Business
MillerKnoll : Quarterly Report for Quarter Ending February 28, 2026 (Form 10-Q)
MillerKnoll : Quarterly Report for Quarter Ending February 28, 2026 (Form
About this update from Millerknoll, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except share data) The following is management's discussion and analysis of certain significant factors that affected the Company's financial condition, earnings, and cash flows during the periods included in the accompanying Condensed Consolidated Financial Statements and should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2025. References to "Notes" are to the footnotes included in the accompanying Condensed Consolidated Financial Statements. Business Overview The Company researches, designs, manufactures, sells, and distributes interior furnishings for use in various environments including residential, office, healthcare, and educational settings and provides related services that support organizations and individuals all over the world. The Company's products are sold primarily through independent contract office furniture dealers, direct customer sales, owned and independent retailers and the Company's eCommerce platforms. The following is a summary of results for the three months ended February 28, 2026: • Net sales were $926.6 million and orders were $931.6 million, representing an increase of 5.8% and an increase of 9.2%, 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 $909.4 million and orders were $914.8 million, representing an organic* increase of 3.8% and an organic* increase of 7.2%, respectively, when compared to the same quarter of the prior year. • Gross margin in the third quarter was 38.1%, an increase of 20 basis points when compared to the same quarter of the prior year, related primarily to the impact of favorable leverage on fixed costs on higher sales volumes as well as favorable channel and product mix. • Operating expenses decreased $106.6 million or 25.7% as compared to the same quarter of the prior year. The decrease was driven primarily from the impact of non-cash impairment charges in the prior year. This decrease was partially offset by an increase in fixed and variable compensation costs and incremental costs related to the expanded retail store footprint. • The effective tax rate was 19.2% compared to 88.3% for the same quarter of the prior year. The change compared to the prior year relates primarily to the discrete tax impacts of the impairments recorded in the prior year. • Diluted earnings per share in the quarter was $0.34 compared to a loss of $0.19 in the prior year. Adjusted diluted earnings per share* was $0.43, a 2.3% decrease compared to the prior year quarter. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." A comparison of Net sales and orders during the third quarter to the prior year quarter by segment is as follows: • The North America Contract segment in the third quarter reported Net sales totaling $488.6 million, an increase of 4.4% compared to the prior year period on a reported basis and 4.1% on an organic* basis. North America Contract had orders of $490.9 million, which represents an increase of 13.1% from the prior year on a reported basis and 12.8% on an organic* basis. • The International Contract segment delivered Net sales in the third quarter of $156.9 million, an increase of 7.8% compared to the prior year period on a reported basis and an increase of 1.9% organically*. Orders in the segment totaled $160.3 million, representing a year-over-year increase of 0.7% on a reported basis and a decrease of 4.3% organically*. • Net sales in the third quarter for the Global Retail segment totaled $281.1 million, an increase of 7.1% over the same quarter last year on a reported basis and an increase of 4.4% organically*. Orders in the quarter totaled $280.4 million, up 7.9% compared to the same period last year on a reported basis and up 5.1% organically*. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." The Company's fiscal year is the 52 or 53 week period ending on the Saturday closest to May 31. The fiscal year ending May 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 and nine months ended February 28, 2026, including discussion of significant variances compared to the prior year periods. Reconciliation of Non-GAAP Financial Measures This report contains non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. These non-GAAP financial measures are not measurements of our financial performance under GAAP and should not be considered an alternative to the related GAAP measurement. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. The Company's presentation of non-GAAP measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. The Company compensates for these limitations by providing equal prominence of our GAAP results. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included within this report. The Company believes these non-GAAP measures are useful for investors as they provide financial information on a more comparative basis for the periods presented. The non-GAAP financial measures referenced within this report include: Adjusted Earnings per Share - Diluted and Organic Growth (Decline). Adjusted Earnings per Share - Diluted 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, 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. The adjustments made to arrive at these non-GAAP financial measures are as follows: • Amortization of Knoll purchased intangibles: Includes expenses associated with the amortization of acquisition related intangibles acquired as part of the Knoll acquisition. The revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. We exclude the impact of the amortization of Knoll purchased intangibles as such non-cash amounts were significantly impacted by the size of the Knoll acquisition. Furthermore, we believe that this adjustment enables better comparison of our results as Amortization of Knoll Purchased Intangibles will not recur in future periods once such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets. Although we exclude the Amortization of Knoll Purchased Intangibles in these non-GAAP measures, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. • Integration charges: Includes Knoll integration-related costs which 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, facility consolidation charges, and accelerated depreciation of fixed assets. • 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. • 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. • 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: Includes the income tax benefit/provision effect of the tax-related items from our non-GAAP measures because they are not associated with the tax expense on our ongoing operating results. The following tables reconcile Net sales to Net sales, organic for the periods ended as indicated below: Three Months Ended February 28, 2026 North America Contract International Contract Global Retail Total Net sales, as reported $ 488.6 $ 156.9 $ 281.1 $ 926.6 % change from PY 4.4 % 7.8 % 7.1 % 5.8 % Adjustments Currency translation effects (1) (1.4) (8.7) (7.1) (17.2) Net sales, organic $ 487.2 $ 148.2 $ 274.0 $ 909.4 Organic Growth 4.1 % 1.9 % 4.4 % 3.8 % Three Months Ended March 1, 2025 North America Contract International Contract Global Retail Total Net sales, as reported $ 468.2 $ 145.5 $ 262.5 $ 876.2 (1) Currency translation effects represent the estimated net impact of translating current period sales using the average exchange rates applicable to the comparable prior year period. Nine Months Ended February 28, 2026 North America Contract International Contract Global Retail Total Net sales, as reported $ 1,531.0 $ 495.3 $ 811.2 $ 2,837.5 % change from PY 4.2 % 4.4 % 6.1 % 4.8 % Adjustments Currency translation effects (1) (1.5) (18.5) (14.2) (34.2) Net sales, organic $ 1,529.5 $ 476.8 $ 797.0 $ 2,803.3 Organic Growth 4.1 % 0.5 % 4.2 % 3.5 % 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 (1) Currency translation effects represent the estimated net impact of translating current period sales and using the average exchange rates applicable to the comparable prior year period The following tables reconcile orders as reported to organic orders for the periods ended as indicated below: Three Months Ended February 28, 2026 North America Contract International Contract Global Retail Total Orders, as reported $ 490.9 $ 160.3 $ 280.4 $ 931.6 % change from PY 13.1 % 0.7 % 7.9 % 9.2 % Adjustments Currency translation effects (1) (1.5) (8.0) (7.3) (16.8) Orders, organic $ 489.4 $ 152.3 $ 273.1 $ 914.8 Organic Growth (Decline) 12.8 % (4.3) % 5.1 % 7.2 % Three Months Ended March 1, 2025 North America Contract International Contract Global Retail Total Orders, as reported $ 434.0 $ 159.2 $ 259.9 $ 853.1 (1) Currency translation effects represent the estimated net impact of translating current period orders using the average exchange rates applicable to the comparable prior year period. Nine Months Ended February 28, 2026 North America Contract International Contract Global Retail Total Orders, as reported $ 1,489.9 $ 476.8 $ 822.8 $ 2,789.5 % change from PY 2.5 % 0.1 % 5.3 % 2.9 % Adjustments Currency translation effects (1) (1.6) (17.4) (14.8) (33.8) Orders, organic $ 1,488.3 $ 459.4 $ 808.0 $ 2,755.7 Organic Growth (Decline) 2.4 % (3.6) % 3.4 % 1.7 % 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 (1) Currency translation effects represent the estimated net impact of translating current period 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 February 28, 2026 March 1, 2025 February 28, 2026 March 1, 2025 Earnings (loss) per share - diluted $ 0.34 $ (0.19) $ 0.98 $ 0.29 Add: Amortization of Knoll purchased intangibles 0.09 0.09 0.26 0.25 Add: Integration charges - - - 0.40 Add: Restructuring charges 0.03 0.06 0.06 0.06 Add: Impairment charges - 1.91 - 1.85 Add: Debt extinguishment charges - - 0.12 - Add: Knoll pension plan termination charges - - - 0.01 Tax impact on adjustments (0.03) (1.43) (0.11) (1.53) Adjusted earnings per share - diluted $ 0.43 $ 0.44 $ 1.31 $ 1.33 Weighted average shares outstanding (used for calculating adjusted earnings per share) - diluted 69,132,164 68,353,906 69,099,988 70,181,279 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) February 28, 2026 March 1, 2025 % Change February 28, 2026 March 1, 2025 % Change Net sales $ 926.6 $ 876.2 5.8 % $ 2,837.5 $ 2,708.1 4.8 % Cost of sales 573.7 543.8 5.5 % 1,744.3 1,662.4 4.9 % Gross margin 352.9 332.4 6.2 % 1,093.2 1,045.7 4.5 % Operating expenses 308.0 414.6 (25.7) % 946.3 1,050.2 (9.9) % Operating earnings (loss) 44.9 (82.2) 154.6 % 146.9 (4.5) 3,364.4 % Other expenses, net 15.7 18.6 (15.6) % 56.5 53.1 6.4 % Earnings (loss) before income taxes and equity income 29.2 (100.8) 129.0 % 90.4 (57.6) 256.9 % Income tax expense (benefit) 5.6 (89.0) 106.3 % 20.5 (80.3) 125.5 % Equity earnings from nonconsolidated affiliates, net of tax 0.9 0.1 800.0 % 0.9 0.3 200.0 % Net earnings (loss) 24.5 (11.7) 309.4 % 70.8 23.0 207.8 % Net earnings attributable to redeemable noncontrolling interests 1.0 1.0 - % 2.9 2.8 3.6 % Net earnings (loss) attributable to MillerKnoll, Inc. $ 23.5 $ (12.7) 285.0 % $ 67.9 $ 20.2 236.1 % Earnings (loss) per share - basic $ 0.34 $ (0.19) 278.9 % $ 0.99 $ 0.29 241.4 % Earnings (loss) per share - diluted $ 0.34 $ (0.19) 278.9 % $ 0.98 $ 0.29 237.9 % Orders $ 931.6 $ 853.1 9.2 % $ 2,789.5 $ 2,710.9 2.9 % Backlog $ 711.6 $ 686.4 3.7 % 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 and nine months ended: Three Months Ended Nine Months Ended February 28, 2026 March 1, 2025 February 28, 2026 March 1, 2025 Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales 61.9 % 62.1 % 61.5 % 61.4 % Gross margin 38.1 % 37.9 % 38.5 % 38.6 % Operating expenses 33.2 % 47.3 % 33.3 % 38.8 % Operating earnings (loss) 4.8 % (9.4) % 5.2 % (0.2) % Other expenses, net 1.7 % 2.1 % 2.0 % 2.0 % Earnings (loss) before income taxes and equity income 3.2 % (11.5) % 3.2 % (2.1) % Income tax expense (benefit) 0.6 % (10.2) % 0.7 % (3.0) % Equity earnings from nonconsolidated affiliates, net of tax 0.1 % - % - % - % Net earnings (loss) 2.6 % (1.3) % 2.5 % 0.8 % Net earnings attributable to redeemable noncontrolling interests 0.1 % 0.1 % 0.1 % 0.1 % Net earnings (loss) attributable to MillerKnoll, Inc. 2.5 % (1.4) % 2.4 % 0.7 % Net Sales The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three and nine months ended February 28, 2026. The amounts presented in the graph are expressed in millions and have been rounded. Net sales increased $50.4 million or 5.8% in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. The increase was primarily driven by: • Price increases, net of discounting, which positively impacted net sales by approximately $23 million. • Favorable foreign currency translation, which increased net sales by approximately $17 million. • Increased sales volumes in the Global Retail, International Contract, and North America Contract segments contributed approximately $5 million, $4 million, and $2 million, respectively. Net sales increased $129.4 million or 4.8% in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. The following items contributed to the change: • Price increases, net of discounting, which positively impacted net sales by approximately $42 million. • Favorable foreign currency translation, which increased net sales by approximately $34 million. • Increased sales volumes in the Global Retail, North America Contract and International Contract segments contributed approximately $23 million, $23 million and $8 million, respectively. Gross Margin Gross margin was 38.1% in the third quarter of fiscal 2026, compared to 37.9% in the third quarter of fiscal 2025. The year-over-year change in gross margin percentage was primarily driven by: • Favorable leverage on fixed costs due to higher sales volumes and operational efficiency which positively impacted margin. Gross margin was 38.5% in the nine months ended February 28, 2026, compared to 38.6% 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: • Favorable channel and product mix and the impact of incremental list price increases, net of contract price discounting which positively impacted margin. • Favorable leverage on fixed costs due to higher sales volumes which positively impacted margin. • These increases were more than offset by tariff-related costs, net of pricing actions taken to help offset costs, incurred in the first half of the year that adversely impacted gross margin. 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 February 28, 2026. The amounts presented in the graphs are expressed in millions and have been rounded. Operating expenses decreased by $106.6 million or 25.7% in the third quarter of fiscal 2026 compared to the prior year period. The following factors contributed to the change: • Impairment charges of $130 million related to goodwill attributed to the Global Retail and Holly Hunt reporting units, as well as related to the Knoll and Muuto indefinite-lived trade name intangible assets that occurred in the prior year period. This decrease was offset in part by: • Increased fixed and variable compensation costs of approximately $14 million. • Incremental costs of $4 million associated with the impact from opening new stores. • Unfavorable foreign currency translation of $4 million as compared to the prior year period. • Variable selling costs which rose by approximately $1 million compared to the prior year period. Operating expenses decreased by $103.9 million or 9.9% in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. The following factors contributed to the change: • Impairment charges of $130 million related to goodwill attributed to the Global Retail and Holly Hunt reporting units, as well as related to the Knoll and Muuto indefinite-lived trade name intangible assets that occurred in the prior year period. • Acquisition-related integration charges which totaled approximately $28 million that occurred in the prior year. These decreases were offset in part by: ◦ Increased fixed and variable compensation costs of approximately $27 million. ◦ Incremental costs of $11 million associated with the impact from opening new stores. ◦ Variable selling costs, including sales-based commissions and royalty expenses which rose by approximately $10 million compared to the prior year period. ◦ Foreign currency translation also contributed an increase in operating expenses of approximately $6 million relative to the prior year. Other Income/Expense During the three months ended February 28, 2026, net Other expense was $15.7 million, representing a decrease of $2.9 million compared to the same period in the prior year. The change was primarily driven by lower interest expense of $1.9 million resulting from reduced debt levels and increased interest and investment income in the period ended February 28, 2026 compared to the same period in the prior year. During the nine months ended February 28, 2026, net Other expense was $56.5 million, representing an increase of $3.4 million compared to the same period in the prior year. The change was primarily driven by a loss on extinguishment of debt of approximately $8.0 million incurred in connection with the refinancing of term loan debt during the current year, partially offset by lower interest expense resulting from reduced debt levels. Income Taxes See Note 9 of the Condensed Consolidated Financial Statements for additional information. Operating Segment Results The business is comprised of various operating segments as defined by generally accepted accounting principles in the United States. These operating segments are determined on the basis of how the Company internally reports and how the chief operating decision maker ("CODM") evaluates financial information used to make operating decisions. 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 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. 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 14 of the Condensed Consolidated Financial Statements. The charts below present the relative mix of net sales and operating earnings across each of the Company's segments during the three and nine month periods ended February 28, 2026. This is followed by a discussion of the Company's results, by reportable segment. The amounts presented in the charts are in millions and have been rounded. North America Contract Three Months Ended Nine Months Ended (Dollars in millions) February 28, 2026 March 1, 2025 Change February 28, 2026 March 1, 2025 Change Net sales $ 488.6 $ 468.2 $ 20.4 $ 1,531.0 $ 1,469.1 $ 61.9 Gross margin 175.4 161.0 14.4 557.2 522.6 34.6 Gross margin % 35.9 % 34.4 % 1.5 % 36.4 % 35.6 % 0.8 % Operating earnings 41.9 17.0 24.9 142.8 82.6 60.2 Operating earnings % 8.6 % 3.6 % 5.0 % 9.3 % 5.6 % 3.7 % For the three month comparative period, Net sales increased 4.4%, or 4.1% on an organic* basis, compared to the prior year period due to: • Price increases, net of discounting positively impacted net sales by approximately $17 million. • Increased sales volumes within the segment, contributed approximately $2 million to the increase. • Favorable foreign currency translation, which increased net sales by approximately $1 million. For the nine month comparative period, Net sales increased 4.2%, or 4.1% on an organic* basis, compared to the prior year period. This growth was primarily driven by: • Price increases, net of discounting positively impacted net sales by approximately $38 million. • Increased sales volumes within the segment, contributing approximately $23 million. • Favorable foreign currency translation, which increased net sales by approximately $1 million. For the three month comparative period, operating earnings increased $24.9 million, or 146.5%, over the prior year period due to: • Increased Gross margin of $14.4 million due to the increase in sales noted and an increase in gross margin percentage of 150 basis points. The increase in gross margin percentage was due primarily to: ◦ Fa vorable product mix and operational efficiency which increased margin . ◦ Price increases, net of discounting resulted in a positive impact to margin. ◦ Favorable leverage on fixed costs due to increased sales volumes contributed to gross margin improvement. • Decreased Operating expenses of $10.5 million. The following factors contributed to the change: ◦ Decreased non-cash intangible impairment charges of approximately $20 million as compared to the prior year. This decrease was offset in part by: ◦ Elevated compensation and benefit expenses of approximately $7 million in the current year period. ◦ Variable selling costs which rose by approximately $2 million compared to the prior year period. For the nine month comparative period, operating earnings increased $60.2 million, or 72.9%, over the prior year period due to: • Increased Gross margin of $34.6 million due to the increase in sales discussed above and an increase in gross margin percentage of 80 basis points. The increase in gross margin percentage was due primarily to: ◦ Favorable product mix and operational efficiency which increased margin. ◦ Price increases, net of discounting resulted in a positive impact to margin. ◦ Favorable leverage on fixed costs due to increased sales volumes contributed to gross margin improvement. ◦ These increases were partially offset by tariff-related costs, net of pricing actions taken to help offset costs, incurred in the first half of the year that adversely impacted gross margin. • Decreased Operating expenses of $25.6 million. The following factors contributed to the change: ◦ A reduction in acquisition-related integration charges, which totaled approximately $ 25 million. ◦ Decreased non-cash intangible impairment charges of approximately $20 million. These decreases were partially offset by: ◦ Increased variable selling costs, including sales-based commissions and royalty expenses of approximately $9 million. ◦ Increased compensation and benefits of approximately $9 million. ◦ Increase of approximately $1 million driven primarily by restructuring charges associated with facility consolidation initiatives. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." International Contract Three Months Ended Nine Months Ended (Dollars in millions) February 28, 2026 March 1, 2025 Change February 28, 2026 March 1, 2025 Change Net sales $ 156.9 $ 145.5 $ 11.4 $ 495.3 $ 474.3 $ 21.0 Gross margin 55.5 52.2 3.3 176.6 172.6 4.0 Gross margin % 35.4 % 35.9 % (0.5) % 35.7 % 36.4 % (0.7) % Operating earnings 12.1 9.9 2.2 41.5 41.6 (0.1) Operating earnings % 7.7 % 6.8 % 0.9 % 8.4 % 8.8 % (0.4) % For the three month comparative period, Net sales increased 7.8%, or 1.9% on an organic* basis, over the prior year period due to: • Favorable foreign currency translation, which increased net sales by approximately $8 million. • Increased sales volumes within the segment, contributing approximately $4 million to the increase. • These increases were partially offset by incremental discounting attributable to product mix, net of price increases, which adversely impacted net sales by approximately $1 million. For the nine month comparative period, Net sales increased 4.4% or 0.5% on an organic* basis compared to the prior year period. This growth was primarily driven by: • Favorable foreign currency translation, which increased net sales by approximately $18 million. • Higher sales volumes within the segment, contributing approximately $8 million to the increase. • These increases 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. For the three month comparative period, operating earnings increased $2.2 million or 22.2%, over the prior year period due to: • Increased Gross margin of $3.3 million driven by the higher sales volumes explained above, partially offset by a decline in gross margin percentage of 50 basis points. The decrease in gross margin percentage was due primarily to: ◦ Unfavorable foreign currency translation which negatively impacted gross margin. ◦ Regional and product sales mix which had an unfavorable impact to gross margin. ◦ These pressures was partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes. • Increased Operating expenses of $1.1 million driven primarily by: ◦ Increased compensation and benefits of approximately $3 million. ◦ Foreign currency translation which contributed an unfavorable impact of approximately $2 million compared to the prior year. These increases were offset in part by decreased restructuring charges and impairment charges as compared to the prior year period. For the nine month comparative period, operating earnings decreased $0.1 million, or 0.2%, over the prior year period due to: • Increased Gross margin of $4.0 million driven by the higher sales volumes explained above, and a decline in gross margin percentage of 70 basis points. The decrease in gross margin percentage was due primarily to: ◦ Unfavorable foreign currency translation which negatively impacted gross margin. ◦ Regional and product sales mix which had an unfavorable impact to gross margin. ◦ These pressures were partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes and favorable material performance. • Increased Operating expenses of $4.1 million driven primarily by: ◦ Increased fixed and variable compensation costs of approximately $5 million. ◦ Foreign currency translation which contributed an unfavorable impact of approximately $2 million compared to the prior year. These increases were offset in part by decreased acquisition-related integration charges and impairment charges during the prior year period. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." Global Retail Three Months Ended Nine Months Ended (Dollars in millions) February 28, 2026 March 1, 2025 Change February 28, 2026 March 1, 2025 Change Net sales $ 281.1 $ 262.5 $ 18.6 $ 811.2 $ 764.7 $ 46.5 Gross margin 122.0 119.2 2.8 359.4 350.5 8.9 Gross margin % 43.4 % 45.4 % (2.0) % 44.3 % 45.8 % (1.5) % Operating earnings (loss) 6.3 (94.4) 100.7 11.8 (80.8) 92.6 Operating earnings % 2.2 % (36.0) % 38.2 % 1.5 % (10.6) % 12.1 % For the three month comparative period, Net sales increased 7.1%, or 4.4% on an organic* basis, over the prior year period. This growth was primarily driven by: • Price increases, net of discounting positively impacted net sales by approximately $7 million. • Favorable foreign currency translation, which increased net sales by approximately $7 million. • Higher sales volumes within the segment, supported by our North America retail store expansion strategy, contributed approximately $5 million to the increase. For the nine month comparative period, Net sales increased 6.1%, or 4.2% on an organic* basis compared to the prior year period. This growth was primarily driven by: • Higher sales volumes within the segment, contributing approximately $23 million to the increase. • Favorable foreign currency translation, which increased net sales by approximately $14 million. • Price increases, net of discounting positively impacted net sales by approximately $9 million. For the three month comparative period, Operating earnings increased $100.7 million or 106.7% compared to the prior year period due to: • Increased Gross margin of $2.8 million driven by the higher sales volumes explained above, which was offset by a decline in gross margin percentage of 200 basis points. The decrease in gross margin percentage was due primarily to: ◦ Targeted incremental promotional actions to offset adverse weather conditions which negatively impacted gross margin. ◦ Unfavorable foreign currency translation negatively impacted gross margin. ◦ These pressures were partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes. • Decreased Operating expenses of $97.9 million driven primarily by decreased non-cash intangible impairment charges of $109.0 million compared to the prior year. This decrease was offset in part by: ◦ Increased fixed and variable compensation costs of approximately $5 million. ◦ Incremental costs of $4 million associated with the impact from opening new stores. ◦ Foreign currency translation which contributed an unfavorable impact of approximately $2 million compared to the prior year. For the nine month comparative period, Operating earnings increased $92.6 million over the prior year period due to: • Increased Gross margin of $8.9 million driven by the higher sales volumes explained above, which was offset by a decline in gross margin percentage of 150 basis points. The decrease in gross margin percentage was due primarily to: ◦ Tariff-related costs, net of pricing actions taken to help offset costs, incurred in the first half of the year that adversely impacted gross margin. ◦ Unfavorable foreign currency translation negatively impacted gross margin. ◦ These pressures were partially offset by favorable operating leverage on fixed costs resulting from increased sales volumes. • Decreased Operating expenses of $83.7 million driven primarily by decreased non-cash intangible impairment charges of $109.0 million compared to the prior year. This decrease was offset in part by: ◦ Increased fixed and variable compensation costs of approximately $12 million. ◦ Incremental costs of $11 million associated with the impact from opening new stores. ◦ Foreign currency translation which contributed an unfavorable impact of approximately $4 million compared to the prior year. (*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures." Corporate Corporate unallocated expenses totaled $15.4 million for the third quarter of fiscal 2026, an increase of $0.7 million from the third quarter of fiscal 2025 related primarily to higher fixed and variable compensation expense. Corporate unallocated expenses totaled $49.2 million for the first nine months of fiscal 2026, an increase of $1.3 million from the same period of fiscal 2025 related primarily to higher fixed and variable stock based 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) February 28, 2026 March 1, 2025 Cash provided by (used in): Operating activities $ 135.1 $ 138.4 Investing activities (77.8) (60.3) Financing activities (83.8) (127.6) Effect of exchange rate changes 7.4 (11.1) Net change in Cash and cash equivalents $ (19.1) $ (60.6) Cash Flows - Operating Activities Net cash provided by operating activities for the nine months ended February 28, 2026, totaled $135.1 million compared to $138.4 million in the same period of the prior year. 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 and changes in working capital. Working capital remained a use of cash in the current year but decreased compared to the prior year. Our working capital consists primarily of receivables from customers, inventory, prepaid expenses, accounts payable, accrued compensation, and accrued other expenses. The following all affect these account balances: • Fluctuations in inventory levels; and • The timing of collection of our receivables; and • Changes in accruals related to variable compensation. Cash Flows - Investing Activities Cash used in investing activities for the nine months ended February 28, 2026, was $77.8 million, as compared to $60.3 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 third quarter of fiscal 2026, there were outstanding commitments for capital purchases of $22.7 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 $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 2026 were $83.4 million compared to $68.1 million for the nine months ended March 1, 2025. Cash Flows - Financing Activities Cash used in financing activities for the nine months ended February 28, 2026, was $83.8 million, compared to $127.6 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 705,141 shares, including shares withheld to satisfy tax withholdings, at a cost of $12.3 million in the current period as compared to 3,286,029 share repurchases, including shares withheld to satisfy tax withholding totaling $84.8 million in the same period of the prior year. • During the current period the Company entered into a three-year accounts receivable securitization facility. Net proceeds from the facility totaled $70.2 million in the current period. This was offset in part by: • Net payments on the credit agreement of $37.3 million in the current period compared to net borrowings of $24.0 million in the same period of the prior year. • The refinancing of Term Loan B resulted in a net cash outflow of $65.6 million in the current period. In the prior year, term loan debt was reduced by $29.7 million through scheduled principal payments. • Deferred financing costs of $2.2 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 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. These sources have been summarized below. For additional information, refer to Note 12 to the Condensed Consolidated Financial Statements. (In millions) February 28, 2026 May 31, 2025 Cash and cash equivalents $ 174.6 $ 193.7 Availability under syndicated revolving line of credit 419.4 382.2 Total liquidity $ 594.0 $ 575.9 Of the Cash and cash equivalents noted above at the end of the third quarter of fiscal 2026, the Company had $161.4 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 February 28, 2026, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $293.5 million with available borrowings on this facility of $419.4 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. recorded in working capital. The Company has recorded a $3.5 million deferred tax liability related to foreign withholding taxes on these future dividends received in the U.S. from foreign subsidiaries. A significant portion of the $137.3 million of undistributed foreign earnings was previously taxed under the U.S. Tax Cut and Jobs Act (TCJA). The Company intends to remain indefinitely reinvested in the remaining undistributed earnings outside the U.S. which is estimated to be approximately $382.9 million on February 28, 2026. The Company believes cash on hand, cash generated from operations, and borrowing capacity will provide adequate liquidity to fund near term and foreseeable future business operations, capital needs, upcoming debt maturities, future dividends and share repurchases, subject to financing availability in the marketplace. Contractual Obligations Contractual obligations associated with ongoing business and financing activities will require cash payments in future periods. A table summarizing the amounts and estimated timing of these future cash payments as of 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. Guarantees See Note 11 to the Condensed Consolidated Financial Statements. Variable Interest Entities See Note 16 to the Condensed Consolidated Financial Statements. Contingencies See Note 11 to the Condensed Consolidated Financial Statements. Critical Accounting Policies The Company strives to report financial results clearly and understandably. The Company follows accounting principles generally accepted in the United States in preparing its consolidated financial statements, which require certain estimates and judgments that affect the financial position and results of operations for the Company. The Company continually reviews the accounting policies and financial information disclosures. A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Company's Annual Report on Form 10-K for the year ended May 31, 2025. New Accounting Standards See Note 2 to the Condensed Consolidated Financial Statements. Cautionary Note Regarding Forward-Looking Statements 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 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 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: • The effects of the ongoing conflict and broader geopolitical instability in the Middle East, including with respect to negative impacts on our supply chain, decreased sales within the region or beyond due to supply chain constraints, and broader inflationary and macroeconomic effects; • 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, the escalating conflict 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; and • 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 May 31, 2025 . 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.