SCS - Earnings call transcript Q2 2021

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Operator

Good day, everyone, and welcome to Steelcase's Second Quarter Fiscal 2021 Conference Call.

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

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

Mike O'Meara

Thank you, Michelle. 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 to 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 Jim analysts. turn will now and our to and prepared Executive investors over President remarks, questions from I our Chief call will the respond to Keane. Officer,

Jim Keane

Thanks, good Mike, morning, and everyone.

second that XX% the our adjusting of is $X.XX This charges. against reported quarter, despite growth we XX% EPS decline. after improvement restructuring the And delivered expectations. year, a and for own last organic or beat revenue earnings a $X.XX we For

supply to to through around of the our all, while could quarter, credit had was control the profitability ramp all second at have start they In due, pandemic. continuing to continued backlog or strong in took Our control world. our shutdowns people factories to first quickly to orders give make. what actions the significant work the entire expense In also the I of we faced restrictions the of large costs. operations at from operating the the of quarter, they first they onset in to the up quarter, chain

how do that. quarter were in Our efficiently second show gross strong margins they the able to

cost operational because execution and was controls. it of very good quarter So, good

selling many would the used with the to package, reductions recovery without of had would Remember, of control we we the reduce costs thought quarters, eliminations. second and in job of crisis, quickly way people as economic sort the And help some beginning begin summer. first stimulus the the During pandemic. effectively a the at

clear Americas the effects for salaries long. while will and the employees that reduced it's Now, accept in Europe, longer. for economic a expect cannot possibly continue We to our that

salaries a we our Americas So restored plans workforce ago. few to we for XXX%, and reductions in weeks announced the

have those last implemented. of been actions week, As restructuring

for it's we a what us, As about think recovery take Asia business. helpful closer look to the at look like our could broader

course, in orders and be the And Of shutdown China government year. was with virus, China to after good hit fast. it back are started, effective. was was about prior That's the year to aggressive year a Today, levels. first and the really months prior eight the our

is getting in So are and rising that's while despite normal, and political quite terrific. life tension office, back to generally the to US prior back year operating the People And are levels China. not businesses really normally. our between back is

nice have controlled, been In second concerns our shown but the a to a in entities return recovery. pent year, recovery to because In school. about down wave preparing the bit remain quarter orders returning second it without and delayed, the where EMEA, has a when was are of trying Projects government came China, well still everyone's demand. countries large the So continue, up. came, virus a we work. lag, Germany, of weak, been a our orders catch including quickly, because and in versus And people were for where customers, safe to there gap closed prior up that's have orders a but few much

a crisis. or region, forced to so crash and to wear home. the economy Every replacement dot Projects bounce Every reduced in suggests day work It is is plans financial dramatically. older This rules is was down and because wants for of news. tear, furniture The bounce recovery day good back, from to that that's delay. think the even This recession government offices to normal really the unique stop, once without demand different. seems com like I shut is had to and underlying mothballed, back many controlled were just completely new business. virus different. people that of project That's unprecedented. office furniture the is to

on in the haven't over sure new of of increased is So back the companies, office. seen But the are our days. plans it the saw work the as to earlier than the are to many directives the X Americas effects we're large be ramp spoken return all I a months. when to home, out the about And Americas. then wave during large office. moving the put bounce companies to In with for plans But negative with date now continue as of companies to will were in office, the first the issue that the next pretty few in later. later ago, it I’ve work A recovery second workplace returned planning are the said signs seeing several to how There up to from hold. workforce top-down to But back companies last most could January also companies the stable, accumulating trend play We fall. few and what they back have Americas, can't date we weeks for are already the come quarter, XX% to cities, signs returning more I'm recover. hearing business two their or who that Yet, the say in started Orders weeks, towards moving we've that's in China happen, worse, start new. some could EMEA this interest seemed other clients approaching be unprecedented. who in quickly, summer. but those to office larger in got seeing to most in would

when as not next. even occupancy, is engaging the challenging, conversations just and get high us be get beyond as the to policies areas with of Yes, and are helping arrives, to what's about is the won't will sharing not more As office. a customers the desk they This go perfect, XX% vaccine first because reconsidered. companies we're get experiences, need everyone because workers be and back that the vaccine. concern to own vaccine going away we density But in to begin customers our about safety, safety bring result, from learn part know will

with on issue, will changes require pathogen can safety help is important it helping The likely new ideas we're and MIT we workplace. an generate So, And will work that. to physical remain to doing us transmission, we the can customers. with bring

that how rooms to We ways central change to new designed work from effective. to did home home they is connect been like people, the because and were in the way faced high to products meaningful for that know, We recently working help. is, more working for people media:scape, for through didn't with distractions more believe, our their from Some that time. a meeting the Microsoft. in support safety, many for to shutdown? easy from some rooms question years, office can accelerated not will need that open, changed workplace. they do, of when and felt they doing the have example, more forever. will during that. are with And they productive partnership have need most Beyond We've things And We shared, same time density

the And to with have just to at too. It's going in that can not help okay is employee that step than workplace more the productive an it to so we be going And up. feels home office.

Our the pads respond and by products, to solutions this wall architectural Orangebox, like offered all need. Brody,

of footprint. about in While have We estate still examples real not Most deciding we workforce and working are companies talking home, few interested even from parts articles even examples their see aren't companies a about rethinking very this. see their permanently of they're of there considering do it, our of to clients few it. large

how change flexibility clients good for For They are change very see inevitable. almost adaptability because example, If versus much are suburbs. will in their realized, be it center in and city is these plans in interested our business, as lead always and change, should reconsidering the the to workplace.

need. new this product designed meet Our specifically to Flex was

better we starts That's So work, on the thesis. can again, understanding with and to them. investment how focused do work support We're Steelcase needs we change help. workplace. to people Everything the workplace how worker,

workplace safer, productive, more you flexible, to our to will more well, that's but matter, be change need will the believe workplace inspiring, the more strategy. If

are that e-com at for We and setting market channels. opportunity for ergonomic an home to directly there's from and business we customers work support sell products who we believe ways. you their home, to multiple retail We through serve in support If consumers, up employees. sell programs work furniture

Our surged classrooms signs in say come would work important adapt need each It's demand well, positive will exactly for the can't in going of the when markets us, year, believe to also to you to education are we're and from change and business clients imagine. and those And home also if as this healthcare, helping update you to EMEA, we I customers it's are to signs in in Americas. already showing beginning but and to there telehealth. Asia. believe office market, happening return is recover to

are to to to on touch couple over investors important company. other in want Before that many turning it a Dave, our topics I of

neutral making year. last decade, First, got of gas We renewable there month, we're we because the in in emissions we XX% energy. had greenhouse of over the goal through being investments last this announced and reduction achieved carbon a

in limiting for science goal consistent with Celsius. can't So We XX We temperatures third a set based those goals through rise global of targets offsets. now, to party years. we achieve the well-respected the with set targets, degrees new next worked X.X the to

progress, work We work, greenhouse their targets. they and it's critical making of continue so have This effect hard the with is achieve our reduce own climate emissions suppliers, and to to but reduce change. to gas set to

equity which equitable our to guide to three a access reflect we of action teams curate and and of pillars to Steelcase, work opportunity across are build work, to to have communities, diversity, as continue Second, diverse we identified ensure inclusion, our on inclusion. our culture

strategies. We opportunities share to accelerate have our measurable setting perspectives, growth up us hiring, are for help diversity to employees development, around more experts outside engaged developing different and and goals

Chief Prior welcome President is International including speaker International to was is Linda Day forums, our their at a Linda board to frequent Women's Management at the executive Vice Officer for member. and event, number sponsor Hewlett Packard Williams this of divisions. pleased Enterprise Linda newest Risk Executive CFO I'm Pride of HPE Audit a their Finally, and of role, is event. Enterprise.

Linda. looking with We working to forward are all

over turn our Dave to it review Now I'll to financials.

Dave Sylvester

Thank good morning, you, everyone. Jim, and

by start I'll get Before couple the the just summarizing our financial into results morning, mentioned. I of Jim which takeaways, details a this of

workforce. First, most to the the results our expected, better were a our decline, XX% to recent we our recorded adjusted compared XXX% quarter factor from restore of primarily second income organic global the strong decision despite for cost salaried than impact We our in to negative and strength containment pay year, the to higher due prior revenue operating was efforts.

we are improved Asia demand EMEA. Pacific in Second, patterns and seeing

opportunity few improvement Some a markets year, plus quarter monthly improving consistent monthly Plus while than rates rates - markets improved. showed are the the our UK, like for very decline backlogs prior both fairly more end order are also the April order August. China, of and have higher in remain soft, our total and like the than pipelines others, between regions, other

relative year virus seasonal well employees August. orders for and And in which decline the was the the overall monthly months, to did shape. average, patterns, project the take the office, further dollar returning industry and The improved less to could over also and in XX% as from as also orders ended a the than through volatility to recovery with which dynamic, quarter, in reflect year these be to but negatively sometimes of While rebuilding of over environment order fall. the the experienced the In it significantly, resurgence relatively over stabilize, could the a starting which business a summer decline in declines, demand smaller customers, the of amount weekly compared first Americas, year furniture, good into lower seems declines economic was quarter, modest impact positive. year reflected before regions remains the delay we and

million, COLI significant cost reflect decided to with our year, down our the and declines actions orders to to which facility. However, lastly, to full August liquidity of to prior $XXX global balances. credit $XXX implement continuing have million $XXX XX%, structure. permanently very And at access more includes pipelines million And remains reduce compared strong our we our we

as was of sequential operating the we orders, in detailed restricted during start in the Total summer from first $XXX drivers a second of Smith by benefited was the the projections the quarter, to of income income our a by million than number modeled. some million with operating better we more and seasonality or $XX that of increase And financial margin, versus incremental had manufacturing will including backlog the second expected. million $XXX a quarter. also the and from results, of the I were The sequential increased was of much loss into factors, System. supply year driven and a quarter quarter, We quarter customer favorably activities the to Adjusted high of our first the fewer of better Moving which strong quarter. revenue. million, XX%, we the of a first accumulated delivery experienced minimal exceeded disruptions, in relatively shipped increase were little impacted the $XXX compared by quarter. expected, delays by $XXX revenue beginning in prior while also And leverage, million project than the of chain second comparison we strong

our First, in despite flat variable revenue. keeping them discretionary with sequential controlled the relatively quarter, semi first tightly the we costs, significant increase and

invested loss, target margin Second, thresholds. we began our had the exceed being capital compensation benefited first adjusted accrued quarter return the to on variable operating incremental offset until not expense from and

through the adjusted operating gains second income salary results by Third, typical so though backlog, million performance heat closely which exceeded million, employee back to called million minimal very its especially in land year, were during discretionary our workforce $XX Plus, compared once revenue $X work compared manufacturing of the social standard of impressive from and first shutdown lastly, distribution modifications was measures. efficiently own, COLI and declined across quarter. the costs our given quarter, due and our of other driven other quarter. is operations Compared our of deliveries recorded the essentially inefficiencies approximately first we hourly we by quarter, given $X balance compensation deferred to expectations. versus by And to restart strong We distancing more higher organically. the including in operating and driven we offsetting the by but events, spending. experienced the cost more $XX services, approximately million, The on optimize what and the of our a the even exceeded fully XX% and the $XX expense other and the significant our during was approximately eliminating improved to prior experienced temporary each quarter the were to summer months, contracted safety reductions, level revenue, lower million reductions, work of by travel, able initial and to our to income

we strong mentioned year, $XX variable the the million benefited lower We our realized benefits a prior from income to pricing also recorded lastly, COLI And and compensation compared of expense. moment gains land results and ago. also

tax our the I liquidity, a income recorded in pretax will tax tax as We a only return. items, recorded to the in the if a actual first to and in available results, results. are this were first Before XX% we filing our XX% Act, recorded rate, prior in the our our quarter of CARES estimate rules the I in based for under quarterly accounting of approximated Variations three on tax the move essentially year period, XX% interim quarter, benefit income of function year. and expense which discrete month compared cover provision our quarter financial benefits effective

tax second able we to effective approach. are an the quarter, now use For annual estimated rate

Our second tax methods. the between the the in quarter, of transitioning expense impact two includes

they CARES quarter. approximately approximately benefit the must the which XX% For rate tax the the on tax and higher earnings XX%. and estimate considered estimated loss rate US, XX%, XX% restructuring in costs, accounted the to tax of benefit, be discrete for estimated back fully or restructuring in intend related are for under estimates to Act our third include an tax the effective costs to when adjusted fiscal We our for that a year the when domestic XXXX, tax we as carry was contribute quarter,

date this Our deposits, largely million XXXX. increase seasonal our quarter. first year including at repurchases all the a operating March. the three $XXX Because $XXX which overall are stability Year significant precaution of offset dividends, liquidity lower XX% capital the during which we weeks in strength end of the of borrowings facility, of we year, profile the the disbursements first repaid completed million which cash capital customer the end and of our half of the had quarter, as at in reduced has flows, our capital working expenditures, fiscal first the under and than of liquidity year. compares profitability credit generated to the year, the we earlier our markets, of strong the drawn during last and to Through management, of

$XXX outlook our to quarter, the X% prior orders of year. our was backlog third customer lower Moving million, totaled the than and beginning for

year, the first XX% including of an see It orders category. be other the the three months. in plays compared in out three how to September, and Americas declined average seasonality XX% of in EMEA, weeks will Americas, fall declines in the the to the the Over of next interesting over XX% prior XX%

the support customers from office improvement their typically said into push I investments uncertainty the could work and of possible also It's employees. could out other that around to see year. further the to ready of But an see the to calendar political programs, employees through economy, and earlier, for from we begin make some we home customers it's the end seasonal heading pandemic, if the return their improvement As continuing some landscape, possible the or demand.

Our reflecting backlog, a will minimal outlook most current for third patterns amount seasonal we and the quarter, demand improvement. of our stable, will shift remain relatively of assumes

The income the non-operating third also of be outlook compared the you $XXX quarter, third or income $XXX provided decline the our From included should and earnings million, $XXX of million sequential and we of to estimated modeling operating to of the leveraging projected to to in to million quarter. the revenue to we operating an reverse quarter estimates, in second the And $XXX $XX third represents million range revenue approximately in with range estimate adjusted provided of currency. quarter, help we adjusted million able $XXX estimates constant expenses taxes. information range relative million release, a your of the operating estimated to income scenarios for an expenses you further for engineer

the the income reflects high related the are operating Our estimates decremental The expected adjusted margin and relatively the quarter, in sequential for comparison. impacting earnings revenue. declines third factors to sequential following

estimated million benefited benefited the due netting which compensation $XXX income, quarter and compared income. a gains quarter $XXX to million second lower of mentioned variable relative operating land to first COLI to the the temporary quarter, of quarter, the the the expenses for from to I second from third First, loss represent strong Plus, increase sequential earlier. expense reductions, the salary and

business impact unfavorable leverages including in the to the costs. accelerated an which priced, sector, expect that and increased our quarter government expected to mix, typical was global which competitively timeframe, has business our the increase on very is supply over ship third an is seasonal margin EMEA and large in gross project comparison. Plus scheduled education chain in our our from some business shifts Americas, in less we Second, the

experienced distribution that reduction in from Third, quarter. inefficiencies strong and level modest our a estimate the the during across includes year second manufacturing we

dependent As There state companies by employees will wherein we be spending, sentiment. approach positive the office our fourth preparation, other recovery influenced CFO CEO return are invest broadly. world. quarter, could capital And office on and and be the companies broader their preservation. scenarios of more there their retrofit return quickly will one a are scenarios the revenue the COVID to the and defer economic which in And wherein capital for reconfigure to to prolong post spaces and that imagine and

is the uncertainty, consideration and we estimated current workforce the year. provide exchange ongoing investment, What of for At controls, of year, share revenue spending in estimate of adjusted of $XXX to expected increased level quarterly restoration the an recent will to That of and reductions, sale compared some our unable currency are adjusted our the approximate quarter of organic operating the year and breakeven decline end. Given week would full of the breakeven some represent million the timing strengthening our the updated the revenue. I level of income into our around our point modest for salaries, of rates. we approximates prior outlook point, color an fourth level extra foreign due XX%, PolyVision taking to

And over our though this breakeven positive restoration well, uncertain, of Asia liquidity a the results, stress end increase more remains through take quarters. not me our efforts. cost in our was to the may different a which growth the financial supported signs significantly may a quarter. those salaries. levels the Let forecast. EMEA or we circumstances. showed reduction the the quarter and We in light form, strong And our Pacific delivered very of executed strategies it on choose as and strong of closing, remain that estimate In change investments of continuation Demand strong. current is assumes coming

another quarter the than which actions why the As reduce took we level our stressed decline of to In moderated, environment it's is backlog rates improved. and mixed, the structure. and monthly or least may permanently more higher the the for pipelines year, demand two, Americas, of prior order at cost remain the our also was

we include will of employees may will questions. it customers to their get for and the From there, the shape take believe as over we reinvention turn begin workplace, However, back offices. into recovery their

Operator

[Operator instructions].

Thompson comes from question Our Kathryn Research. Thompson of first

open. is line Your

Kathryn Thompson

had, appreciate QX the taking and my also for questions color you today, for QX you outlook. and the both thank Hi,

a few in discuss In QX outlook, and Thank you. comes second that back more aren't, standpoint. conceptually, believe part that semi-permanent a overall from could just then coming online of of ones nature? costs that that are of people which the are it But when costs terms terms you is you and clarification in particularly

Dave Sylvester

Dave. start. it’s Kathryn, I'll Yes,

the get projecting of the or I to through quarter, end XXX benefiting back XXX coming the quarter That's the more that as - the that related driver estimated third we about of XXX and We're on we are biggest the quarterly which the in recorded fully versus the be million the reductions will to that into basis. million costs second for of are largely or all, we fall. First salaries, the to quarter. we're half think approximate $XX release of our reinstatement a we offsetting between for completed last the in the X second week,

and cetera. T&E semi that, whether modest services, a modest a costs, level what it's incremental spending. amount or of Beyond as et discretionary that, there's we contracted refer a to of variable There's also level minimal of

Kathryn Thompson

Okay, that how back at we the and of on orders. right today orders, given clarify you say typical in noted, ago, your on at to helpful. comps seeing the particularly of But year as six terms could orders volatility And clarify Circling XXXX cadence seeing seasonality. orders, backdrop, think it's as unusual this COVID. what to highly or over order And are perhaps against year with not it's trends, trends, less tells particularly you commentary terms if with of challenging look you're three you months sequential now. what you're with about business your versus seeing we in

Jim Keane

Sure.

by again Jim, region. start and - I'll is this So the region

orders, Asia I'm China, month EMEA, remarks. being sequentially sequentially, quarter in which seeing with my month sequentially. improvement more by in seeing quarter. notable So of to I than talking we're also And talked in to most In here, case about the improvements we're evidence

the say we few we So I way in improvements, strong And mentioned improvement over gradual Americas, year more question best it’s it. that to part I'd the numbers. the describe order earlier. finished look not are in in large the seeing, is thing. and of actually year, about I’d But orders last the in because you stability year of education orders at volatility, the in EMEA, quarter over months, bad if with volatility kind don't a to in year a is over stable say Back

volatility, it some what some means customers we we beginning when orders significant. know, some is to these that of who days those place parts could business, have the see be and You or are of orders,

EMEA, example, So sign up, be right now, the in we evidence consider seeing a volatility starting there's of we're in orders and activity volatility positive places that Asia. to in for and some in

Kathryn Thompson

Okay. the Final XXX cleanup Thank breakeven. question you. on

the assume Just clarify, and that changes? structure on to that is cost based current no

Dave Sylvester

the it. increase anticipates modest It basically that's quarter costs, but Yes. spending the in sequential third of our discretionary in semi variable

Kathryn Thompson

great. Okay, Thanks again.

Operator

Reuben from comes question of Garner Company. Benchmark The next Our

open. is line Your

Reuben Garner

customers. back? conceptualizing gone from morning, to safer over what organizations start maybe you I from conceptualizing the office And those office Good of and to the placing the point could with make about where, mentioned the we have come takes Jim, us guess actually, conversations future. it everybody. elaborate to months your last or how maybe was know, to know, you the you the specifically, I about know, - office few you to how for the trigger evolved conversations a return folks more you. to on Thank maybe thinking hoping these order are up, companies you set and they've

Jim Keane

glad to. be Yes, I'd

about pretty answered at couple we say conversations end. go back I were I'd people that were So, the the to that interested of of were The They question could conceptual. immediate at what working have But home. seeing kind any to and talking they sort I'd a out do return it. didn't we imagine of office. to were if of the the as you to most started say what people themselves curiosity we of to were point, were months plans at ago,

are starting office, kind how deal could just on do they more that? have later ramping the to here, is people were in we several trying this the of on. recently up clients office. get intelligence do expect occupancy the questions over last the with how back things have back of gathering because of early we starting to So, from some in More specific weeks people to about, and with they're as So office they the do part we deal that slowly our learned we've a now, lot and

a high occupy but can that share things situations. people products lot them density space with have have also we helping So of safely, they are have where we we especially

help becoming them with more and tangible. that, so And we that's

I have that also so rooms the home improving compete of food a the after experience, boxes that more spaces last kinds of provide that ways that's And finding part improve with have while individual that are. get to now. and we benefits? over, is lot of a we - how all and of do like concentration checking think can zeros safety in there's of The it And and as customers with longer of that big the How those improve in spaces, we a distraction, they who now people weeks, of behind decisions against this few the things conversations the this, kind dealing focus home, productivity? shifting and dealing get people ways lot conversation. there's through is getting individual term. checking so and can for they're this service, be office where What the those press So that's after the should they're the back? them do office of conversation offices of in our temperature those on

but and make conference rooms sorts participants so can safe are up that What of how allow about happen? rooms they they're Another needed part the investments And on that also and do effectively? we connect down set remote to productive, is conference that to line.

So product. shift last where that's the the conversations those tangible have towards eventually towards conversation space, begins the then overall and applications use And more say gotten few and I’d over to of towards weeks.

your sort that of I So, hope question. answers

Reuben Garner

bigger providing to set with that evidence companies participating working working That great. that home to their think the to should a I conversations, on you that same do your guys kind a companies of And something know, trend, some to near that seen Yes, won't really or just business? phenomenon expect those gain I very of was note, order know, are, your up? we've mean, you that's know of Is - that website stipends to term, traction? in employees from small you increasingly and you and product. are links become organization's helpful. bigger piece any Or we the

Jim Keane

so definitely growth in we've seen it. far, Well,

small base, it's compare multiple to up to multiple from were a off I year up in ago, if So but the work home times. it's times total

all the it's you of And the So, growing the business. includes things part about. fastest it talked

of to it can up So first lots take those worked of includes, for where programs customers And their with customers, we've trying all, are set different home who forms. commercial programs employees’ offices.

be Sometimes company the it can directly providing to employees. furniture those that

given where can the it the those in stipend. can it a money spend it a directed be stipend wish. Steelcase, the as is Sometimes cases, be might be employee in the And case they they might and at or form of

so it some the And we're been to larger we’ve easier competing that of business. those to steps year for customers make for received in growing, to That's I as really said, take programs. this collectively. continue to do have orders And that we related

we and that as growing products. whole people looking finally, own then And we’ve store, past through of who are up through demand we've furniture for work different set our now sales a that rapidly lot from direct for and increasing are retailers, host a have channels years got we for the home their business of office. in furniture to is Secondly, Case where home sell consumers, e-tailers,

come that should terms the as consistent earlier, had That’s in whole of the make mentioned of within desk, people when choices hour that been would at sit that we've expect with best their are hard choices tomorrow, is over lots have today, workplace. and would though, to recommending day. for to best Gone longer to one I I the what for days say. the lots they In working and clients, desk work from and choices their be employees was of to true when hour. where term, control the done

is mobile. from And the quite includes the includes Work move and people on that throughout suppliers. customers traveling home. campus. the Now, and visiting working It throughout road, building freely

And we've many that's conversation with had so been years. a clients for

a who very done themselves of to have experimenting lot clients that lot found reluctant them, think is have found those rapidly that and here of are I try all changed things, a what's there's with right, in effectiveness that.

told expect ongoing A at to people executives makes in with way imagine Steelcase. more I, but done, home here home more freedom we lot could plenty about kind basis, offices. the from don't a generally their home our will So like invested continues home we've them, home. upgrading for the work work these employees of grow, home permanently to be of It's ergonomic course, to Dave have from in of where from made or people see space That’s just investments. shows of more haven't at for lot that it giving we research have offices. they different senior of people groups we large because companies, and on sense do a I as space. we've And for And offices of as in are when we'll that an interested that not do working of those furniture other that that

furniture opportunity homes. are to better today, an want there So where going go their for people from is where realize are to state they're we to quality a to going

see for our ongoing that expect of demand do I we'll that So segment business. increased

Reuben Garner

much to year you've much to of say got a like quantify know, way working any was home. avenues - three quantify to it you how Any ago, sell And your that business - sounds is it and from how today. way to

Jim Keane

it would our I even that small but And say our it, quantify historically part compared small. can't business. a relatively has growth, total to I relatively still of been business, with it's the

three their or that's outright. companies You that is across buying I'd programs new say it the up idea segments would the employees, stipends actually part that for look set those

urgency before. that the see don't mean during on new, we're the like the happening really crisis. I to and I'm it's to say kind seen basis. an anything We that probably haven’t of never COVID definitely not ongoing something happened, of going that's sure that's that's but

other continue will really important. to expect two be The I segments would

Reuben Garner

the then on Dave, a Okay, And for breakeven clarification, last me fourth great. quarter. just one in point is the

as million roughly - that breakeven $XX it point savings You year? was that fiscal some move that savings remains, things lower of referenced, of assumed takeout that from anticipating I or of like think comes T&E million spending. or $XX through kind it in and is level discretionary or cost we back that Is other

Dave Sylvester

Just you’re a in over year of bit is XX little it, comparison a The the Reuben. quarter. referencing current year

just back, we to So little would a that anticipate bit. but some of come

Reuben Garner

and guys, good the Thanks of through great. navigating year. the rest Okay, luck

Operator

[Operator instructions].

from Our Burns Greg comes next question Sidoti. of

open. Your line is

Greg Burns

morning. Good

- to on on how further on feel business that infrastructure investing just follow get to address points work of just area you of on that with just to or different of that e-commerce. I beyond different importance e-commerce? you in line investments of up questioning So Thanks. you invest Is an really - that products have, last the office? of either Or to business the trying of it. the market for to the wanted last and wanted products, more your support kind need and part like and you sense I the a from new those in the view kind channels, like the and where of focusing kind - price home it are

Jim Keane

products through make available and this. know, got example, opportunity at week spending the successful. our least of end products of range of lot that acquisition that working mornings or spending the leading us two the business. team think business, you better make with lot our entire that through we connect make to everything with a appropriately. range think to the we aware to we've there's chains we happy investments consumers recently, of that a on sure making need continue the we've product Between that's to rate we we're we're right working of I'm products area, line, front the growing. I'm in are the I just specifically, We're supply made think sure three that’s now. handling with for how got be for a we and have and blocking But to do at AMQ business lined that you know, it's tackling, for Steelcase to up all of want the sure We time growing We’re

mostly execution So investments, we're making now. say I'd the on side right

products, know, consumers ergonomic interesting might from best our about made deliver line, to be products you as which that buy that performance, to the might you expect. own choose what flagship it the than said, is have the tended their they choices Now, product that different

the that actually you know, think You this so might in we've on. high our low been costs performance products very some about, line. and is successful all But with of

the products. people are aware Now, that might because be of other some less of

why that's as good an opportunity. So, see - a as but we it that see also thing,

Greg Burns

terms of you the for it pretty Thanks. outlook your cut great. then obviously pandemic. of CapEx, significantly And Okay, the in beginning at

spending be you there. CapEx on other investments thoughts other bring - might areas to and back some started want that looking of maybe to You spending. your make get I to just growth

Dave Sylvester

Yes.

up little this ramp the of the Greg, a CapEx On a because which for facility. part balance will put to an from reflect in million in side, moving year, XX the in our facility Q bit over we're moving fiscal the year, China, of of we'll estimate new of current in a plants spending

Q. So XX we’ll include the estimate million the in is

Greg Burns

any Okay. Any network? with And then are network of with you dealer remaining in in dealer orders your your North challenges the kind seeing depressed stress America?

Jim Keane

No, and that. we're about really happy

with we they done they closely. need the cost revenues. the align job make And managing of very to the taking actions have structure monitor dealers businesses that their a and Our take sure to great

And dealer network evidence seems far, we've seen to be the so that healthy. quite

you to we're So to that. happy anything that? want add about Dave,

Dave Sylvester

resilient. highly No,

Greg Burns

you. Thank great. Okay,

Operator

over questions. Jim any for further no are There to to back remarks. turn I’d call Keane the closing like

Jim Keane

you. Thank

Thank crisis. the need COVID renewed So thank second strong again, begins able see to today, and joining to and from APAC in you and recover economy your deliver we've we're need strong confident the improvements to the the office Americas. got the return to all pleased you been the cost to a emerge in for as in we and see signs liquidity Steelcase. We're quarter. interest have Pleased EMEA, - structure of for to interest call that to in we

Operator

the and Ladies conference does call. gentlemen, this conclude

a have great Everyone, disconnect. now may day. You

Steelcase (SCS) 23 Sep 202021 Q2 Earnings call transcript