SCS - Earnings call transcript Q2 2022

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Operator

Good morning, good afternoon, good evening. My name is Rouel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Steelcase Second Quarter Fiscal 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's there will be a question-and-answer session. you. Thank Instructions] [Operator you. Thank Mr. may begin you conference. your O'Meara,

Michael O'Meara

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

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

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

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

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

Jim Keane

Thanks, our I'm today. be glad Mike, updates you to good and morning, with everyone. share to

in and second Americas. The broad-based reflecting XX% Our grew prior sequentially the segments, including last over all quarter, every across orders the market versus order in first the year regional discussed quarter we was recovery XX% quarter. growth growth strong

our parts Our by approaching the saw fact of exceeding business in pre-pandemic confidence recovery supported levels. is or we order the

Smith in 'XX all than period higher levels FY Our were second pandemic. the the quarter System, Orangebox at AMQ and order before same

outlook of Asia decline such impacts chain And order we able materials, the some ongoing quite India to third challenges, disruption than anticipated Unfortunately, FY some expected, the were supply to those ago, regions of where the overcoming everything procuring chain then, revenue up a but The out quarter. were issues improved, for which our and supply APAC of revenue large of and in days also same EMEA lasted ship to quarter, we arose. suppliers. includes spoke 'XX significant. sets strong quarter. and in not levels. And at second that challenges X% due a longer Pacific, caused strength pandemic were Our have raw XX as others we have some since about the in we you new shortages shift issues labor those logistics to within

teams When overtime diligently we we've have Our our been sometimes commodity the product up. suppliers materials. supply to late, have challenges. sources has to working been catch been sourcing run changed and are and logistics resilient When alternative difficult, and overcome expedited found

provide been minimal we've after for has were also take commitments. and steel Labor of quarter, we've list across which then, customer vaccines the immediately many course, didn't, effect customers and the long of I vaccination begin last commodity When variant year U.S., to plateaued and had port less recently rates the many are if longer several widely eager And an freight recent facing anticipated employees week Biden ocean the the adjustment. positive that given have critical a reliable, The mandates, their caused are in to extraordinary. then, employees of of we And we'd believe in Day. increase We've continued planning cancellations administration to transit, third when announced steel a which consider in will increase, we federal have get unprecedented Since increase need time, higher levels to to to delta ordered industry. customers they spread our weeks. companies commodities recently some fact, price expected become needed impacting many but It's quite longer their just we our earlier available airfreight We time. decline, another our last Therefore, increased we cost back challenges. November. to office these their announced other high to to many challenges, costs but Since and in this space plans. price U.S., and our a has the to other clearer vaccine are material were the is business. As to began inflation meet allow and return announced spoke safety sense of same customers to stocks path many disruptions for will become of incurred entire stay that companies inflation of we these for real a and and are established mandates when office. seen second for said of seen our our delay industries

mixed at As look quarter, signals. we had activity the some Americas presales second of we in during the the

project Our are or our and new be a the of delta bit. because a up, could might return back distraction. it chain but down office opportunities in-person to were were supply plans, business pipeline pushed That the customer be RFPs variant disruptions

virtually were the quarter orders, we and be weeks no to cancellations optimistic. strong during continued three first very to September, we in through and the orders continue of have be As strong seen existing

how about workplace We take will of future shape. have more the confidence the now

will at work compete Those a the giving for clear struggle productivity, hybrid also who to home employees It's to for talent. remain that extremes them permission will is companies will and more innovation other perspective occasionally work for most work the offer to don't experience, either or interactions mainstream locations. of office are because there critical the place culture. While primary informal the end, for

shift a digital hybrid customers, They need who many coming naturally. change their their to workplaces, update But office. environment customers office and to shift not rigid hard. furniture there's modernize videoconferencing. to individual will spaces. to already For is office layers need integrate lot team ready will to from for allocation be other and they every solutions, of happen of more They to this their to the need and support will fixed and architecture We believe flexible will will

be are more as post-COVID this role, feel down with from order next ever with pleased emerging here in Steelcase stepping been the than be be month stronger than so more customers. been over XX in I'm in a strong. these many after my though I'll announced, pleased recovery world, retiring to January good we Sara months the I'm CEO years and tenure seeing are XX of to picking so crisis up years have previously where Armbruster. the to Company. we even our after and and have I'll around really seven rates It's have XXXX of As Americas the last steam than making And that the so things people even here. time transition we relevant challenging, I done ever the

of EMEA the again, in years. has our much terms presence Our APAC over growing so business made and last few business is progress profitability market and

really our of about measure here, go and has it product core. XXXX won't just Our also Americas in business has accountability the our I'm I'm proud trajectory. expanded report commitment optimistic the acquisitions because up all ongoing our to carbon of into an our week, TEI so new our reducing released successful last updated We markets to impact goals. emissions I portfolio and through except set commitment to future ESG. highlight to our against we progress through

do much every get so Sara, of continue optimistic skills right next. team to because We a continue And who experience year. terrific together. they excited what company next. the lead also better to I'm and with to people has and I'm learn experience, we character really to has this of Sarah working see

now I'd ask So to Sara to take as make to as CEO. she a few like remarks prepares over

Sara Armbruster

be of good and say investment today, more I a to I community closely with and Jim, future I There's into role optimistic. It's with and of forward working great look lot Thanks, morning, why could when step about I'm Steelcase you the CEO. everyone. the to the

So I'll the we in continue pandemic product invest saying development, the and by during to we so that to I'm did. new glad start made decision

launch people and working we'll need help of space, the continue to Customers inspiring products teams these developing Our allowing customers our create our coming work to they similar support have within that same us and needs. is work high-performance seamlessly that between the products more modes collaboratively, been focused more tell identified more furniture has spaces, months. and flexible both research to shift to more throughout

So hybrid of as need mentioned, we Jim work. to concept will companies this believe solve evolving for

when job to doing the we people better spaces shift support Some to designed some offices We their range focus isn't for have of providing desire a of in days of But they throughout And how of collaborative hybrid a employees do a need with how is organizations. many are is work Hybrid know possible, their those spaces of in need times office have and work meetings, creating good while which employees, their wondered come work companies seismic working. coworkers. to and each companies normally when scheduled. are mixture to from when will work why focus experiences. all especially collaborate day, ways that our whether happens a sessions home it's to most they

working product in patented will employees rapidly we're a next individuals represents office something cover at more design that I'm over privacy and provide And whether and particularly for and proprietary they're XXst And to new even provide evolving home. the a floor product few needs product products unveil expectations. new the for It plan. These new expansion privacy plans solving So materials will the in the focused really that line that excited week. we individual leverages market to that on. truly of the available on we collection next meet focusing include that or introduce about we will very be this control. is months, technology, needs hybrid And that by today, flexibility, will entire plan only and components the believe flexibility century

other markets In categories core can but focus that consider, well specific many believe office as we product CEO, I clearly strengths. our prioritize leverage don't education geographic as innovation, areas addition will Inorganic today, supporting as such announce opportunities. to in expand continue growth our we'll opportunities new we'll have to our see and is for as opportunities are growth. likely as to adjacent areas organically where specific grow growth maintain vertical there care you I expect capabilities well. on anything to our that that and health and I but to something also to explore We're

latest ESG. impact Finally, Jim our our on on focus report touched and

are those healthy work. world a have And I'm heart offices values the supporting to people One together, and their get don't that around improvement, people and a they I'm life. collaborative living of depends and and having we're test the on core everything they help as learning grow. takes people because to networks to the our committed their empowering supportive stood help feel to that CEOs hybrid the keep of values there's spark to need our healthy but was to ways these right. XX create to protecting our want and redesigning room the those because hearing at for reasons adjustments recognize energizing largely building how culture and seriously. on hybrid learn we're back I closing, from that treating planning environment, for commitments with culture award want returns always to Steelcase and our success. our proud talent already doing of decades knowing of and was We we listening to things with ready spaces building years bring of In time. that them toward do. occasional they dignity they evolves, strong the and Companies healthy are working, the been committed are and and planet, for and Steelcase people committed those They our efforts work, critical cultures business integrity, innovation, of I'm a the and things partnering attracted and their ago support and be Company new current We've for to doing right part the of safe, steps, to take keeping making who legacy people cultivating ideas

your turn financials. the over like I'd for today. once look cover I forward to to future. to Dave again, with you you the thank So And in it now time to working

Dave Sylvester

expected, quarter results, of and Thank you, comments remainder balance to performance highlights comparisons the in to we better XX% Sara, the in year. morning, most I June first everyone. was My cover outlook today broad-based the quarter the across related include for to for we and second favorable targets comparisons June, outlook was will sequential the we sheet provided will good our growth our flow, than cash and our and also including third quarter. regions. the Compared the order and to provided of the outlook

quarter and share per million second $XXX were provided. of of below However, estimated ranges the earnings revenue $X.XX we

organic driven shutdowns year, of For decline year compared by government-mandated the in beginning during backlog the the XX% higher first quarter. recorded an we revenue, the prior to the to due prior

order second the was than intake quarter throughout stronger expected. Our

outlook. backlog to I disruptions However, second and of significant an quarter, will and million revenue the of at when this supply the in that expected cover end had detail until after the were estimate aggregate the our chain on shipments delayed quarter which impact the address during contributed more quarter strong in quarter. end the the at some We Americas of least $XX I

missed margins, projections. offset by expenses compared due revenue we operating earnings, targeted to lower our partially to our range the lower For lower gross and

Our benefits, $X million. impacted of gross million by year approximately margin by performance inflation higher the by approximately and prior driven commodities, and was exceeded which steel expectations $XX our other net than negatively pricing was

of higher which included the $X we Operating in our our chain favorable and below million sales projects, sale the $XX a pace and million small with land due lower included income. freight activity, a investment related a cost estimated were guidance, to spending experienced marketing on COLI addition, million supporting $X gain product to range of associated development supply inefficiencies gain was expenses, that In disruptions. the

to navigate great a we Our our job teams supporting managing prioritizing investments growth the strategic recovery. while costs as do continue

Beyond we quarter, tax planning the of million tax these discrete $X drivers, recognized by benefits in driven strategies.

Smith of disruptions. quarter the driven other Operating the first on other costs backlog the on versus increase tend the sequential offset at driven increased the includes $XXX to related increase million ship gain that to normal million a inflation was The and the seasonality, summer in System revenue Moving of the $XX by and by business to strong second quarter. $XX partially revenue comparison and months. of chain projects the beginning the during land, in sale and sequential by supply the quarter results which by higher million, education income

While the freight expense, largely plus sequential benefits muted challenges. impact the chain expense the product were gain were by related lower to our expenses, of second awards. timing increased the activities, quarter, comparison orders second flat relatively margin higher in higher quarter, results typical inflation, of associated equity selling inefficiencies mentioned costs adjusting with that were they and which in recognition growth by the cost on land seasonality, as the the I variable development, XX% by for quarter And higher is for operating supply offset first of marketing related after by was compensation second to chain quarter of quarter supply than challenges in second The financial gross pricing was approximately better the than of earlier. the impacted $XX million net driven

the the other Americas, organic strengthening trends continued order our to patterns quarter, orders our see demand total we XX% quarter, in compared sequential and in orders in expectations. exceeded category. of quarter, basis, EMEA grew and On the XX% XX% growth compared which year XX% the to the prior sequentially with in within first the during to an XX% Regarding

Americas. exceeded In And order parts order our trends throughout in approached the as addition, levels. several business improved of quarter average weekly pre-pandemic mentioned, the Jim or

growth, million the to expenditures, with in in capital expenditures in it reflected million capital cash dividend ended $XX liquidity. for And cash and sheet, and repurchased and September. $XX full between cash approximately $XX in shares to $XX flow the million share relates we million returned year. shares we XXbX-X Operating million total to balance shareholders million $XXX increase a additional flow quarter we've continue As the $XXX X.X revenue million the an and $XX announced interest million of million and of through capital related June. to of to $X We under quarterly million refund. during program million semiannual our $XX the receipt of expect our payment repurchase sale included yesterday, sequential $XX land and per an activities of million we through X.X $X.XXX the in tax Investing of the working from quarter and total the proceeds

Moving outlook. to the

global basis, temporary $XX approximately For we to the organic second the reported to third XX% within to impacted quarter, on approximately negatively prior the than a $XXX quarter. is revenue XX% due we shipment $XXX expect higher than to by which report shutdown. operations million a And million, million an to year, revenue was higher which of range X% of X% delays the in approximately

We following and impacted increase year-over-year expect additional the to factors. sequential be the by in revenue

higher First, our the higher the or of pushed basis quarter. the the consolidated the of prior year the into the driven by shipments supply was in than at backlog quarter XX% on million quarter, chain which that second otherwise XX% organic in end second quarter at part first an than the end have challenges, $XX third would and approximately shipped

Second, plan we their to because part investing return seasonality, sequential the more in their also levels, will to modest continue in workplaces. we but and a office expect order to improvement employees due for expect companies in

of order $X.XX for supply subside. chain orders into this per fulfillment persist higher a fiscal range $X.XX includes backlog pricing revenue the scheduled inflation negatively chain equates and in the sequentially quarter. quarter disruptions Third, to higher patterns range range within second investment to of of of benefits approximately of and challenges net approximately $XXX to beyond third report XX%. to earnings income third related $XX trend of impact The in $X until we of Plus million. and effective persistence $X by expense, quarter this quarter, million, expected the to Operating level expect our tax 'XX, an of million, level includes development quarter. to expect and similar expectations which of our we net share the we which the experienced year-over-year ship supply broader increased million consideration, Taking the investments an the supply of challenges a times from approximately in impact marketing expenses to continued income global includes and which historical other expect current million chain of second we at similar to to increase Interest approximately lead activities. rate the product $XXX than and our second to sales percentage a costs and

the the their fourth revenue operations year. increase For of will year-over-year Thus, quarter, QX we the their offices through comparison conversion effects global chain year-over-year shutdown expect the will by last their of growing over growth. been we continue experiencing supply capital could the of percentage to of impacted revenue be reopen to the challenges end companies our our couple spending target related impacting Plus year. The the will and double-digit in of workplaces. we've prior quarters continue the

the I release increase effect inflation, it a in throughout taking increase the driving announce in to continued earnings us that price mentioned Regarding to third quarter, second November.

in quarter, fourth and November the a benefit resulting in is sequential from net improvement offset to between expected the August higher inflation, potentially we we yield adjustments, adjustment the April will expect quarters. the which in a our and While expect projected sequential fourth third small result

rate and We quarter for to be quarter. to what third tax similar are a operating projecting are non-operating we items also expenses, the targeting fourth

In will half primarily offices, out our and include action and but impacts. the benefits projecting remain reopening prospects year-over-year questions. for shipments, pricing challenges confident Inflationary second push with supply improved and to of recent continuing, from mitigate And fiscal levels believe turn XXXX current in quarter performance fiscal pleased of inflation the rates we improvement. it Thereafter, challenges. increases demand are XXXX a have over offsetting the are supply revenue due dampened unexpected pressures there, I for recovery. year the are of for in chain continued double-digit for the broader potentially price an closing, From the chain we taken year of decisive moderating prospects potential include fiscal multiple but for the we this to growth the current through the order

Operator

from Sidoti Your Instructions] the Greg of line from & question [Operator Company. first Burns is

Your line is now open.

Greg Burns

your of trends in remained I in like kind have because wanted strong, little So to around of had of little commentary you the commentary just sounds on orders also dig like demand. metrics on other a softening and but a kind bit it bit indicators leading pipeline order around some some a

So to of up that your seem doesn't showing kind in but be orders yet. --

see we that to those to of should margin, something bit the some in of take we how monitor? little is as And could that? bigger Is Or just So it's look from a starting maybe that a slowdown a headwind on is that forward? you're areas? something

Jim Keane

right of -- say we're but would kind spirit talked The I concerned now. we've completely we're of Yes. about it these not about it because long transparency leading in indicators. sharing

new projects talked when sales So tracking appearance We beginning are them. about not these customer into perfect metric. horizon. software. tools on lot We maybe our a are those our them. engage just relies track opportunities organization of or on the a It's It entering we the on to projects,

fall, can are could sure the pace already at orders and new dealers, focused already it getting on identification organization project customers opportunity showing The off mentioned chain entering. we it also could take interruptions make some we're have which on sometimes really in with So customers our but we sent orders when And their caused scheduled. communicating as are entered. sales and rise focused in-house, up, and we How been that that. that our those organization, our seen see supply are our all that a we've about sales our signal, do shipments be be that really that in the are when just are

right about now that concerned particularly and not I'm metrics. because in it's imperfect So there's system noise it so an much

quarter. were visits I in-person As customer up during said, the

are and because probably easing. that here. to travel of us COVID was visit people is willing More Some

but So that we slightly, were in that had down direction. going RFPs surge of RFPs saw nice a before. we

sharing that So in And again, of rise rising, of we're could we interest any delta really We've just our sign softening in on. to the -- with the a radar have transparency. carefully the we're cause delta been see in watching that it business. probably because up people delay can first We've orders or decide orders, that as that growth to seen we in and as show orders, to sequential I'd we've continue, where strong in defer hasn't orders. seen but tell. happened year-over-year expect actually growth far

So is optimistic order be because for we Greg. wanted it, we're now, that with growth transparent sustained, to but

Greg Burns

pricing might Okay. the And have risk that then from increases, your customers? increase got demand be orders there the you in prices a is terms cause delayed? to continued what's of pushback -- or And dampen your in any

Jim Keane

We any I being think, risk dampening demand always. delayed but or haven't of of this of point, orders that there seen is evidence at

professional all going we have So have very we're increases versus they're organizations -- that push a same data going sourcing price customers those price justified. and if have do who we who to are data we sure make the to that anticipate anything their to have, our we increase, data us

do You two increases.

that have say, twice. Everyone wow, on. three to to what's going going increases. okay, I going You're conversation is do

customers buy. COVID, they just that XXX% And So lots of they're Steel that's remember. as as I of it are that. It's other unprecedented before And across a on we have And get things an since inflation facts been but conversations can seeing has example. a our those as energetic, extraordinary. lot side. far

place conversations, back to and to -- I are think, have to those to So going continue up. take these things we continue

-- -- the again, to have we So back we up. but facts it

Greg Burns

recent of were seen they seems India? have know Okay. of in improvement that seen And have but lastly, it COVID, any you then in any to improved. the epicenter the Have for I kind you wave change market?

Jim Keane

Yes.

about the the talk supply that demand from side. both side and I'll So

through ability is India. orders, now. tough went better fulfill very side in time and much that's supply a our the So own We to

we Our care our plants our and people sure of Sara point the focus, helping more things. We people and now ventilators our factory shifted towards people, fulfill vaccines really a been down. making And those at shut all sorts can and of as taking access orders said, our in we've weeks, now were up. And than back several ramping has we're we really last received. where were

demand we're So no longer constrained.

we're side, of orders, now in build. supply the seeing that that imagine, customers as people On new same wasn't state. lot There can you our placing demand were a but

the to we're that pipeline to We're Specifically in will entered and to process being convert India, coming to weeks. or of that and seeing up orders, opportunities actually where to expect scheduled, the to few -- we getting the from part builds. are here the being orders build seeing they the wins continue in next

So in very have case, a good see we we that that that -- should and visibility boost. short-term

Operator

line the Rudy Your is from next question from Yang of Berenberg.

is Your line now open.

Rudy Yang

orders just your this pre-pandemic do from question my in a And strong? much guess quarter. guess, pretty back is. that you your So you levels. again I I I just business? they're of areas areas can want business talked lot expand think rates to of in considering areas strong growth already And I these some some pretty in about more guess in to revisit order orders because clearly, were How upside expect the further they orders these we can recovering

Jim Keane

I so, hope I and think so.

So first all, of geographically. talk I'll it about

are like was the those to markets continuing show momentum. strong have sequential order And Asia where EMEA, We the markets geographically. and strongest growth

So a like sign I pent-up us of is some have think not peak. And I seen there demand. hitting any

we order we've demand. months FY in of back us to not orders But of getting just it's 'XX. rates less -- a the got XX So saw matter

so And there is a pent-up there. opportunity demand

-- education. infrastructure around growth the lot And to primarily that's some the aimed of it the have Smith System, and any we when other in fueled of So of stimulus K is is comes signs mentioned, I'm acquisitions like business in Americas that money XX not in that. seeing Smith we by the helping the at through here rebuild money being a System

recovery So of driven is as for the that a for next to Pods office, office just into lot that comes flow calls spent used expected is key these it When are video flow really products. Steelcase well Orangebox here continue for for to an we the kind telephone Orangebox One private be and that and to being pods. building by like demand conferences, of year, short-term continues and that of Orangebox to can Orangebox, but see kind product kind business a money pandemic, my spending. it's not at as of pod. be from even

do the As a spaces offices, can where their you can having you is there in kind people home. have interest when you of video had return privacy you to where conferencing from increased privacy or work with

recovery we products. see it forces fueled business. the demand And some just isn't seeing. for a a pandemic, actually with of by AMQ being strong these is a but it's AMQ, finally from then Orangebox Again, good So we're

a we have that We creation addressing creation distribution, -- expanding to in grow plan a beyond products. new was were plan standing We intended products, about launching that's value 'XX. where had that business value FY

I beyond opportunity so And to think continue there to grow that. for us is

Rudy Yang

you second my in impacts growth won't additional on and for you're still, target encapture any the the half I continuing to QX? fiscal year. supply guide you but chain then revenue guess And what it. It of question that gives like confidence QX Got is seems revenue second double-digit

Jim Keane

Well, we that actually. the expect will, we --

the know expect we don't works. to we way And away So problems go supply chain this instantly. the

of up. few The improving. You problems chain then broad is we're facing number and a something else fix supply things pops

of about And face. affects systemic face We to challenge sort that some talking Those do this we or ocean freight expect which not of anymore. steel and logistics, product foam lines. of our we ocean would So issues we're continue. are

at to figured that issues. than then If pace were we supply a better that, is we outlook in we're greater issues So already the our but as we those than providing already do considering should provided ongoing expect, we improve revenue chain that have outlook.

Operator

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

Your now open. is line

Brian Biros

wondering first, they to you around actually actually want and are thinking long to Does supply maybe about line impact super deal product place you the ordering guess, is customers to get Steven. of lead call. and decisions? there's that for this I Biros when delays time orders or sooner I just not chain seeing This owners that? Brian no of taking on ahead incentivize talked about have maybe in on guess, the on what with guys the kind the maybe times throughout challenges things

Jim Keane

lead these had they reservations ourselves used because and sometimes. get customers out do earlier the like longer to okay, quite almost And their looking your projects. -- would, just saying, as so and dates times, miss then question, orders we've delivery than this to don't get bit Yes. let's that they they discussion that imagine normally Good that could placed, and a on start on see you question you elaborate

in sequential So break Asia as our most of you might our the the think that challenges kind happening supply we degree. I much order growth question the so severe. much because is -- and is to what less and when it's probably The due growth growth is have question degree. to things coming fastest -- But -- when growth seeing, can to look is some the of think happen. chain we as and been And that? where it orders, EMEA, year-over-year How down order don't we're

So and lead spending real of of kind System, that And change Act that's that's times. by the say -- other that I by think when fueled driven Smith by in that, either. that's CARES would by at like look our areas so that really growth there, out that's longer affected don't probably we less kind growth, the

order the as evidence. though of seems by be look how be again, that the don't see regardless would we we in But affected most So that'd it, growth it that. one at Americas

Dave Sylvester

see mean, air bit a then two see see before we weeks, spike, takes the and next we effect, a I we increase is two of frankly, No. week an pocket. or a the what price

price So if evidence orders ahead more weeks, increases you strong weeks, kind four but are we forward of of step for feel any it's back couple that a from those evidence significantly there or later. out like don't significant of really see pulled pulled because of that exact being have it might kind you

Jim Keane

that Well, management orders get clients, So, industry. your are that Americas, affecting saying customers design are their you whole because challenges and firms the chain didn't architects anecdotally, of why and that not here we in companies you we project advising the may no. in are just wonder, it. should We're hearing supply and say some the

it's I a some don't So it think again, there degree. comes probably up, But to and degree. there it's significant to

Brian Biros

Yes, U.S. And touched that Understood. the response the there. the the better mostly EMEA, seeing chain on revenues better just between was you related. supply guess than the is I for you U.S. U.S. not helpful in side? can delays what's very how in it and like EMEA? going I be out this, you're EMEA the pushed on clarification there. on touch in versus having it on seems to chain much supply U.S. the that the seemed Just The differences guess,

Jim Keane

Good Yes. question.

foam, things COVID. So and issue. a this the that and chemicals they the It chain, steel was the really U.S. that when and once not within it The became issue global related affected foam weeks everyone steel Americas, issue hit issue Texas globally. was so an a few global the was supply affected to out foam really market the issues started everywhere. foams. were lot that of the knocked is go a The to related But the for hurricane like in into hit foam

then Americas we there's to of we still the few a details, in the Americas. long EMEA in global that sold And gotten have suppliers have those, the are that resolved. And with have when issues few Americas they but issues have with They supply different goods issues those on of the kind only some into than chain for of in that kind but are only product do affect freight, So Americas, And lines. ocean are issue. the primarily of has products been. a finished they facing the get doesn't reliant

business around has less have supplier of I been issues. of Asia, have issues of the Asia. broad that just that by to don't Americas what down We we in our of that. kind mean We're So now been these a had issues Malaysia. ago. less quarter discrete by kind supplier more by And had affected we that's In in EMEA and

that serves And in India, sell which an serves all had Americas effect then EMEA. Our better on today. also but woods, so was suppliers not That and Malaysian definitely related but of across the the Malaysian They're are down the but that Pune in talked during it out we now products effect better. quarter is Asia, to which which the of plant, plant, factory doing they're completely Asia. and shut India, we much running, not doing an about to was open factory, which and

So Americas each own I regions supply the today, suppliers. the some of has of by those its to discrete think, and specific chain, is, related affected more items

Operator

of is question next line from the Your Instructions] Water Tower Budd from [Operator Research. Bugatch

Your line now is open.

Budd Bugatch

Sara, and to best tenure you CEO David Jim, retirement. and congratulations your good your to on role. wishes And morning, you the Jim, Sara, and to on Mike. seeking

Jim Keane

Budd. you, Thank

Sara Armbruster

Budd. Thanks

Jim Keane

and quarter? improved second I order quarter. guess the everybody improving into said, actually is to quantify Can of I quarter Is I the seeing I going third into as the and were bit orders, looking pacing David, will, was quarter? you're third it a the kind interested, little third you you you improved. what think in

Dave Sylvester

Yes.

first have September of been The weeks strong. actually three quite

Budd Bugatch

weeks that Or it three second the quarter? is to does And last -- how the in stronger? compared

Dave Sylvester

Yes, a rate to weeks saw order little always of they we growth the the prior in higher I'm quarter. weeks. versus they the in But prior grew only patterns year, year more second to it's three a the three weeks. first three at because give Yes, than hesitant rate relative --

three to So first strengthen they continue of into those weeks. kind

Budd Bugatch

to the it work. mean of that's than I better way would And kind XX%,

Dave Sylvester

Yes.

Budd Bugatch

the the -- That's math and upon guidance And wind gross third the margin pretty it will from implies? kind looking Okay. what my just in you XXs? for quick. quarter encouraging. Can based your right -- high if margin Is the you quarter, where gross think is you're at it's your third of up in

Dave Sylvester

you components. asking And Well, you're the all I for answer. now the gave

Budd Bugatch

Sure. I not? why mean,

Dave Sylvester

to are but I'm them have to me, mean Yes. I going sequentially we mean, there again. I -- correct so going -- many Mike, through but variables, I'm go

We the have of say, issues we're related with. freight to similar global, let's inefficiencies levels dealing cost

net inflation We pricing. pressure increased have of from

We're going volume, quarter second versus to a right? little higher third in volume. higher it's bit be higher quarter. So, to the little a guiding But bit the

dramatically quarter. third So model, shouldn't how second does in that be I in what we out quarter as find I'm think But than that you what do you're I guess, to versus is you the your gross going the second modeling. going all different let the to quarter? saw play the margin

Budd Bugatch

Americas was seeing did got I I remember just tried a kind I as margin. it it margin interesting, I And that, back that's a concerning. it big gross I to. Am -- and to at -- lower I don't gross mean, that. of And look is go where but Yes, that's was -- than

as am so well. wrong I on Yes, And that that? reported you've before

Dave Sylvester

look Good another inflation the back. chain those it's numbers are supply pretty are from million some of inefficiencies didn't I very and go big margin. cost question. all how by Yes, low. I year-over-year of impacted But global the impacting it's that million issues, when at $XX $X

Michael O'Meara

thing in benefit quarter. here now, increases they will benefit start hard few The Well, us hits quarters. us they next but start inflation time the over fully a to won't There's the hitting as Yes. third build where, you price -- know, the to is us. right

impacts price So be but increase will the great we're is as as trough where inflation this in they nearly not are eventually, right sitting away.

seen on So the Americas margins. that's downward you've pressure where

Budd Bugatch

share can you XXb-X? year? repurchases, where to under under And think for be go going curious And think to kind did what for where that's of that you so the is going Okay. more work you XXb-X, September the if see year? how know gave I'm far, us you would aggressive to much but you I do in the

Dave Sylvester

price What you a of the going bigger is question. for year? the the rest It's stock do to think do

confidence we we the saw So patterns and And that in offset you an to order it's intention this to quarter know minimally talked dilution. been rate in growth our approach the opportunistic supported our is with recovery, be about quarter. by last

stock did seeing, some the some put we shares might we last recovery quarter And place the downwards. the didn't drift the in XXb-X into If an in buying be So as interested ways, market like in then back. program insurance buy really, we policy. were

in we it and program so continued And shares XXb-X buying yesterday. up ended through that

Budd Bugatch

Okay.

bit, where questioning particular on thing. [Bobby] would, released happened for you kind think new I'll change helpful. last end is And of Where lot for it ESG. is obviously, going that a a one going? it of you've let here? ask me or ESG. differences a if I Talk some just by I my corporations with last in what you did week. that's see And us about DEI we report of saw seen, from little as We've seen question, actually with maybe summer, the

Jim Keane

think is -- Sara said, for a for Steelcase. I as old And of new topic an companies. this topic a but it's Well, lot

commitment haven't a the the business because always to term, way a commitment the always to sustainability, ESG part do that's has role fairly phrase been been has but a Steelcase. play where new We of part of used we we in communities Steelcase

And through waste. work I But broadly materials think for about going around particularly it's important. where lot started sustainability. the mindful and own effort has we of today, -- of shifted the is suppliers. our operations a through being We methane and we towards carbon and dioxide now still lot chemistry operations climate think of thinking our our about a us and our more carbon, and the of when and reducing that's change released

frankly, difficult, work the it's maybe was which based towards which for based neutral are addressing China time carbon the and real of embracing for to adoption targets, but we've sophisticated science really maybe globally science become be that's issue So far more the and And of targets. less sexy, that's now carbon, of this early companies shift carbon -- stages is quite been is from neutral. some -- why

think emissions gross emissions purchased. So gross core your gross and emissions chain you your the energy from your gross about got essentially from from means supply it's operations, emissions, to you

be that could from. the So buy utilities energy you

that commitments got of team do great a are a math we You But lot starting companies can just just kind figuring out. all to have We've those who've other imagine that. that. done the these to of people and made of in targets, involved

math, and in that shift. one -- kind more engineering Like symbolic of much are we're initiatives frankly. science be that's the more light think sustainability from that things the about with I emotional moving may So and towards and past

that. on right we're So

and I as proud cases and company, that, think a of last across We efforts well, DEI. business, every around reenergized we still year, executive measuring how for around think our ways. part about it's across are equal we that hiring goals. think that of goals rising in really promotions to including really society and there. It's mindful compensation set every how development opportunities getting and We Steelcase better of we're actually topic be this people, of our year. the about people the being in DEI those progress there's different against that is clearly lot room on I'm has true, lots a leaders and efforts

it So it that's of target. a compensation. big was kind ESG part an broadly executive ESG not difference. of In was typically, If was, past, the

Steelcase is in think going this, DEI. force. Now And to Sara's it's I it's during again, other a zeroing doing but rising leader. And And more companies there a it's tenure. continue on are

I think up comments. in that's brought her she quite

that? to to to every Okay. fronts. is progress think add you have CEO all CEO to anything Budd. want those continue Steelcase to and Thanks, I Do along every going of make

Budd Bugatch

Lean change Lean. symbolic I how base kind ESG the able So executive adoption, on Are getting do engineering remember becoming for was and kind compensation and back, was and a supplier get the into when to broader you to science-based of climate of issue back and your base the into supplier big issues? supplier going a you back topic on basic base, keys big get

Jim Keane

a in this. the good question. world the are. But over all companies top XXX because We are That's really

if companies their or suppliers might of XXX I be asked any for the even us, go who top already by top those to those questions. They've they're So to XXX questions the been ready customers.

rest most this, generated question. the ask ready data, we is first them material ones which and the is, the the about the most when for them supply or And asking very this difficult so them. it's are not often a chemistry data We're it. probably and base, they've of frankly, carbon got carbon supply of base But of really their process for

whose where our is? so a companies? that had of next going CEO because X,XXX X,XXX we How and place? customers, particular in a carbon And interesting this and -- is out tools breath And figure do in we footprint his do do make that they How really even we need one actually what Fortune we that. XXX think recently would that? about our to What largest business like next past How you big are get the business are the of okay, committed the things to go, I put to have doing and reducing processes it's the start? conversation with the And about is to up components bring take we problem.

us with experiences have continue and So those he going was our interested to conversations. we're talking about very in to

In his kinds big our chain people in a supply taking next commitments. about frontier, it, some Americas things getting meet fact, the same of of that's his the it's -- and I of the some but these be -- business, collaborating, are we've of learned people help specific him is develop to next midsized to those tools. won't ready that more part

Budd Bugatch

we of Yes, that. And exciting just can get issue. we actually I kind think It's iceberg -- if do way the that's a it's can if -- that's find brilliant. to

you answer beyond. quarter and the Sara to that for to for thank team best again and So third and you wishes and to

Jim Keane

Budd. you, Thank

Sara Armbruster

Thanks.

Operator

back time. this at questions to call further Mr. the Keane, you. no turn are There over I

Jim Keane

you. Thank

shareholders and and for enjoyed you years. years, for I've today how So for of our being and thank in be over Steelcase. known our can Thank who the behalf the of at your I've some your analysts would XX on and company about our ideas a all than personal interest more you you, level, company better. I conversations shareholders to of cover like of our we part our

Operator

conference This today's concludes call.

disconnect. now may You

Steelcase (SCS) 23 Sep 212022 Q2 Earnings call transcript