SCS - Earnings call transcript Q1 2020

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Operator

Good day, everyone, and welcome to Steelcase's First Quarter Fiscal 2019 [Sic] [2020] Conference Call.

As a reminder, today's call is being recorded.

For opening remarks and introductions, I would like to turn the conference call over to Mr. Mike O'Meara, Director of Investor Relations, Financial Planning and Analysis.

Mike O’Meara

Thank you, Daniel, and good morning, everyone. us financial recap results. joining quarter our for XXXX fiscal you for of the first Thank

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

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

may today non-GAAP measures discussion to Our include financial and references forward-looking statements.

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

prepared our Following questions to we respond and remarks, from analysts. investors will

our the Jim turn over Keane. call now Officer, I'll and to Chief Executive President

Jim Keane

and good Thanks, everyone. morning, Mike,

is income performing well business revenue XX% X% in first with year-over-year and growth quarter. growth, Our the XX% operating very growth, order

less shipments. our and many shipment in the in on placed expected, we because typically primarily that revenues, less that which than dates quarter saw further with profits, see. timing Our More May, had and what were order first we growth of of April Plus, strong occurred than we Americas. were requested impact orders therefore out

problems asked completing U.S. markets. some shortages on customers local to they're labor us new construction because of delay planned office having their addition, in In of already time shipments because space

against a the quarter X% quarter, the organic that's We prior up second in to growth in strong X% expect year. revenue pretty and

quarter to public be our history. In fact, company in expected second-largest our second it's

track order-to-ship of we'll and our By our towards profits. revenue still labor Our on full-year to expect see that shortages. outlook be for targets in cycles right expectation growth because longer mid-year, we ongoing reflects

fully delivering driven in that growth order which of organic X% improved that QX, been revenue pleased We're were is is are in France. up, tariffs segment we're segment. our in threat was and the were pressures of the by primary and of rates where We primarily because profitability in concern. our continuation win a underweighted orders segments we've The very part a aware certain economic EMEA holding XX% the profitable in growth customer yet Germany Germany, and

an we can Overall, more we have realized quarter to be this but EMEA to also was future in needs important EMEA, a invest we lot milestone profitable do. growth. consistently for so confidently

performance. working a of teams dedicated improving have on series our We to initiatives continue

revenues. remains strong where Asia we in quite despite strong, China, prior Our business grew including year

Our business the in towards and quarter. as was. end still India got okay, momentum of began order second to and off disputes and about tariffs Mexico, with to Concerns but as trade Americas, CEO are the China confidence a it is the slow but Germany not In factor. pipeline good start, build a

We Canada avoid the see to and happy Mexico reach to aluminum and we steel the U.S. and with Mexican were were agreement tariff. appreciative that end, able another all governments and were tariffs and

and are tariffs steps the supply only reduce to by chain taking further China the U.S. adjust are impacted to We and modestly our impact.

without in in these making on talked playing for consistent Every focused CEOs capital framework growth that some initiatives field what and of away people weeks of one like. from spoken I've and the difficulty a pulls the about sort turns is look our twists with innovation. last will distraction long-term the decisions few

global stability the trade. officials and rebuild group confidence senior to CEOs economy administration Last free the a in conversations the principles week, getting and of in to passed of I the with in joined and a importance talk legislators about and of Washington USMCA series of need

economy strong benefits last the manufacturing to going. trade about our of free that grown need three keep and proud employment by over the reform, XX% but of to the have years and fair a tax we Michigan We're because

will to keep reason believe every have that We going. we

is orders look and in QX we Americas up. QX Our were strong, shaping to grow our continues how at pipeline as

look project the already to pipeline expect of know ordered, year, competing. to we a projects that tight very there a are not continue have lot of of a likely of but a who to delays we we but lot the still forces, are shortages. second won, we are opportunities labor half As market, is and customers it's half are second and of There positive labor we yet face to healthy because shift where also

time we have at related us our over hopefully, some the pleased are them more were and were we visibility, in the We this you join was targets to last course of reaffirming NeoCon week, able of trade. showroom. more and refine to expect and as to full-year year the clarity

future strong the and a pace, have of of We workplace, of and work of point vibrancy. of variety about view the energy, of full

and products Collection our was customers, architects Traffic sustained. across Flex new of and strong and quite interior designers. full several and we really product, a won which is company, Microsoft. And were of with Steelcase showrooms including full Roam awards Our the collaboration

fluid These can of a and work themselves specifically tools on design the teams will space for need individuals the system allow is using change demand. or components where teams processes users solve thinking work processes workplace for to designed complex that furniture Flex using a broad agile problems. and

Roam move Surface continue device cart to the workplace is Hub the flow. allows battery allow A even the digital interrupting fluidly work and without available. to when power content supports to will in the Microsoft X AC throughout not users

quarter NeoCon. XX% organically their grew revenues all and were Our at visible three than the in acquisitions more

and with our and our away our Orangebox which other pressures, some softness expect main to was introduce overall is showroom fully was desk NeoCon building. this story. perfect global year portfolio, into Orangebox with markets pods from very integrated they're the U.K., the its as in timing customers. to the but you'd is debut strong Brexit demand facing in made order in Orangebox

both Steelcase own of in capacity these of ahead Smith companies. were are additional Both well. for had showrooms add System their and invested just we've AMQ targets, showrooms and as U.S. the their acquisitions represented and manufacturing to

last relationship year's Our starting. could and new NeoCon, later, West Elm we made the one at year have was we were most display more we of than One in are products West products in just place, Elm workplace but facilities. announced Steelcase

showrooms, our workplace few private established of In Elm West includes had the to more we NeoCon, many a in and the by show WorkCafé applications. showroom other pop-up our range of we Greenpoint showroom featured benching We also the miles collection at Elm, West which from mart March offering. a but products our office

combining other appreciated The designers Elm manufacturing, engineering, isn't our of offering like this products. just and power legacy amazing and acquisitions, brands, West expand designs combined of about lot partnerships offering quality logistics. Steelcase But and a have and to breadth all with objects. West Bolia relationships U.S. the an our of in Customers the to of Elm, Steelcase the include our

We're how specify, our choice and integrating those they and more more year order, dealers work. is install products. that customers' for receive designers, select, and users' bring the that offering into helps a need we over This price, system to scale control need for the to customers, plan

to We're forward Our be strategy a is targets. track what looking on to expect our fiscal second mid-year, we expect be very XXXX By we quarter. to achieve will working. strong

to over it turn I'll Dave. now And

Dave Sylvester

targets first start our some with finishing and results, comments and today about then highlights an My our update second for will balance Jim, XXXX. will I few cash with morning, before good you, regarding quarter outlook for to share summary Thank related the everyone. a remarks sheet, flow. our quarter fiscal

largely expectations, But Jim make anticipates shortfall. than As mentioned, orders to our just shipment of the results were quarter first our and due for second little quarter up a timing outlook we can the lower that dates.

targets earnings in first the we half and revenue report the we a was of to is fiscal the what largely shared result, in March. the assumed consistent expect As year with for XXXX

our earnings requests quarter, impacted were extended normal. were and first which Americas, the For higher in by shipment revenue dates than the much customer for

we addition, quarter Americas growth the order in occurred in our the later strong In than anticipated.

to estimated range and the earnings of growth fell X% our just result, a of was X% our quarter organic our below of As revenue XX%, estimates. short our also in

than ended contributing for significantly is in backlog the higher which year, order quarter. prior customer our second the outlook However, Americas strong the to the quarter

timing in are the points shipments mentioning. other a and orders worth the few Americas, of Beyond

due First, operating expenses the were timing to than largely project less to of the spending, a which shifted anticipated, few we million dollars quarter. second

our lower-than-expected Second, of gross with were consistent impact the expectations margins after largely volume. adjusting for the

last after but a year beginning year. includes net business mix, Our to gross of some as the are headwind reflect comparisons of of beginning this we benefit Plus, to prior of much mix in unfavorable the business for these inflation, shifts to impacts. year-over-year also pricing, being margin abate our from continues are

As after our a its behind within gross year-over-year year the of margin the leads points EMEA benefits XX-basis mix which in And very in the posted leveling year net much impacts of decline. in the a point off XX-basis result, XXX-basis of first continued our improvement the continued along more in pricing, of business inflation, reflecting was margin A last with prior from and than first improvement improve gross gross assumptions are that is fiscal in in margin start a nice year. point a EMEA overall fiscal key gross to to profitable and target our was that margin XXXX. to our point, quarter, another quarter

quarter, simply the X%, by basis. Americas summarized, up customers $XX I category growing market around comparisons. grew with responding, many and the working gains world. and representing organic of We growth Other the the broad-based year-over-year XX% won't X% X%, just but in in million growing Jim or on an and that with strategy everything $XX share Switching repeat to other markets the Americas our continued organic X%, our EMEA reiterate revenue in it's million, are and is showing growing

earnings in earnings, year. $X.XX For compares of quarter the to in the the prior $X.XX

in we fiscal due by XX-basis the points, our improved margin operating offset part our XX basis began leverage, in point XX-basis by operating decline of in margin. last In Our improvement our second expense a and have XXXX, point half gross those development and expenses. revenue growth been over strategies, other operating from including growth partnerships realizing ramping quarters, investments our we which product up leverage And has investments, in acquisitions. and improved the four to

profitability. as across continued our improve business helping to drive which reallocate growth process to to efficiencies support we addition, resources fitness well is model, existing and initiatives, as drive In

margin, point year-over-year but Other we Americas. the decline EMEA than offset quarter, the by gross a posted in this was improvement category more in in and For first the XX-basis

but to unfavorable mix impacts, actions last were continued the pricing freight with of quarters, net plus commodity higher taken Americas absorption the benefits The cost. the partially experience over offset higher and by several business these of associated volume, benefits

cost continued Our a was business our but largely of our growth reduction overhead support by year costs ago efforts. in are than strategies, also this benefits offset and higher continuity from

XXXX accelerated fiscal the basis end fiscal our in hundred by it quarter orders points. price was growth XX% thereby which As in in Consolidated order the of in the from the of EMEA the the growth category, a orders higher XX%, comparisons favorably than a Americas quarter year. by driven into growth to quarter orders first XX% the approximately relates by the growth to February XX% the prior compared current grew we quarter the These list at few fourth impacting while prior estimate Other in year. XXXX, first favorably of rate XX% was XXXX, quarter, adjustment backlog were impacted and

of some first summer the plan inventory support the million the working to seasonality flow used impact of seasonality contributions. normal including our the extended compensation We Increased earlier. Moving sheet. of balance System's and variable to mentioned Smith cash operations in reflected as capital retirement $XX seasonality, to from as quarter, cash dates the increased and shipment payment well accrued plus support

[ph] we million expect $XX were returned first $XX expenditures of The Capital dividend be quarter share. We during obligations. in the with per And to approved quarter, satisfaction associated to and share to in $XX paid total million continue the in the same equity a of July. tax dividend participant the to awards level Board the the of shareholders cash and yesterday, $X.XXX were repurchases the full-year quarter the $XX through million of million. approximately of vesting to Directors of payment approximately

present and lease new operating Related quarter and distribution the and This of represents and recorded payments and the million. obligation value $XXX obligation standard offices totaling an our manufacturing for to the lease adopted this balance vehicles equipment. facilities, showrooms, sheet, we lease accounting

standard statements the did earnings nor of of our retained did Our or adoption not impact income flow. cash impact it

You to of can about read our adoption this which in more Form our standard tomorrow. we file XX-Q, plan

which earnings revenue organic to project currency an divestiture. a share, of $X.XX small after $X.XX $X.X Recall growth expense. of year. compares on revenue we earnings to we to adjusting the expect which translates translation second report a the segment, which increasing after to acquisitions gain the prior double-digit the From of quarter, had consideration of included $X.XX growth, million For in per property X% prior the the expected effects, Americas by perspective, $X.XX to for related in year sale and variable compensation approximately X% effect

also The also comparisons initial segment. But and liability, warranty, items they prior accounting of in and in Smith operating the effects year-over-year workers' These the impact favorable cost margin included total, of gross two System. the product largely to year expenses purchase last compensation Americas related will offset. and

well net as targeting X.X% are For an revenue the growth some recall year, items. inorganic X.X%, to includes which component, from benefits between organic full as we

potential reflects our of which in strategies, win and ability product deployment been are pleased most project in the the have markets, navigate expanded growth activity for offering, fiscal we help workplace. balance rates, sales supported customers strong changes by of and our XXXX with pipelines we believe Our to

in seen for fiscal for strategies. continue we Thus, have target our across to and growth percentages to X% This grow industry target faster single the average also in approximate X% several growth to we fiscal industry improvement targeting markets. revenue implement XXXX. markets in again low day-to-day will between assumes and growth than our continuing We business organic that by XXXX digits, are demand

fiscal revenue organic XXXX target higher the half growth to XXXX, of the in the during revenue Based fiscal rates growth for second on first how anticipates year compared the half. organic our accelerated

mostly to timing In in Together, Orangebox revenue approximately inorganic the the half in consolidating we fourth X% fiscal of of contribute an the from the benefit will benefit the these System due will year. of our of addition, impacts for our our Smith quarter first reported revenue year. year-end. to will impact week expected report extra this of full-year, Plus, and a growth XXXX are revenue which

report our currency revenue currency year. the the rates we rates start exchange the growth negatively fiscal which to dollar. Regarding impacted, was effects, revenue several Accordingly, translation the of based on translation our impact have where the to in exceed X.X% rate our approximate relative continued of March, at could on and foreign countries be U.S. we estimated in devalue exchange could

$X.XX for scale, This the growth our XXXX targeting share. with we objective target by continuing business fiscal earnings is at our across and fully earnings, drive For are grow our model. leverage diluted our mid-term consistent rate earnings and to profitability in between $X.XX per improve EMEA, revenue fitness Xx of to organic

growth In earnings the we few a drivers of mentioned. expect I with of associated addition, pennies inorganic each just

growth and capital the XXXX a around for economic reductions and assume fiscal slowing growth economies and The are notable, world. the growth. major relatively to targets geopolitical in CEO stable recent in sentiment Our temper environment spending continue projections continued could for various

of faced share it headwinds. resilient the in than similar past economies has been spending when industry could believe our we global capital more However, be

viewing We modernized and their which we their us believe work their and are these need if uniquely compete talent, be assets, organizations believe for position knowledge innovation to as drive increasingly during C-suites strategic to cultures. our transformation. workplaces strengthen going productivity, and are growth they And with help to

turn we there, will over questions. it for From

Operator

Bobby from comes Griffin with Our Instructions] question first James. [Operator Raymond

line open. is now Your

Bobby Griffin

questions order Good growth. morning, and you taking strong congrats appreciate everybody. my I on the

Jim Keane

morning. Thanks Bobby. Good

Bobby Griffin

Munich upon verticals I the First, business, better can you at bit on success you're you you improvement that us some some going a there. success innovation maybe of performance that did is give wins there. into the Center the maybe dive look you're EMEA seeing little more to new wanted Just of of the bit little than and expand some driving? verticals color having and a When at the historically on of that's

Dave Sylvester

nothing from not the would the visiting that and particular out that sector that I on seeing of a based jumping vertical perspective, Well, are necessarily seeing lifts customers say, link, names any market customer out. stands I'm the is

our it's have illustrate has their almost the customer more about we broad-based. pretty teams to is can visits Those thinking opened customers been, bring who Munich since been we high high and spaces using value helping So, what years I been are stayed sales two – ago. definitely think, that strategically.

activities as organization driving significant we've success our from So, also I in continue our our sales range the or the think marketing gross which we've EMEA, a that's also is across pushing fitness. a business, organization is And to been we but factories and initiatives things pushing had that contributor margin continued on pretty well. been seeing or that in cost-reduction improvement of to drive have number

several referenced And we able the our times relatively to – we're are years not hold we've fair win region, working the that hold growth. spending last from over fitness, a try and perfectly driving line some revenue in I've been few gross that growth our seen in on while seen to been diligently the rates. we've flat driving very spending top product we've flat, nice and amount but to we've of margins, improvement and offerings

So, world. it's do It same same is working in all But a in economic parts environment and a it the of the is the of the Europe read than less stable mean, kind the I little we at you let's is news. uncertain, thing little more bit bit, other time, in now. right say,

So, pretty for about we we're cautious remain outlook the – EMEA.

Jim Keane

of to points I'll that. a add couple just

of we really talking on key that implementing sales our efforts, vision for credit worked, Bobby, That years and to I remember, have sales well. a focused and about lot alignment sales might and give salespeople accounts. ago, You leadership our were force of for couple get a our that helping

some that to through done three or bit little and delivery that caused were we and a quality. us team going of job lose has a with customer probably performance ago, a And And some operational years triggered confidence for also, little disruption while. operations two changes on-time great

So, customers to of and rebuilding will an congratulate work confidence I question with just relationships as – with a rebuilding in opportunity use lot good with our people your for customers. sales

Bobby Griffin

Okay. of to the that's combination like that those of better better the and that about Yes, combination share here a a seems seeing? of Is the wallet and way success it with think new we're customers customers. a growth order –

Jim Keane

we've other served there back some done for projects And them also Steelcase, customers had reasons, and we've manufacturers, Yes. I with signs who, past of add, would in the a recent had is is which to variety coming great.

Bobby Griffin

your is earnings half year, are in expectations the Great. can Okay. Maybe And same then the makes at guide and we last a me what net year. versus bit? gains through implied look growth try of sense. some to second the tune I your a that. roughly implying we just accelerates embedded appreciate little to at That this second growth growth Dave, half for when when it better little our earnings bit earnings up where we try first we half the the, your for walk guidance or in model look

Dave Sylvester

of we first earnings saw growth than what QX, guidance Well, I year half mean, to relative half our of we reported or the it QX second earnings year what obviously, look of first and half. this in year, last our the were what more that – second significant last is if in implies, where in the you be at would in the to in half

mean, that? prior that has year I of So, why do with to some is comparisons. the

to where I fiscal good thought a remember, of starting looking for walk tried I to dialogue a point you was you what in went project at I of March, a through to from XXXX. might baseline bit little a You

some I you and last I think you had through it but that of starting it each year, puts $X.XX was a takes walking to get to we in reported baseline.

in certainly puts that half for in those earnings and adjusted QX. reported would like guidance takes improvement more of that QX some the gain first have we for land the you have our to relative and what in QX last include And shown year, we if

year has say, talking year about, improvement The we beginning tailwinds half talking with that some for more the mix to in to last about been do or – issues improvements in much the price year related of headwinds the started back we've that to some targeted, cost started I'd last EMEA. that the of to lap and business of significant of early in were

help of would three combination the all what the the expansion half a earnings those back of year. are things in So, drive

Now, that's earnings.

you revenue all Let's revenue and want QX, XX% flat organic for year, X% QX. talk growth in to year XX% growth was accelerated. in QX, QX, remember that a because that last in throughout second, I about the growth make our It growth in sure

the comparisons So, we're we've back up against got that of the year. in half some pretty challenging

feel good about against pipeline our recently. order and We've comparisons. up got second difficult we're coming quarter, momentum some of nice more good activity but project the in We rate

of pace second So, could mentioned. is while growth because things we the the revenue just the won't that the – half some half in it did at the first the half, same see likely projected stronger rate second in do I of to earnings in in the

Bobby Griffin

model Okay. we March we think last have by surprise pushed kind guess lastly, I I the deliveries, still of from there. pushouts? And basis assumed in extended when deliveries What Or we all help to is, returning guide XQ out. – with from kind us spoke here caught what the or when kind the we getting in rest maybe of the work of delivery you we your guess and in about more with got year time then then our and frame for assumption can some normalized

Dave Sylvester

them high kept at We relatively a level.

our into for – we gap is looked did we look relative modeling the to at in that carried that saw we and what QX history, we QX. So, gap

same the the drivers see industry. And second a really, in will have let's the our – construction play we related because mostly think, negative that's we we these on in impact that rates, that are shortages quarter. labor conversion anticipate So, drivers say, to

our other in QX, QX, acceleration shipments, so beat Now, revenue an we orders because recall, project if you I we what in part go interesting, had estimate, and words, a were than of back faster our completions had strong anticipated. to is

has say, bit little So, we a consistency QX, pushout. significant a around historical amount then And moved anticipated more, saw we it of let's on and in us.

Jim Keane

that's in the QX we relatively assume is So, conservative for as just we to QX now. going outlook because continue did have it that

Bobby Griffin

appreciate jump the back I’ll going details. of the I all Best in queue. Okay. luck forward.

Dave Sylvester

Bobby. Thanks,

Operator

you. Global Thank Instructions] from with Our [Operator next Matt question McCall Seaport Securities. comes

Your line now is open.

Matt McCall

Thanks. everybody. Good morning

Jim Keane

Hi, Matt.

Matt McCall

the So, Dave, line. maybe start I'll expense with operating

sales I you based think you a said in lower percent it think, outlook talk actually all would've maybe was expected I that remainder It said of Can should of you about was about and from on, item, for higher the than line had perspective. what's the the expenses top you modeled year shortfall. just line the I than we for operating guidance? think maybe how

Dave Sylvester

higher anticipating. of QX, less we we few was I $XX $XX think, million million in a to year I XXXs or And you low a saw, operating some expenses the than ago. in million that reported, it were Well, And think than approximately shifted the number suggest I QX.

only So, I QX, expense higher sequentially, in not if in I drive which $XX profitably probably variable it would then be for it's year-over-year. QX I right, that fact is all to at the least is million, going but than compensation model were I you, would more. the QX, And say, higher significantly will mean,

plus year would $XX something OpEx if QX the to assume, mean, going imagine, than to in you're do prior higher million would in I range. be get you place to all by where I that, So, a you

pace So, of on activity X% the the X% of XXXX or part of year, on fiscal closer fiscal we're growth not balance and the depends or our part whether the the our our to target. project it XXXX

Matt McCall

Okay.

two from what to much have, so scenarios how in – we of what a those So, what? Delta would

Dave Sylvester

don't in tell when have thing targets, both margin think Mike's we're and I is me, details included I operating our our improvement how I from talk you went Matt, into gross of in though margin, as would so our back some live I I March we in to, well can't is targeting leverage. about our in deck that remember take investor expense operating that front improvement you. today, as in this about again One

and that. We're cognizant would We we're improvement QX, to see that expect So, in leverage. of it we targeting to in had continue it.

– not but different you a lower I'm as margin Now well. why entirely assume you gross I modeled modeled number, clear, a you

Matt McCall

a of – year, the the the leads the gross okay. any leveling Well, and Yes. well, then for mix to and – guess to The just assumed a about about but to you the by opportunities, margin. you you of give progression talk price of mix, pressures margin segment last the similar talked out and gross question? that's I price think cost, maybe little Can some bit, the improvements. Can way that about EMEA remainder the the what's in guidance or

Dave Sylvester

I think, more gross to last but than not, now, tailwind you in felt margin. been that’s year-over-year. Well, the and I'll we expect, we more flat margins a Not one And inflation gross several. start targets significant with little bit, last of gross positive year-over-year the boils really I business our our have been down Americas, have impact to outpacing to year, to pricing not certainly to the improving talking often Other but We've category. every over the I volume mean should go improve margin. our where quarter, most that it does EMEA, turned move mix. If a and than around about often

been has project good is recently, there drag the out. it's fact for a business, largely to which business. predict certainly a feel how on do play to mix, has that try been that where about going are our business demand to I improve just too of mix that's What day-to-day many me more our growth by business And driven variables started to

back the So, the that on business positive challenging is just can't a whether well. also of demand sustains And business we're as predict I improved influence to predict. by seeing in trying day-to-day mix, half category through year, then is pretty fact demand the that some product

Matt McCall

leads question. next to actually That the

trends and about desks the those – know kind the we've expensive about prices the average stabilization? per Is broader still pressure? is we just for saw as dollars less the sorry, some there curious seating seen a and it's you, Jim, long-winded be industry-wide about employee. white the saw trends, we stabilization we I'm Maybe specifically dollars this question, adjust thinking average about I I'm got Are broader at introduced? maybe and and and way we a selling you've looked per now So, think to trends seeing I'm foot selling prices, one ancillary. of have like-for-like some or just is products and question with of past. test it, kind in products broader with

anything you ASPs? about can tell the Just trends me with

Jim Keane

Sure.

first business chosen So, of to options level. above that that think a the participate at say, you to level. all, choose below had I'd part points years, And our for couple we then about certain customers the last address, the over more we include that prices if of price we've of added

weren't from so, because of so perspective, And the that's buying our come them. more them our you just you products, business, customers go, we've it before. business if selling look because weren't lower-priced a from yes, we at not Steelcase seen It's

the been have industry. buying price may manufacturers the them at of The from customers other

of that were so, share price And wallet those we're in points. some recapturing

shift So, is. down short saying that broad this it I so of I don't feel as seeing as we're stop much it market.

broader particular. compete broader across seating a And prices. that range about that's in speaking a today have allows us We of offering to

still like relatively the it's so categories tables a and for industry. height-adjustable other category new In on,

and in you systems we you past, that expect, are cubicles so, segment have as so more with on solutions have industry that basic as that so of at would matures, furniture, lower time, price the on. saw that offerings over the And points, and

Our those everything segment, But every done have Customers competitors doesn't in products. sell it done that. moving that that. mean chosen have We've sometimes that we is direction.

and grow prior seeing as that's we're BIFMA those is I'm that about back – that Isn't interesting your and So both of now the that And trends if kind it collar acknowledging than per But also in Dave happened, I'd point. of you worker? go what say forces faster of have white years? step also change spending because I about. talked grown it's

CEOs per workplace furniture, supporting versus and fundamentally executives way working do senior not different." need we've up at to it's collar anymore. actual the but doing no know look to say, We way all. The spending worker all as and this we're something projects white So, owned what, just their goes "You

actually time a good of it's the industry growth. for because So, really

at have to as the to have it's not deliver done shift. value, But and the are products mix just You simple we've that right as that. price right

there was industry a danger say a there commoditized. products going state of flat much from becoming of was the period change wasn't workplace of where I'd a – in on moving and the and sort

world we're thinking a a where different very in workplace. are world, people different Now, very of fundamentally be

quite Now, the on top of different. all other. not each actually We're all competitors are

at that real NeoCon see so some offering could to You choices customers. our

XX than, it's I'd more So, healthier, industry I say, vibrant much years a X think or ago.

Matt McCall

referenced can Okay. to yet Dave That helpful. those sneak one gives made won, of you maybe already you half? size the the Jim, ship, you it won maybe in the well? already was that and then about in. wins to And of talk as the very expand on visibility I'm and back comment health was projects how pipeline about projects going you, you it more The much

Dave Sylvester

when a we day-to-day which up necessarily that's organization That pipeline that revenues.... in confidence in pretty pipeline not referenced our of pipeline significantly than won, where project activity. remind pipeline referenced. I but you the it total have still business, What stand I half of that though is our Well, overall opportunities, is for competition. not both There of we're of would the more competing varying is of that degrees entered as includes is by projects and I of sales

Jim Keane

see Even can't it. we

Dave Sylvester

ability an predict to that. have don't We

And a just really pipeline ship really of it's the it's revenue year. activity, of component. would it's the project total potential in that represents – only to we of it So, balance percent expect the the really the project

improvement, which which it's feel a good. indicator an amount, good So, about. is it's of up And we year-over-year fair quite

rates been win have Our solid.

they and ordered of haven't some won And yet. we've projects been those actually

good, it the give a balance it's all year. So, complete you of picture any not, the but for by does means,

Jim Keane

designers. We the project requests all have across-the-board, conversations with pricing of look with architects at other like and like dealers, have we're of number say indicators have getting soft a salespeople, larger-sized I'd And positive. of with we are things those quite We lot conversations can for we projects. conversations really

pipeline. there's why to of be about again, we're still lot feeling that in And that But a so projects are positive there that's won.

Matt McCall

all. Thank Okay. you

Operator

comes Dezellem our next Bill Thank Management. you. from question And with Tieton Capital

Your line now open. is

Bill Dezellem

Thank have a you. I couple of questions.

First select one, that and order for them designers to tools you the referenced products. the updated allows

see more I'm secondarily, press designers. Given just could feeling where from then talk the detail think gaining be you relation that like perspective. least the the that momentum, commentary, can to go mind question. then into business and a those but has for that dismiss about and you the how And that numbers the same some release, as you with that And hoping called more you the not share would your you're qualitative out it's numbers, most significant you'll that in if and perspective, we from the the can but

Jim Keane

Okay. Good question.

to related the tools. all, of first So,

So, dealerships, are our but when firms. all, designers design first architectural talking also are I designers talk about designers of inside that about I'm here, that inside

Our that have design so designs from great tools for designers and offering always had Steelcase's help those on. customers, turn to their into select them to dealer workplaces orders

enhance and those systems continue that, systems. we've So, we had to for

happens, portfolio few include larger a is, What's more this ancillary design bit available from. the right them our tools, furniture, architectural industry. dramatically who little select dealer believe changed designers inspired of easier customers. and people broadened the the to and to product But a with up products to need as that just group into for what's of that see so better end is in to years, work for tools their and a complexity industry we And need also, as of sets it firms learn the this residentially last SKUs same lot to our inside that, what gets calls we've pick make of for our that you of furniture, the

the the to the be decision will which offered make really products about dealer Sometimes designers customer.

Sometimes it our decision may decisions those and be to the designer dealers. working inside an A&D on firm that whose passing then making

until capabilities kind web really those have tools so basic Up and fingertips So, it's and and now at on, both, we've the our necessary enhanced inside in offered design selection the catalogs us of both dealers. but of digital for to we've tools. firm the

can need, tool our our of different then something just a through ways of and goes our use and that select to offering convert that to different can lots to lots that architects dealer. designers what identify So, they they what dealer filters we use screens to in sort using created and need, able be

it order entire can converts job to to be the then single example, truck dealer order an and appropriate. a sequenced the on for delivered, Our be or as site

system. what front we're system The really that that back-end end about. So connects is is it to the tool talking that of end-to-end this

momentum, which On more most your region little precise you a about – clarify or product maybe talk about answer. then about? I can and least maybe second you to a bit answer, little – what me can like kind question I among – you or or would a bit momentum before talk customers vectors of Like or more give

Bill Dezellem

numbers Maybe not yet there be trying there up just not is you're thing, to a maybe be the a that's would terms yes. able And is to be perspective. might an answer where that trying there of in might may understand. the but grasp themselves yes, Really momentum from area trying be again, such behind be The it in a showing you're from numbers to geographic maybe a that grasp the less feeling is building – numbers, it's in product it what we would even Alright. some front-end yes, is and with perspective. if lead what the if And numbers? see component not momentum to from perspective. that Wherever, where

Jim Keane

Okay.

few I'd draw that. a versus a a we and see might of today. contrast have ago momentum between seen we example one I'll you give years And, – say, years I'll few what So,

few and and a both last probably industry, competitors ago Steelcase our years driven really, job I'd by So, in over the being about, as the years, growth. – would say XX talk

their companies satellite addition complement adding find and hiring companies increase have they needing of through in just to save existing footprints; headcount, out every main grown to inside to office the grown, cost. and more a facilities facilities lease people, they've try maybe then, or order way that to So, density those on headquarters, room now of their as and consolidate running

tough. that growth levels hard at it's That – But X I in the done. that, been furniture people job hire years don't for still would or say people to hiring on as momentum were because less part there's same say ago. office not happens. want I'd trigger not before. is I And XX It's to the purchases. to historically a it's say degree

space, just we and So, on furniture, more we straight up – X,XXX more people need a less we're side. little that adding momentum need

building are hey, years, what not in Now, several of we building of over seeing we and companies but up the terms we plenty momentum, saying, space, more overnight, new more again, CEOs, last design thinking working people can't retain processes have and we new adopt We furniture. like We just people. want. anymore. can't inspire attract can't It's agile. can't We plenty the We people. not of have

all out, but our workplace pretty desks it's We that needs to is enough – that say, lined big all causing we've And them still the in say wearing combined up meeting forces hierarchical the isn't it's isn't those are furniture and just anymore. were nonhierarchical and ways. yet this are and it had

And so, starts conversation every that. with

and the I'll So, that's one say can one, kind it, hint of area momentum. explicit. you And it heard other me make of more but just about I'd

the And it's are about little So, find started facility someone a lot of way on at the than – the Americas, these bit competitiveness. start I different because install in true driving the think people cubicles We what's the really real them. whereas that's largely C-suites wondered it I whether base the In suite, same thing the and call save in the a And that's to in install or and the actually might we're EMEA in furniture with that's little momentum. new C trying is a systems to a here. EMEA in we'd estate, conversations past, evolving think now suite see as Americas. bit have base

wasn't starting literally a model. In was point it It Europe, different that.

causes that to install even the and Germany out obsolete the turns have same their It they is in the same in do yes. getting base exactly thinking to stickiness go agile, it like who We're answer celebrating at countries as France rate? largest processes culture, the start-up celebrating in the now companies. beginning entrepreneurialism, the conversations innovation same are adopt internal So, design

same those we're shape. take So, seeing forces

So, at helps answer question. the to begin maybe that least

Bill Dezellem

Are or Asia Jim. – does, is you Are you It EMEA? it in seeing so the that still and there? in to seeing that in strength also come Americas you're

Jim Keane

can't Asia, with I think a because different Asia story talk really I the is install about much base.

growing like about all locally you headquartered. If serving fast big, very are China, are companies that the places we're companies new, think

growing they're those mode. start-up still – from are So,

from companies You install many XX-year that state shifting with have other. XX, one bases are old XX, don't to the

do So, about around we figure so how support to much just both and because in talk trying out don't cultural do scale the up the their growth, how country, they and they're those change in in region places world. the they

advantage globalization there a we global of really And the there have footprint. more So, strategy. of good our momentum is a because

Dave Sylvester

to C-suites scale-up the talent. they're compete for But you'd for we leveraging talent, are in – their say those help strategies, see there – and space competing are that organizations those certainly

overlaps. some are there So,

Jim Keane

That's Yes. true.

Bill Dezellem

you both. Thank Great.

Jim Keane

You’re welcome.

Operator

Thank comes from next Sidoti with Burns & Company. question you. Greg And our

line open. now Your is

Greg Burns

you're economic success? looking relationship do how is Good Steelcase? partners morning. to is to partnerships you you. or that how And optimal the currently whether number just do number have? that And What you you get how or assess valuable with an you have partnerships these the many do And to? of there assess Thank partnership

Jim Keane

I'm how that and because going lot, every partnership with some do hesitancy the is I I'll So, get a but different. give many you numbers, to some questions, it asked

So, the through in have scale a now offer at that different only we offerings product that system that than are smaller like partnerships we products be U.S. and and our a might partnerships Elm small Bolia manufacturer few a somewhere broad West from have

we customers different. set all all each of they're is the quite broad a each them because But different. have need of all. one them of interests, We establishing – And and love cost

lot than say of would total. an partnerships asterisk in includes again, a small. that could and have that you put that XX more I So, on we But say are quite

the The of people products. is And we it them, assessment a ultimate believe kind established specifying be some partnerships those are when the will based assessing those of them, terms lot these on we of imagination trends. our very of whether of In new. designers, industry captures customers, partnerships that

or So, as kinds turn partnership go, continue the design then lucrative as partnerships of and and new then customers' new partnerships may of to may may trends the add we come for we products partner, likely continue of those on. time, those partnerships will demands or end they us over for we not move that emerge certain will And But some in to some for grow. our out industry. it's

to good. So, the really partnership established that are a to an cast partnerships. We've that dynamic, have feel EVA about the grow together. been We opportunity to have The partnerships then are asked be from partnerships business meant are we startup we ability the before. there economics is and just our Once new of tools, very cost then on add anticipated. is perspective, partners our attractive the

them don't are competition from we see products. We us, we for partner when sell in when happy perspective. sell products. as Steelcase an So, We're e-commerce happy we

Greg Burns

historically the you'll terms steel What do – then looking is industry and has continues And the be you Thank thanks. fluctuated? steel as low? forward, think gap, in able you. Okay, to when to of steel decline, price is cost how hold behaved price

Dave Sylvester

last I'll continue the even volatility mean you and in in prices last over to X over that XX steel question, the a how back steel years if decade, go We've months. Well, decline. started I lot prices seen to of

I remains basket cetera. at our delivery prices look seen all actually prices, seen what and steel inside they're how what are do, and to labor be to So, of be as entire meet look at and of Steelcase doing. rates costs, fuel But other et as we it also tracking, think remains and quarterly it commodities well commodities our

and come by time, to prices prices, decline is from what be organizations seeing some While continue same we're that are might steel recent could some the different steel peak the there in there as the projections down. challenge the in and in basket. labor war commodity rate factories, our as we're And the has that continued of. of increases our because for cost year-over-year to middle talent freight well delivery in At offices

Greg Burns

Okay. Thank you.

Operator

to Jim you. call questions remarks. any now this time. Thank I the to over closing like not back turn any am I for further at Keane And would showing

Jim Keane

Thank you.

in to Steelcase, I'd our we're like and and today's again, very joining call. order pleased your So particularly dealer seeing, strong we're thank products with the and thank reaction the you customer, designer new momentum for interest in for Americas. to you with

Operator

conference. thank wonderful and you program, may for Everyone, This Ladies have gentlemen, participating today's a in disconnect. today's all day. and concludes you

Steelcase (SCS) 21 Jun 192020 Q1 Earnings call transcript