SEC Filing | MillerKnoll

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 26, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-15141

__________________________________________

MillerKnoll, Inc.

(Exact name of registrant as specified in its charter)

__________________________________________


Michigan						38-0837640
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

855 East Main Avenue

Zeeland, MI 49464

(Address of principal executive offices and zip code)

(616) 654-3000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.20 per share	MLKN	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the

registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of April 1, 2022, MillerKnoll, Inc. had 75,792,770 shares of common stock outstanding.

MillerKnoll, Inc.

Form 10-Q

Table of Contents


			Page No.
Part I — Financial Information
Item 1 Financial Statements (Unaudited)
Condensed Consolidated Statements of Comprehensive Income (Loss) — Three and Nine Months Ended February 26, 2022 and February 27, 2021			3
Condensed Consolidated Balance Sheets — February 26, 2022 and May 29, 2021			4
Condensed Consolidated Statements of Cash Flows — Nine Months Ended February 26, 2022 and February 27, 2021			5

Condensed Consolidated Statements of Stockholders' Equity — Nine Months Ended February 26, 2022 and February 27, 2021			6
Notes to Condensed Consolidated Financial Statements
Note 1 - Description of Business and Basis of Presentation			8
Note 2 - Recently Issued Accounting Standards			9
Note 3 - Revenue from Contracts with Customers			10
Note 4 - Leases			12
Note 5 - Acquisitions and Divestitures			12
Note 6 - Inventories, net			15
Note 7 - Goodwill and Indefinite-Lived Intangibles			15
Note 8 - Employee Benefit Plans			16
Note 9 - Earnings Per Share			17
Note 10 - Stock-Based Compensation			17
Note 11 - Income Taxes			17
Note 12 - Fair Value Measurements			18
Note 13 - Commitments and Contingencies			21
Note 14 - Short-Term Borrowings and Long-Term Debt			22
Note 15 - Accumulated Other Comprehensive Loss			23
Note 16 - Operating Segments			23
Note 17 - Restructuring Expense			25
Note 18 - Variable Interest Entities			27

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3 Quantitative and Qualitative Disclosures about Market Risk			45
Item 4 Controls and Procedures			46
Part II — Other Information
Item 1 Legal Proceedings			47
Item 1A Risk Factors			47
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds			48
Item 6 Exhibits			48
Signatures			49

PART I - FINANCIAL INFORMATION

Item 1: Financial Statements

MillerKnoll, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)


(Dollars in millions, except share data)	Three Months Ended				Nine Months Ended
(Unaudited)	February 26, 2022		February 27, 2021		February 26, 2022		February 27, 2021
Net sales	$	1,029.5	$	590.5	$	2,845.5	$	1,843.6
Cost of sales	692.7		359.6		1,880.6		1,118.4
Gross margin	336.8		230.9		964.9		725.2
Operating expenses:
Selling, general and administrative	282.3		157.4		907.8		450.2
Restructuring expense, net	—		0.3		—		1.5
Design and research	28.0		18.1		79.6		52.0
Total operating expenses	310.3		175.8		987.4		503.7
Operating earnings (loss)	26.5		55.1		(22.5)		221.5

Interest expense	10.2		3.6		24.9		10.8
Interest and other investment income	0.6		0.5		1.2		1.3
Other (income) expense, net	(0.2)		(4.6)		11.9		(7.3)
Earnings (loss) before income taxes and equity income	17.1		56.6		(58.1)		219.3
Income tax expense (benefit)	2.7		13.0		(11.5)		49.9
Equity (loss) income from nonconsolidated affiliates, net of tax	—		(0.3)		—		0.1
Net earnings (loss)	14.4		43.3		(46.6)		169.5
Net earnings attributable to redeemable noncontrolling interests	1.8		1.8		5.7		3.8
Net earnings (loss) attributable to MillerKnoll, Inc.	$	12.6	$	41.5	$	(52.3)	$	165.7

Earnings (loss) per share — basic	$	0.17	$	0.70	$	(0.72)	$	2.81
Earnings (loss) per share — diluted	$	0.16	$	0.70	$	(0.72)	$	2.80

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	$	5.4	$	10.8	$	(48.7)	$	45.9
Pension and post-retirement liability adjustments	1.5		1.1		5.6		3.7
Unrealized gains on interest rate swap agreement	10.2		6.7		13.2		7.8
Unrealized holding loss on available for sale securities	—		—		—		(0.1)
Other comprehensive income (loss), net of tax	17.1		18.6		(29.9)		57.3
Comprehensive income (loss)	31.5		61.9		(76.5)		226.8
Comprehensive income (loss) attributable to redeemable noncontrolling interests	1.8		2.1		3.7		6.9
Comprehensive income (loss) attributable to MillerKnoll, Inc.	$	29.7	$	59.8	$	(80.2)	$	219.9

See accompanying notes to Condensed Consolidated Financial Statements.

MillerKnoll, Inc. and Subsidiaries 3

MillerKnoll, Inc.

Condensed Consolidated Balance Sheets


(Dollars in millions, except share data)
(Unaudited)	February 26, 2022		May 29, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	245.9	$	396.4
Short-term investments	—		7.7
Accounts receivable, net of allowances of $8 and $5.5	313.8		204.7
Unbilled accounts receivable	42.1		16.4
Inventories	520.8		213.6
Prepaid expenses	139.9		45.1
Other current assets	8.6		7.6
Total current assets	1,271.1		891.5
Property and equipment, at cost	1,488.9		1,159.7
Less — accumulated depreciation	(904.6)		(832.5)
Net property and equipment	584.3		327.2
Right-of-use assets	418.6		214.7
Goodwill	1,282.7		364.2
Indefinite-lived intangibles	503.8		97.6
Other amortizable intangibles, net of accumulated amortization of $120.7 and $68.6	378.1		105.2
Other noncurrent assets	79.1		61.5
Total Assets	$	4,517.7	$	2,061.9

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	340.8	$	178.4
Short-term borrowings and current portion of long-term debt	28.8		2.2
Accrued compensation and benefits	102.1		90.2
Short-term lease liability	78.7		44.8
Accrued warranty	19.9		14.5
Customer deposits	126.9		43.1
Other accrued liabilities	136.4		103.4
Total current liabilities	833.6		476.6
Long-term debt	1,384.9		274.9
Pension and post-retirement benefits	37.9		34.5
Lease liabilities	392.4		221.1
Other liabilities	344.9		128.2
Total Liabilities	2,993.7		1,135.3
Redeemable noncontrolling interests	68.1		77.0
Stockholders' Equity:
Preferred stock, no par value (10,000,000 shares authorized, none issued)	—		—
Common stock, $0.20 par value (240,000,000 shares authorized, 75,798,552 and 59,029,165 shares issued and outstanding in fiscal 2022 and 2021, respectively)	15.2		11.8
Additional paid-in capital	820.6		94.7
Retained earnings	713.1		808.4
Accumulated other comprehensive loss	(93.0)		(65.1)
Deferred compensation plan	—		(0.2)


Total Stockholders' Equity	1,455.9		849.6
Total Liabilities, Redeemable Noncontrolling Interests, and Stockholders' Equity	$	4,517.7	$	2,061.9

See accompanying notes to Condensed Consolidated Financial Statements.

4 Form 10-Q

MillerKnoll, Inc.

Condensed Consolidated Statements of Cash Flows


(Dollars in millions)	Nine Months Ended
(Unaudited)	February 26, 2022		February 27, 2021
Cash Flows from Operating Activities:
Net (loss) earnings	$	(46.6)	$	169.5
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization	150.3		64.8
Stock-based compensation	27.0		6.1

Pension and post-retirement expenses	(6.2)		2.3



Deferred taxes	(16.4)		4.1

(Gain) loss on sales of property and dealers	(2.0)		0.2




Loss on impairment	15.5		—
Loss on extinguishment of debt	13.4		—
(Increase) in current assets	(219.6)		(6.4)

Increase in current liabilities	33.5		9.7
(Decrease) increase in non-current liabilities	(8.6)		11.0
Other, net	1.8		(1.2)
Net Cash (Used in) Provided by Operating Activities	(57.9)		260.1

Cash Flows from Investing Activities:
Proceeds from sale of subsidiary	—		11.5
Proceeds from sale of property and dealers	2.8		—






Capital expenditures	(65.8)		(42.8)


Acquisitions, net of cash received	(1,088.5)		—
Proceeds from the sale of investments	7.7		—

Other, net	(1.2)		(11.6)
Net Cash Used for Investing Activities	(1,145.0)		(42.9)

Cash Flows from Financing Activities:

Repayments of long-term debt	(56.6)		—
Proceeds from issuance of debt, net of discounts	1,007.0		—

Payments of deferred financing costs	(9.3)		—
Proceeds from credit facility	815.7		—
Repayments of credit facility	(627.7)		(265.0)
Payment of make whole premium on debt	(13.4)		—

Dividends paid	(39.8)		(23.4)
Common stock issued	6.8		3.9
Common stock repurchased and retired	(16.0)		(0.9)



Other, net	(5.3)		(1.9)
Net Cash Provided by (Used in) Financing Activities	1,061.4		(287.3)

Effect of Exchange Rate Changes on Cash and Cash Equivalents	(9.0)		13.5
Net Decrease in Cash and Cash Equivalents	(150.5)		(56.6)

Cash and Cash Equivalents, Beginning of Period	396.4		454.0
Cash and Cash Equivalents, End of Period	$	245.9	$	397.4

See accompanying notes to Condensed Consolidated Financial Statements.

MillerKnoll, Inc. and Subsidiaries 5

MillerKnoll, Inc.

Condensed Consolidated Statements of Stockholders' Equity


		Nine Months Ended February 26, 2022
(Dollars in millions, except share data)		Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Deferred Compensation Plan		MillerKnoll, Inc. Stockholders' Equity
(Unaudited)	Shares		Amount
May 29, 2021		59,029,165		$	11.8	$	94.7	$	808.4	$	(65.1)	$	(0.2)	$	849.6
Net earnings		—		—		—		(61.5)		—		—		(61.5)
Other comprehensive income, net of tax		—		—		—		—		(15.2)		—		(15.2)
Stock-based compensation expense		—		—		15.1		—		—		—		15.1
Exercise of stock options		49,584		—		1.3		—		—		—		1.3
Restricted and performance stock units released		358,016		—		—		—		—		—		—
Employee stock purchase plan issuances		19,020		—		0.7		—		—		—		0.7
Repurchase and retirement of common stock		(267,522)		—		(11.0)		—		—		—		(11.0)

Shares issued for the acquisition of Knoll		15,843,921		3.2		685.1		—		—		—		688.3
Pre-combination expense from Knoll rollover		751,907		0.2		22.4		—		—		—		22.6

Dividends declared $0.1875 per share)		—		—		—		(14.3)		—		—		(14.3)


August 28, 2021		75,784,091		$	15.2	$	808.3	$	732.6	$	(80.3)	$	(0.2)	$	1,475.6
Net earnings		—		—		—		(3.4)		—		—		(3.4)
Other comprehensive income, net of tax		—		—		—		—		(27.8)		—		(27.8)
Stock-based compensation expense		—		—		7.0		—		—		—		7.0
Exercise of stock options		52,697		—		1.5		—		—		—		1.5
Restricted and performance stock units released		91,443		—		0.2		—		—		—		0.2
Employee stock purchase plan issuances		18,813		—		0.6		—		—		—		0.6
Repurchase and retirement of common stock		(76,246)		—		(3.3)		—		—		—		(3.3)

Forfeiture of shares		(130,410)		(0.1)		—		—		—		—		(0.1)
NCI Adjustment		—		—		0.5		—		—		—		0.5
Dividends declared ($0.1875 per share)		—		—		—		(14.4)		—		—		(14.4)
November 27, 2021		75,740,388		$	15.1	$	814.8	$	714.8	$	(108.1)	$	(0.2)	$	1,436.4
Net earnings				—		—		12.6		—		—		12.6
Other comprehensive income, net of tax		—		—		—		—		15.1		—		15.1
Stock-based compensation expense		—		—		4.9		—		—		—		4.9
Exercise of stock options		11,053		—		0.3		—		—		—		0.3
Restricted and performance stock units released		45,417		—		—		—		—		—		—
Employee stock purchase plan issuances		20,437		—		0.7		—		—		—		0.7
Directors Fees		23,255		0.1		1.5								1.6
Deferred compensation plan		—		—		—		—		—		0.2		0.2
Repurchase and retirement of common stock		(41,346)		—		(1.6)		—		—		—		(1.6)
Forfeiture of shares		(652)		—		—		—		—		—		—

Dividends declared ($0.1875 per share)		—		—		—		(14.3)		—		—		(14.3)
February 26, 2022		75,798,552		$	15.2	$	820.6	$	713.1	$	(93.0)	$	—	$	1,455.9

6 Form 10-Q



		Nine Months Ended February 27, 2021
(Dollars in millions, except share data)		Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Deferred Compensation Plan		MillerKnoll, Inc. Stockholders' Equity
(Unaudited)	Shares		Amount
May 30, 2020		58,793,275		$	11.8	$	81.6	$	683.9	$	(134.0)	$	(0.3)	$	643.0
Net earnings		—		—		—		73.0		—		—		73.0
Other comprehensive income, net of tax		—		—		—		—		28.9		—		28.9
Stock-based compensation expense		—		—		1.5		—		—		—		1.5
Exercise of stock options		8,133		—		0.2		—		—		—		0.2
Restricted and performance stock units released		106,607		—		—		—		—		—		—
Employee stock purchase plan issuances		25,116		—		0.6		—		—		—		0.6
Repurchase and retirement of common stock		(36,644)		—		(0.9)		—		—		—		(0.9)
Directors' fees		3,013		—		0.1		—		—		—		0.1




August 29, 2020		58,899,500		$	11.8	$	83.1	$	756.9	$	(105.1)	$	(0.3)	$	746.4
Net earnings		—		—		—		51.3		—		—		51.3
Other comprehensive income, net of tax		—		—		—		—		7.0		—		7.0
Stock-base compensation expense		—		—		2.4		—		—		—		2.4
Exercise of stock options		54,771		—		1.9		—		—		—		1.9
Restricted and performance stock units released		3,688		—		—		—		—		—		—
Employee stock purchase plan issuances		14,880		—		0.4		—		—		—		0.4
Repurchase and retirement of common stock		(1,198)		—		—		—		—		—		—
Dividends declared ($0.1875 per share)		—		—		$	—	(11.1)		—		—		(11.1)
November 28, 2020		58,971,641		$	11.8	$	87.8	$	797.1	$	(98.1)	$	(0.3)	$	798.3
Net earnings		—		$	—	—		41.5		—		—		41.5
Other comprehensive income, net of tax		—		—		—		—		18.3		—		18.3
Stock-based compensation expense		—		—		2.2		—		—		—		2.2
Exercise of stock options		10,628		—		0.1		—		—		—		0.1
Restricted and performance stock units released		1,736		—		0.1		—		—		—		0.1
Employee stock purchase plan issuances		17,709		—		0.6		—		—		—		0.6
Repurchase and retirement of common stock		(579)		—		—		—		—		—		—
Deferred compensation plan		—		—		—		—		—		0.1		0.1
Dividends declared ($0.1875 per share)		—		—		—		(11.1)		—		—		(11.1)
February 27, 2021		59,001,135		$	11.8	$	90.8	$	827.5	$	(79.8)	$	(0.2)	$	850.1