S&P moves MillerKnoll view to negative

S&P said it revised its outlook on MillerKnoll Inc. to negative from stable and affirmed its BB+ issuer and BBB- senior secured debt ratings. The recovery rating remains 2, indicating expectations for substantial (70%-90%: rounded estimate 75%) recovery in default.

“The outlook revision reflects weaker-than-expected operating results for the past two quarters due to raw material and labor cost inflation and global supply chain disruptions. Despite organic growth, the company's year-to-date adjusted EBITDA margin of 13% was below our expectations,” the agency said in a press release.

S&P said it estimates MillerKnoll’s adjusted EBITDA margin to tighten further to around 11% for the full fiscal year 2022 (ending May 31).

“The negative outlook reflects the potential for a lower rating over the next 12 months if we believe the company's operating performance will not recover, resulting in adjusted debt to EBITDA sustained above 3x,” S&P said.

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