MillerKnoll Inc (MLKN) Q4 2025 Earnings Call Highlights: Strong Performance and Strategic Expansion
Adjusted Earnings Per Share (EPS): $0.60 for Q4, outperforming guidance.
Consolidated Net Sales: $962 million in Q4, up 8.2% year-over-year.
New Orders: $1.04 billion in Q4, up 11.1% year-over-year.
Consolidated Gross Margin: 39.2% in Q4, up 130 basis points sequentially.
Cash Flow from Operations: $71 million in Q4.
Liquidity: $576 million at the end of Q4.
Net Debt to EBITDA Ratio: 2.88 turns.
North America Contract Segment Sales: $496 million in Q4, up nearly 13% year-over-year.
International Contract Segment Sales: $186 million in Q4, up 6.9% year-over-year.
Global Retail Segment Sales: $280 million in Q4, up 2.2% year-over-year.
Full Fiscal Year Net Sales: $3.67 billion.
Full Fiscal Year Adjusted EPS: $1.95.
Capital Expenditures: $107.6 million for fiscal 2025; expected $120-$130 million for fiscal 2026.
Q1 Fiscal 2026 Net Sales Guidance: $899 million to $939 million.
Q1 Fiscal 2026 Gross Margin Guidance: 37.1% to 38.1%.
Q1 Fiscal 2026 Adjusted EPS Guidance: $0.32 to $0.38.
Warning! GuruFocus has detected 3 Warning Signs with MLKN.
Release Date: June 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
MillerKnoll Inc (NASDAQ:MLKN) reported strong Q4 results, significantly exceeding expectations with adjusted earnings of $0.60 per share.
Consolidated net sales in Q4 were $962 million, up 8.2% year-over-year, driven by strength across all business segments.
The company opened new flagship locations in London and New York, enhancing customer interactions and increasing visits.
MillerKnoll Inc (NASDAQ:MLKN) introduced over 30 new products at Design Days 2025, showcasing innovation and design leadership.
The company plans to expand its retail footprint by opening 10 to 15 new stores in fiscal 2026, aiming to double its store presence over the next several years.
Tariff-related costs are expected to negatively impact margins in the near term, with a $9 million to $11 million reduction in Q1 earnings.
The retail segment's operating margin decreased to 5.3% in Q4, impacted by new store opening costs and unfavorable product mix.
Order growth in North America was partially driven by pull-forward activity due to tariff surcharges, which may affect future order levels.
The company faces a dynamic macroeconomic environment, with cautious optimism in both North American and international markets.
MillerKnoll Inc (NASDAQ:MLKN) anticipates a two-quarter impact from tariff-related pricing actions, affecting profitability in Q1 and Q2 of fiscal 2026.
Q: Can you provide insight into the pull-forward effect from pricing actions and how it has impacted order growth in the current quarter? A: Jeffrey Stutz, Chief Financial Officer, explained that they are down mid-single digits in order entry year-over-year, which aligns with expectations due to the pull-forward effect seen in the fourth quarter. The expectation is to resume growth as the quarter progresses.
Q: What is the confidence level in the aggressive expansion of retail stores given the current demand environment, and how long does it take for a store to mature? A: Andrea Owen, CEO, expressed confidence in the expansion, noting that the company is under-stored compared to competitors and is filling a market need. Debbie Propst, President of Global Retail, added that new stores become profitable within the first year, with Herman Miller stores maturing faster due to their smaller footprint.
Q: Can you clarify the estimated pull-forward amount in North America and its impact on future quarters? A: Jeffrey Stutz confirmed the pull-forward was estimated at $55 million to $60 million, primarily from North America. John Michael, President of Americas Contract, noted that significant orders will ship in Q1 and Q2, with leading indicators still pointing in the right direction.
Q: How will the pull-forward and tariffs impact profitability, and how long will this dynamic last? A: Andrea Owen stated that the impact is typically a two-quarter dynamic, with the biggest impact in Q1, lessening in Q2, and healthy coverage expected in Q3 and Q4.
Q: What are the expectations for free cash flow and leverage levels in the new fiscal year? A: Jeffrey Stutz highlighted a focus on paying down debt and building out new stores, with a prudent approach to managing debt levels amid geopolitical uncertainty.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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