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MillerKnoll (MLKN) Q3 Earnings Beat, Sales Miss, Stock Down
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MillerKnoll, Inc. (MLKN - Free Report) reported mixed third-quarter fiscal 2024 (ended Mar 2, 2024) results, with earnings surpassing Zacks Consensus Estimate and net sales missing the same.
Shares of this interior furnishing provider plummeted 12.9% in the after-hours trading session but rose 1.8% during the trading session on Mar 27.
On a year-over-year basis, the top and bottom lines decreased. The company experienced declines in the contract and retail segments in the Americas but saw more positive demand levels in the International and Specialty segment, particularly in the contract component. Although consolidated order levels for the quarter fell short of near-term expectations, there was improvement across all segments as the period progressed. In February, consolidated orders increased by 2.8% compared to the previous year.
The company is confident about diversification, international expansion, technological investments, streamlined processes and innovation.
MillerKnoll, Inc. Price, Consensus and EPS Surprise
MillerKnoll reported adjusted earnings of 45 cents per share, which beat the Zacks Consensus Estimate of 44 cents per share. However, the bottom line decreased 16.7% from 54 cents per share reported a year ago.
Net sales of $872.3 million missed the consensus mark of $910 million by 4.2%. The metric also declined 11.4% from the prior-year quarter’s levels of $984.7 million.
Organically, sales were down 10.1% year over year. The downside was due to declines in both America’s contract and retail segment sales. Demand across various sectors of the company's operations remained lackluster, primarily influenced by high interest rates in key global markets, persistent geopolitical tensions and a sluggish housing market in the United States.
Orders in the quarter amounted to $830.3 million, down 6.2% on a reported basis and a 4.7% organic decline from the prior year’s levels. While the company’s order levels for the entire quarter fell short of its short-term expectations, there was a noticeable improvement in trends across all segments as the quarter progressed.
Operating Highlights
In the fiscal third quarter, the gross margin increased 450 basis points (bps) from the prior-year quarter’s levels to 38.6%. The upside was primarily driven by strategic inventory management, moderating input costs, the implementation of price optimization strategies and ongoing synergy efforts. The adjusted gross margin expanded for the fifth consecutive quarter.
Consolidated adjusted operating expenses declined 6.4% year over year to $294.2 million, primarily driven by the continued focus on cost optimization and synergy capture.
The adjusted consolidated operating margin contracted to 6.7% in the quarter from 7.5% a year ago.
Segment Details
Americas Contract: Net sales declined 9% as reported and 9.2% organically from the prior-year quarter’s levels to $441.1 million.
New orders in the quarter amounted to $420.1 million, down 9% year over year on a reported basis and 9.4% organically.
The adjusted operating margin contracted 70 bps year over year to 8.1%. The downside can be attributed to lower sales. This was partly offset by positive price/cost dynamics, moderating input costs and benefits from synergy capture.
International Contract and Specialty: Net sales declined 10.4% as reported and 10.6% organically from the prior-year quarter’s levels to $217.3 million.
New orders amounted to $227.6 million, up 8.3% year over year on a reported basis and 7.9% on an organic basis.
The adjusted operating margin contracted 110 bps year over year to 10.4%.
Global Retail: Net sales declined 17% as reported and 11.3% organically from the prior-year quarter’s levels to $213.9 million due to softened housing-related demand.
New orders amounted to $182.6 million, down 14.6% year over year on a reported basis and 7.1% organically.
The adjusted operating margin expanded 10 bps year over year to 5.6%. The upside was backed by improved operational and delivery efficiencies and a favorable product mix.
Financials
As of Mar 2, 2024, the company had $558 million in liquidity. It had $223.6 million of cash and equivalents at the third-quarter fiscal 2024 end, up from $217.1 million in the year-ago period.
Long-term debt was $1,290.4 million, down from $1,365.1 million from the fiscal 2023-end.
During the fiscal third quarter, MLKN generated $60.6 million in cash flow from operations. The company repurchased approximately 1.5 million shares, with a total cash outlay of $40 million.
Q4 and Fiscal 2024 Guidance
For the fourth quarter of fiscal 2024, the company expects net sales in the range of $880-$920 million compared with $957 million reported in the prior-year quarter.
The company expects adjusted earnings per share in the range of 49-57 cents for the quarter compared with 41 cents per share reported in the prior-year quarter.
For fiscal 2024, it expects adjusted earnings in the range of $1.90-$1.98 per share compared with $1.85 per share reported in fiscal 2023.
Zacks Rank & Key Picks
MillerKnoll currently carries a Zacks Rank #3 (Hold).
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Ralph Lauren Corporation (RL - Free Report) presently sports a Zacks Rank of #1. RL has a trailing four-quarter earnings surprise of 18.7%, on average. The stock has surged 60.7% in the past six months.
The Zacks Consensus Estimate for RL’s fiscal 2025 sales and EPS suggests growth of 4.2% and 9.5%, respectively, from the year-ago levels.
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MillerKnoll (MLKN) Q3 Earnings Beat, Sales Miss, Stock Down
MillerKnoll, Inc. (MLKN - Free Report) reported mixed third-quarter fiscal 2024 (ended Mar 2, 2024) results, with earnings surpassing Zacks Consensus Estimate and net sales missing the same.
Shares of this interior furnishing provider plummeted 12.9% in the after-hours trading session but rose 1.8% during the trading session on Mar 27.
On a year-over-year basis, the top and bottom lines decreased. The company experienced declines in the contract and retail segments in the Americas but saw more positive demand levels in the International and Specialty segment, particularly in the contract component. Although consolidated order levels for the quarter fell short of near-term expectations, there was improvement across all segments as the period progressed. In February, consolidated orders increased by 2.8% compared to the previous year.
The company is confident about diversification, international expansion, technological investments, streamlined processes and innovation.
MillerKnoll, Inc. Price, Consensus and EPS Surprise
MillerKnoll, Inc. price-consensus-eps-surprise-chart | MillerKnoll, Inc. Quote
Quarter in Detail
MillerKnoll reported adjusted earnings of 45 cents per share, which beat the Zacks Consensus Estimate of 44 cents per share. However, the bottom line decreased 16.7% from 54 cents per share reported a year ago.
Net sales of $872.3 million missed the consensus mark of $910 million by 4.2%. The metric also declined 11.4% from the prior-year quarter’s levels of $984.7 million.
Organically, sales were down 10.1% year over year. The downside was due to declines in both America’s contract and retail segment sales. Demand across various sectors of the company's operations remained lackluster, primarily influenced by high interest rates in key global markets, persistent geopolitical tensions and a sluggish housing market in the United States.
Orders in the quarter amounted to $830.3 million, down 6.2% on a reported basis and a 4.7% organic decline from the prior year’s levels. While the company’s order levels for the entire quarter fell short of its short-term expectations, there was a noticeable improvement in trends across all segments as the quarter progressed.
Operating Highlights
In the fiscal third quarter, the gross margin increased 450 basis points (bps) from the prior-year quarter’s levels to 38.6%. The upside was primarily driven by strategic inventory management, moderating input costs, the implementation of price optimization strategies and ongoing synergy efforts. The adjusted gross margin expanded for the fifth consecutive quarter.
Consolidated adjusted operating expenses declined 6.4% year over year to $294.2 million, primarily driven by the continued focus on cost optimization and synergy capture.
The adjusted consolidated operating margin contracted to 6.7% in the quarter from 7.5% a year ago.
Segment Details
Americas Contract: Net sales declined 9% as reported and 9.2% organically from the prior-year quarter’s levels to $441.1 million.
New orders in the quarter amounted to $420.1 million, down 9% year over year on a reported basis and 9.4% organically.
The adjusted operating margin contracted 70 bps year over year to 8.1%. The downside can be attributed to lower sales. This was partly offset by positive price/cost dynamics, moderating input costs and benefits from synergy capture.
International Contract and Specialty: Net sales declined 10.4% as reported and 10.6% organically from the prior-year quarter’s levels to $217.3 million.
New orders amounted to $227.6 million, up 8.3% year over year on a reported basis and 7.9% on an organic basis.
The adjusted operating margin contracted 110 bps year over year to 10.4%.
Global Retail: Net sales declined 17% as reported and 11.3% organically from the prior-year quarter’s levels to $213.9 million due to softened housing-related demand.
New orders amounted to $182.6 million, down 14.6% year over year on a reported basis and 7.1% organically.
The adjusted operating margin expanded 10 bps year over year to 5.6%. The upside was backed by improved operational and delivery efficiencies and a favorable product mix.
Financials
As of Mar 2, 2024, the company had $558 million in liquidity. It had $223.6 million of cash and equivalents at the third-quarter fiscal 2024 end, up from $217.1 million in the year-ago period.
Long-term debt was $1,290.4 million, down from $1,365.1 million from the fiscal 2023-end.
During the fiscal third quarter, MLKN generated $60.6 million in cash flow from operations. The company repurchased approximately 1.5 million shares, with a total cash outlay of $40 million.
Q4 and Fiscal 2024 Guidance
For the fourth quarter of fiscal 2024, the company expects net sales in the range of $880-$920 million compared with $957 million reported in the prior-year quarter.
The company expects adjusted earnings per share in the range of 49-57 cents for the quarter compared with 41 cents per share reported in the prior-year quarter.
For fiscal 2024, it expects adjusted earnings in the range of $1.90-$1.98 per share compared with $1.85 per share reported in fiscal 2023.
Zacks Rank & Key Picks
MillerKnoll currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Consumer Discretionary sector:
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ATGE has a trailing four-quarter earnings surprise of 16.9%, on average. The Zacks Consensus Estimate for ATGE’s fiscal 2024 sales and EPS indicates an increase of 6.4% and 10.2%, respectively, from the year-ago levels.
Ralph Lauren Corporation (RL - Free Report) presently sports a Zacks Rank of #1. RL has a trailing four-quarter earnings surprise of 18.7%, on average. The stock has surged 60.7% in the past six months.
The Zacks Consensus Estimate for RL’s fiscal 2025 sales and EPS suggests growth of 4.2% and 9.5%, respectively, from the year-ago levels.
Hyatt Hotels Corporation (H - Free Report) currently carries a Zacks Rank of 2 (Buy). Hyatt has a trailing four-quarter earnings surprise of 17.8%, on average. The stock has increased 51.6% in the past six months.
The Zacks Consensus Estimate for H’s fiscal 2024 sales and EPS calls for growth of 3.5% and 27%, respectively, from the year-ago levels.