MillerKnoll’s QQ1 2025 results show improving demand in the Americas Contract and International/ Specialty segments, supported by a 9.2% year‑over‑year backlog increase to $758 million and consolidated orders of $936 million, up 2.4% YoY. However, revenue declined 6.1% YoY to $862 million as a larger portion of orders remained in backlog and shipments lagged due to longer lead times from larger projects. Gross margin remained approximately 39%, with margin progression offset by unfavorable mix and reduced manufacturing leverage from lower production volumes. Operating income was modest at $15.2 million (operating margin 1.76%), and net income was negative at $1.2 million, reflecting ongoing leverage and inflationary pressures in a transitional demand environment. Management maintained full‑year guidance of $2.20 in adjusted earnings per share, with 2Q20 guidance of $0.51–$0.57 per share and net sales of $950–$990 million, while highlighting a cyber/holiday marketing shift that will move roughly $17–$23 million of revenue from Q2 to Q3. The quarter also featured strategic brand and footprint initiatives, including two MillerKnoll flagship locations (London and New York) and ongoing international dealer network integration aimed at accelerating cross‑brand adoption. Overall, the setup suggests a path to margin improvement in the back half as demand normalizes and overhead leverage returns, but near‑term profitability remains sensitive to mix, project timing, and macro momentum.
Key Performance Indicators
Revenue
861.50M
QoQ: -3.08% | YoY:-6.12%
Gross Profit
336.30M
39.04% margin
QoQ: -4.57% | YoY:-6.09%
Operating Income
15.20M
QoQ: -75.72% | YoY:-62.28%
Net Income
-1.20M
QoQ: -112.12% | YoY:-107.19%
EPS
-0.02
QoQ: -112.21% | YoY:-107.77%
Revenue Trend
Margin Analysis
Key Insights
Revenue: 861.5M, YoY vs. 918.2M prior year (−6.12%), QoQ not disclosed in this release window.
Gross profit: 336.3M, gross margin 39.0% (flat vs. prior year).
Net income: −1.2M, net margin −0.14%, EPS −0.0171.
Financial Highlights
- Revenue: 861.5M, YoY vs. 918.2M prior year (−6.12%), QoQ not disclosed in this release window.
- Gross profit: 336.3M, gross margin 39.0% (flat vs. prior year).
- Operating income: 15.2M, operating margin 1.76% (vs. 1.77% prior year).
- EBITDA: 52.8M, EBITDA margin 6.13% (EBITDA/Revenue).
- Net income: −1.2M, net margin −0.14%, EPS −0.0171.
- Backlog: 758.0M, up 9.2% YoY and up 10.9% since start of fiscal 2025.
- Orders: 936.0M, up 2.4% YoY (3.5% organic).
- Cash flow: operating cash flow 21.0M; free cash flow −1.5M; net debt/EBITDA 2.84x.
- Share repurchase: ~1.5M shares repurchased for ~$44M.
- Liquidity: cash balance 209.7M; current ratio 1.59; quick ratio 0.93; cash ratio 0.31.
- Segment highlights: Americas Contract net sales 455.0M (organic −7%); International Contract & Specialty net sales 214.0M (−6.5%); Retail net sales 193.0M (−2.8%). Adjusted segment margins: Americas Contract 9.5% (down 110 bps YoY); International Contract & Specialty 7.9% (up 140 bps YoY); Retail 2.8% (up 120 bps YoY).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
861.50M
-6.12%
-3.08%
Gross Profit
336.30M
-6.09%
-4.57%
Operating Income
15.20M
-62.28%
-75.72%
Net Income
-1.20M
-107.19%
-112.12%
EPS
-0.02
-107.77%
-112.21%
Key Financial Ratios
currentRatio
1.59
grossProfitMargin
39%
operatingProfitMargin
1.76%
netProfitMargin
-0.14%
returnOnAssets
-0.03%
returnOnEquity
-0.09%
debtEquityRatio
1.36
operatingCashFlowPerShare
$0.3
freeCashFlowPerShare
$-0.02
dividendPayoutRatio
-1100%
priceToBookRatio
1.55
priceEarningsRatio
-430.75
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Demand momentum improving: Andi Owen stated that orders are up YoY and demand is improving, with continued momentum in Americas Contract and Asia within International and Specialty.
- Backlog and project mix supportive: Jeff Stutz noted consolidated backlog ended at $758M, up 9.2% YoY, with larger projects (>$5M) driving extended lead times and a higher percentage of orders remaining in backlog.
- Strategic investments and footprint expansion: Management highlighted flagship stores in London and New York and a broader Design Within Reach strategy to expand Knoll, HAY, and Muuto offerings in North America. Andi emphasized two new flagship locations and the ongoing integration of Knoll into the international dealer network.
- Margin dynamics and guidance: The team cited improvements in labor/overhead leverage, offset by unfavorable mix from reduced high‑margin retail and specialty product lines; management maintained full‑year adjusted EPS guidance of $2.20 and provided 2Q guidance of $0.51–$0.57 with a $17–$23M revenue shift from Q2 to Q3 due to cyber/holiday marketing timing.
- Operational cadence and delivery timing: Andi and John noted bookings and shipments are being paced with longer-than-historic lead times, requiring tighter cost management to align with sales levels.
- Dealer network integration progress: Jeff highlighted that the MillerKnoll combined dealer network integration is approximately 60% complete in the international network, with a target of full integration by year‑end.
"Orders are up year-over-year and demand is improving."
— Andi Owen
"In addition, we introduced two new MillerKnoll flagship locations in London and New York..."
— Andi Owen
Forward Guidance
- Near-term outlook: Management maintains 2025 adjusted EPS of $2.20, supported by improving global contract demand, backlog strength, and a more favorable macro environment in the back half of fiscal 2025.
- Second quarter expectations: Net sales guidance of $950–$990 million and adjusted diluted EPS of $0.51–$0.57, acknowledging a shift in the holiday/cyber promotional period for retail that will move an estimated $17–$23 million of revenue from Q2 to Q3.
- Demand and mix sensitivity: Gross margin is expected to be influenced by mix (retail and specialty brands) and leverage on labor/overhead as order activity ramps, partially offset by price and channel mix. The potential for margin uplift exists in the back half if macro conditions improve and volume rebounds, enabling more fixed-cost absorption.
- Key monitorables for investors: (1) trajectory of global contract demand and backlog conversion, (2) pace of Knoll brand integration and international dealer network maturity, (3) retail cyber/holiday promotional timing and demand response, (4) housing market and mortgage rate trajectory impacting North American retail activity, and (5) cash flow and leverage improvements as volumes recover.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
MLKN Focus
39.04%
1.76%
-0.09%
-430.75%
LZB
43.10%
6.53%
2.62%
17.50%
MBC
31.40%
9.83%
3.05%
15.56%
BSET
57.00%
2.99%
1.11%
18.49%
AMWD
20.20%
10.20%
3.24%
13.40%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
MillerKnoll is navigating a transition: backlog expansion and improving contract demand provide a foundation for earnings recovery, aided by strategic brand integration, flagship store investments, and a more robust North American retail strategy. The stock’s value proposition rests on margin leverage from higher activity levels in H2 and the contribution from higher-margin retail mix as the brand ecosystem expands. However, elevated debt levels and a volatile macro environment warrant a cautious stance until volume growth and cross‑brand synergies translate into sustained margin expansion and free cash flow improvement. Investors should monitor the speed of Knoll integration, the trajectory of large project wins in international markets, and the timing of housing market recovery that could unlock retail demand.
Key Investment Factors
Growth Potential
Backlog of $758M with 9.2% YoY growth supports revenue visibility; Americas Contract and International/ Specialty segments show meaningful order growth and project activity, including larger wins in tech, finance, and healthcare sectors. Expansion of North American retail footprint via DWR and flagship stores, plus higher-margin retail mix over time, offer upside to margin and ROIC as volumes recover.
Profitability Risk
Near‑term margin pressure from product/mix shift and front-loaded marketing spend; elevated leverage (net debt/EBITDA 2.84x) exposes earnings to volume downturns; longer lead times for large projects can induce revenue delays and backlog build‑to‑ship risk; cyclical sensitivity to housing/interest rate dynamics affecting Retail segment.
Financial Position
Solid liquidity with $209.7M cash and current ratio 1.59, but elevated debt (long-term debt ~$1.70B; total debt ~$1.82B) yields net debt to EBITDA of 2.84x. Positive backlog growth and ongoing cost‑reduction actions provide a path to improved profitability in H2. Free cash flow was negative in Q1 (-$1.5M) despite positive operating cash flow ($21M), reflecting working capital timing and strategic capex.
SWOT Analysis
Strengths
Diversified brand portfolio across Knoll, Herman Miller, HAY, Muuto, DatesWeiser, Geiger and others enabling cross‑sell and design leadership
Weaknesses
Negative net income in QQ1 2025; low near‑term operating margins; exposure to cyclical office furniture cycles and housing market dynamics
Opportunities
Rising backlog and project activity, especially in Americas Contract and International segments; flagship retail expansion and Design Within Reach strategy to expand brand presence; international dealer network integration enabling larger cross‑brand opportunities; sustainability initiatives and healthcare design competency
Threats
Macro backdrop risks (rates, housing demand, macro growth) affecting retail and enterprise spending; supply chain and lead-time elongation; competitive pressure in alternative workplace solutions and premium interiors