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Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>MLKN bettered our expectations for revenue (+$15 million versus our estimate) and adjusted EPS (+$0.03 versus our estimate) even as industry conditions remained challenged.</li><li>Gross margin, down 33 bps to 38.8%, was affected by product mix, while the 81-bp decline in operating margin to 7.1% was due to higher variable and compensation expenses andthe need to ‘preload’ marketing expense in Global Retail even as the calendar split the critical holiday/cyber promotional period between 2Q and 3Q.</li><li><p>Americas Contract and Global Retail posted solid quarters amid industry headwinds, while International Contract demand (typically more variable) was down.</p></li></ul>

MLKN bettered our expectations for revenue (+$15 million versus our estimate) and adjusted EPS (+$0.03 versus our estimate) even as industry conditions remained challenged.Gross margin, down 33 bps to 38.8%, was affected by product mix, while the 81-bp decline in operating margin to 7.1% was due to higher variable and compensation expenses andthe need to ‘preload’ marketing expense in Global Retail even as the calendar split the critical holiday/cyber promotional period between 2Q and 3Q.Americas Contract and Global Retail posted solid quarters amid industry headwinds, while International Contract demand (typically more variable) was down.

<ul><li>MLKN’s first-quarter earnings showcased strong margins but slightly lower-than-anticipated revenues as delivery times for big projects extended and more deals were booked later in the quarter (see WTR summary note).</li><li>MillerKnoll’s 1QFY25 revenue was down 5.3% Y/Y on an organic basis and adjusted EPS of $0.36 was $0.03 below WTR’s estimate and $0.04 below consensus.</li><li>Gross margins were flat at 39%, with a 175-bp decline in Americas on lower revenues offset by improvements in both International and Global Retail.</li></ul>

MLKN’s first-quarter earnings showcased strong margins but slightly lower-than-anticipated revenues as delivery times for big projects extended and more deals were booked later in the quarter (see WTR summary note).MillerKnoll’s 1QFY25 revenue was down 5.3% Y/Y on an organic basis and adjusted EPS of $0.36 was $0.03 below WTR’s estimate and $0.04 below consensus.Gross margins were flat at 39%, with a 175-bp decline in Americas on lower revenues offset by improvements in both International and Global Retail.

MillerKnoll, Inc. Revising Revenue and EPS Estimates

<ul><li>Herein, we refresh our estimates and economic model for MillerKnoll after its release and conference call for 4QFY24, which ended May 2024.</li><li>As noted in our earlier earnings analysis note dated June 27, 2024, management delivered strong margins, enabling it to beat estimates with the report.</li><li>The margin performance benefited from cost discipline and sustained pricing benefits.</li></ul>

Herein, we refresh our estimates and economic model for MillerKnoll after its release and conference call for 4QFY24, which ended May 2024.As noted in our earlier earnings analysis note dated June 27, 2024, management delivered strong margins, enabling it to beat estimates with the report.The margin performance benefited from cost discipline and sustained pricing benefits.

MillerKnoll, Inc. - Updating FY25 and FY26 EPS and Revenue Estimates

<ul><li>EPS topped our estimate and consensus on margin strength.</li><li>MillerKnoll posted 4QFY24 EPS of $0.67 versus $0.40 in 4QFY23 on continued margin strength even as the macro environment remains challenging.</li><li>Adjusted EPS beat consensus of $0.54 and our estimate of $0.55. </li></ul>

EPS topped our estimate and consensus on margin strength.MillerKnoll posted 4QFY24 EPS of $0.67 versus $0.40 in 4QFY23 on continued margin strength even as the macro environment remains challenging.Adjusted EPS beat consensus of $0.54 and our estimate of $0.55. 

MillerKnoll, Inc. - 4QFY24 Adjusted EPS of $0.67 Tops WTR Estimate of $0.55 on Strong Margins

<div><div><div><div><ul style="list-style-type: disc;"><li><p>As noted earlier, MillerKnoll’s 3QFY24 EPS beat expectations but revenue missed widely. 4QFY24 guidance was also below pre-report estimates.</p></li><li><p>With the misses, the stock gapped down by the mid-teens (~$5.00), closing at $24.76, thereby truncating and halting its recent rebound.</p></li><li><p>Y/Y revenue comparisons were negative in all three segments: Americas Contract (AC) at -9% to $441 million, International Contract &amp; Specialty (IC&amp;S) at -10.4% to $217 million, and Global Retail (GR) at -17% to $214 million. </p></li></ul></div></div></div></div>

As noted earlier, MillerKnoll’s 3QFY24 EPS beat expectations but revenue missed widely. 4QFY24 guidance was also below pre-report estimates.With the misses, the stock gapped down by the mid-teens (~$5.00), closing at $24.76, thereby truncating and halting its recent rebound.Y/Y revenue comparisons were negative in all three segments: Americas Contract (AC) at -9% to $441 million, International Contract &amp; Specialty (IC&amp;S) at -10.4% to $217 million, and Global Retail (GR) at -17% to $214 million. 

MillerKnoll, Inc - 3QFY24 EPS Beats; Revenue Misses

United States

MillerKnoll, Inc. researches, designs, manufactures, and distributes interior office furnishings, furniture systems, products, and services. The Company markets its products to companies, organizations, and individuals worldwide.

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MillerKnoll (MLKN US)

MillerKnoll, Inc - 2QFY25 Adj. EPS $0.55

MLKN bettered our expectations for revenue (+$15 million versus our estimate) and adjusted EPS (+$0.03 versus our estimate) even as industry...

Water Tower Research

MillerKnoll, Inc. Revising Revenue and EPS Estimates

MillerKnoll’s 1QFY25 revenue was down 5.3% Y/Y on an organic basis and adjusted EPS of $0.36 was $0.03 below WTR’s estimate and $0.04 below consensus.

Water Tower Research

MillerKnoll, Inc. - Updating FY25 and FY26 EPS and Revenue Estimates

Herein, we refresh our estimates and economic model for MillerKnoll after its release and conference call for 4QFY24, which ended May 2024.

Water Tower Research

MillerKnoll, Inc. - 4QFY24 Adjusted EPS of $0.67 Tops WTR Estimate of $0.55 on Strong Margins

MillerKnoll posted 4QFY24 EPS of $0.67 versus $0.40 in 4QFY23 on continued margin strength even as the macro environment remains challenging.

Water Tower Research

MillerKnoll, Inc - 3QFY24 EPS Beats; Revenue Misses

As noted earlier, MillerKnoll’s 3QFY24 EPS beat expectations but revenue missed widely. 4QFY24 guidance was also below pre-report estimates.

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