Steelcase (SCS) 20 Dec 222023 Q3 Earnings call transcript

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Steelcase Third Quarter Fiscal 2023 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator you. Thank Mr. Mr. begin may O'Meara, your you conference.

Rob. for you you, XXXX results. everyone. third Thank us for financial morning, joining the fiscal Thank quarter Good recap our of

Chief are Vice Senior and Chief our Here Sylvester, President Sara Officer. me and Dave today President with and Executive Financial Officer, our Armbruster,

of crossed Inc. earnings a webcast webcast is and this webcast wires is accessible A call on through third quarter today. the conference being Our our production is Steelcase of copyrighted replay release, which posted later be yesterday, website. This will this ir.steelcase.com

financial today of and most discussion incorporating are may in our earnings details with Our text include measures into statements reference included the references of release. by GAAP statements. the regarding our to conference release, non-GAAP are to and call use risks the in associated Safe the measures we Reconciliations the this statement and forward-looking Harbor comparable forward-looking included

now analysts. Executive call Armbruster. remarks, and questions Chief will Officer, to prepared we to President over I respond our Following will our investors turn Sara from and the

today's Thanks, joining and hello, everyone, thanks for Mike. And call.

in third and about results challenging Our we EPS provided finished feel about expected we within quarter the what that we range given revenue both good guidance as were the and environment. September,

clients of to We potential at our QX, down and corporate this soften. caused order as recession slowed has end many quarter. to space have of our continued a Our started world, the and investment demand pattern throughout and face the in they office in third parts economic uncertainty see our this flow levels

QX, continue by labor. to and within persists inflation enough supply our we multiple struggle in strategic actions. executing three and against delivered find to expectations pillars by results additional side, partners chain our Yet, supply the taking On our

and customer we in corporate softness the diversifying helped segments market. progress in serve offset the market Our

adjustments action recessionary of successfully, EMEA I in operating chain under challenging continue disruptions improve our from implement targets us expenses that, to corporate numerous environment, impact note market, the these CEO a stay, furniture and abate financial the income we improvement proud us their contributed results support our of the a that in Dave with deliver by in our right headwinds significant supply and that We're also less can markets offices will $X how a patterns, market the offices our in over of we differently contract pandemic. cover work confidence successfully quarter. evolve – and levels primary I'm about to organization's to want demand to demand next space company of to that the deliver of concerns our in invest strategies. compete and hybrid environment. detailed and coming to large solid share We now, and customer forward and to mitigated current which win continued I'd we're for commitment it's in core results. will ready that like is managed XXXX market our prior delivering in why navigating. than we're landscape customers more it's operating our to and we pricing today, needs no that on pursuing that office believe intensified about around few face objectives to of driven pressure, to We will relentlessly, long-term and to operations. decide we've in invest improved results despite invest thinking we customers hybrid cities, thinking drive business million customers the clear I evolving quarters, three objectives diversifying There's more imagine focus serve, big to fiscal meet path by strategy transformation, not we work improving position weighing how work Because Americas. we a to with he'll minute, in to model for our leading next share the essential typically a share disputing to the how years. picture paint recent office three more think years. expectations about want the more profitability. our and the but customers believe to is we're quarter space the our and current over traditionally with flexible here In may we earnings And And in see customers as this especially wise it's

two there things at are here. So, important play

the know that might gap recovery for stabilizing a would First, at create size of market you us one levels, obviously work large below don't strategies. office to if be contract give revenue industry companies model what the level implement you furniture XX% ultimate But Americas XX% to the scenario, to pre-pandemic hybrid fill. that's as we a

the believe ways they'll types demand, corporate is which employees that changing. of solutions they for of matter need the the pandemic. their prior than how the the in level that support different we of from Second, nature The future are changes, demand today no work and customers and to

reduced bring hole this we only evolve those created of for that been and sharing this to does for expand a innovation corporate changing to you with me believe do. pillars leaders not ability be Industry customer do customers the in last we're business to continue we And has parts quarters. what insights our few we to we've to our the that fill based and can needs. portfolio what to for to intend mean also to market our That's corporate brings confident years shifts by may three adapt. serve face demand, So, other Well, that's done and Steelcase customers' XXX what Steelcase?

That's workplace. of intend the three invested remained are strategies and model in And the the the ever. now changes and lead our and challenges we why product portfolio innovation profound to insight to past first, we our Corporate work our nearly work go-to-market our customers matter even hybrid with So, evolve transformation. more years. than during grappling in

Our as hybrid collaboration market pods on new plan research. future Orangebox spaces help customers more the focused collaborative for and hybrid Frame, We the of corporate their individual Spaces, customers engaged our and products we Personal experiences such equip and Everwall the focus privacy reimagined introduced These needs ready most workplace. product ways We've development leader, research for solutions work, based such and that next product needs in in position our both work work this workspaces critical and is changing. expanding delivering as has Flex have ways supporting And to Active innovative believe Flex investment driven as our spaces on portfolio share. and a solutions to reinforces the of is increased on understand relentless year. introduce customer great

compared The and as growth, this effective sales year, ways shifted we grown faster past go-to-market market than also the align to sales our to We're strategy. and efficient. Over resources to be attractive to and in roles we've to We've more tailored our This resources support we in and industry. person our and more segments which month, for opportunities continue provide what high we offer, model position products redesigning delivering healthy a business. we're and customers and impact influencers have virtually. both significantly more accessible to go-to-market experience to enable and customer we to more will are leading too, and changing are and customers ways. experiences maintain These local, innovations in engage who corporate us that

expand higher gaining work lead the is hybrid strategy also a business our market we and market, on opportunity that transformation Our to segment. share tremendous focused beyond the corporate to of see

So decline also contribute potentially in continued aggressive serve. the enable our offsetting second any to than of any pillar market the we decline. customer corporate market, targets segments believe We us to more diversification this offset will and and

we've of In Our and System providing their the leader diversification of System year-to-date our classrooms at Smith is centered mid-market point XXXX is is the progress. Smith fiscal K-XX about and plan. our markets. and for XX% acquisition, same we're which around business education initial approximately revenue education, ahead has been doubled in since business proud very a the in solutions our consumer

ours, which globally. an potential focus also has believe growth of strong additional higher education, We been provides market important

Our education good success seen example, Pacific, Asia several over years. past has the for business in

to West And leverages new XXX% as accelerate we Americas, to invested success mid-market and also investing partners companies We're grow Elm will the and year-to-date Buy. has excited revenue This geared desire, our consumer of progress compared Best that above acquisition. initiating smaller simplicity growth more our about speed, have operational around delivery, revenue has to it In this to approximately towards mid-size is digital more rolled Americas which customer XX% market speed the fiscal in reach here. XXXX, up and like in and additional expect experience solid out we growing be businesses. and continue. to and manner. driven that retail business represents delivers since our consumer segment. to enhancements segment. tools and additional serve typically allow XXXX. better smaller enhanced We've fiscal AMQ effective The and serve potential, the diversification XX% strong support, year mid-market approximately year to XXXX I'm AMQ which really at doubled customer an compared consumer world, had is than business the experience the through year-to-date we've and this the We to to AMQ, we businesses a over growth up fiscal have and tailored of consists in expect opportunities

where who support Gesture, insights-based is work for provide to design, we expect and bring consumers eSports, performance quality work grow potential target and are quality Steelcase innovation such performance. We niches, as play at like also our all products looking significant higher to home. a of specific to to as day consumer their combination There and

The increase strategy profitability. pillar our our to is third of

fronts working improvement. actively We are on to multiple drive

have two we've as our experienced actions. industry over and inflation, years, past the we extraordinary has taking responded continuously pricing by significant discussed First,

quarter, if we cumulative still the pricing inflation could for these QX the on reflected earnings. net see to exceeds a benefit we earn and can pricing fully While we benefits. Once year-over-year margin cumulative inflation second intend, as consecutive benefits offset,

always our improvements. we've focus cost The on cost annual a however, pursued more structure. pricing, improving environment, Beyond current aggressive requires

we've past months, three for working been initiatives. several on So, the additional

regional similar reduces consolidation our improves which close production and space and to processes that the other and floor equipment. reduce efficiency optimizing include significantly October, complexity, Denver bearing our improve modernizing footprint, reduce with challenges. portfolio that the First in fruit, is model This example increasing product chain to is which evolution mitigate to being operational supply an our required and were our able distribution technologies manufacturing our work investment facility of include will one one examples of in new Two our we agility into in operational our center. Americas, efficiency redundant

and efficiency We are parts gains. cost moves operations provides of and action are These taking streamline costs. examples also insourcing reduction certain kinds and goods finished reduce to we're the which of

is The effort planning while is process on our updating design business more system. processes, second focused efficient transformation, business initiative effective which enterprise resource and our to

as at and the of expect processes this great of beginning customization systems. business supporting but we effort, multi-year our We best reduced adopt are practices benefits and we

at consultants Our with of external ensure achieve gains future we level the appropriate as teams investment working we to to our platform. are the transition maximum

The redesign our third earlier. which is we efficiencies capture I to go-to-market as certain initiative mentioned approach,

aviation adjust deployment experience our customers where customer component by can we reduce will customer with better they cover in be are, of more our engagement an will will decision more Grand down costs only it go-forward we aviation strategy. This will engaging carbon reduce investment but for move specific ramp a Rapids approach. the potential our minute. free to important continue our our and financial not Our up Yet, footprint. as to capital strategy, customer support our of Dave implications also

The is that better us. help market. to we diversify aspiration believe possible. to to in and by do share change market work Before leading in our volume to we the offset future with traditional to forward. we Dave to change, office our And profound the We corporate and creating increase serve, why market just have work, I'd that, We gets world segments is the our reaffirms corporate space their places better. from our investments path the people summarize believe this experiencing gap profound decline like exciting any hybrid transformation customer may initiatives our potential believe is work to along the face of the by best

have the is On to there potential plans the to more initiatives of implemented, margin that our and coming pre-pandemic say the believe level benefits of timelines provide today initiatives our for expect levels deliver believe $X.X is these we coming and quarters. of timing The quarters profitability. above of assess to anticipated magnitude we results higher X.X%. profitability front, revenue Fully and We'll develop we fully as we as strategy and billion our point the the over regarding operating drive more the could in initiatives. our key more details meaningfully ultimate

it I'll outlook the So turn results with and review over to to that, our more deeply. financial Dave

everyone. our and share comments quarter recent comparison quarter And to some third some My we outlook some Thank thoughts preliminary as also our our regarding comments in sheet for September, patterns, cash will including flow. will and color the cover morning, XXXX. demand as good provide about a I around you, the the Sara. fourth results, outlook provided well today actions, balance the fiscal

in sale earnings notable the despite a delivered completed challenges gain the our the revenue Sara projected implementing disruption to fourth the million of quarter. being and headcount in previously is supply line property continuation of the were we $X our As results and our from about delayed internal with of announced that performance quarter reductions, and quarter, which in chain we the What's third expectations. the said, adjusted

estimate impact many remain experienced dates within our times. customers to a For million despite Requested the prior we our all by standard extended, $XX patterns products volume line. relatively the by top revenue, order delivery which being softening modest. We quarter year, driven was available approximated growth our had Thus, was small the organically XX% pricing we compared and benefits in segments. lead grew of year-over-year core on

our which to range we was projection, and gross the operational respect operating offset As headcount were $XX expenses, to by in it corporate earnings, in implemented basis. helped this inefficiencies. coming we operating reduce in approximately due lower which to Americas resulted cost structure quarter than million and functions, expenses to adjusted lower relates lower restructuring million our our $XX With to some margin than projected, actions annualized of to an on the and expected previously announced in costs the the is approximately slightly

part many which As earlier job of requisitions, structure our this the were were than replacement reqs more also part we eliminated of open and work, cost of XX in year.

strategy. we functional in work, with our Sara next coming identified continue wind reallocate was we aircraft And review and/or down pull the support To not to and our to difficult a completed additional also this through for to a potentially customer additional we the of this pause Beyond decision opportunities these using opportunities or actions, we look reduce go-to-market just refinement over highly approach. is the spending eliminate endeavor, to that spending year. back, Americas that summarized recently aligned that Also with of sell Xero-based go-forward strategy aviation our connection summarized, our months. the made in spending

in in annualized fully the first implemented the will We million result once restructuring expect and $XX of costs fiscal approximately XXXX. generate of of action $X this fourth in savings approximately million quarter quarter

aircraft of May addition, use pay which expect to on the sale X, the related off we to matures XXXX. financing, our the from proceeds In

and we ended in cash the million flow total and which in few $XXX was with quarter cash million dollars than a balance million For higher the sheet, QX. liquidity, $XX

which our million collectively During cash other approximately million a funded financing. of and including our the of borrowings aggregated aircraft remaining related of $X in expenditures, million $XX the credit debt costs, payments, At of working under million dividend net million quarter, $XX $XX million million in our and third credit end total impacts, $XX EBITDA, debt facility. $XX million under quarter, adjusted and term to capital $XX we facility capital, $XXX positive repayments generated improvement $XX million net of million, $XX of the our restructuring of of

less fourth term We million, to times X.X on our two off debt third net long quarter. of liquidity. than the sale credit trailing approximated facility and ratio represents expect taking reduce pay the project the of into with the four end the adjusted term debt the continue basis the will which quarter, $XXX consideration our of our aircraft, our our long by paying financing, EBITDA times, related to we it's a which And to end At of quarter to notes. off

by we Americas, broad-based volume third as we prior in Moving in patterns XX% orders, by offset growth the impacted XX% decline believe concerns. to geopolitical to by year-over-year, XX% was related linked we which In approximately declines year, across more benefits. orders quarter and demand softening saw segments, to XX% the XX% to driven including the category. year, by due than being are this XX% reduced compared Compared Americas, industry which EMEA, and to earlier all macroeconomic other estimate sentiment are declined partially the trends, to in pricing

year. addition, strategies there, XX% Across we XX% customers year-over-year, their that down in the a And on disclosed December, hybrid seen three support decline September In through consolidated prior and we've the the declines followed weeks November. varied undecided the October of quarter, X% full in remain the the to through the XX% were of prior significantly. three versus first From year. weeks work. to month compared many our that comparisons declined of approximately first of year-over-year XX% by orders September last quarter of Recall

consecutive shown and we weakness where While order Americas, months now creation year-over-year the of has improved, earlier patterns the in compared six opportunity new have year, to in growth. have varied especially project seen

the within design is to one and report which over returning quarter encouraged improvement the to report offices Shifting earnings news the outlook, adjusted fourth their them are some significant to of breakeven we and the which represents year. And $XXX the that by share a $X.XX more range expect EPS million, prior expect to approximately in revenue year. to addition, with flat adjusted the of significantly. per we had firms between In we large of $X.XX, million we are prior $XXX hiring, is

In year estimate which and includes addition the includes nearly points to the prior projected million. inflation projected revenue, the higher approximately basis benefits $XX XXX earnings range XX%, is year-over-year of of gross approximately margin of of pricing net than

$XXX are related includes $XX of of expected assets. intangible operating $X.X from purchased of expenses to and approximately assets we million, to of million sale $XXX gains between addition, amortization million million In fixed projecting the which

net expense effective interest expense, expect to of million Lastly, we items non-operating XX%. projecting tax rate approximately other we and are an approximately and of to $X

we the XXXX, are several beyond look year things into and As fourth quarter fiscal consider. there to

First, we the pricing inflation fully actions cumulative basis. quarters, on the approximately realize over which are million targeting from to extraordinary more seven taken the benefits to last totals offset we estimate we've a $XXX the

employee additional benefits In next are benefits and year activities to we're addition, broadly, disruptions. gross and offset health initiatives pay reduction supply targeting earlier. to more actions some in investments from increases, strategy fewer targeting we the and from cost summarized operational across strategic merit recurring Sara chain margin our operations our costs care higher And related improvement with

revenue demand we volume. our will and fast significantly more to expenses, the questions work? shareholders our for concerns question at of we revenue And but abate, for and similar relatively a recovery next and we is that their also volume What are contribution to know that how recessionary the if some environment context I least growth targeted year the our target whether strategies the increase much at to strategy by return about you target how our all improving picture investments improvement. about detailed, levels we structure my increasing pre-pandemic clear invested Americas incremental there its clients for there of investing earnings compared the margin do the that, beginning the a to as how thinking to demand opportunity through expect clear will The our support earnings for and benefit for include might a slowly wanted creation, And a state. with from big environment we'll from patterns what will future. we're to what strong for clear remain the from cautious managing worsens, to We smaller office or returns how year, quickly I quickly wherein answers pace is structure managing a deliver be Sara the hybrid and meaningful our clear acknowledge our offset this is I approach, is be will as uncertainty. in term, are during partially invest actions the we doesn't current an cost are next a at operating For the industry with planning we savings Longer summarized about comments. that how share These paint stages. increasing questions beyond once and of and/or while continue aren't is future point. range early settle cost probability into environment improves, which if we is at target the

diversify However, our the lead our further to potential to transformation offset base. impact we our targeting and on revenue the revenue hybrid are through strategies

the we And the addition, have additional to to improve clarity strategy as quarters workforce, meaningfully laying our we to our initiatives returns investments even path out higher and in with believe profitability come. fund to look enable well as more shareholders. In help forward that in potential to

on as execute financial are our strategy. about it optimistic very focused From I through results questions. managing staying we're environment, will while So driving the we for over there, current turn we improved

[Operator Instructions].

line Your Reuben Garner first of comes Company. question the Benchmark from from

today? the kind they timeline the this color how you are education, down consumer. revenue there goals start strategy. and any idea with that timing road. could big down Can think can the early today? end diversifying point? mentioned at potential we if mentioned road. for those it's you of mentioned Any give I buckets percentage know you you markets share I mid-market quantification of and And three are Maybe stages, and What us you

at and that conversation we the initially announced could I take Well, acquisitions. offline of with you back guys want look Ks where might go think to you some when Mike,

commented size businesses how we think organizations of we the and since included on some than doubled of or initial Sara the them, those more date. when acquired tripled we've those I acquisition

of So reference stand much at how of where trying I the XX% There, today, might XX%, way smaller I modeling least to is give answer how I'll we they your get different know the some sense you'll help. be. might industry to which a question scenarios. a don't But behind we're context used think

you If a a $XXX initiatives, on million, Americas a FY see revenue, imagine as dollars, as potential to several well our million, share kind decline. up downturn for of as XX% in with kind $XXX million the diversification XXXX hundred a come you gaining let's smaller say. And offset we of industry our that way

of we not what saying because sense to look kind give I'm you three the how our we But in magnitude or that and target don't hopefully industry Now, But that kind a go-forward, revenue context. the our industry diversifying a growth we're going of that helps, to predicting of years. our share strategies of that's is really two know the in intention as shared higher well Reuben. as to

Yes.

Just follow-up does FY that. on a quick XXXX? to relative volume today stand Where

tracking versus at Well, our versus with as and What tracking how XX industry in low softened to It the we've XX% patterns levels. And in pre-pandemic more from kind the And more has has significantly. it's core of say, levels levels. the would pre-pandemic initial it's the part and are been worsened XXs, since pre order it how range closely, it stands business patterns the order the our down to I interim the as of pandemic there year, pandemic. over have followed. in year-and-a-half improved been

got the your announcements and between headwinds? the catching have talked $XX help You know On the costs $XX those then and incremental – than year? tailwinds quarter. these a like that on to initiatives price last kind still you kind you've the up. you of or all that these profitability coming in more you for us can bridge of incremental for cost aviation savings million offset what together I some you about are this initiatives, line million, offset have guess, that some you're sounds first might with but of today the quarter, It put or profit I volume And can

we'll I'm that you share the XX you've of thinking kind help way Yeah, don't you we're about try today. you it in the just little to a more how But to And bridge, is unfortunately, detailed But summarized. quantifications. bit days. with those not got have the ready

summarized. I our I from think fourth can quarter kind in to and adjusted take income you range add conclude engineer you next you we're when and year. there, our that this $XX this of operating pricing Sara income, savings for guidance in initiatives get million reverse year From year, that operating adjusted it an to the targeting of factories would targeted benefits

Now, costs we're investments in strategy. have of our going to investments and merits in health care and other parts

And we've healthcare question the at will the have summarized just for have we process net from And where that is planning that we different is scenarios about this work can office. how three think years. get that and And back clients are of better don't have our been feel know side, And will we're savings But we'll our exactly to make do through planning consecutive on to continue operating to this strategy. investments we sense months. for point. in creation their scenarios. to the people our They one situation that's environments. volume. just meaningfully not for those. opportunity there, is improving will But costs, largely investments similarly, it almost offset our to for and I From that positive. and hopefully, in And those So big six something in merits initiatives want to expense because gets we the we

with they the we're and get companies would it accelerate of like been feels here how little an just we office return are their COVID and and here aggressively so, meaningfully thought And lunches ourselves ago. were the bit asking offering environment the more right? people back. think different a and helping and that. and year free getting And a about like. beyond variants of We found like, them to initial efforts more starting But more with We to we've before, Reuben, in more

on year. just yet view I have don't So, for a volume next

to I more if can. sneak one going in I'm

the those investments moving Do already some to Going maybe more markets, exactly to do some areas? you organically diversifying this – Or how back end can there of and grow some trends can and those acquisitions you you just your markets, there? get Sara, of have in bigger elaborate with to need you make what are those players in areas? on to

that respect all, we diversification your shifting would accelerate to alluded that, resources, we yes, as System want also feel significant in question, areas in parts really that open. of business of always to keep addition, help grow with would organically. into help I you investments about of say, made at point, true opportunities acquisitions, have from very some dollars, say, our to it's the those this And accelerate we companies to dramatically, Smith talents, that we've to like first we I number just strategy. been of intentional to that eyes with But a at our look acquisition

quite good strategies say where think we we So, sit positioned about those would how we're I forward. to feel I move today,

to we we'll an always additional Of again, continue if to phone while about organically, think interesting need open, market opportunity But, that eyes to course, there's capitalize things up need to we pick I our always investments question, do we're to on make externally. the are thinking your potential.

can have I with the what good we that now. think right resources do feel we we about

Greg Your Sidoti. Burns comes from next question line from of the

Just of on a market opportunities. follow-up new those some

America size your market terms of globally? education North that what's you the market, how share? in And In and would current market

I'm for answer Not comfortable a that where not see at we sure feel sharing have that. today. whether Mike point or looking have you we're to at we Don't it.

I and Americas. know in we ed globally We're it's the US, on we not relatively that think there. But on growth you. both in big the see definitely side we I see for a significant also doesn't opportunity. the as penetrated quite help are higher Globally, opportunities as K-XX.

higher and continues certainly education. the there's quite to market, I investment add that, both be in a in would to K-XX of US just flurry and been

to of other it's or part some stimulus in and cases, System support We growth governments school supported federal education of really are market. thinking nicely with And pedagogy a national over new their education Smith world, many case significant infrastructure broader opportunity adopt countries about how to ways in the parts time. in of education as plans of quite national wellbeing that systems lot those plays new by continue. in compete Steelcase And there's economic and support think investment that driving and really we funding. the learning. markets that'll of approached to In countries have which are the in Some their that a those eager

think there's quite in the dynamics we bit a out of playing different world, but So there's parts really of different opportunity globally.

then and is education larger of traditional it from Do Or the there's players in below the is different dynamic players have the you than corporate kind market more a landscape it Is similar a market? some competitive that? handful fragmented? type of Like, maybe more smaller where others? scale market

similar, that education in players different would think significant And say the fragmented but is vary. market. say it I that in parts of a Yeah, I world the it's pretty would I

think traditional serve in think market education us that opportunities leverage I a thing that have scale about the to to we to is that our So and Steelcase as capabilities thanks we to way. competitive really Steelcase we business look to is one allow our

does terms backlog the help opportunity on that you In Like, of creation, It's can not quantify up? show new that? where yet.

sense opportunities? are getting are to, next these decision us And maybe stage the the where are this a leading of is well, at Like, of timeline in like, So you acceleration making? what the an here move couple decision still businesses just they next maybe or that forward? quarters year? Or feeling to are ready are a kind you researching on make Like, here? or of phase

– I I'm in at I year. were we've that the strong can tell looking Well, had chart down prior to months across months of increases, that opportunity Americas, much creation I pretty up What now, consecutive all which of much had now wish those you some is six and after pretty pretty questions, several double-digit answers Greg. over the seen

feedback you've – see broad I got. And Americas think that team of pretty but there seems looked about, markets, Mike, tool position from our out. that of at the to weakness where months And across positive. – quite the is that it sales win improving looked the if learning coming it looked are in isolated opportunities we across stuck sales for. prior at vertical consecutive or our six to in that to kind based some organization it regions, it be we anything When CRM Now, the they're are they're what was significant entering in could or is of competing that year, Steelcase

a I how So I it'll help is that number pre-pandemic. multi-million And same positive. not it don't into large is What in had deals a know I take can't still you tell will a I as are the positive. it But dollar think there generation. materialize we revenue but quickly

that So of there are there them. aren't some of many them, but

larger to mid-sized initiatives, that faster the or ship opportunity So this creation more smaller have do projects. suggest tends which potential than the is to

Lastly, in in a of of XX% XXs, to to you back wouldn't get years, you the time? there over it able think terms structurally there Is be to get you of it back XX% that anything the was why to level gross profitability? low margin, couple could changed we range. back that's look Do

I think so.

our in difference to will earn don't structural a sustain We we're between that industry. that I the any the gross our see to revenue toward to the versus And on put but cover pricing and core diversifying margin on recover, obviously that inflation. benefits volume need have margins inflation we'll we've

we that XXXX like, we to FY potentially So, margins the would an get is And expect had. example. or exceed to back even gross

Instructions]. [Operator

the Research line comes question Steven from next of Thomson Your Group. Ramsey from

backlogs backlogs, still much that over couple delivery on backlogs Just that customers quarters? see of out any and an you that elevated thinking to order I'm from to is pushing much and color extended shipments due or kind being levels, you shipping the at next is about delayed placed? how of these for of of is times you? How trending larger where after times

majority I chain out certainly hear disruptions. supply our of it of sites. is are lot around would noise dates. labor guess We customers in dealing with due to still We that construction pushing the a

pre are they it's week POs We X, substantially were significantly X, late months pandemic. have was But still less than what every than higher ago. it that XX

larger time we're contributing is probably furniture guess installation. contributor the it's ready but the I taking site think readiness, to the So some, would for I get fully sites

the there reopening the recently, a prior category improving months? China degree conversations seeing any greater In are or you other orders from ramping with to

did have We that felt finally did ordered large That's order relatively get lockdowns. it like was actually one that question. during certainly a hold good on the

that our tell an a if one then largest teams But really order. one it big So, would is customers But trend, great. was had of region. indication our be that the one paused because of with lockdowns was local a only that of it us in relatively the

direct-to-consumer go past pondered then that it approach? a a still me. space, driven What consumer for you with do next is the way? And to over of after one to model can segment? is guys in well. years in attacking a partnership years Is growth to lastly, about profitability Last seem for that particular being and over you number you've greater doing a accelerate that partnerships Thinking been that the be few few the this

direct-to-consumer through by a Well, do saying today we have business I'll Steelcase start store. that Online our

is as to So also the that combine the our of think potential we Europe. our that really combination their as out, continue we our there's good that is point our the one. and the intend you manufacturing, been fruit reach And here grow through it's to strategy retail partnerships and And and portion partners' in engineering, can that bring that to that both critical those consumer innovation think to with have certainly bearing been a quality, the relationships. of part consumer brand But a strategy into of insights-based market. some we design, we knowing And strategy, that recognition one partnership has that well the continue. as

also both any So direct-to-consumer, term, on comment tracks. partnership. we I further. don't for on the intend think you say moment, a of in And has the Dave, know those continue I emphasis our near to been kind if but strategy want to both strong would I

part on in evolving anything share business you profitability the that of you next in years? maybe see Can it of and the couple where

is kind consumer Profitability margins you see disclosed broad some in to operating our of kind similar from our really the business. of that separately income and It's strong of our competitors.

Budd of the comes Your Tower Water next from question from Bugatch line Research.

we I in APAC any there other EMEA difference noting? you difference Dave. in the that Is was the to, One, referring it or you in structural – should the questions. Two think talked about seeing not much or seeing be Americas you're areas were structural

so. don't think I

that today's Additionally, for we Steelcase those and the technology some is airplane flash you U. And from you when but yet, points to environment, to talked remember in about in reasons past. the the and and of you're and I'm understandable in had have asset old I excess safety made was an and moving the – fund enough sold enormous away which CapEx laudable, frankly,

have work with on in Steelcase the what's different can marry to and so, And you work? customers asset how you going University what's really with understand help

intent a say leverage customer certainly as to been. question. great first Grand of would that, it I And significant is to continue our a has as location, That's just all, Rapids

year, commercial hundreds come this whatever that's who every of whether or or have their car aircraft location We might on visit it be. own, customers here

So travel willing we willing cases, travel we has changed many significant don't customers, in that intend are to And see do respect, behavior really less less that customer that to distances. change. this in or to

locations significant many in the other So we really and up we think not importance is but amp other – the around to to of importance of really the lessen it of around that time country not world. the investments have, investments Rapids, Grand the certainly to

of during spend closer And pandemic chosen or the in significant day. home to traffic about seen to to their many stay as to all in not the customers of Steelcase, just Again, be look best other able really of to really experience to this we decisions if but the more make have locations have So, to also Rapids, we've where people Grand allow terrific those strategy at a more have different looked in we just locations. and how people they investments.

think and there we've to significant been on. by that buoyed really So, something there's traffic I capitalize

So, to be Grand Rapids will continue important.

people visits to the in other best need make to to we to also that are locations to customer expect providing this continue as location. We sure Steelcase we of well. have significant But

infer do we some or to mobile events more go there's Sara, going from more to showrooms sort of that that be around?

and customers two of kinds say in high engagement impact making experience would that showrooms I with evolving continually and experiences locations. in the One right sort locations, we sure that existing and provide the those is things. meaningful we can are of

in So try be date about innovation tools, have could most to that to could our be how that up that using there out. and available customers for to we expertise, thinking bringing continue be digital could

pop that there's permanent that we whole successful to spaces locations. we intend a been don't have a we've that's But those things host strategy So right, a cities of of do up showroom. in in quite as also you're And pursued well. where

So we as part also locations overall up anticipate pop continuing to leverage approach. our go-to-market of

one sneak if in more I to going I'm me. for Last could.

XX% to XX% and mentioned You a quantified hole.

changed that given I'm has magnitude us to definitely to that the Just the a number may that match unable many different several help get dollar talking understand the times or percentage? hole footings XX% last me Because about? over years XX% so of the reporting you're that

you be that a only any would to Well, smaller. percentage first sense that. XX% remind that points it's not we just or we're suggests sharing don't you all, not give we're of the scenarios of have I industry be a really smaller by to few might just imagining projecting – it We're that going

that think it's three a give two, We settled existing what return diversification work, an through industry approximation support we're as the targets investments to use there there's has strategies So share smaller be hole Sara could the we that our rough, can our industry And in is like can industry the smaller. and we as we from XX%. now were our of probability in. our work think that once just in the And, well we gain and about to, might of of to with acknowledge trying therefore, what a magnitude sense of XX% hybrid found its that Again, future amount, look years state kind hole across summarized. to hybrid segments we talking smaller by ongoing you if fill office fill. strategies of the

is that to what get is that that Understood. was percentage number dollars? to get terms us if the trying What number? dollar I it what happens, But And of? that, of does to

office at Well, the cut the get you to and FY of of to taking contract looking core could to start by furniture some XXXX it. kind hair and then back Americas going that to for traditional take try and XX%

So probably the few you of math Americas I XX% don't in you could FY you'd that, the XXXX ballpark. help probably last math be with if XX% had But took over But years. is. took some we've that disclosures what revenue Mike know of the exact and from offline then different

to sentence, so apples just we'll oranges. from was and trying it take and I'm one it But – to then it was offline. In industry Americas,

And the Ms. over no to there you. back Armbruster, further at time. turn call I this are questions

focus and driving Well, this happy results. have on Great. hope morning. Steelcase your all would and you you challenging we improved you just we great interest a for of through And us a I as appreciate times wish And joining these holiday thank navigate day. all in

This concludes today's conference call.

You may now disconnect.