SCS - Earnings call transcript Q2 2020

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Operator

Good day, everyone, and welcome to Steelcase Second Quarter Fiscal 2020 Conference Call.

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

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

Mike O’Meara

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

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

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

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

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

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

Jim Keane

good and everyone. Mike, morning, Thanks,

continues to Our perform business well.

In one of revenue quarters strong quarter we as operating two against strongest fact, orders which this past income XX%. was in we XX% XX% and year X%, growth grew a was We in decades grew delivered prior the growth. which our

executed share our per $X.XX good of earnings Our operationally estimates really as and controlling costs beat and we commodity well job a did overall spending.

business offset performance and new extent underlying with couple company. typical that We than Germany. charges, quarter. economic their faced were miss businesses we’ve able a and strong customers We won in and in to estimates. the the also to a markets had But UK, some challenges small we faced We like with softness headwinds across took few the more we China,

a So, good quarter. it really was

so showing the previous over and In BIFMA bit a our three-month doing I'll shipment and we through outgrew most recent an Americas, we to over share improvement of growth the are about BIFMA period, in Dave three-month well the the our gaining to periods, with go X% is for both share. then turn industry financials. businesses, those it period, more

the industry the connection the challenges it's between productivity. growing are for processes we Yes, related to also like efforts to faster? talent, and work really other is business Why why related workplace and and adoption of Customers growing, their seeing it's are war and to improve workplace. the their even new Agile, innovation,

year Last in here visits providers, to was Rapids the ago, over week, world. remained Grand partner products opportunities our the healthcare up strong well. versus who all higher are Grand because with it manufacturers, and is to I customers These a are consumer U.S., win universities. and to financial Customer service major are Rapids, Australia, product update we customers from And year. providers, rates continued met we and and have of offering as our our product pipeline have more sell, last than Canada,

digital continue and marketing designers. Revenue from we're We by our selection specify the through steady our and our and partnerships dealers in is to increases succeeding expectations, to our from making simpler use and ahead developed and and designers year, is, feedback and order portfolio. see last in it and expanded specification dealers adoption from we launched of

to acquisitions UK, of and effects value-creation far our is so the acquisitions established We faster prior plans year. softening quarter, and from remains collectively against growing in two value Orangebox second at Capturing maximum have than in acquired business. negative XX% the seeing some over based from grown the Brexit System, industry. course in past includes for fiscal is that XXXX that these And key which market. the revenues Smith Orangebox The AMQ, we the each the established. and years, plans Through are value-creation meeting

had Designtex grew large projects quarter particularly across It ever many India category other winning good QX. revenue Pacific. the on region, in with quarter our a topline in corporations. in exceptionally and on based but The XX% well Pacific multinational organically grew Asia Asia was the highest

earlier, is mentioned but China starting growth in business some our continue downward Asia see pressure, Hong see Kong and to to to across Pacific. I we As solid expect

versus profit quarter than our always in year markets. faces initiatives EMEA more profit UK. narrowed challenges of August and our because offset some in second We the shutdowns continuing the holidays because improvement in prior loss softness the

the value target in Continental pipeline, our the We're achieve our new of like plan our on to XXXX in our believe product We from focused fiscal EMEA. being offering acquisitions Europe. that Moving growth is expanding expand EMEA forward, profitable through remains our creation driving partnerships Americas. plans our we across growth and which similar healthy, Orangebox will

in of I end also about give before is start products year. regions products encouraging. Early [ph] now on to you in Collection previous quite interest update customer The want regular we’ve an the the in calls. the talked other orders supporting are on of and teams Agile Americas, we'll the and taking actual calendar Flex orders production

support Hub we selling our collection X of expectations. ahead developed now available Surface and product to the regions a Microsoft all is Roam, in

example remember might digital success when together. and without of technology, space the flow. workplace these to allow designed interrupting You throughout It's that move products furniture, potential content users the are another for

commercial seeing helping furniture we is feel innovation and strategy the drive in with believe win industry. to and demand for us our to evidence We this. of compete talent, summary, their about in invest In keep to we tangible spaces customers good overall looking

of Our first half the we little had the were better than year. results a beginning at planned

EPS we the of year higher $X.XX the the for outlook our at our now $X.XX. target finish are to of end account range third to targeting quarter, into Taking

performance our turn to for about for and Dave it over I'll more our Now, outlook QX.

Dave Sylvester

our remarks flow, today outlook include you quarter few quarter everyone. earnings and a Thank results targeted and for the year. full the to third our morning good cash second Jim My comments highlights plus about related for will and

customers a and we earnings in rate resonating we basis, growth organic growth and on second earnings by or target with had mentioned, of just the organic very revenue X% in growth our growing is excess evidence of Jim an longer our that at grow term quarter, achievable. total strategies to twice delivered XX%, revenue providing strong As are XX%

Relative $XXX was estimates June, provided we've of by of slightly than to and the million of top per share higher our end the range revenue estimated earnings $X.XX quarter in second $X.XX. guidance the our exceeded

which impact beginning For and growth orders. a revenue, plus the inorganic other strong acquisitions our included growth, backlog from organic of X% XX% customer items, benefited of

on was ongoing as not growth direct revenue economic their results global our of have it tariffs, been, to as quarterly Our of for estimated and uncertainties any consequence. the growth, quarter our might range revenue more related than significant offset took Brexit, slowing but the impact into consideration second strategies the and

result, a the report to higher we our guidance As than end top able quarter. revenue for were of the

revenue dates, vertical and represent customer with approximately historical strength Americas the largely of this quarter again agreements. broad-based but Americas than two-thirds which product believe first across The orders mix extended regions, of their Smith at an consistent we geographic markets, revenue have categories, customers for the annual and was included could to averages were assumed our remained X% estimates. shipment higher continuing which included quarter, year. what of was we in improving revenue from requests revenue included in Similar The System, seasonal growth organic with whom

The growth opportunity X%, of better and expected, second continued a despite challenging pipelines revenue environment half organic the growth posted in revenue was EMEA to for than of the growth reflect year. UK. the our

Designtex. a revenue by of record level growth very The had revenue growth. the XX% the being Across quarterly region, other with was driven growth Pacific posted Pacific all organic other also category from quarter India growth strong, a but from Asia Asia very markets strong strong of year-over-year revenue and

and a approximated Smith second System, full increased. has the and from revenue quarter second of first approximated of mid-single-digit our increase XX%. quarter a sequential this year quarters inclusion increase the seasonality the between the Historically, percentage, With

the this order in high system increase quarter the level increase, Smith of drivers quarter sequential the patterns sequential First second the the seasonality at revenue start of other but the and primary backlog year. and were contributed business to our of also resulting

second to the the growth of year, growth prior organic Compared on of XXXX. in organic quarter stacks top the X% X% fiscal

even of XX% quarters organic of in revenue prior fiscal and of become fourth and the respectively. XXXX as third the XX% difficult the we year, growth our posted Over year comparisons balance more

across $X.X For improve points a as earnings, we to favorable of price in both by the we margins exceeded mix as didn't X.X% continue performance to and to margin gross yield, plus XX improvements the expected a materialize due project in employees helped basis of some and business role than drove by quickly the expenses, expected expenses operating range Better than quarter, played the revenue our top and as commodity our fitness operating Lower to operating estimated. drive improvements estimates. our year-over-year as end reflected percentage our favorability in which favorable quarter. of our also the spending business, costs

Across were costs than better other the also were better the But our corporate largest expected contributors Americas our the than to category results segments, EMEA and and expected. performance.

a can our top by working our quarter, end the earnings things favor of you of exceeding As $X.XX. had see, lot our this estimates which we to in contributed

year, Orangebox acquired year-over-year million growth the $XX a $X $XX of XX% effect. translation Smith them $XX representing included in small million net and currency of before comparisons, net and of into or from revenue and the which benefits, inorganic broad-based deeper at quarter, million little X% in a $XXX prior revenue the of System we organic grew divestiture, million, Diving coming with unfavorable we million, by

product which to also The consideration the unusual effects by effect items items, compensation System, earnings initial related included variable quarter this per year, property workers’ largely liability in increasing Smith compares $X.XX approximately compensation prior the purchase had lower offset. For and accounting in after the related that some of earnings, share warranty, and costs, but expense. including included these of year to $X.XX prior a $X.XX the gain

of or exceeded growth, the impacts. in And the margin contribution approximately income balance million related effects acquired the be over items or represents improved the adjusted revenue year. few after A of the organic operating million can the attributed prior to which dollars leverage of revenue operating by prior year the quarter. unusual to consideration $XX the $XX Our in improvement million the accounting the purchase XX% for

lower inflation reduction absorption much of commodity mix cost included from beginning us multiple pushed take benefits to and to pricing, facing growth also support pressures strong investments costs After fitness benefits the related which offset by cost unfavorable year, commodity to Beyond pricing actions, leverage the business initiatives, and for improved and abate. our partially initiatives. last significant cost, fixed are operating to

pricing benefits at kicking actions While are time, fully. the same of more the our in

year. prior balance and And on benefits product but we to fitness lower the the of demonstrating initial in of expect in increased pricing for significance beginning year, as other and at in while few are in supported net the reduction improvement lap we cost sales, We fitness, benefits the investments development delivering expense efforts. the marketing, of our our quarter, a an areas leverage our levels operating business,

a top of XX% X% the XX% the year. on quarter, to the relates after XX% which prior to of category XXXX. the it growth order growth X% to in top growth growth strong orders on the As declined growth other compares Americas prior the growth compared year. X% And fiscal EMEA year, X% posted X% prior in grew in Across segments, prior in the order the posted year.

revenue in XXXX that year anticipated As patterns in fiscal accelerated on the reminder, target and to we revenue order third fiscal based year, second first year, higher during order those the half the quarter the indicated revenue current consistent well of of for at XXXX. patterns the the compared beginning far our thus half, estimate how with revenue our a as for as rates the our growth growth and our expectations. organic are And organic

and flow the in more expenditures balance also payments. in cash working earnings generation we benefited timing quarter, was lower million strong income year-over-year to and improvement than Moving to the the $XX second driven the year The strong $XXX quarter. flow and prior nearly growth cash consumption free reaching But the and by was of estimated exceeding million. related from tax sheet, capital capital by

Capital the in expenditures quarter, to $XX were $XX year-to-date bringing spending million. million

of $XX total year half to But We related expect to manufacturing second approximately the now expect investments. year higher the full primarily levels of spending $XX million to in million. we the

plus yesterday dividend in to And of the through share quarter returned million a per we second the $XX share, of third payment cash which shareholders We October. level of announced quarter of for dividend be approximately in the modest the will same $X.XXX a paid level repurchases.

million Orangebox, to $XXX remaining projecting we $X the of a translation to of X%. an year, effects are impact growth $XXX acquisition the offsetting grew is compared this we estimate range on and fiscal or the growth growth quarter, million $X related Because compares to XX% organic unfavorable And million X% to also million, projected by X% to approximately revenue third organic X%. the range For prior are basis in again, estimated currency between which strong XXXX.

share, $X.XX earnings the an or adjusted From earnings to of in expect report charge. which of a we per $X.XX to prior impact of the pension $X.XX excluding perspective, $X.XX after earnings to compares year,

share. the year-over-year advance As you as costs also third quarter, included tax in to update promotions, items fourth approximately quarter, these $X.XX impact by adjustments adjustment total per the in your the our lower year interest favorable accrued in models comparison prior recall favorable for and issuance a the debt of

quarter, performance which full the the following finish consideration: our EPS are at higher of into consideration year-to-date end our the outlook targeting now range, target for year factors to Taking third we and the into takes

XXX S&P same continue spending through whether Furniture the our help Fortune organizations data in from growth the war in over productivity industry capital the of This appears suggested across BIFMA, gaining stronger calendar at as the talent. capital derived drive industry resiliency, spending period, of to growth Americas, for in July macroeconomic invest the from reported slowing of workspaces expenditures their XXX. XXXX looking than to or or capital compete and to share maybe be as by

approximately up to prior compared the the Our beginning backlog of is at the quarter year. X% of third customer orders

the Our from should end next months year year with with contemplating believe of regions research resonating We're Overall Americas, base. of continue in end EMEA for our believe sentiment and opportunity calendar their and is and world our growth -- the across business Asia support leaders win around and seasonality our rates environments. for pipelines six reflect remains dealers investments pleased sales in innovation the most Pacific. normal work which to leaders our we positive customer

points around performance center shared I quite the uncertainties. conversations that good the investor of recent many to and growth same because industry individual important our it's has time. at economic those note been our And

back to it operator turn we'll there, From the for questions.

Operator

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

Bobby Griffin

more excites Dave. on profitability for It EMEA, the the color some fourth if maybe year? I that that better to flipping could business what of on pretty the curious, we confidence around in just the little guess, a from? last come on get half you're else first off, to Anything details just give of us back quarter third just year. think start us our seeing in implies some confidence a where level you upside improvement and flipping and to will help you, profitability the year. the a of maybe bit nice the versus improvement Can you business for of models and

Dave Sylvester

Jim pressures nice business mentioned, the in has is of some we're growth. the reflecting offset Well, we're of that won UK. for feeling we've that as opportunities I our pipeline said, competing some

are continue the pretty + Center in the LINC, launched good improving. Customer the markets a in be EMEA introducing U.S. in we've solid. Innovation Learning at to Our new that in of We're rates lot or win Munich products most visits

to teams but year-over-year so is not not our we're about of steady feeling and we're quite the improvement. to confidence super broader environment, the performance continue us -- is that's business economic our show giving So, excited solid,

Jim Keane

terms that Operational and all on-time really across strong shipments margins. eventually those I'll been gross we quality better and all translate very add. metrics track, the has things performance in into of but

Dave all important an think So, factor. mentioned, also I that's on of been things the top

Bobby Griffin

starting months can us? it saw bit that bit? your great how And type a Any talk what share the Elm to with setup you move maybe needle about then Is along, few anything I we of the would great? was are early little some can also color. of NeoCon you're little else a a growth Alright. But I It be partnerships and learnings at appreciate particularly coming there that ago. West a partnership, seeing?

Jim Keane

Sure.

overall. partnerships happy we're with So, our

can designers using launched principals both are too of it since from a include can has who we're our adoption they're I terms them. first shipments, dealers. in dealer expectations that and and but ahead can the orders, see that in terms of dealers of increase As here, to in we terms others said, tools see also and and we it feedback getting continues the of those of is increased created dealer we tools Their ago. digital we And year -- we see

tool. rev remember, second have, already that you our We as of on may we're

the continue a we great and to make getting So, reaction. that, also are investments in products

relates products products. back -- We dates to the West it Those new we a launched to exposed passing lot Elm continue order as launch NeoCon. their dates, market As all specifically, are first ship West year at this the to Elm entry continues. first

several have few in shipping, those we begin here the shipping to of products begin are going some weeks. next already So,

at of look and So, we're lots feedback really specifically, Elm when everyone. West hearing you optimistic from positive

moving think not our we're yet but results happy with material something the we're on. the I is needle to trajectory

Bobby Griffin

flow, bit on that strong And here. one pretty in I’ll timing – try that XQ? of and XQ should through nice continue we I functions sneak more it just second to little then last lastly, Is to year should or free versus in kind half or trend and But reverse it's of the a guess, year-to-date. Dave year-to-date, the a cash more expect

Dave Sylvester

but improvement three by also receivables, the all working inventory, and on very Well, payables. I strength it's being capital think focused components; across earnings driven we're our of first,

there the improvement do I have we on world various some that result more is a So, are in working the we're in know little teams of And that timing the going sustainable. initiatives the will the think hopefully back did is diligently regard. around to -- then of outflows in that year. I very bit fact seeing half

CapEx, implies in For half. expected we first million to for the the quarter. investments in the full estimated tax still this year, in little we’ve and million That a were we're think and less $XX $XX example, a income half, more our than or spent range timing million payments back $XX our

So, well. timing also as that's I think

Jim Keane

all A little say. bit I would three, of

Operator

comes question Matt with next Seaport Global. Our from McCall

Matt McCall

tariff the gross together. mix curious think to in the maybe steel some prices? benefit of start cost, -- start or quarter? But price issues detail. obviously, OpEx maybe wanted everything I that just delays. you spending you put with And was, any, So about quarter? SG&A. Dave, if the Can you any some mentioned issues talk in you I gave to margin, Maybe, ask Specifically, what I about the then quantify project think Can and

Dave Sylvester

pace start It it big it’s a was with it’s -- meaningful not not delays. question, the a a just a contributor. OpEx bit. just But differently did. they the little I'll than that projects a last little some Not deal. thought We we’d we had number, Well,

chains, all the we’ve really, they're our that impacting puts adjusting supply impacting to us start I'll tariffs, offset they're through and to our And it. supply but with us, not -- actions it's dramatically. impact, gross very of offset hard margin with negotiating and much takes, the pricing On chains, have whether because taking our worked teams

in numbers, headline really it's us. but So not our for it's a

It our driver contributor pricing little and a number gross I’ll of bit than inflation significant commodity our versus one as many largest outpacing. It’s our is improvement, pricing after as as with of lead side, a better quarters estimates. performance expected. On well margin the

a benefiting time the meaningful prices, you right from down recent to come Our pricing whole the same And more tailwind of highs. finally industry that's efforts have as moved At now. steel that. know on were

mix… Business

Jim Keane

our credit commodity helping give doing I’d people recapture those their some of a and consumer lot increases. cost for and us job of also

also it's our So internal but both forces lot efforts. the macro of

Dave Sylvester

to been off Good part origination we're recent we're still see us our mix mix but some with benefit than year-over-year, it's improving unfavorable starting of quarters, an agreements customers. in lap in beginning this the of to point. business Business hurting because it’ it is but also because a still less continuing us, business has of negative of hurting

little. So a starting to it’s abate

Matt McCall

Thanks for the detail Dave.

the that, on were I cost positive could price was you just do don’t So the cost we maybe price front, in but know the -- quarter? tariff, excluding price

Dave Sylvester

Yes.

Matt McCall

for the in the us? -- can you what's it And But through and we expectation guidance, then year? the quantify as progress

Dave Sylvester

We're not enough it to points. share basis quantify to able precisely

a Our it of and driving to mix as from to modeling assumptions lot actually and apart requires tease what's it, trying pricing.

from driver. away was the quantifying So significant it we're going to but most stay it,

Matt McCall

Okay.

you So But to where you to think other maybe on there some on specifically, of going India pipeline. had Is say be is call I growth India this specifically? driving going category, specifically. type positive could that the something one a out called quick about there the out things consistent? you interesting growth what's if

Jim Keane

have Yes, and first terrific it market that great in we we customers relationships people market. and all, I new think of the team serve of with that a builds customers in continue to

up have have So job, performing market. straight by just saying, a to the start we doing they're a in team I just great great and

made also the address that in product investments of there. last couple some our broadening specific to we developing years the over saw line gaps We've

emerging. -- that’s a to existed couple gaps gap. of because as products will very here. and Now, I this, the gap are done that we've develop and A maybe quickly, about lot that, product these we back not emerging I quickly talked be fill when to That's for case as usually to of times years before, and they're on gaps come when it’s want that I say I've it that careful we're

a some period product. see had of the and jobs, time lost win we where very short we just because we right to didn't might opportunities have we So

some also also, about of isn’t about gap that kind of case, filling gaps. just fill innovation. in commodity It's basic really trying So those about we've been intentional to And products.

we for example saw market, developed product started product that that we the a we world. X, ago, opportunities opportunities all couple around launched and to response And as of for sell Series to market a years the that the So we saw for emerging Asian as India. in

team make in So -- to invested and relevant great have just summarize, also supply we’ve a just I'll we We've more in product chain. developments market. helped Indian our investments us that made that in our our customers

So lead factory manufacture, with completely factory times, aligned that can improved adding the has there, market. capabilities more that to list our has more of expanding our products that, our costs

across of different So that of pleased a we're lot good functions but performance. a works lot really with

across And really although we called to I talked didn't say out and India, about also quarter, that had have good Asia, I Asia, and this do across would better we've Southeast also Australia the region. of seeing performance headwinds really in In of it's the really on going But a other we're been broad way, there things China. China, in of Asia because some course parts strong. really,

Dave Sylvester

performance of parts had than even others. the wasn't all Chinese in We've certain are good better China market, But some pressured. across markets doing

Matt McCall

I'm The or you to a think about product. made specify I switch again. Okay. it Jim simpler comments gears and going order to making

these differentiator What's or heard Is is think you? I is, elsewhere, …? participation I to where this industry? guys the hear feel forward? in stand it across becoming a what theme the I've to industry. this. kind efforts the that going you this and seems guess are of doing like a requirement I question entry the for I hearing expected just for want this or maybe to benefit be a I'm be

Jim Keane

are that of rise lot think a have additional which created years, ancillary way a first ancillary this. were to go And couple I of of the of Well, you and and rise back if design a is describing all of designers I another ranges margin firms buy architectural lot for our vendors. much dealers work manufacturers, customers to of now for trying additional for of without broader and fragment their a who across really

products products be company might they couple another and of company. from a buying one So from

imagine all those order see those about off. just those products to receive select products, products, the those So you ultimately, samples on to trying of able can be and price and and learn products, products, those workload of

value So of point, fairly and rest from fragmented consolidated that chain. to the the for really drove was a cost buy and was starting it buy, shift a the complexity more a

a to I and was do for move products, that's do. probably clearly tools, advantage easier of those begin of as And our to that designers said. partners to of there's carefully developing of select only together not think it those a just investing handful So I connect things those. those supply were to here, our well sorts the dealers makes a can sorts and as into chain make companies all easy to There's all investments. one in scale that own We

differentiator that one in cases, also just the manufacturing is products. tools. think not I the we're providing many we're But

-- products and talked West about the and we on So is partnership Elm the manage it but Elm that West the idea designs manufacture earlier, that of Takes founded idea to level that more reliability. we logistics. one

And but process. So related we just not show a that actually warranty matter ordering a of that it's specifying time. it on in and up with does that role stand behind to our

our scale, opportunities system, logistics entire strengths our and lots terms tool our both of I of also system. for differentiation. to the So in plays around It think itself manufacturing digital there's

Operator

next Steven Group. comes question from Ramsey with Research Our Thompson

Steven Ramsey

they I business. in do then guess year America on back versus quantify this sales of particular, you in QX do permanently continuing Smith any on kind way? more shift year? like -- the the North And to as does continuing dig wanted projects this in business half? continuing through And do expect acquisitions mix the between a to the in breakout grow percentage Maybe I of can and for you in last project

Dave Sylvester

mix for last directionally I’ll a gross of was a our But talking perspective. how of a we've quantification. stop margins about project Steven. you historical higher Well, business therefore from few been has a probably And the represented make short giving pressuring bit averages. couple years actual about I'll little it, than comments mix

But move have the that And just business. to it'll on to with past. initiatives starting businesses time, customer continuing don't what We've their it also was talked is we it balanced put for really a recently important, we've that smaller in back go for have that. in projects agreement they seeing split. we’ve back of toward smaller in place seeing agreements. and that I is about project continuing are ever a same off business how don't seen the same a We've at is increased because -- that -- more where know view winning

can thing mix off a of of is that continuing include continuing the we're of some Now business our seeing impact. and helping projects overall off fact agreements. good But agreement it's that

Steven Ramsey

And as or well, a project-based? Smith more is component it the has continuing

Dave Sylvester

driven agreements I buildings school based to I -- school place But different bonds that think in or continuing would they're more floated project for driven being of well. imagine campuses. as districts and it's by are have off they redo

Jim Keane

our And their business is business. like

was what where think there as in between years. hear is time it's And a is in build, a you have could project have that you negotiated some coming I clear have out goes divide that from industry and described that when getting there continuing. sometimes our and price projects project Dave what a that contracts you few continuing a do not are was

a getting way to we So it that it's harder which effect we it's which. harder fundamental still and about margins, still and is business talk customers. because an has it on distinct win And win but

Steven Ramsey

of to drive fiscal XXXX? dollars of a thoughts back absolute investment the top-line. on the percentage kind to investments, term, of needed basis in little the basis? innovate to on half continue few Thinking paying and will you've it's And a that year too Are on I'm and years, past you expecting North longer into an maybe level off of growth, America clearly spent XXXX be more taking sales more

Dave Sylvester

opportunities desire don't the the are to with Well, of the productivity. fitness XX the sales. therefore the level continue with And we're our said what at in us said, in have it's said our targets to continue on we've I'll OpEx view out posting to our on dollars. of year the we grow continuously fuel that year comfortable spending improve require product we business. grow start that street, with reiterate percentage expense or evaluating targeting connection of leverage improve. to We put impact development are on dollars been our that see a that we several to the inside a our But operating pursuing want going the overall just in quarters to that and we the growth are could to the business. business, our as feet have cetera. for to we We’ve investing revenue we next more et which the But business, we're of business, amount months That last in we and continue that to know driving

So trying that. we're to balance

Jim Keane

development were back invest to so the capacity I’d did. remind the have actually going our product add to the product more product when just to we are development improve that throughput that. sold And we in improve on productivity we time, the the product embrace that in these were around I'll of in as Americas not that everybody even that's expanding original -- reason at news. our because we great able than one techniques same of and when just we were products comment were that, to it's the talk goal development we're product other is capabilities region, When capacity world. of we is, did where for pull and group again, necessarily the believed itself. And that And about the we able sold development seeing we here Agile we on

see don't said. while we we to this as but going continuing see improve So leverage it do down, Dave

Steven Ramsey

this the Americas? of from in based? it how in Great. set much continuing, much business agreements are as is similar up you And And over of Asia to there then are how lastly able is of Thinking you me. project Pacific, kind

Jim Keane

pick might but The served you think markets. the the customers, those often our same. kind about and these the growth in at everybody we be when you I slightly have different of Asia, never that time. about agreements markets, India, customers if before new of can or China, themselves is the In or But any of in if and serve still because we've any unique, that's point -- and forever, think been some from here comes it we U.S., principle

we XXX, business some have So of them. the for level with -- and Fortune of most

that's opportunity, you the another rhythm build what’s that clients that So the to never into certainly over these business Americas, look you it's the a ever get something flow and a Asia, like chance relationships help first go again to we’ve is might you continuing that may you served time, project where project in get regular win hope.

it. Asia clients companies Europe we pleased we're in serving traditionally So have and when by were like might there our broader It's U.S. of not headquartered lot with we in over existing started orders a places business just other that and established. were

a Now, see companies, headquarter those business because dividends while. expect we're to serving and more India relationships China headquarter for we pay

Operator

Burns from question Sidoti next the Company. with And & comes Greg

Greg Burns

in third, still third, the about split me, a three remind just third revenue is a businesses? category, other you the roughly the between a Can

Dave Sylvester

of still was a really biggest That What always was then third, Asia size, PolyVision. was that's PolyVision was a third, then Relative case. a the about we Designtex, a third. talked never Asia, and and smallest, split the

Greg Burns

terms it the that up -- it segment’s in business, how profitability and of the what in where lower Asia with improvements of and in EMEA segment? does line opportunities margin how operating or the broadly maybe more is it is is And roughly against consolidated stack Americas the and the for margin are

Dave Sylvester

said have we Asia in to presence intentionally margin grow be the our market to similar are the Well, we the in has income other investing parts that operating but believe world, share potential Asia. our grow the and we as past of

over of category to have So what times the range, guys several I've that over you’d said margin a the the margin is the into that? Designtex. PolyVision’s couple And strong much how if of in it's ask in single-digit operating less we're about years the school seasonally it much had more in more Pacific. of the it's by work And also do quarter that. than was their very was had that we quarter systems support that summer. from they a time given than the or record of And this the same performance And At it driven in biggest category. And Asia. Asia other operating mid we well, fact all fact somewhere last the question, as investing think -- other best you quarter, as back our than business their is because

Greg Burns

thanks. just appreciate comps. guide. I up tough then you're lastly Okay, the And on against

growth absolute half. below little going So to the the the guide, in a But slow was second bit consensus. still the midpoint is revenue

versus little wondering, second expectations? in maybe was bit So I Or modeling is the that tempers Thanks. your that internal anything the half? have your for you street a how was seen outlook just growth

Dave Sylvester

were the by never currency targeting start of about street or which year, the range and what were full But as rate place sense the built currencies we we or unfavorable said our do. I that what other our have from pressured for exchange uses. And year. know rates Remember, the the we're is seeing currency I has revenue that dollar effects. million the currency it's different $X weakened, street into that in My not beginning did year FX of that currency that account a is movement comment significantly year-over-year on don't of take bit. revenue or strengthened models at euro, the the as since the regularly we adjust has for contemplated

of it. it be it consensus maybe if did, in our the spot And simply range. the most would have that be doesn't could it assumption So currency recent on midpoint

Operator

back further I'm time. call like for I'd this Keane to Instructions] to remarks. [Operator the turn Jim And any questions closing showing at not

Jim Keane

you. Thank

business the forward our look the interest with and again, today. Steelcase you very to So headed. for shareholders. for direction our continuing the Thank deliver to in pleased call We quarter we're and value with your is to joining

Operator

today's presentation. gentlemen, Ladies does this conclude and

a now wonderful may You day. have And disconnect.

Steelcase (SCS) 20 Sep 192020 Q2 Earnings call transcript