MillerKnoll Lowers FY2027 Revenue Outlook as Q1 Sales Fall, Margins Expand

MillerKnoll Inc. (NASDAQ: MLKN) lowered its fiscal 2027 revenue outlook after first-quarter sales declined, while maintaining its adjusted earnings forecast as stronger gross margin and higher orders helped offset the top-line weakness. The quarter’s margin and earnings gains were materially supported by tariff refunds, which contributed an estimated $0.11 to adjusted diluted earnings per share.

Net sales for the first quarter of fiscal 2027 fell 3.4% year over year to $923.4 million. Excluding currency translation effects, organic sales decreased 3.3%. Orders moved in the opposite direction, rising 3.2% as reported to $913.9 million and increasing 3.5% organically.

GAAP diluted earnings per share rose to $0.38 from $0.29 a year earlier. Adjusted diluted EPS increased to $0.53 from $0.45, including the estimated benefit from tariff refunds.

Margins Expand With Tariff Refund Benefit

MillerKnoll reported a GAAP gross margin of 41.7%, up from 38.5% in the prior-year quarter. Adjusted gross margin reached 41.8%, an increase of 330 basis points.

The company estimated that tariff refunds added $16.5 million, or 180 basis points, to consolidated gross margin. Global Retail accounted for $11.8 million of that benefit, compared with $4.6 million in North America Contract and $0.1 million in International Contract.

After related incentive compensation effects, the presentation estimated that tariff refunds contributed a net $10 million, or 110 basis points, to operating income. The net impact included a $10.8 million benefit in Global Retail, a $1 million benefit in North America Contract and a $1 million negative effect in International Contract, along with a corporate impact.

GAAP operating earnings were $51.8 million, compared with $53.5 million a year earlier, while the GAAP operating margin remained at 5.6%. Adjusted operating earnings increased to $65.7 million from $60.1 million, lifting the adjusted operating margin to 7.1% from 6.3%.

Adjusted operating expenses rose to $320.1 million from $308 million and increased to 34.7% of sales from 32.2%, reflecting higher expenses against a lower revenue base. The non-GAAP calculation excludes restructuring charges, amortization of Knoll purchased intangible assets and CEO transition costs.

Cash Flow and Balance Sheet

Cash provided by operating activities was $49 million in the quarter, up from $9 million in the same period last year. MillerKnoll ended the period with $179 million in cash and $1.27 billion of long-term debt, excluding the current portion. Its net debt-to-adjusted bank covenant EBITDA ratio was 2.75 times, and available revolving credit capacity totaled $402 million.

The company expects fiscal 2027 capital expenditures of approximately $125 million to $135 million. Its capital allocation priorities include supporting growth, retaining financial flexibility, improving leverage and returning capital to shareholders.

Fiscal 2027 Revenue Outlook Lowered

MillerKnoll now expects full-year fiscal 2027 revenue of $3.88 billion to $4.03 billion, compared with its previous range of $3.93 billion to $4.13 billion. The company maintained its adjusted diluted EPS outlook of $1.85 to $2.15.

For the second quarter, MillerKnoll forecast revenue of $972 million to $1.012 billion and gross margin of 38.3% to 39.3%. Adjusted operating expenses are expected to range from $321 million to $331 million, with adjusted diluted EPS of $0.43 to $0.49. The quarterly non-GAAP outlook excludes an anticipated $5.7 million charge for amortization of Knoll purchased intangible assets, as well as the related tax and per-share effects.

The outlook remains subject to uncertainty surrounding trade policy and tariffs, including the potential clawback or reversal of refunds and the possibility that additional refunds will not continue. Other risks identified by the company include consumer spending levels affecting Global Retail, geopolitical instability, supply-chain disruption, raw-material costs, inflation, interest rates, foreign-exchange movements, executive leadership transition and obligations associated with acquisition-related debt.