SCS - Earnings call transcript Q4 2021

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Operator

Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Steelcase’s Fourth Quarter and Fiscal 2021 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. now turn would to call I Mr. Instructions] like the to over [Operator O'Meara.

your may conference. You begin

Mike O'Meara

Michelle. morning, quarter you, the financial Thank Good recap us for results. of for joining our fourth and XXXX everyone. fiscal Thank you

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

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

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

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

Jim Keane

Mike. morning And Thanks everyone. good

benefits, in little Americas fourth stronger EPS of we and freight revenues by offset Our expected quarter some because than better higher a was tax costs. firstly the

the reporting causing first which celebrate have one spend the a But quarter on focused was on because also We in about we profits. I'd couple to had in and and It just didn't Americas. XXXX, we in then business in that of forward. COVID minutes two from will more just of year was the home Dave year this years to a we fourth our quarter going was Europe, like talk then work shutdowns, a see were significant what decades. ago, reflecting increase Asia, finished factory we in our some time helped on best fiscal detail. drive

some to projects And began paused. down went forward, their shut were while offices. many customers Our also

For PPE we focused serving customers U.S. on by industries, making local in for in several the essential out weeks, hospitals and helped

As of we protocols invest then aggressive reduced first dividend by actions When our but discretionary adopted new by wasn't selective of our profit we new protected were development. and liquidity hours than clear, it in going last and processes conserve reducing be virus including billion employees drop the reopen costs continue factories full in and product became reduced actions temporarily headcount. to We and wave of our to through report in the offices, reducing $X able actions, a a safe. all reduction those despite capital. Because working keep later we wave. a to We salaries revenue. We fixed spending, to and working more series year, the to for the

furniture office were of an were deliver year we customers a are company. And not when many able our their offices. We to using in a profit largest

we they made profits a they will we position with us get employees crisis decisions year. in the really us this some our and through helped it during year. next strong those of bonus, annual because We share through The entered deserve the put our as

investments. with liquidity position the of our strong to support our and that in a relevant maintained products customers, workplace. we We have post COVID And invested new We are designers. relationships to lot future dealers

year. when brought In February weeks, the restarts put were opportunities increase we RFPs we projects seeing confidence now hold came, in put estate particularly their back have the feel On our that talked Americas, Grand virtual January, we visits, versus real Rapids, capitalize I continued last last more track eager vaccine customer work. We these to seen CEOs rollout. returns time, and of the March. customer increases saw been importance project several once strongly. demand investments Because actual are to physical received new trends on to as January doubled. the more call and to through So in last to as first well The in both we're our visits having few about an throughout conversations our vaccine including rising digit with the more And prepared have those those the about And post we the the weeks customers opportunities double in COVID urgency projects. and But more workplace in have conversations. than the year. the

So, people our busy. are sales very

now is returning. workplace busy CEO the leadership restrictions, work emerging. get in the vaccine we impact more as to are continue many day. And even because the the talk return roundtable. vaccine as business measured or hearing through themselves believe we're X with. to spring. employees states work. weeks. expected I key customers about waves getting people seeing see as expect by office quoting spring to is to the hearing the released Many beginning back high We're the promoting U.S. confidence how summer their see team and to as are it we're of fully of are their are busier the of of really to And rollout Previously, and in rapid more very pricing CEOs want the positive and to the we busy. design firms know They to as were first Our same from busy and early coming many a have Many new our the thing it September getting they targeting the

The translates go selection, specification, this design, through bid, orders? project to initiation, several order. and does finally an takes higher when from So sales weeks to process

quarter into expect orders later our second and build to see we in first So our quarter.

a many normally projects projects to good installation because to many by is probably Some deadline completed that now. originally towards scheduled these believe we we faster news of these be see, of operating were seem be

demand. pent some So up there's

assess the hybrid begin to customers without then as will and return will many the believe wait changes, of their significant projects office. to making also challenges offices workplace, update the We to they

fiscal So different we in to challenges expect The projects of of counts, The case new timetable. also and unfortunately clearer rising to seen the Because quarter next APAC a to the half a leading boosting year. economies our vaccine. expect lagged media second in shutdowns likely on picture a efforts appears those recover they slower to the are the so of develop be rollout with have trajectory continues the nicely. have stimulus of EMEA recovery. far, we to of the

We been on a track our were prior China ahead. strong project new APAC to has and very Our strong quarter level up believe orders year is the have fourth in versus two the year. months, opportunity past for XX%

enter our we we a relatively our rates. seen low yet inflection As in backlog first and not an order quarter, have we have

We costs to including caused a inflation ice phone Texas are storm the challenges, due shortage of higher some also because number a few commodity chain supply weeks and by of ago. a global facing temporary

So that the we levels, didn't largely an the same could cost we scenario it's consistent participation interrupt At time, report the been additional which to expect want take toward. strong we're operating managing the quarter. is also with actions loss in we've preorder activity in reduction any recovery. why to our really But seeing

with second basis We by are profit the targeting a mid-year that be quarter on year-to-date approximately a to quarter offsets expected approximately breakeven loss. first

as for the But to year downsize companies beyond, Initially, offering We XX% hybrid per get of of their one outlook survey were of home Every to offices, days in office, it need in It's hoping of future remote were we of seems KPMGs to reductions permanent jump a business. post workplace. when implications in significant, about the everyone Individual will of distracting talking often of about not to employees will we the too, the space In XX% the was footprint same companies there to week. hybrid video might working will that idea room. But to feel not hard needs. discover year. participant, recent as rest save about the compared shows quite and to completely others. optimistic office same hybrid the the consider work meeting going on agree have different it's articles they August be the the is only principles was and to right. without option back are a the a same call returned skeptical. with think by as remote. the include office Everyone making but our two money be when CEOs we employees CEO everyone from as their will As the last

better job our During we've learned together after just the make moving we meetings, connections connections all offices these make offices. an when before the many important we office, meetings, we're through much a are how we do But could or when in miss happen. helping crisis,

compete have to the to more their people Offices to offer to choice be has employers with It the employees, As has commute. worth home. the office better. work help

purpose So see but the collaborative with that. have they we be for be more to reconfigure people help And culture we of have and so and getting people safe flexible, have and new that to investments smaller. the Offices so the don't products need have that. to space what and we believe in with companies flexible Offices for office now. and have work office make work will we other, based can can right each for safe also helping to can the better. individual be on have designed productive to reconnect work, users the And that be company. feel offices with Offices inspiring,

they're person, potential. get And double now. people about how going not We're to back retaining the digit competitive right is about reach I recovery is of to productively. footprint And more think team, of here help. revenue less company attracting the The part second safely to just of be CEOs every reducing year. their its have is every why every targeting it's It's that. every important we're in recovery. to full and the CEOs why interested for but half the also and talent, get during office this business it front together it's in is our us, growth helping understand

to I'll it the Now, cover Dave over to turn financials.

Dave Sylvester

Jim, the and of our and everyone. to the to as the today include estimates focus outlook some My details in highlights provided well changes for fiscal first will as related you quarter, half our sequential results will Thank I and back we good quarter, comparisons largely for on targets and results. comments morning, quarter second last XXXX. our to fourth quarter related

covered outlook in finished million and $X.XX. by comparisons revenue higher, Versus As in earnings favorable the the quarter the were were December, earnings per share fourth $XX year-over-year release. we provided

the labor tax available somewhat from items recovered the the expectations dampened to line the in with ordered supply the quarter, planning by as versus quarter, declined higher chain for historical earlier driven organic QX were operations of was cycle. to a than XXXX. which the the than dates revenue delivery approximately associated While in challenges well Order the driven in the by organic delayed income requested were income several higher from The some freight comparison The us by and revenue this and sequential strategies tax income we same adjusted in adjusted by will from the shutdown the items. The largely than operating The favorable and favorable quarter, expected. temporary decreased $X in operating the and costs chain million were revenue third offset time, increased we release. leverage and levels navigated for variable tax million the carry the related and implemented supply increasing better with Act following fourth a incremental with our challenges, the despite of timing $XX levels fiscal team bottom operating the revenue suggests to expected compensation to At associated by have driven optimization included sequential growth operating little tax than during our the benefits benefit purposes CARES the tax $XX expense outlined million. million, in report With the was as loss results shutdown. sequential as may reached under faster by was in higher which in U.S. decrease quarter the from seasonality, QX back which quarter and respect $X change revenue. quarter, third items, income was increase only of modestly compared more

the quarter. in kept costs to First, we related catching and higher supply incurred from the aggregate disruptions fourth up operation the shutdown quarter chain last

expect negatively in of in quarter, Second, the input price impacted will in April. adjustment the which and significantly increased number to we in first plan inflationary across a fourth sequential began comparison take advance to effect quarter pressures we a of more impact see commodities the us

approximately $XX received of marketing, incurred subsidies expenses by operating to in around costs and technology. investments and to the information increased Plus, we employment driven organizational product Third, changes areas by few the million continued related modest government severance development related lower world. a

For of expense operating Plus tax related awards if the million stock expenses we related compensation $X to last the to incentive quarter. I variable favorable higher mentioned recorded compensation incurred approximately and discretionary items. we

Moving to the targets outlook our next year. for and

digit are targeting quarter offset the loss that growth. a year, double earnings the and revenue loss first back net would quarter half We projecting the of the are first approximately in we second for and the targeting quarter we are in

$XXX million to decline factors. the the million, million revenue quarter, fourth quarter. first by driven to being the is sequential is in -- reported we than the a report estimated The following of $XXX For revenue we of sequential the lower $XXX which within range expect

orders typical driven also First, lower shipments timing start the The in decline. customer business. the $XXX at fourth the quarter shipment our the of fourth QX. operation of UN dates by of that in from orders I million is in our shutdown requested backlog seasonality earlier, the approximately and than approximately $XX remaining delayed of which decrease million mentioned included the was to contributed But quarter,

to to and from Second, of supply fiscal continue chain delay impact disruptions in the are shipments second first the a quarter to of company quarter. expected XX the some result

to impacts, delivery materials and of including all the doing in expected impacting processes, supply normal near can procurement customer we chain outside is our to our minimize continue are term. costs which We

seasonal business summer in build by peak part the System We first driven levels a orders to expect order improve education the as the our see in sequentially improvement Smith Typically, rest quarter. and we months. for of

other in expenses of backlog Jim sales revenue to quarter to remarks. million second million with half end are begin the range activity of increased and to back Taking the projections benefiting have orders of this also for in we benefits, to mentioned up effective projecting or much and into that We from his tax But pricing the in projected is that XXXX. fiscal inflation operating related between an $XXX along rate XX%. consideration, earnings $XXX release highlighted of the

per share. net report loss between to $X.XX We a expect quarter to first $X.XX

companies and For revenue and targeting for we broadly, are order capital their begin offices the improved to second returning higher spending increase more quarter, their seasonality from patterns as workplaces.

With land plus the of higher benefit breakeven the are revenue, quarter the approximately to halfway second bring first the the we earnings gain, a million approximately quarter and in projected year. targeting us through offset to loss $XX net

first begins recovery an as we strong out growth Thereafter, industry from across land as relatively for XXXX, $XXX targeting of we're offices, at compared remain of fiscal year. targeting operating second of the our this in before of customers half projected half are expenses in half gain to as return the below or operating targeted to standpoint, fiscal the digit we're revenue quarter targeting the to and a double million From balance revenue significantly. leverage to their per more the XXXX growth the second play the year, earnings

Lastly, of data other fiscal for a modeling. couple points XXXX your

quarter other affiliates, more and fiscal year. gains across investment other minimal expect we entire losses income year, of or we're to million from levels the approximate low level year. items for And our quarter assuming interest the $X.X for rates million income income expect miscellaneous per unconsolidated We targeting the current market $X.X debt of and next interest includes exchange and foreign net, for expense which given per

expenditures increase rate estimated the to will estimate while effective represents quarter. offset results we've expected tax next chain expect current $XX outlook the $XX increased first we fiscal first and As for the were million our between which $XX inflation during to In for some several supply navigating fiscal our I supply to to expect quarter approximately quarter XX%, better challenges the over fourth our a outlook chain amortization continued includes challenges begin But than lastly, mentioned inflation chain price capital we of and depreciation And fall full million XXXX. projects approximate an year. of the closing, earlier, and several for months. that million to some we announced quarter supply constraints. The reduce the and

for the Our optimism offset leverage we first approximately it relatively targeting income that over growth. continues into to revenue targeting XXXX second and there targeted questions. the will versus and year loss, double and growth quarter estimated in operating second the digit seasonally net XXXX half for From quarter revenue strong build prior fiscal of as we from the net fiscal and progress turn we're would we're higher

Operator

[Operator Instructions] comes Your question Bud private Badach investor. [ph], first from

Your line open. is

Unidentified Analyst

[Indiscernible]. impact was I'm I million liquidity last $XXX Good for congratulations you difficult Thank questions. pretty it the and many would people no and guess, And debt you year And with come about down been you year, entire clear. up and I to my net first now for quite family, Jim, think period, navigating third. and also about with everybody. becoming morning, taking all with this the wishes a said, a you could best of time has have Steelcase this your revenues have families didn’t out much thought unmistakably They're

area I distorted your the thinking talking way the So broad second it's of If what in think it that's, got My products can that's the I you're hybrid us? What there. -- Jim; conversations in you the office goes think. the tell with roundtable. a an you they're What it's to to office affect are You're tell is a the way what addressed the with business look? -- pandemic. spaces first some you still office, utilized? sense overriding and by the future first And incredible question performance kind it about are about quarter CEOs us will the can about on

you this can will us color products look give future new maybe the the and like, as for thinking what you're what So some or to for world?

Jim Keane

And first the family. Sure. wish your thank same all, your of for and comments, and for kind you you Bud also

on talking on even panels suddenly though with, there's And a been CEOs CEOs I, recently others business of have conferences There's topic hard other part mean, they that I'm everyone's of tendency group, kind I the meant been changing. to I that put talk super and about are this others roundtable agenda, how conferences are got the engaged given about be is the agenda. office together this So with it's on that where it. our the it's of see topic.

about So I'm excited that.

have anything that have. that's that to projects we October, lot willing our be these in actual weren't sit It's it into changed to Americas were were And customers they to go September, all of I'd about down they and you had back February. we continued interested way, kind from in We that January wanted the they'd sort everything now to projects, with to the it's talk through January think they and have to the But right and interested. build came curiosity conversations. I'd But were holidays having going And a people do if it to a suddenly and conversations sure, now. say, changed. we really I share, back something. learn And January. had a November, clients, say done had in research, in of,

the So I've first shift that's I seen. think big

every it's I the for time funny, out real the person like? period one like come the look CEOs, CEOs largely asking, I clients, seemed reenergize. is get talk estate what do start of people about from of weeks. how's work this, lot back. our a don't going came we office start our So be there people to getting a head But get had of think get we every furniture it that advantage; we ramping And back few talking going I this going how like office to to this what going happened, where are to We've not would every not, CEOs talked done are energy I need to we the home. there's time to our because to CEO what's think is going through and need they forward, CEOs do with want to that back just what a are with we a people to I is And was great we there of think our the need job how But is together. up. together, they organized, about

interact lot. wandering get much their meeting you into and number of that also smaller CEOs narrower that to spacewalks organizations the hear your to we what another. so recognize their that own on people chance So from when is on a a video get much view through you're is than today; one with calls you

of So is organization what's getting happening, much sense your a tougher days. these in

it's So days think topic. interested basis. And almost an talking, asked a of meeting they interest -- three been these on or yes. a people, those and there's in by we doing other And to in before CEOs this immediate, I weekly when usually get two with I've calls the the CEOs lot are I

that there's lot of a So on. going

about going how strong to office of look, that. ideas terms we have In the is

actually is not some and So benefit able privacy room senior come go they're effective got for of that who to we to And supporting a home they've had office, been an office, going for less they they into bedroom, back as accept have where this that work. kind of environment back they've where room get they concentration. to going offices more or where home, can't example, somehow in close door, home the from uninterrupted working a the is find the enough and into people a spare think, dedicated that for have if executives maybe they've they

that or better can enclaves offices at new think I distraction, provide less, furniture interruption. going concentrated go, to where to people of whether So be more work, have pods, places less or less is kinds supporting they're providing

important to it. going aspect of an that's think be I

meeting going about to we meeting. to have that's of braiding have and in to reconfigured every accept that a be given any space the does the the participants, access video remote team is it's conferencing and think digital Secondly, support include technology, physical, and the that of to spaces therefore the video to kind together is not conferencing how physical just

example. it's I'll business the to second physical maybe the So all the resilient our have that and includes more And how estate all flexibility, with end learned office. and in we've to models that real be learn we in environment of the

reconfigurable, So flex, by before, having basically you've earlier, that's a architecture said in relevant furniture like I the and more configurable, themselves, be question, going as users we are post even the seen those COVID products workplace, Bud. which to least very think

Unidentified Analyst

Thank that the to last -- you've, years, got where industry end watch with hit of you've we'd over some We there the you, was relationship less this Microsoft. go couple space. Okay. private the benching less

the change the in saying the that been really has a last significant what that years. I require going about that is that Am for way understanding correct? So the really is to office this last, thought you're XX

Jim Keane

Yes, new do. I be I it's a really going think era. to

to year across relationship where work bring And number well have learned the physically us handling mounted I their By of we from last the we sure the are great continue a things colleagues, we consistent in interaction learned Microsoft about their make but as check see meetings, that work in think principles with the that we COVID need relationship. of also that to physical work. great research recognizing that tools having missed office the to way that value best better The of stepping help year as the with last And Microsoft those the that and take get been a an this better, Surface seeing is a we to up they we that the we to experiences to product is in context relevance then how we've research the I published there with Because with things see post And you things the product to our you encourage over all last a working with make think are this we've a about the lot mentioned a on world. collaboration office. fronts. people increasing forever, change have the also our quite tools connecting those about and a that Hub have way, and trying together, digital in of the back of all Roam and And we we opportunities lot going better, recently product most example remotely. what work out. the they've is Microsoft. the to, how year Microsoft back been we have of the are done our and in is own and They've changing. forth to lot things like go sharing is

Unidentified Analyst

seen back? much in we schools percentage comments, vector you the that the are is Can What's referenced going Dave, you educational so market with, in is now for in education? your you've that spent? for What Or now a seeing haven't now see, can apparently been stimulus you being doing. legislated on that backlog money you that? Smith expose Systems of with

Dave Sylvester

tremendous. know been to I but I customer specific that related education will share have don't visits really the the percentage,

do going that dogs I about virtually. Our classrooms local we the be had the in belief And to government education. teams of sorry state has talk a directed that people need drove stimulus money classic been is from work number have and to the that and a of doing to that change end And lot have home. for that's toward from to them in about have going around region up the with think we've physically, to -- barking,

Unidentified Analyst

now Well, Excited, that of you've you for what about did fact revenue financials And see we investing did tell you the we're my still in us the the pulling in reduced headcount hallmarks while in? can lower invest than all what the one I the people was cost. right, you Steelcase recession, read think just some, orange. excited. in really if numbers, the great In it of your I you're

Dave Sylvester

the We of better have ideas. pretty exactly of And in are think post Yes, internally a new we a started, the of invested workplace, we you're of four lot for the in see that's we that going part lot not products would the a that of if were is those And I comparison our a new through financial think it about the relevant consistently. as get the we us, Bud. And for likely in very part workplace, navigated the in did possibilities same in Recalling the of because or chose well product to those, change. we're we changes that's number us. we we but came impact excited front we bit, COVID that We things initiatives of of saw to that level about. as we mean, year. because three of of a didn't the tremendous We as what pretty talked through last And front how contributed feet it invested of did to number years, I behind amount to crisis, see workplace. have so because to every crisis. at of but we front that for world, now. have reduce right we changes, on we navigated the we that stay the industry reduce in the of us stayed headcount saw mean, front share talk we we a out during as gaining There the in in products, not quarter, street strong, well.

Unidentified Analyst

in just couple seeing me. Is And showed They're improvement Okay, and XX% a coming of the that for an of orders from a in the out quarter? world. China -- is faster here? is more than that faster. that What we world? rest overall? the a faster the the the out is coming They're fourth that harbinger rest are

Jim Keane

well. not, it's in doing in overall, our every businesses quite Asia. Asia Yes, It’s different country

it people But challenges at offices third the something through felt crisis. in China, the like of and western very their we've recent dramatic for countries. back Of second with then India's the Coronavirus. through course, that taint waves faced beginning on they every everybody's went of But shutdown didn't the without seen pretty a going

has recovery continue and of that where serve companies from. sustained. Chinese are companies global is really that headquartered continuing gradual been we China growth lot the are And So that's grow. And and a coming to more to today

those might relationships, I the months, also I, is by of the in work too the weren't other think it markets. fact some encouraged you broadly seeing might in winning teams part the they developing in last growth we're So also but touched team's on who some business but in our it based of of that building economies, kind region. dramatically in of of few a be job Again, the and based doing our with good be that's past. but could not that's, won on just have across also And local relationships been customers the true,

Unidentified Analyst

I see, You little will bit I but the a questions, other about period? you've the thoughts What's the to showing this it any, dividend opportunities in to of What's others. little bit? I'll up bunch talk a then Are cut increased just about any want the have dividend? floor cede you the there a and outlook I Okay, any for or acquisitions -- did dividends?

Dave Sylvester

dividend. long history, value. part of decision been performance. on based quarter comment a really future the each and we as to a how important shareholders But the return board to can't important it's value to be I has That’s of So know, our return our takes on you of continues financial the way part

yes, XX%. of, or the were before at the to quarter, of cents a of half year the same workforce the at salaries in go the think, were part, much chose to cents. start across global seven time, by a per that And board cutting we at ago, pandemic, pandemic, XX So I and because we the about

at So least the to the XX And quarters, then is per couple long, it going certainly while be in dividend. which was at how XX%, dividend another back pandemic we deep we they, liquidity we've to we By we $X.XX salaries, also the to tracking we they in been level brought going when time quarter. at, that same were the it. at reinstated our how half for the ballast cut and evaluated to had a the carry

like would On looking could were likely that focused some in back some are front, had off And ideas acquisitions growth growth thought I on ways things acquisitions certainly say took some that pandemic, forward initiative. on past. ease across and be we the wouldn't getting looking And that still our as to to to we the But acquisition at. for looking bolt were our acquisitive. up, before we year about are were were say strategy go of that the Because the more becoming of targets we we world business. I conversations that start accelerate more part were they we growth we existing an accelerate help and of we into at to completely, that,

Unidentified Analyst

Thank I'll much. you. floor very to you Thank the others. see

Dave Sylvester

Thanks Bud.

Operator

And comes from TRG. from your question Ramsey Steve next

line Your is open.

Steven Ramsey

think good term trying guide, end of context? has high the and mostly you're one for demand and into of any by guidance but chain only you're Clearly, Hey, know, about morning. if are the sales think issues, seeing for losing driven plays that supply to and challenges term to much that the you trying already with think near ramping guidance? deferrals? with about the do chain the issues, What not the QX, they near the supply the chain And you're sales You supply challenges? how through QX. up low how

Dave Sylvester

Jim add Yes, this few comments. a start and will I'll is Dave, maybe

the it's You quarter-to-quarter this not the that of related revenue like because that it's we into know, to there material chain have number managing because I'd it. in a But material supply we at anywhere that remind of cyber-attack We don't magnitude. shutdown quantified first, the are delayed near believe when quantify through. had fourth level that didn't you was disruptions we we're impacts, quarter,

feel where in see either be possible our felt delivery every we order that single that we the not we like times on it with, that could could able fulfill So in, lead to certainly some date. of revenue is expected push out or potentially

So on things that materials managing our higher chain air, spot of order commitments little through the of in supply outside like possible, in that of to leveraging contemplated we're and delivery and, to we're the our what challenges, means business. of procurement and costs, there's course, including that freight, to level doing a incurring meet normal we're is the bit market our really which buying every means customers in sustain order guide,

money that don't risk. at actually I business protect to business any don't, like and expect to we're serve be spending We're putting I as continue feel to customers So our they served.

that typically the was QX what you're we where QX. feeling in, benefit, think revenue like than to absolute softer the any typical fourth any, have QX. a seeing just QX the we level at guide is I from quarter revenue don't QX is we're And in of we're seasonality. the million shifted little had XX of bottom, for in

return now. just So the orders I the at quick we think to feeling related fact the we're that It's to office. see shipment some come you're that bottom right can possible in

offices of hard of or back build existing guide. But about early that into changes some customers any QX without to the shipment are getting our in those beforehand. significant quick summer, a the their evidence that order kind accelerate in patterns. For in thinking requests, might office have It's into that they spring

Jim Keane

agree would all I that. Yes, with

slightly lose are this converted going hasn't closed. I that is your of plus that into too largely even But the losing mean, there's have the without don't because softness knowing because long. I because if still offices in at I part a we of I lot you're of and demand softness point. think it the business times. combination seasonality we're think demand, on. And activity shipments. And we're that lead of think can longer lead some seeing to times But cause are you it

activity levels are far. able chain manage down volumes. would lower it which because the supply normal navigating in through bigger because we're our we factories be But demand. volumes, deal we're at a issues, And if of our So at through to so were we're

Steven Ramsey

That into workers continual that saying from that's going we back? calling offices in come we to maybe is, Great. the demand QX. How And there's out thought that, the thinking in general these out That's, sense Or are customers kind into half general And helpful. helpful stepping this want Is how basically many then? return? are back offices our guide, about of, stepping with playing for our office a do workers context in forward? that there how in up up you and you're that QX, will then sequentially. conversations of invest get after QX investing before look QX and see companies of we within them their of a products, of

Dave Sylvester

part. the Jim, take I'll second first part. Okay, the take

level ready about from they office in which there. of Jim in how on and conversations year, it make depends On organization first their return be steps across changes, go the half part the really I’ll question to It take of investment also what back way or is the of to your for have we the we demand, that our continued fast is the significant thinking advance year is of with continue. operations expect companies really planned But following possible. the a to of improvement let more more of would into demand, the also it in because the want to we

Jim Keane

I'd say kind number a strategy, of fair Yes, and are a see customers of as wait who there have strategy. your default

Let's people back. then actions. We'll we'll And goes. get see take some it how

make back, simple want something of and Now wait saying, to of think few I'll, a But say we than true see. we that not sure before it ago we're more kind today, not bring lot is that's are a want that months was I into customers was to yes, safe. nice, we walking today. answer a that people those Because

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that them clients So choose in looking by they workplace. cases, at we there's and changes come into that and make before some the there back help might, to

they'll them, they'll, I unsafety, and for think around the there's all productivity. of bring really and they people others, issues for realize back

be seem don't weren't same going meetings they complaining expectations be to things these the about are before, higher. are So complaining as to people before, about

now. that weeks. quite of was that where orders and was expect others that another we for we're worked those have shipments back calling can we're a a what that or clients. coming few and of saying, then on learning clients is And first before. and about of can work learning, we And to convert are gather few hope wave weeks there'll back any for the us kind coming our us is we're this information that So what it we project can solutions it board we're And fast or and work work. related and recommendations be There's drawing or you then that that track in help not that into back not that few those is really

they or put based right Some or of supposed to now doing on planned lease could to the a place of by space now that it one where building were that to a changes. be may it's in. triggered from or on And or their hold. planning they're on tweaks another to time year, going building. that's COVID, but project relocating they They're projects was they significant some work were move terminations lot work project want already That's in of restack do already are the planned, as cases, a was they making it on or, the reaffirming last happen like that to

So that I help? office be space. in to just Does we're the lot of coming work, seeing back is think, not a space, that

Steven Ramsey

the you me. color. Very That for for helpful. it Thank does Yes.

Operator

next from from [Operator comes Your Garner Reuben Benchmark. Instructions] question

Your line is open.

Reuben Garner

Thank everybody. morning, Good you.

into I are guys and if the get rough in XX%, get mean, back line, range you second pressures, And that on quarter, margin getting start cost that then it materially looks of kind as so low some back maybe think with look think even to How back for the gross if these QX back the specific we jumps are But and there and XX% XX savings QX to do or that into back like, a back where we XX guidance I revenue year-over-year helping level. you cost QX I So already. mix in Again, you In other maths about quickly? level some half that. were growth. I give the gross range. sort you're to kind the from obviously, the you to of can right, of might of to XX% think, what the into of subside, margin pretty costs year, didn't like line move when think you I said, the like

Dave Sylvester

dramatically always shipped from than remember I education Smith's that summer two from Well, average the we are, it's seasonality months. QX, System. the we not a year higher business the that of the it's sequential margins of typical in Smith have in benefit those the And of Systems, summer business, is and do thirds

you And back the many half period expect is way What should least up will inflation from and have our So which predicting April that, we the summer, at the the margins. of benefits the then of back at summer are pricing that inflation. would in our quarter helps more we behaves a it our covering the some start in tremendously when come third time is in year go if high throughput adjustment fall down. the about to to start the gross expect

that like would the feel we So of come picture. out

and costs that by We rear in incurring hopeful navigating also supply are view for in us quarter. incremental be of more will the mirror than the third chain challenges the front we're that

the margin not all digit year drive his to us, it don't rate, mostly. you we is the we're a absorption Jim the really with back of of specific it's mentioned know, about the could the But, be the for half gross of more reasons feel for in and in the the year, a we starting be guiding in of level growth And significant. back -- the recovery it largely in modeled to half remarks. or thing double on could depending in because the percentage an back year So the confident gradual, volume we're going half not that

growth. less that we of guys, for double unusual back you would why challenge the I puts year, the digit we operating is that confident don't the know kind feel did quarter. on that to target it we or just which you but that we're So per I level know expense the how per, much be, of XXX targeting we thing with million share what half can

hopefully helps want build that that that So the the revenue growth models you to your you based on project for company.

Reuben Garner

low to recovery? expecting saying right at look you're XX%? digit you And faster that that way I are based where rate the kind In double is That, operating level? million? have just expense to on that spend it XXX more Is there type and you're on going of growing, ramps is north mean, than I to does. a certain a growth Or mean, the you're still expenses? of a that clarification if than sort words, other still of operating revenue then

Dave Sylvester

some course, higher runs would it's I expenses. would have it level, really kick through significantly, we Well, I expense profits at variable mean, operating compensation of higher growing, that likely if in. and mean,

ceiling the that in the estimate. the the there's reasonable on absolute half million XXX no to yes, ceiling of that’s modeling, quarter, back we're per couple a growth million, of expenses XXX double digit a So operating year, but see relative we

Jim Keane

pick There than when investments, sooner volume can great things bunch that later. of rather up. are that. for year, can payback looked that to we do register, waiting ring our single the at shorter initiative, towards a had year, this strong add of imagine, bias for and budgeting a cash When every single as lot you we to starts I'll we every in spend, investments next

volume and don't we're going pick we opportunities. to to sure were to make this going up, if So we're miss business, run those

So we year And for to the a spend whole is lot have now great We more Dave based now. what and right of of every are materially probably budget to than some be picking to But saying. unlock a mean happy into about we that, is doesn't going ideas. also we're that. it we're going see where on the we'll up spend into projects, industry potential business those of locked

Reuben Garner

year the Got year. in EMEA. I half comments it. the And mean, for Americas of more by mean, other and EMEA kind driven taking obviously fiscal EMEA then hold the over assuming one, one or the the in that pretty in as vast is is me. well The about half majority are of the vaccine the I back you're confident move result assuming category, of you back of you're same your you of that slower the sort as there. with for

Jim Keane

correct. directionally Yes, I'd say that's

to that of. year to to remarks well. not bounce lot a from hear well, not said, this going a you off they're expect Americans optimism doing talking and hear having But The the off business of I year. quite they're and have is the business. today Americas it of us related activity to the I the bounce Asia is think to have I you EMEA do quite to about good continue trough They're the as kind the

step of our we're I the So in to morning it's winning a comes really right macro It's you word if from for day, paint And we're woke the you a approved picture. this come know the I probably that. seeing not up it operating business say. so to really all start We back signals to six I pattern, being about shipping we're now. message saying that to see to is leadership spent a for economies of definitely happening business struggle When so. negative while just hard encouraged demand The by going the we've stimulus or had is were going you don't patterns bunch last to wins overly EMEA, packages those want going to Americas media mean, a level. business text recession to at more are EMEA they and EMEA, later. out if in the day or EMEA and couple what's the the from are of economists are of and months to days, recently an likely but

strict while economies France the core going seen it's the be a went recently strict is a lockdowns robust. to perspective, getting So before not relatively lockdown. a relatively from meanwhile easier. Germany tougher, lockdown. EMEA being as into back Coronavirus And are in are a

So those are of engines growth really the for two EMEA.

So we're year. I have next more I but a being And don't half of right cautious point second now. that quarter. about have But, we the view strong of of we'll the will don't maybe

Reuben Garner

you Thank and Great. luck. good

Jim Keane

Thank you.

Dave Sylvester

Thanks, Ruben.

Operator

I back remarks. queue. turn no over this At the call [Operator Instructions] in Mr. have for questions time, to Keane further closing I’ll

Jim Keane

year to forward we're and looking you ahead. Thank this

stay As want to we you the end safe. call, I all encourage to just

that or I'm if you get We’re face being hope not to they're year. when sometime your vaccines this face. can able can, forward we do And to available. you looking out of And I the again to woods really guys see yet,

thank you. Thanks Steelcase for the a day. So today. and joining in call Thank you have great for interest

Operator

you, call. joining us will Thank conference today's everyone today. conclude for This

You disconnect. may now

Steelcase (SCS) 24 Mar 212021 Q4 Earnings call transcript