On March 27, 2024, MillerKnoll Inc (MLKN, Financial) released its third-quarter fiscal year 2024 results, revealing a challenging period marked by a sales decline yet notable improvements in profitability metrics. The company, known for its research, design, manufacture, and distribution of interior furnishings globally, reported consolidated net sales of $872.3 million, a decrease of 11.4% from the prior year. Despite this, MillerKnoll Inc (MLKN) achieved a gross margin increase of 450 basis points over the previous year, reaching 38.6%. Operating expenses saw a reduction to $294.2 million, down 6.4% year-over-year. The company's diluted earnings per share (EPS) were reported at $0.30, with an adjusted diluted EPS of $0.45, which is a decrease from $0.54 in the same quarter last year. The full details of the earnings can be found in the company's 8-K filing.
MillerKnoll Inc (MLKN, Financial) has three reportable segments: Americas Contract, International Contract & Specialty, and Global Retail. The company's products, catering to various environments such as offices, healthcare, and educational settings, are sold through a network of owned and independent dealers, direct sales, catalogs, and online stores, with the independent retailer division being the largest contributor to sales.
In the face of declining sales volumes attributed to the current macroeconomic environment, MillerKnoll Inc (MLKN, Financial) has focused on improving its profitability metrics, as highlighted by the expansion in gross margins across all business segments. The company has been proactive in streamlining operations and reducing costs, including capturing $153 million in run-rate cost synergies from the Knoll integration. This approach has helped protect profitability and enhance operational efficiency.
Despite the challenges posed by elevated interest rates, geopolitical concerns, and a slow housing market in the U.S., MillerKnoll Inc (MLKN, Financial) remains optimistic about future growth. The company has taken restructuring measures to optimize its cost structure, including workforce reductions and showroom consolidations, positioning it to thrive as market conditions improve.
Looking at the financial achievements, the improvement in gross margin is particularly significant for MillerKnoll Inc (MLKN, Financial) and the furnishings industry, as it indicates the company's ability to manage costs effectively and maintain profitability despite lower sales volumes. The company's liquidity position, with $558 million available in cash and credit, along with a net debt-to-EBITDA ratio of 2.65x, reflects a solid financial standing that can support future growth initiatives.
MillerKnoll Inc (MLKN, Financial)'s performance in the third quarter of fiscal 2024 underlines the importance of cost management and operational efficiency in an uncertain economic climate. While the decline in sales presents a challenge, the company's focus on margin improvement and cost synergies demonstrates resilience and strategic planning that may appeal to value investors interested in long-term potential.
"Our teams continue to make great progress towards improving our profitability metrics with this quarter's Gross margins surpassing last year's levels across the three business segments despite volume declines. While the latter is driven by the current macro environment, we are building a fundamentally stronger company, protecting our profitability and enhancing our operational efficiency." - MillerKnoll Inc (MLKN, Financial) Management
For the fourth quarter of fiscal 2024, MillerKnoll Inc (MLKN) expects net sales to range between $880 million and $920 million, with adjusted diluted earnings per share anticipated to be between $0.49 and $0.57. This earnings range implies a year-over-year growth of approximately 29% from the adjusted diluted earnings per share reported in the last fiscal year's fourth quarter.
Investors and those interested in the company's performance can join the conference call and webcast scheduled for March 27, 2024, at 5:00 PM ET, to discuss the third-quarter results in detail.
Explore the complete 8-K earnings release (here) from MillerKnoll Inc for further details.
