MLKN — MillerKnoll, Inc.

Summary of MillerKnoll, Inc. Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted Earnings Per Share (EPS): $0.43, exceeding expectations.
• Consolidated Net Sales: $955 million, down 1.6% year-over-year; down 2.5% organically due to prior pull-ahead sales.
• First Half Net Sales: $1.9 billion, up 4% year-over-year.
• Orders: $973 million, up 5.5% reported and 4.5% organically.
• Gross Margin: Strong at 39%, with proactive tariff mitigation expected to fully offset costs in the second half.
• Operating Cash Flow: $65 million; liquidity at $548 million.
• Net Debt to EBITDA Ratio: 2.87 times, below covenant limits.

2. Strategic Updates and Business Highlights

• Global Retail Segment: Orders increased 6% year-over-year; North America retail orders up 8%. Successful holiday promotions led to a 12% increase in orders during the peak shopping period.
• Store Expansion: Four new stores opened in Q2, with plans to open 14-16 stores in total for the fiscal year.
• Contract Business Growth: Orders and dealer sentiment improved, driven by the return-to-office trend and strong demand in sectors like healthcare.
• Product Innovation: Successful launch of the Noel Dividend Skyline product, generating significant interest ahead of its official entry.

3. Forward Guidance and Outlook

• Q3 Net Sales Guidance: Expected between $923 million and $963 million, reflecting a 7.6% increase at the midpoint.
• Gross Margin Projection: Between 37.9% and 38.9%.
• Adjusted EPS Guidance: Expected between $0.42 and $0.48.
• Investment in New Stores: Anticipated incremental operating expenses of $5 million to $6 million for new locations in Q3 and Q4.

4. Bad News, Challenges, or Points of Concern

• Sales Decline: Consolidated net sales down year-over-year, primarily due to prior pull-ahead sales impacting Q2.
• Operating Margin Pressure: Adjusted operating margins declined in several segments due to lower sales and increased costs related to new store openings and tariffs.
• Economic Headwinds: Concerns about macroeconomic conditions impacting demand, particularly in the public sector and certain industries like pharma and banking.

5. Notable Q&A Insights

• Order Consistency: Orders showed consistent growth across all three months of the quarter, with mid-single-digit growth continuing into the new quarter.
• Geographic Strength: Notable recovery in markets like the Bay Area and Southern California, while the Northeast remains strong.
• AI Impact: Early discussions around AI's potential impact on workspace design and employee productivity, though actual changes are still minimal.
• Capital Allocation: Focus on growth investments, with a mid-term target to reduce leverage to 2-2.5 times EBITDA while maintaining dividends and considering share repurchases.

Overall, MillerKnoll reported a solid quarter with strong order growth and strategic initiatives in place, despite facing some sales declines and operating margin pressures. The company remains optimistic about future growth driven by retail expansion and product innovation.