Steelcase (SCS) 19 Sep 242025 Q2 Earnings call transcript

Good morning. My name is Rob, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Steelcase Second Quarter Fiscal 2025 Conference Call. [Operator Instructions] Thank you. Mr. O'Meara, you may begin your conference.

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

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

crossed a release, on This Steelcase copyrighted is production quarter call yesterday, and webcast, website. wires which of second is the Our this conference being earnings accessible our webcast is Inc.

will be posted ir.steelcase.com of replay this webcast A later to today.

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

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

and our hi, we Mike, for a progress second to remarks the quarter explaining of I'll some highlights call to like results. of against thanks offer make cover Thanks, today. continue strategy, how I'd our and few and everyone, our joining

lead As market use diversify our has pillars: a profitability; the to fourth, third as our second, and we X reminder, is workplace; business transformation force serve; the first, our the segments to of and good. for strategy to customer to a improve

transformation. with begin me let So

and and face. that thinking, understand insights driven through we're we Steelcase, design. realities innovation work research breakthrough us our to deeply changing critical to lead And At of that human-centered design the customers uncover

their research monitoring research Steelcase constantly firms. and we approach analysis know, you and both evaluating top are led how from through As work companies

that showing employees. capacity more in employees exclusively be among majority the tracks highlights remote, remotely, that hybrid done can their of Gallup's the And U.S. than is data percentages and on-site working prefer. a half For example, X hybrid and is employees that consecutive what Gallup jobs quarters, for research and hybrid of are

new Many evolved accommodate offices organizations not still have have their hybrid this designs don't spaces pre-pandemic working practices. to reality. These address physical that

companies backspace also And they and add of areas. finding reduce have And in to are for their mandating gone really far days certain evaluating companies presence. now are a growing how in-office a we some number too are see that minimum number of who footprints

culture, is big And think, taking other. approach new I to helps organizations, connected So more helping a its employees challenges. realize a and these solve each Steelcase that the company's to feel leader to purpose,

strong in continued Our rate is over demonstrated the share our our win market and gains year. by leadership the Americas past

met increase I employee transform who business quarter, productivity objectives. to to meet to are workplaces This their help looking their and engagement customers several

working their example, to space hybrid to privacy. expanding was reinventing of applications For their meeting reflect focused and one were higher experience enable workstation they largest on our customers patterns, of levels

sightline vision. ocular and that our dense campers and tables supported Our solution customer's

our sales in customers, the our And transforming as of to about this I'm closely confident segments find met we teams across of the are we market opportunities we year. continue and where levels organizations their see higher by Steelcase. with needs they this that are their will largest back like many see orders workplaces excited half And work

modernization. new and strong part customers System business, Smith we bonds construction our half the second this with issuing first year, supports posted year-over-year quarter, Systems very growth. led school the segment districts growth the the in U.S., potential, year-over-year. customer Americas in due in Smith Through diversification. segments from our to growth have XX% see number grew our the to strong now a quarter Moving for which of order or the education all K-XX In of

years our XX that including dealers' on where the the school ideas based chose recently a delivery district schools solutions us districts on best-in-class furniture and collaboration quality at approached upgrade our cost operational they We up X our and and to furniture support, effectiveness, When installation. elementary of old. supported and was seamless quick for previous our

the of more lives we in end, K-XX this than when that while expect broader classrooms. is represents one into in to segment. impact brand-new X,XXX walk in it just So example, And the district kids the they opportunity

we're medium-sized diversification our all And care, businesses, in and and making of addition to consumers. small including health education, across efforts, progress

Turning to profitability.

and X% Our results strong reflect second quarter growth. organic growth earnings revenue

gross share last And was $X.XX an per ninth XX% we've of for of year. margin year-over-year increase earnings adjusted versus Our improvement. quarter, driven the consecutive

cost drive this continue our center margin lines to distribution to and a to to closing optimize production moving gross contributed operations network. Our efficiency initiatives operations reduction included initiatives, improvement our which leaders These quarter. increase

our efficiencies spending More to helping our growth to to profitability. and efforts And find support improve profit broadly, in continue these enable investments our employees managing are our improvement initiatives.

income we the prior improvement over revenue million the of operating look organic segment X% drove year As $XX our at and adjusted growth. Americas performance, delivered

structure a results segment International operating reduce year enhance the environment. efforts soft Our due improved demand our $X.X million to to our by and cost our in competitiveness versus to prior adjusted response to

goals workplace. the we community efforts and and share that to recent in our for published planet, annual I'm this week. about our force use our stronger report building think business good shares a the report design progress better as sense for and people a we excited The belonging in futures Finally, as impact and to of

since our committed XXXX. and communities acting mention thrive, XXXX more with that fostering We employees is I'll inclusion, of the report One integrity. toward by XX,XXX volunteered goal hours from helping highlight have our XXX,XXX are to than hours

reducing future carbon working circularity, responsibly. the choosing its better designing for and by also and using a materials toward planet footprint, for is Steelcase

ways use BIFMA-level to certified average in continue all packaging. we new in and product Steelcase pilot deliver of industry products, on the So We package, recycled ship, we to the content now XX% products. brand number and lead

report. outlined toward progress Steelcase meaningful as our So, who make people congratulations impact planet have employees and goals the year's to this all helped in

that make to diversify strategy year the of about through and close lead half the we good. for profitability the positive the results first customer I'll transformation strong, our by our we our force are market a the and our we use of workplace, against and So improve continue business segments serve, remain progress as the sharing to

it I'll Dave So turn and the over to review now to financial outlook. results our

good Thank you, everyone. Sara, and morning,

acknowledge worked friendship on Rest His Before our and becoming be will XX Steelcase the we would public in Budd years and financial industry, into with get a I passing industry missed. and his Budd. advocacy details, in first like peace, to since I company impact his his August. Bugatch our his unexpected involvement. ago, and Steelcase closely from benefited for Budd

then The my start fiscal for our balance share year. outlook with today the to third about our balance flow. and comments remarks a second-quarter results, full cash few of will some quarter about related the and the I sheet thoughts will highlights

our we largely revenue results we expected with provided per the range. earnings expected. and as slightly slightly estimated in our of largely segments Our June, midpoint Both finished $X.XX second of our midpoint as $XXX share, million, performed our quarter the below adjusted above the of range of of

land. acres and sale the million, During completed originated which unused unsolicited the represented for of land offer our $XX we of an of approximately XXX unused majority from the quarter,

to adjusted for consistency. per largely from variable the which in prior income driven compensation X% periods growth And year, adjusted margins. our $XX of presented by gross was Americas, prior share we organic million resulting adjusted have non-GAAP of gain the operating calculation the EBITDA. excluded expense adjusted net revenue and improved Compared operating adjusted was the The higher, measures related earnings posted the and income,

education business and operational our The The from and revenue growth large performance our from our margins and from driven was mix volume cost business strength were favorable government customers reduction higher by benefits initiatives. and driven corporate by gross growth segment.

improved by actions to prior adjusted $X.X second well operating soft. results segment implemented we International the measures as environment year million restructuring by as as benefits ongoing The last control driven from remains quarter year, cost the demand compared the

adjusted driven by in business ship by the million to by sequential summer driven projects includes increased a which that education months. in normal the other increase million, during And tend as the seasonality in System operating $XX Sequentially, first compared and quarter, was revenue Smith $XXX income increase revenue. Americas, the to

relates million cash and QX, EBITDA land balance short-term sale. driven to adjusted $XX sheet, from flow investments million $XXX of from primarily the by As increased it and the and cash the proceeds

adjusted million is same time X-quarter or revenue, XXX basis $XXX trailing EBITDA is which than higher of year. X.X% Our frame the points last

XXXX. debt approximately X.X the $XXX of second approximately million to liquidity total Our in million. quarter, end which exceeded shares $XXX repurchased fiscal We million XXX,XXX the of the or quarterly aggregated to over with the quarter our dividend shares year. first million the the fiscal at half first approximately we've of aggregated returned When in shareholders $XX months our X $X.XX of per share, of

markets, growth after health by in XX% a the were of quarters marks growth. corporate down government, in the large led year growth several vertical our Americas the offset in from growth our the prior with and row quarter customer The in to in X% Orders an was in consecutive order education Americas. international. care in part year-over-year by decline in and strong orders the a decline customers order fourth of year-over-year quarter the QX compared modestly Americas

evidenced the reflective by our Our are while growth business of the transformation the or over estimated believe in is in Americas. continuing market day-to-day our business QX, our strong the We we win project workplace and share year declined. of last grew the business leading as gains orders in project rates how

our of where driven year-over-year was expect markets The strong in customers continue largest back India, exception the XXXX. We declines in fiscal our order growth with in the to most to growth. see return order decline international of by of half we major from

quarter. outlook the to for Turning the third

the days to year. and expected of backlog to is flat within to overall compared contained approximately percentage Our ship orders XX year higher compared the prior a prior

growth to to which of within million X% year. prior expect X% $XXX the $XXX to revenue reflect to range organic would a We compared report million,

to which accrued the of in related expect liability and the As included approximately $X.XX it an adjusted per assets. we $X.XX sale the $X.XX benefits year, $X.XX earnings, to fixed prior from compares relates and which earn-out gains of of earnings report share, to between to reversal of estimated

includes to range In earnings expenses the projected of addition $XXX related of to which purchased million to XX.X% approximately million, $XXX of to assets. XX.X% operating amortization and margin of the adjusted includes estimate intangible revenue, million $X.X between gross

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

higher to We the confidence March. end of earnings in adjusted communicated targets per have our we of that achieving continue range of the potentially XXXX share fiscal

corporate second it's project of customers timing in to However, orders factors results in largest high impact out projected. note related differently could opportunities the our could half requested including Americas out and of which play dates than the play the important year, few with how to a confidence the our delivery

secondly, could live requesting through And into business anticipate from customers and shipments new cutover, earlier QX the our year. and advance QX start the of fiscal we of going after the have on cutover managing cutover or the dealers shipments system our pushing of into of year next in pulling business effect year the from at of next requesting QX QX ERP next

first progress In the of for outlook there, the through make Sarah initiatives. summary, to said, quarter. And feel continuing we as for our well working, year our turn operator and to good we'll believe it the our third important about we questions. back strategy the as From is most financial as results our on we're half

comes from first Instructions] Sidoti. of Burns [Operator question line from the Greg Your

that commentary in picking you of talk of second corporate up maybe confidence little half? some a your in you Maybe Please the your in that more around gives bit are the about seeing outlook? metrics terms about what pipeline -- orders

a it's what quarter largest Yes. really the our we to globally. leadership that's we orders And of wired group when pipeline. serving came play look second is I customers. that was to of confident on to and sales Greg, And mean, them these when manage balance with the the talk accounts that the out expecting schedule. as were corporate quite Americas, their in really well as towards quarter, the come the that in we what didn't related at the about team happened in feeling year the What they're in leadership we in

just pushed a they're back timing of confident half So the bit quite the They little for the still year. customers. the those is pipeline out toward in think

that than or might lower cuts And were of come making quarter, And drove cuts terms the variable in OpEx I significantly you came in. the permanent going for you're just about maybe temporary it then talk Could pretty maybe guiding you guess what back that are in for those that? in?

you net OpEx I you'd you that the pretty take see back compensation, in gain variable if add line. OpEx closely was our think and the of

reconciliation the net to you're make GAAP of sure release which back non-GAAP. our the adding is shown So back gain, our of in in

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

the Good land beyond solid cost the that to to in targets. versus do based about continued How I coming on volumes and in range again. you FY orders 'XX margin moves wanted the your think maybe ranges business just much midterm solely see even and flexibility for these improvement have your efficiency to through? and

the I cutover say the yet We've finish the for biggest timing fiscal additional mean related of out. and the readiness to these I play corporate drive orders X. we probably to have customers. year. balanced work how it's the large big will would margin between the complete is will That's also ERP variable improvements. But to driver some we a the that got

And Americas, there win That's success win Or you in being rates in to the point to thinking it put so Maybe context, correctly. does about thinking your gains just describe as would strong X then steady? just rates? we're incrementally this about share helpful. rising more

suggests these don't wouldn't high. the and gaining like than that rates of but I running that but Americas. in that they're rates say our gaining win that extraordinary I It know have target, are mean they're definitely market resulting go back these they're they're the to they time anything pretty see share, years. I above information we're at been Well, or in have that, previous record I higher levels that in share win out they're least levels, based BIFMA. we from at on in industry us know

Does lastly a on in you could the half for project it seen half. large looks? for And kind the of what corporate Is those helpful. you've we've business of than general different trend that it of that give expected business look over flavor how to flavor reflect rebound me second Maybe what then the That's improvement the Or wins in the year? past year is can seen? like?

think is business we our it's typically share was order year-over-year. of quarter where down. in business to important than What's from project because recovery was did don't I grow in It are the you that the different. continuing it is. of business is And pandemic, remind continuing the larger of a

our XX-XX-XX XX-XX-XX with generally the split can And us the heard business project not You've programs the are programs that in project off after don't you being customers talk marketing past bottom that between of at us. continuing think of basically then activity is running that pandemic. and because restarting a shut for agreements have it's

that majority But activity. off is we was the a the rate it we're orders not fact on in bit large the So little because a year-to-date little to it's sure I'm note that and and the seeing growth in it's project QX. They influenced nicely But project a important why as QX, ahead down continuing prior is year. like QX corporate was of in corporate versus now declined our that rebuilding, grew for they're the trajectory basis. overall large business. bit also the of ahead

don't I sure, seeing business speculated some list. of We've know some have more were there we're now. we're advance have corporate could in business concerned contributed from that large They but pull-forward about QX not largest customers our what strength that migrating have in price pulled the could QX. into some to forward that, which right to recent been of for may in that

they add here, think X just this they even color us, Now the are can I with to and I have are of they to little projects just meet anecdotally. talking earlier are and maybe continue they significant visiting, week, would customers, that to I where a I pipeline. mean in

Work those So sense is confidence. life and color just conversations I in to and feel kinds traffic of that make helps the changes a ongoing think of centers additional interest that we see us

the from Garner next Benchmark. line Your from comes of question Reuben

the Wondering just some still of despite growth near-term kind Americas outside you orders you're of of touch the given corporate, some pressure. if drivers seeing that on you that grew in that could large of

what mentioned think Any you kind others much of runway You that? there? of do well driving doing particularly do is how you to have education. the And go and

from Well, that these the years of areas investing last health, vertical areas, couple of know education, mid-sized in small you businesses. we're these to

as job We also our to of sector attentive competing in government that a in well. are government. nice lot doing a There business are terrific the And opportunities is team segment. for

the necessarily of little play recently strength a are sector. Now big and historically, not it's a more the for there we've we it because of opportunity because bit that diversification us emphasizing but been

we Education, lot to, she they're from participating to just I'll need schools as in recently let opportunity modernize would modernize change Health school I share that in as the that visited as a needs won. say, Maybe we're of about built. Sara the think, I Sara a well. gave diversification care of has and and areas good had a comments that well, some example jump and way that.

Yes.

continue Now, are to we've solutions well. for bring the in new add just build said. it mentioned, the where our markets we that that the to needs also believe And reasons innovation, as we because say to those do need investments push I to Dave, think, And Dave all we where covered focused would market. do Dave relevant I opportunity just are focus need we market do these there's on do our you kinds we to need that where really capabilities, of to to clients'

those innovating of what allow of doing on investments being think but depending responsive be those are mix in to continue see to look we segments to going we like we each those for focused and bit happening is the those and markets we're to are of kind we sure able that different things to really us what So a be to what fastest, making growth win. drive the on

dealers survey numbers is nice our I the a last of depressed out areas how in jump verticals west, being there in couple of had color or you be technology of that concentrated would quarters risk there out other coming market just given the you pretty then to how industry any and wondering And that has potential the opportunities out strong bounce months has was recently had kind the of as if had any great. and been.

your a a bump to have actually West and the of from survey, see little I Mike, been bit On waiting Reuben, Coast.

was is So see reason from it. the we our West wake X is internal to Coast well it nice finally have bit. information the seen tech as it days similar And the Amazon Other that starting dealers our up to see office. are expecting now about we tech as companies made mean a intel news waiting on large moves. you've is to get I recent in

some higher they have much they've too of reduced in by them, of number pandemic, bit especially people. a And during too, that days want little a move their to their the the to realized space office as

shaping So are we've pretty a for for the In Coast busy while. been West are year interesting. to on the up look that next California, levels activity Southern pretty starting actually there

all different of been and vertical but a sales team for markets. in tech across Our not dealer good the competing lot necessarily has business,

improving. So to near-term the survey acknowledge finally mid- is glad the your dealers I'm starting that in outlook that are to

challenged one outside I'm macro-wise overview International India me. Last what's but of and going The just in. of going your more one quarter, a there progress. kind this a little sneak quick for obviously, to of internal on bit segment,

Yes.

varies mean markets really challenged, I right I environment that's Now, those in of right. many market. that you're is by the it but think

India. try we focus our really we EMEA So balanced continued a local to of in multinational and continuing are activity on business weeks opportunity see do exciting energy the things and to to ago, to are investments grow. our more just and of India we've in everything shift I in investment APAC that that in maintain Indian incredible to doing customers to continue and drive was places think I'll how towards was companies a strong to talk couple to I see major across from amount to say, focus -- organizations where both it

So time, But that different. that. market realities know the we the good same feel we at about really are

further I do we so So continuing that think, where we we opportunity the we we disciplined the in also that profit how to how this year-over-year we on way we do be have really about drive do do to to in are have business things reset margins, make the quarter. improvements continue, drive work sure efficiency, how to

Tower question of from comes Brian the line Your Gordon from Research. Water next

there's share well, several guys to you these how care that health wanted just on follow how look markets. in the all, getting see the part you do you the do guys are education big up with these, you business -- the at government, I evidence success of then And having years? of that areas? When gaining and think secondly, this next that over a you are first

on the your by get market market industry. we regarding Well, vertical question share, don't data across

recent and it we we're What don't was like spring so, to what we looked months of our couple in or ago, in our at in year really the showed calendar ago business that diversification. Day, I a guess, XXXX, XX out strategy vertical Investor just we looked 'XX executing play completed most how is had like our 'XX, or mix of years by successful the the of could know. Americas it continue we fiscal So in presented what if it

that nice through investing be may time level it same said, since. we've therefore, diversification. markets And And aggressively our that you'd and more to has from Sara because XX%, those have, what what it component of XX% walk continued Historically, it not it you it's but as making them than corporate could has I maybe progress more think, Mike large can the And is were them recover pre-pandemic. potentially and we're these pretty period, business. know in a from -- know offline, charts, than less acknowledging through we're been, you'd meaningful potential. growth was We

in So magnitude be interesting potential revenue. our quite to it overall of has the

that on And is International? guys there a horizon for similar opportunity see the you

I some make bit is care opportunity. least a think a diversified significant say, investing pretty or to I way little more see Europe in and scaled opportunities date. to at as of Pacific Health have way find the in to after in would both and progress education, to we a more We're there. it, -- Asia challenging sectors go

we're the So playing not are that as but space, aggressively Americas. as in we in

really I to of part part And I say our corporate we businesses dealer larger in that a medium-sized more of Where of been Europe, we're market. in successful larger business. how big led, really, focused is win and do would the share that business the or business Europe we've has small- a fairly say, now historically would in been often is in which right

a We on we has feel some their the better, improvement targeting. of rates in improve breakthroughs. to had been opportunities and starting team do nice in recently, show Their to leader, should okay we've sequential of and win emphasis industry be but up that's pipeline. Europe, we as doing large are couple the it's And area that starting an in

pleased with as well. progress So we're that

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

So day. for appreciate a interest all have joining your and thank in you hope We great you today. Steelcase

call. today's This concludes conference

disconnect. now may You