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Second quarter fiscal 2024 results

Miller Knoll, Inc. flourishes despite challenges

In their recent fiscal report for the second quarter ending December 2, 2023, Miller Knoll Inc. showcased a resilient performance, albeit amidst challenges.

Photo: MillerKnoll

Here’s a snapshot of the standout points:

- Earnings guidance boost: The adjusted earnings projection for fiscal year 2024 is now anticipated between $2.00 and $2.16 per share, signaling an optimistic growth trajectory.

- Consolidated margin surge: A significant 470 basis points expansion in consolidated gross margin was reported, reflecting positive trends across all three segments.

- Profits on the rise: Demonstrating noteworthy profit growth, the company experienced a striking 114.3% increase in US GAAP and a commendable 28.3% growth in Adjusted EPS, year-over-year.

Key insights
The quarter saw consolidated net sales of $949.5 million, showing an 11.0% decline on a reported basis and a 10.1% organic decrease compared to the same period in the previous year. Although experiencing a dip due to reduced backlog, a faster fulfilment pattern mitigated this decline to some extent. The quarter's orders totalled $944.0 million, indicating a 6.8% decrease on a reported basis and a 6.0% organic decline compared to the prior year. However, there was an encouraging sequential uptick in order intake as the quarter progressed.

The company recorded a robust gross margin of 39.2%, marking a significant 470 basis points rise over the same period last year. This upswing was attributed to strategic inventory management, moderated input costs, successful price optimization, and synergy efforts, resulting in four consecutive quarters of consolidated year-over-year adjusted gross margin expansion.

Operating expenses for the quarter were $311.6 million, with adjusted expenses at $296.9 million, showcasing a $7.0 million year-over-year reduction. The operating margin was 6.4%, significantly improving from 3.6% in the same quarter last year. Adjusted operating margin hit a record high of 7.9%, marking substantial progress since Knoll, Inc.'s acquisition.

Earnings per share demonstrated positive growth, with reported diluted earnings at $0.45 compared to $0.21 for the same period last year. Adjusted diluted earnings per share stood at $0.59, showcasing a 28.3% increase year-over-year despite a 10.1% organic net sales decline.

Outlook for fiscal 2024

Despite economic uncertainties, the company is optimistic, foreseeing margin improvements and indications of demand stabilisation in North America. The adjusted diluted earnings guidance for fiscal 2024 is revised to $2.00 and $2.16 per share. For the third quarter of fiscal year 2024, net sales are estimated between $890 million and $930 million, with adjusted diluted earnings expected between $0.40 to $0.48 per share. These projections account for consolidated orders' growth and seasonal trends.

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