Research Update: MillerKnoll Inc. Outlook Revised To Stable From Negative; Ratings Affirmed

U.S.-based office and residential furniture manufacturer MillerKnoll Inc.'s recent order trends have improved in both its North America and International contract office furniture segments. Despite difficult operating conditions over the past two years, the company has improved its profit margins and generated satisfactory free operating cash flow (FOCF). Industry conditions are improving, the risk of a U.S. recession has declined, and global GDP will increase slowly over the next few years. We revised our outlook to stable from negative and affirmed our 'BB' issuer credit and 'BB+' issue-level ratings on the company's senior secured bank credit facility. The recovery rating remains '2', indicating our expectations for substantial (70%-90%; rounded estimate: 75%) recovery in the event of a payment default. The

...- U.S.-based office and residential furniture manufacturer MillerKnoll Inc.'s recent order trends have improved in both its North America and International contract office furniture segments. Despite difficult operating conditions over the past two years, the company has improved its profit margins and generated satisfactory free operating cash flow (FOCF). - Industry conditions are improving, the risk of a U.S. recession has declined, and global GDP will increase slowly over the next few years. - We revised our outlook to stable from negative and affirmed our '##' issuer credit and '##+' issue-level ratings on the company's senior secured bank credit facility. The recovery rating remains '2', indicating our expectations for substantial (70%-90%; rounded estimate: 75%) recovery in the event of a payment default. - The stable outlook reflects our belief that MillerKnoll will maintain leverage below 4x and gradually improve operating performance, supported by improving order trends and non-recessionary...

Research Update