Executive Summary

Q1 FY2026 revenue and earnings exceeded Street and company expectations: Net sales of $955.7M vs S&P Global consensus $911.0M and adjusted EPS $0.45 vs $0.343; GAAP diluted EPS swung to $0.29 from $(0.02) YoY, despite tariff headwinds . Values retrieved from S&P Global.*
Operating margin improved to 5.6% from 1.8% YoY; gross margin down 50 bps to 38.5% due to ~$8M net tariff impact, partially offset by sales leverage .
Orders fell 5.4% YoY to $885.4M due to a $55–$60M Q4 pull-forward linked to a surcharge and price increase in North America Contract, with backlog declining to $690.9M from $761.3M in Q4 .
Q2 FY2026 guidance implies sequential margin resilience and lower tariff drag: net sales $926–$966M, gross margin 37.6–38.6%, adjusted EPS $0.38–$0.44; tariff impact shrinks to $2–$4M and $0.02–$0.04 per share vs $9–$11M and $0.09–$0.11 in Q1, a positive catalyst if execution holds .

What Went Well and What Went Wrong

What Went Well

Strong top-line growth and profitability: net sales +10.9% YoY; adjusted EPS +25%; operating margin strength driven by fixed cost leverage on higher volumes .
North America Contract performance: net sales +12.1% YoY; adjusted operating margin +200 bps to 11.4% despite tariffs; management highlighted “strong execution… improving conditions… continued progress on strategic growth initiatives” .
Retail growth levers gaining traction: North America retail orders up 8% YoY; opened four stores with plans for 12–15 stores in FY26; new products and e-commerce traffic driving demand (web traffic +17%) .

What Went Wrong

Gross margin compression (50 bps) from ~$8M net tariff impact, with additional freight and mix pressure in Retail; retail adjusted margin fell 190 bps to 1.2% due to freight, tariffs, and new store pre-opening costs .
Consolidated orders -5.4% YoY and backlog down to $690.9M (from $761.3M in Q4) due to $55–$60M order pull-forward, complicating near-term demand visibility .
International Contract adjusted margin down 60 bps to 8.5% on regional/product mix; APAC/MEA and LatAm orders weaker, offset by Europe/UK .

Financial Results

Consolidated Performance vs prior quarters

Metric	Q3 FY2025	Q4 FY2025	Q1 FY2026
Revenue ($USD Millions)	$876.2	$961.8	$955.7
Gross Margin %	37.9%	39.2%	38.5%
Operating Margin %	(9.4)%	5.7%	5.6%
GAAP Diluted EPS ($)	($0.19)	($0.84)	$0.29
Adjusted Diluted EPS ($)	$0.44	$0.60	$0.45

Q1 FY2026 vs S&P Global Consensus

Metric	Q1 FY2026
Revenue Consensus Mean ($USD Millions)	$911.0*
Revenue Actual ($USD Millions)	$955.7
Primary EPS Consensus Mean ($)	$0.343*
Adjusted EPS Actual ($)	$0.45
Primary EPS - # of Estimates	3*
Revenue - # of Estimates	3*

Values retrieved from S&P Global.*

Segment Breakdown

Segment Metric	Q3 FY2025	Q4 FY2025	Q1 FY2026
North America Contract Net Sales ($M)	$468.2	$496.1	$533.9
North America Contract Adjusted Op Margin %	9.1%	10.0%	11.4%
International Contract Net Sales ($M)	$145.5	$185.7	$167.5
International Contract Adjusted Op Margin %	9.3%	12.9%	8.5%
Global Retail Net Sales ($M)	$262.5	$280.0	$254.3
Global Retail Adjusted Op Margin %	6.2%	6.5%	1.2%

KPIs and Balance Sheet

KPI	Q3 FY2025	Q4 FY2025	Q1 FY2026
Consolidated Orders ($M)	$853.1	$1,036.8	$885.4
Backlog ($M)	$686.4	$761.3	$690.9
Liquidity ($M)	$468.2	$575.9	$480.5
Cash from Operations ($M)	$62.1 (Q3)	$70.9 (Q4)	$9.4 (Q1)
Net Debt / Adjusted Bank Covenant EBITDA (x)	2.93x	2.88x	2.92x

Non-GAAP adjustments: Q1 adjusted EPS excludes amortization of Knoll intangibles ($0.09), restructuring ($0.01), debt extinguishment ($0.11), and related tax impacts ($0.05) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($M)	Q1 FY2026	$899–$939	—	—
Adjusted EPS ($)	Q1 FY2026	$0.32–$0.38	—	—
Gross Margin %	Q1 FY2026	37.1–38.1	—	—
Adjusted OpEx ($M)	Q1 FY2026	$290–$300	—	—
Interest & Other Expense ($M)	Q1 FY2026	$17.6–$18.6	—	—
Adjusted Tax Rate %	Q1 FY2026	21.5–23.5	—	—
Tariff EPS impact ($)	Q1 FY2026	$0.09–$0.11	—	—
Net Sales ($M)	Q2 FY2026	—	$926–$966	Raised vs Q1 guide
Adjusted EPS ($)	Q2 FY2026	—	$0.38–$0.44	Raised vs Q1 guide
Gross Margin %	Q2 FY2026	—	37.6–38.6	Raised vs Q1 guide
Adjusted OpEx ($M)	Q2 FY2026	—	$300–$310	Raised vs Q1 guide
Interest & Other Expense ($M)	Q2 FY2026	—	$16.2–$17.2	Lowered vs Q1 guide
Adjusted Tax Rate %	Q2 FY2026	—	22.0–24.0	Slightly raised vs Q1 guide
Tariff EPS impact ($)	Q2 FY2026	—	$0.02–$0.04	Lowered vs Q1 guide

Notes:

Company explicitly includes tariff-related impacts within guidance .
Q1 guide provided in June; Q2 guide provided in September; comparisons reflect sequential directional change.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY2025)	Previous Mentions (Q4 FY2025)	Current Period (Q1 FY2026)	Trend
Tariffs & Mitigation	Policy uncertainty; planning list price increase and possible surcharges	~$7M drag; expect near-term margin pressure then offset via pricing; Q1 tariff EPS impact $0.09–$0.11	~$8M drag; net impact expected $2–$4M in Q2, offset in 2H	Improving (lower impact)
Demand & Orders	Mixed demand; contract orders lumpy; retail strength; backlog $686M	NAC orders up +16% (with $55–$60M pull-forward); backlog +$78M QoQ	Orders -5.4% YoY due to pull-forward; funnel metrics positive; early Q2 orders up ~6% in first three weeks	Normalizing post pull-forward
Retail Expansion & Profitability	Announced 10–15 new stores in FY26; assortment expansion	Opened 2 stores; margin pressure from pre-opening costs; long-term mid-teens OI target	Opened 4 stores; adjusted margin down 190 bps; ~$4–$5M Q2 pre-opening costs; stores accretive by FY27	Investment phase (near-term margin drag)
Product/R&D Innovation	Segment reorg; pipeline expansion; store/showroom investments	Introduced Knoll Dividend Skyline; Herman Miller Gemma healthcare seating; flagship experiences	Launched Aeron ESD for data centers; continued innovation and geographic/channel expansion	Strengthening
Regional Trends	APAC/MEA & LatAm order growth; Europe mixed	Europe/UK strong; LatAm strong; limited pull-ahead internationally	Intl orders down (APAC/MEA, LatAm); Europe/UK higher; margin mixed	Mixed
Leadership & Governance	Segment recast; governance stable	—	John Hoke appointed incoming Board Chair; Jeff Stutz named COO; Kevin Veltman interim CFO	Governance refresh

Management Commentary

“We are pleased with our strong start to fiscal 2026… improving conditions in several key markets, and continued progress on our strategic growth initiatives” – Andi Owen, CEO .
“Adjusted EPS of $0.45… 25% ahead of prior year… driven by better-than-expected sales and strong gross margin performance… despite ~$8M net tariff impact” – Kevin Veltman, Interim CFO .
“Pricing actions… created a sense of urgency… we estimate $55–$60M pull-forward… backlog growth in Q4 means sales in Q1 and Q2 won’t fully benefit from pricing” – Jeff Stutz, COO .
“We launched an electrostatic discharge version of the Aeron Chair for data center clean rooms… strong interest globally” – Andi Owen .
“North America retail web traffic up 17%; new product order growth over 20%… opening 12–15 new stores in FY26” – Andi Owen .

Q&A Highlights

Normalizing North America Contract growth: Combined Q4+Q1 NAC order growth ~3.3% despite pull-forward; demand more volume-driven; early Q2 orders up ~6% in first three weeks .
Pricing vs discounting: Discounting stable; surcharge adjustment in July drove order placement; lead times enabled shipments .
Retail margin puts/takes: ~190 bps YoY margin pressure; more than half from new stores; remainder split between tariffs and freight; pre-opening costs in OpEx, not gross margin .
Tariff mitigation cadence: Net impact $8M in Q1; $2–$4M expected in Q2; pricing actions expected to offset in 2H .
Competitive landscape & M&A: Consolidation seen as positive; MLKN opportunistic on acquisitions; international retail wholesale still lagging, direct-to-consumer stronger .

Estimates Context

Beat vs S&P Global consensus: Revenue $955.7M vs $911.0M; adjusted EPS $0.45 vs $0.343; 3 estimates for each metric . Values retrieved from S&P Global.*
Implications: Near-term estimate revisions likely higher on revenue and EPS; tariff mitigation and backlog conversion into 2H support upward adjustments barring macro shocks .

Key Takeaways for Investors

Q1 FY2026 delivered broad-based beats vs Street and internal guidance; strength concentrated in North America Contract and Retail demand drivers despite tariff drag .
Tariff headwinds moderating in Q2 guidance; pricing actions expected to fully offset in 2H, a potential margin expansion catalyst .
Retail expansion is a deliberate investment cycle (near-term OpEx drag); assortment growth and e-commerce traction support the medium-term mid-teens operating income target .
Post pull-forward, order patterns are normalizing; positive funnel indicators (mockups, pricing requests, contract activations) underpin demand visibility into Q2/Q3 .
Segment mix matters: watch International Contract margins (regional/product mix pressure) against improving Europe/UK orders .
Balance sheet/liquidity remain solid; net debt/EBITDA ~2.9x with extended maturities and refinancing completed (Term Loan B to 2032) .
Near-term trading: positive bias on reduced tariff impact and sustained demand momentum; risks include macro/tariff volatility and retail pre-opening cost drag .

MILLERKNOLL, INC. (MLKN)·Q1 2026 Earnings Summary