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

1 unchanged sentence

North America Contract

Three Months Ended Nine Months Ended

(Dollars in millions) March 1, 2025 March 2, 2024 Change March 1, 2025 March 2, 2024 Change

Three Months Ended

(Dollars in millions) August 30, 2025 August 31, 2024 Change

Net sales $ 533.9 $ 476.2 $ 57.7

3 unchanged sentences

Operating earnings % 10.7 % 3.4 % 7.3 %

For the three month comparative period, Net sales increased 1.4%, or 1.7% (*) on an organic basis, over the prior year period due to:

• Increased sales volumes within the segment of approximately $7 million;

offset in part by

• Unfavorable foreign currency translation of approximately $1 million.

For the nine month comparative period, Net sales decreased 0.8%, or 0.7% (*) on an organic basis, over the prior year period due to:

• Decreased volumes within the segment of approximately $30 million;

• Unfavorable foreign currency translation of approximately $2 million;

offset in part by

• Price increases, net of incremental discounting of approximately $20 million.

For the three month comparative period, Net sales increased 12.1% (*) on both a reported and an organic basis compared to the prior year period.

This growth was primarily driven by:

• Increased sales volumes within the segment, contributing approximately $54 million to the increase;

• Price increases, net of incremental discounting positively impacted net sales by approximately $4 million.

This includes the favorable impact of tariff-related pricing actions.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

For the three month comparative period, operating earnings decreased $8.5 million, or 33.3%, over the prior year period due to:

• Decreased Gross margin of $2.0 million and a decrease in gross margin percentage of 90 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Increased commodity costs negatively impacted margin by approximately 30 basis points;

◦ Loss of leverage of fixed costs w hich had a negative impact on margin of approximately 60 basis points.

• Increased Operating expenses of $6.5 million driven primarily by:

◦ Increased impairment and restructuring charges in the quarter offset in part by reduced incentive compensation as compared to the prior year period.

For the nine month comparative period, operating earnings decreased $23.9 million, or 22.4%, over the prior year period due to:

• Decreased Gross margin of $17.0 million due to the decrease in sales discussed above and a decrease in gross margin percentage of 80 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Loss of leverage of fixed costs due to reduced production volumes as well as unfavorable product mix which had a negative impact on margin of approximately 120 basis points.

◦ Increased commodity and product distribution costs which had a negative impact on margin of 20 basis points.

◦ Increased freight and distribution charges negatively impacted margin by 20 basis points.

These changes were offset in part by:

◦ The impact of incremental list price increases, net of contract price discounting, that increased gross margin percentage by 80 basis points.

• Increased Operating expenses of $7 million.

The following factors contributed to the change:

◦ Trade name impairment charges of $18 million in the current year period.

◦ Increased acquisition related integration costs of approximately $6 million in the current period.

Offset in part by:

◦ A decrease of approximately $7 million in incentive compensation.

◦ Decreased selling and marketing costs of approximately $6 million.

◦ A decrease of approximately $4 million in restructuring charges related to reductions in the Company's workforce.

For the three month comparative period, operating earnings increased $40.8 million, or 253.4%, over the prior year period due to:

• Increased Gross margin of $24.3 million due to the increase in sales noted above and an increase in gross margin percentage of 60 basis points.

The increase in gross margin percentage was due primarily to:

◦ Favorable leverage on fixed costs due to higher sales volumes, which contributed approximately 110 basis points to gross margin improvement.

◦ Reduced freight and product distribution costs increased margin by approximately 80 basis points.

◦ These were partially offset by the impact of tariff-related costs, which more than offset pricing actions taken to help offset tariffs.

The net impact of tariffs in the quarter as compared to the prior year adversely impacted gross margin by approximately 130 basis points.

• Decreased Operating expenses of $16.5 million driven primarily by:

◦ A reduction in acquisition-related integration charges, which totaled approximately $25 million.

This benefit was partially offset by increased variable selling costs, including sales-based commissions and royalty expenses.

International Contract

Three Months Ended Nine Months Ended

(Dollars in millions) March 1, 2025 March 2, 2024 Change March 1, 2025 March 2, 2024 Change

Three Months Ended

(Dollars in millions) August 30, 2025 August 31, 2024 Change

Net sales $ 167.5 $ 146.4 $ 21.1

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Operating earnings % 8.1 % 6.5 % 1.6 %

For the three month comparative period, Net sales decreased 5.0%, or 1.5% (*) on an organic basis, over the prior year period due to:

• Unfavorable foreign currency translation of approximately $5 million;

• Incremental discounting, net of price increases, which negatively impacted sales approximately $1 million;

• Decrease in sales volume of approximately $1 million.

For the nine month comparative period, Net sales increased 0.5%, or 1.7% (*) on an organic basis, over the prior year period due to:

• Increased sales volume of approximately $18 million, driven by APMEA and portions of mainland Europe;

offset in part by:

• Incremental discounting, net of price increases, which negatively impacted sales by approximately $10 million;

• Unfavorable foreign currency translation of approximately $5 million.

For the three month comparative period, Net sales increased 14.4%, or 11.3% (*) on an organic basis compared to the prior year period.

This growth was primarily driven by:

• Higher sales volumes within the segment, contributing approximately $21 million to the increase;

• Favorable foreign currency translation, which increased net sales by approximately $5 million.

• These gains were partially offset by incremental discounting attributable to regional and product sales mix, net of price increases, which adversely impacted net sales by approximately $5 million.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

For the three month comparative period, operating earnings decreased $7.6 million or 43.4%, over the prior year period due to:

• Decreased Gross margin of $4.9 million due to the decrease in sales explained above and a decrease in gross margin percentage of 140 basis points.

For the three month comparative period, operating earnings increased $4.0 million or 42.1%, over the prior year period due to:

• Increased Gross margin of $5.3 million driven by the higher sales volumes explained above, which more than offset a decline in gross margin percentage of 150 basis points.

The decrease in gross margin percentage was due primarily to:

◦ A decrease in gross margin percentage of 70 basis points due primarily to incremental discounting, net of price increases;

◦ Unfavorable product and business mix negatively impacted margin by 50 basis points;

◦ Loss of leverage of fixed costs on lower sales volumes which had a negative impact on margin of approximately 50 basis points.

These decreases were offset in part by:

◦ Favorable foreign currency translation positively impacted margin by 30 basis points.

◦ Incremental discounting, net of price increases attributable to regional and product sales mix, resulted in a negative impact of approximately 240 basis points.

◦ Tariff-related costs adversely impacted gross margin by approximately 50 basis points.

◦ Unfavorable foreign currency translation further reduced margin by approximately 30 basis points.

◦ These pressures were partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes, which contributed approximately 170 basis points to margin improvement.

• Increased Operating expenses of $1.3 million.

The following factors contributed to the change:

◦ Increase in restructuring and impairment charges during the quarter of $4 million.

This increase was offset in part by:

◦ Foreign currency translation, which decreased operating expenses.

For the nine month comparative period, operating earnings decreased $1.1 million, or 2.6%, over the prior year period due to:

• Increased Gross margin of $4.9 million due to the increase in sales explained above and an increase in gross margin percentage of 90 basis points.

The increase in gross margin percentage was due primarily to favorable product and business mix which increased margin by approximately 120 basis points offset in part incremental discounting, net of price increases which had a negative impact on margin.

• Operating expenses increased slightly from the prior year.

An increase in restructuring charges, acquisition related integration charges, and impairment charges was partially offset by reduced incentive compensation in the current period as compared to the prior year.

◦ Increased fixed and variable compensation costs of $3 million.

◦ Foreign currency translation which contributed an unfavorable impact of approximately $1 million relative to the prior year.

◦ These increases were partially offset by a reduction in acquisition-related integration charges, which totaled approximately $3 million.

Global Retail

Three Months Ended Nine Months Ended

(Dollars in millions) March 1, 2025 March 2, 2024 Change March 1, 2025 March 2, 2024 Change

Three Months Ended

(Dollars in millions) August 30, 2025 August 31, 2024 Change

Net sales $ 254.3 $ 238.9 $ 15.4

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Gross margin % 44.4 % 46.3 % (1.9) %

Operating (loss) earnings (94.4) 12.1 (106.5) (80.8) 34.5 (115.3)

Operating earnings 1.4 5.3 (3.9)

For the three month comparative period, Net sales increased 1.9%, and 3.9% (*) on an organic basis, over the prior year period due to:

• An increase in sales volume of approximately $9 million, driven primarily by a shift in timing of the cyber week holiday promotional period.

In the current year, the promotional period was split between the second and third quarters;

in the prior year the entire promotional period was included in the second quarter;

• Price increases, net of incremental discounting which increased sales by approximately $1 million;

offset in part by:

• Unfavorable foreign currency translation of approximately $3 million;

• Decrease of approximately $2 million related to the closure of the HAY eCommerce channel in North America that occurred in the prior year.

For the nine month comparative period, Net sales decreased 2.8%, and 0.9% (*) on an organic basis, over the prior year period due to:

• 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 volume of approximately $12 million;

• Unfavorable foreign currency translation of approximately $3 million;

offset in part by

• Price increases, net of incremental discounting, which increased sales by approximately $4 million.

Operating earnings % 0.6 % 2.2 % (1.6) %

For the three month comparative period, Net sales increased 6.4%, and 4.9% (*) on an organic basis compared to the prior year period.

This growth was primarily driven by:

• Higher sales volumes within the segment, contributing approximately $9 million to the increase.

• Favorable foreign currency translation, which increased net sales by approximately $3 million.

• Price increases, net of incremental discounting positively impacted net sales by approximately $3 million.

This includes the favorable impact of pricing actions taken to help offset tariff cost pressures.

(*) Non-GAAP measurements;

see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

For the three month comparative period, Operating earnings decreased $106.5 million over the prior year period due to:

• Decreased Gross margin of $2.3 million.

Gross margin percentage was flat to the prior year.

Summarized below are factors that most significantly impacted Gross margin percentage during the quarter:

◦ Benefits realized from price increases, net of incremental discounting which positively impacted margin by 20 basis points;

◦ Reduced freight and product distribution costs, net of freight revenue, as compared to the same period of the prior year which positively impacted margin by 20 basis points;

offset in part by:

◦ Loss of leverage of fixed costs negatively impacted margin by 40 basis points.

• Increased Operating expenses of $108.8 million primarily related to impairment charges incurred in the current quarter.

For the nine month comparative period, Operating earnings decreased $115.3 million over the prior year period due to:

• Decreased Gross margin of $9.3 million due to the decrease in net sales discussed above.

Gross margin percentage was flat to the prior year.

Summarized below are factors that most significantly impacted Gross margin percentage during the period:

◦ 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 120 basis points;

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

These increases were offset in part by:

◦ 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.

• Increased Operating expenses of $106.0 million primarily related to impairment charges incurred in the current quarter.

Corporate unallocated expenses totaled $14.7 million for the third quarter of fiscal 2025, an increase of $2.4 million from the third quarter of fiscal 2024 related primarily to higher stock based compensation expense.

Corporate unallocated expenses totaled $47.9 million for the first nine months of fiscal 2025, an increase of $7.7 million from the same period of fiscal 2024 related primarily to higher stock based compensation expense.

For the three month comparative period, Operating earnings decreased $3.9 million or 73.6% as compared to the prior year period due to:

• Increased Gross margin of $2.2 million driven by the higher sales volumes explained above, which was offset by a decline in gross margin percentage of 190 basis points.

The decrease in gross margin percentage was due primarily to:

◦ Increased freight and product distribution costs, net of freight revenue, as compared to the same period of the prior year which reduced margin by approximately 160 basis points.

◦ Tariff-related costs, net of pricing actions taken to help offset costs, which adversely impacted gross margin by approximately 50 basis points.

◦ Unfavorable foreign currency translation further reduced margin by approximately 40 basis points.

◦ These margin percentage pressures were partially offset by favorable operating leverage on fixed costs driven by increased sales volumes and a more favorable product mix which added approximately 60 basis points to margin improvement.

• Increased Operating expenses of $6.1 million.

The following factors contributed to the change:

◦ Increased fixed and variable compensation costs of approximately $3 million.

◦ Incremental costs of $3 million associated with the expansion of our retail store footprint.

Corporate unallocated expenses totaled $18.3 million for the first quarter of fiscal 2026, an increase of $2.6 million from the first quarter of fiscal 2025 related primarily to fixed and variable compensation expense.

Liquidity and Capital Resources

The table below summarizes the net change in Cash and cash equivalents for the nine months ended as indicated.

(In millions) March 1, 2025 March 2, 2024

The table below summarizes the net change in Cash and cash equivalents for the three months ended as indicated.

(In millions) August 30, 2025 August 31, 2024

Cash provided by (used in):

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Cash Flows - Operating Activities

Net cash provided by operating activities for the nine months ended March 1, 2025, totaled $138.4 million compared to $273.9 million in the same period of the prior year.

The decrease in cash inflow is due primarily to lower net income recorded in the current period as well as changes in working capital.

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 three months ended August 30, 2025, totaled $9.4 million compared to $21.1 million in the same period of the prior year.

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

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

Working capital changes were primarily affected by payment of variable compensation in the nine months ended March 1, 2025, the r ecognition of the tax benefit of the current quarter’s operating loss, as well as timing of collection of our receivables and inventory on hand.

The following all affect these account balances:

• Fluctuations in inventory levels;

• The timing of collection of our receivables;

• Changes in accruals related to variable compensation.

Cash Flows - Investing Activities

Cash used in investing activities for the nine months ended March 1, 2025, was $60.3 million, as compared to $61.0 million in the same period of the prior year.

The change in cash outflow in the current year, compared to the prior year, was primarily due to the following:

• 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;

offset in part by:

• In the nine months ended March 2, 2024, the Company received $3.5 million of proceeds related to the sale of its investment in Maars;

• Increased capital expenditures in the current year.

At the end of the third quarter of fiscal 2025, there were outstanding commitments for capital purchases of $20.6 million.

Cash used in investing activities for the three months ended August 30, 2025, was $30.5 million, as compared to $22.3 million in the same period of the prior year.

The increase was primarily driven by higher capital expenditures in the current year.

At the end of the first quarter of fiscal 2026, there were outstanding commitments for capital purchases of $14.9 million.

The Company plans to fund these commitments through a combination of cash on hand and cash flows from operations.

The Company expects full-year capital purchases to be between $80 million and $100 million, which will be primarily related to investments in the Company's facilities and equipment.

The Company expects full-year capital purchases to be between $120 million and $130 million, which will be primarily related to investments in the Company's facilities, (including manufacturing, showrooms, and retail stores) and equipment as well as investments associated with achieving the Company's sustainability goals.

This compares to full-year capital spending of $107.6 million in fiscal 2025.

Capital expenditures for the first nine months of fiscal 2025 were $68.1 million compared to $56.5 million for the nine months ended March 2, 2024.

Capital expenditures for the first three months of fiscal 2026 were $30.7 million compared to $22.6 million for the three months ended August 31, 2024.

Cash Flows - Financing Activities

Cash used in financing activities for the nine months ended March 1, 2025, was $127.6 million, as compared to $213.1 million in the same period of the prior year.

Cash used in financing activities for the three months ended August 30, 2025, was $9.2 million, as compared to $20.3 million in the same period of the prior year.

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

• The Company repurchased 3,286,029 shares at a cost of $84.8 million in the current year as compared to 4,594,116 share repurchases totaling $101.0 million in the same period of the prior year.

• Net borrowings on the credit agreement of $24.0 million in the current year compared to net payments of $48.8 million in the same period of the prior year.

• The Company repurchased 377,995 shares at a cost of $7.2 million in the current period as compared to 1,544,733 share repurchases totaling $43.7 million in the same period of the prior year.

• Net borrowings on the credit agreement of $68.9 million in the current period compared to net borrowings of $43.1 million in the same period of the prior year.

This was offset in part by:

• Increased payments on our term loans in the current period as compared to the same period of the prior year of $7.5 million.

• The refinancing of Term Loan B resulted in a net cash outflow of $58.7 million in the current period.

In the prior year, term loan debt was reduced by $9.1 million through scheduled principal payments.

• Deferred financing costs of $1.2 million were incurred in the current period in connection with the refinancing of Term Loan B.

Sources of Liquidity

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

At the end of the third quarter of fiscal 2025, the Company had a well-positioned balance sheet and liquidity profile.

At the end of the first quarter of fiscal 2026, the Company had a well-positioned balance sheet and liquidity profile.

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

1 unchanged sentence

For additional information, refer to Note 11 to the Condensed Consolidated Financial Statements.

(In millions) March 1, 2025 June 1, 2024

(In millions) August 30, 2025 May 31, 2025

Cash and cash equivalents $ 167.2 $ 193.7

1 unchanged sentence

Total liquidity $ 480.5 $ 575.9

Of the Cash and cash equivalents noted above at the end of the third quarter of fiscal 2025, the Company had $164.8 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.

Of the Cash and cash equivalents noted above at the end of the first quarter of fiscal 2026, the Company had $158.6 million of Cash and cash equivalents held outside the United States.

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 March 1, 2025, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $414.0 million with available borrowings on this facility of $298.4 million.

As of August 30, 2025, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $399.7 million with available borrowings on this facility of $313.3 million.

The Company intends to repatriate $137.3 million of undistributed foreign earnings all of which is held in cash in certain foreign jurisdictions with the remainder of undistributed earnings outside the U.S.

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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 March 1, 2025.

which is estimated to be approximately $382.9 million on August 30, 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.

1 unchanged sentence

Contractual obligations associated with ongoing business and financing activities will require cash payments in future periods.

A table summarizing the amounts and estimated timing of these future cash payments as of June 1, 2024, was provided in the

Company's Annual Report on Form 10-K for the year ended June 1, 2024.

A table summarizing the amounts and estimated timing of these future cash payments as of May 31, 2025, was provided in the Company's Annual Report on Form 10-K for the year ended May 31, 2025.

There have been no material changes in such obligations since that date.

8 unchanged sentences

The Company continually reviews the accounting policies and financial information disclosures.

A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Company's Annual Report on Form 10-K for the year ended June 1, 2024.

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

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

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

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

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

During the third quarter of fiscal year 2025, the Company performed an assessment to determine whether there were 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 this qualitative assessment each interim reporting period.

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.

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 segment re-organization, the Global Retail and Holly Hunt reporting units had remaining goodwill of $357.0 million and $33.0 million, respectively.

Additionally, 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 rate, 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.

Indefinite-Lived Intangibles

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

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

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

During the third quarter of fiscal year 2025, in conjunction with the goodwill impairment triggering event discussed above, the Company assessed its indefinite-lived trade names for indicators of impairment.

As a result, the Company recognized $37.7 million in non-cash impairment charges related to the Knoll and Muuto trade names.

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

In performing this 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.

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 12.75% to 17.25%, royalty rates ranging from 1.00% to 3.00% 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.

New Accounting Standards

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This communication 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, the expected impact of recent and potential tariff changes on our business, 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:

general economic and geopolitical conditions, including the impact of supply chain challenges, tariffs, and recessionary pressures;

the impact of government policies and actions, including those relating to public health, government spending, and trade relations;

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

business disruption following the Knoll acquisition;

the availability and pricing of raw materials;

the financial strength of our dealers and the financial strength of our customers;

the success of newly-introduced products;

the pace and level of government procurement;

foreign currency exchange fluctuations;

and the outcome of pending litigation or governmental audits or investigations.

For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to MillerKnoll’s periodic reports and other filings with the SEC, including the risk factors identified in our most recent Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for the year ended June 1, 2024 .

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.

The forward-looking statements included in this report are made only as of the date hereof.

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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-Q

Item 2. Management’s Discussion and Analysis