SCS - Earnings call transcript Q1 2023

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Operator

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Steelcase First Quarter Fiscal 2023 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Mr. begin may your you conference. O'Meara,

Michael O'Meara

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

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

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

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

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

Sara Armbruster

Thanks, everyone. good morning Mike, and

were than Our this quarter our environment. in part being done better great this we by people in expected, challenging to results the thanks work

I'm challenges have and remain We've drive agile by Our manage operations that suppliers results. work resources which production seeing enforce delighted increase needed. on change we're of and adjustments this and continued improve our outlets, supply to XX% teams operational chain made the our growth. to our helped revenue inventory impact as levels, shifting

to more fuel although inflation response to when strong to customers implementing that drove sales say the We're XXXX by price to want of offset those acknowledge Across XX% recent a We actions workplaces, to detail increases pace our create discuss achieving I'm impacted typical with another year-over-year pleased is outlook inspiring while priorities. and in also growth. quarter committed team our he increased XX% but the of the targets time and delay continue costs this doing including them our plan skyrocketing help of price targets. our remain work Americas implementing our order second our implementing growth hard, inflation engage remaining by achieve in and We quarter our growth spending, segments, of to in organically. invested slowing the and covers I EMEA costs. Dave key to drove to will that incremental revenue grew higher and financials. we logistics necessary extraordinary increases by levels,

had of million year. Strong level high stronger data. And helped in XX% in we growth months eight we've to sustain outpaced $XXX finished have now last XX% up or orders the was the versus QX overall anticipated. than of at each available Americas order of industry Our of last which our backlog, our

by leading welcomed China acquisition of our of recently leverage. In a reported work year master this provides by Steelcase. our offset with drive by first segment in of China. and our operating Halcon quarter EMEA the completed the expect was team to EMEA very of improve this good pleased the that and in over a inflationary most was expense profitable the category, our operating quarter the listed we been to recently revenue and I'm improve proud reopened. Our appreciated income we community XX-years. done pressure many those impacted later business Many to level organization which organizations. report is topline, design in COVID-related have of $X.X and to has as our Halcon restrictions our restrictions other craftsmanship have uniquely million, I'm in quarter

We’re reasons. two main for of brands excited joining Halcon about our family

on Hybrid customer workplace firms, privacy business. of believe professional important us Halcon’s renewed emphasis and large and to a is position this work fostering services will in we this new the base. win part acquisition for a First, especially is legal

same according a these sales. some Additionally, tailwind to to the outpaced and strong office segment data to have others returning that provides in

revenue dealer expect begin as with Halcon drive to that, Beyond we our customer network. synergies connect we to and

Secondly, the their community the at Halcon's award of innovative a gap it's top current for designs are awarded launched products great This any is a Conference NeoCon, newly product NeoCon Last shown in they’ve and and their still highly our the recognition by Best coveted portfolio. was at week Table. asthetic. HELM NeoCon design and for award Halcon for beautiful

from we developing Logitech, their that firms row NeoCon, such affordable And Microsoft workplace offers experience many complement technology partnership update for at solutions additional EMEA with to we're where our technology creates both their product for partners to business in angle and to such support (ph). Orangebox. At Microsoft, process pre-pandemic with evolved also earlier already work, and work of more Show environment Con a in that office needs development resoundingly and agreed Company dealers hybrid A transform. So Flex teams XX% started support the a within are into more was enable is solutions way opportunities participants. cases, that their strategies. portfolio. exploring example the Crestron Many Customers, is the employees. remote integrate engaging experienced a hybrid in we leading in our we with person winning front earn from levels. often development created in work to pods attendance new we and last commute and showrooms being Trade to as We to estimate these forward designers believe the award product Halcon that cultures Hybrid was [BirdSense] including many wider their the better look to screen focus companies and demonstrated solution quickly benefits, capabilities we as collaboration big designed Spaces, hybrid Personal will to together Everwall’s This this the of spaces. with innovative to experience. great the best leaders table how conversations Zoom, build week,

completely companies a entire made a returned as their move growth hybrid of other AMQ's mobi has our to progress between minutes. strongly roughly fully and we large appeals working and five box that small are workspaces shifts for AMQ one that designs Quick in quarter and truly and integrated We a fueled notable the individual in also of office. showcased room a flexibility prompt rethink The had create in to for the We've future. includes strategies. outlook robust the many light by first partly collaborative a and This to conference experiences businesses, to in about strong compelling model workstations Ship mid-size AMQ which year. have teams more NeoCon, agile at which size more mobile believe to television allow deck work. is installs

directed also flourish first and System stimulus of XX% help the by over more year both grow money at continues to education Our the higher half prior institutions. of Smith this the than U.S. versus with business education K-XX expects to revenue year.

build are in nearly Our our doubled education orders a as revenue ago. versus its and working, to efforts QX business year also APAC

System and investments products. have supply localizing the Smith learning adding Our certain for dealers focused included chain

are working All and we of are confidence gives the this lead our is news hybrid positioned strategies to well that me work that transformation.

included to core The for near-term of we're the talent. everywhere our reach and the sector our part is to the Steelcase in helping their just group that is from improve impact this cost serving our We values was career And engagement culture a in leader in community results, Points volunteerism Graduates, of these our discretionary Steelcase top Steelcase this companies overcome and direct The pricing people inflation XX remained response commitment It's year working makes headwinds most Our push a our Light, a continuing again United rankings reflection of fitness X,XXX last full reflects consumer great attract closing, our believe out from In the young a financial the despite headwinds on to Civic in impacting for build, teams XXX [Technical ESG. row. are named this week, professionals a just actions people; organizations. which ranking of a Employers we're as came potential. best States. our our destination and Best to see employee commitment for on their by of also strong, levels States. Difficulty] come inflationary XX, sponsored XX was and of in We the to believe order the high our Steelcase to our facing invest recently and XXXX second efforts. are of United included leader minded the levels Civic have demographic to Forbes list in continues Awards XXrd like New community from the efforts continuously tirelessly aspirations. as to

of momentum the our community the to success results turn positive the the dealers engagements from to it and from Halcon response design of our received We financial With like the to over our acquisition. customers I'd second also to feel NeoCon now that, Dave we review and quarter and outlook.

David Sylvester

with highlights about the provided in results, the sheet cash and provided second the flow, fourth to end and our today our cover outlook and Plus, comparison will first quarter our in including and morning, the related quarter. we outlook, Thank you, March. comparisons outlook Beginning half the for comments of top to revenue both ranges March quarter earnings the XXXX. I sequential good to everyone. quarter thoughts the include will first fiscal My comparisons Sara, of the better than second were to we our and balance

quarter For organic more year, to inflation growth included by estimate pricing later, will from rapidly Order revenue I and which response to volume better-than-expected quarters. We one cover was driven growth. increased also the the was which several conversion of of benefits approximately last growth increasing shipments the backlog in to than our the above in represented and that benefits intake compared higher strong expectations, pricing revenue, of anticipated. the we prior we over both and detail recorded XX%,

operations a we significantly supply adjustments, We but are still to improved which of challenges, our order patterns significant continued managing than our more have make level teams fulfillment chain estimated.

million XXXX, benefits $X million. net million the than our than stack first than than higher impacts year increasing more our $XX of of expectations. And inflation several prior For $XX revenue, negative when year, negative was fiscal two-year the across our approximates in will prior net I the higher higher total and quarter cover pricing Inflation the inflation in pricing I offset inflation logistics. benefits and more address earnings, we impact depth which a approximately to outlook. of the so on higher fuel basis, commodities, exceeded was million $X range due the of projected

versus the results of quarter to fourth earnings stock more Moving first by expense the to which comparisons of the awards the the -- majority the impacted our eligible first of timing expense participants, to heavily is granted. quarter. to recognition sequential related each annual weighs when quarter year the are the The the comparison retirement awards and

small pricing the offset net sequential inflation. benefits gain higher in a restructuring million increase sequential demand as and seasonal Excluding in patterns of represents the from first of increase in costs, and higher stock EBITDA sequential due quarter impact the adjustments revenue spending previous compensation adjusted $XX benefits, first by mostly the outpaced pricing the in quarter, to of million expense was and as $X a lower recorded decrease moderately land

by We category. volume XX% posted approximately slower XX% in We including of order The AMQ, which in reporting But Regarding the challenges lockdowns pandemic-related System pricing. and a India, benefits China, in faced which a across in and in we year-over-year our that basis, resulted organic tempered strong growth offset had in growth other orders quarter pandemic-related market. Difficulty] XX%, the fiscal EMEA work. in our regional first growth growth. sequential they OrangeBox. XX%, growth orders, included have both had growth Americas, customers, rebound a and that prior growth the was decline represented was category most to as System. at increased markets, by year-over-year of growth all one-third EMEA we of return of which the additional the and The that quarter that orders office. fourth in in in at with broad-based trends year. grew our Americas that On from strong in growth positive actions With and been estimate including seeing the to order and X% the their workspaces seasonal contemplate in segments patterns, by [Technical to the across benefits driven hybrid pricing growth the demand solutions support corporate And Smith invest Smith XXXX, pricing we're compared was some

of of positive contemplating to to inspiration our better connect well for spaces years. and hybrid an the transformation plant. we a investment support applications And improve distributed a and we're spaces workplace. the seeing believe for amount been between model. in which seeing their interest connection home this in We increase include can approaches for in Plus, the walls office that we're teams we collaborative using activation screens, from industry, efforts and that to increase these believe Others video privacy, enhanced can order in for of work all division, their the barriers, other example, focused our that by last are For over positioned the many open architectural lead shifts to are customers two customers in space primary of workplace worker. has are through

Turning $XXX million of was quarter a the ended cash compared $XXX $XX cash liquidity, and fiscal million, in sheet, flow balance and quarter total with the of the XXXX. sequential to in million to we which decrease fourth

of tax adjusted of a revenue. $XX prepared recoveries. Smith and income the inventory four last we and million during from to the and the disruptions. quarters, shareholders million to $XX quarter, -- we Investing repay our seasonal variable continue between XXth, to cash million Operating and supply our July close $XX the increase of the flow million included million quarter U.S. contributions or of we hand X.X% which of expenditures, EBITDA For for first $XX share. totaled of X.X% $XX of in purchasing EBITDA the included borrowings following expect million flows chain Operating of facility, million $XX we million dividend the million And quarterly per of $XX also of $XXX our summer in patterns disbursements purchase activities included the the We cash revenue. or and plan total Halcon our as which System June QX. protect of cash capital funded completed returned compensation strong over accrued adjusted retirement expect credit $X.XXX our price QX on through for now $XX seasonality adjust million recorded of quarter, purchase and of we on by under full-year. to to On $XX end against

backlog million, at and which start Moving $XXX second quarter. ship of higher than to prior amount XX% beyond to orders totaled higher-than-normal of the outlook. the Consolidated continued next was the the expected quarter the year to include a

to XX% we result, of to $XXX for XX% million sequential quarter. increase within growth XX% to a represents XX%, of quarter, $XXX year-over-year As second a which the million of report revenue to to first organic and expect compared the a range

projects and consolidated will the expect second which backlog in other quarter We from be education sequential order second the the and and which strong shipped that quarter. of to includes continued revenue Smith start revenue included most increase for normal driven the Halcon, of quarter by in our results be growth, business seasonality, the the System at in

the begin cumulative pricing prior for We negative in our which million to adjusted approximately between approximately to the quarter. been net revenue, expect inflation million, the increase by of inflation, the ahead earnings of has benefits, second as earnings of pricing report when year. QX prior from $XX our $X.XX well of the estimate of as reduce share projections per which of would year, of $XX reflects to expected to the The impact compared $X.XX impact in actions

development, expenses, $XXX increased includes in Smith investments operating operating in Halcon’s and expect investments commissions and $XXX sales System million of at marketing which our We prioritized to million, also employees. product expenses

expect and expense, of modestly interest of earnings Lastly, rate to Adjusted other projected of projecting and net the to XX%. we approximately consolidation an we're benefit non-operating expense items to $X from approximately Halcon. tax million effective are

the acquisition the target taking costs share we we XXXX, communicated in and of into impacts to that revenue second continue half organic QX per of of restructuring Looking earnings fiscal and the ranges recent account the in to Halcon. of growth March full-year

there sentiment in largest of plans employees. their community. to sales activities headwinds, While higher to strength sluggish from solid CEO our most of are remained and significantly by back dealer inflation markets, CFO Pre-sales backlog our some positive on and levels from the including our of return office organization reduced and sentiment, they and we are a want in working office the we and hear and encouraged markets, are their clients that people motivate many in significant

our projecting fiscal increase delivery. external to increasing higher $XX for products, Regarding of estimates costs steel compared in inflation, prices, are petroleum-based significant energy of an of projections XXXX, by at freight initial the rapidly cost currently least and million, we driven changes and

effect a increase Americas, we However, effect in price which global and in new we surcharge May an in the beginning to additional announced take on announced July, recently mid-July. orders will take in

will addition, continue slowed on in longer-term strategy incremental to fitness focus invest near-term and to initiatives, higher we help ability which the these our spending preserving and while of our initiatives. impact growth costs, combat In have

our taken elsewhere. System is Americas, only The For in in Americas And list surcharge, took in and the separate in brands and growth February, and first are your adjustments and our first applicable announced actions challenges operating totals July first remainder pricing orders Americas adjustments Smith In our we and backlog, impacted significant strong And in XX% full-year. X% growth quarter. of we modeling for which in for in fiscal of chain April the mid-single-digit And few EMEA effect and the purposes, published year. the excludes addition the growth pleased the are to supportive we with a activity organic order AMQ. Asia and X% have believe the X% the targeted which are in of but expected we approximated like are pre-sales results in Pacific. achieved the supply inflation these to that a percentage adjustment remain strong across negatively closing, equals pricing projected and quarter that and second, revenue challenges the revenue the

the From are prioritizing we're very our these spending delivering in over investments However, slowing turn targeted growth fiscal combat it critical help protect to a to disruption, mitigate of chances in costs dynamic our higher questions. we will for environment. while incremental and actions XXXX implementing earnings there, I and

Operator

your Instructions] comes from line the Burns of first from Greg question [Operator And Sidoti.

Greg Burns

Good morning.

the versus offset of costs offset of terms higher -- you portion? all going a increase project? of based or increase that In -- and $XX on you the inflation much million are with to price the cost prior your you able how price expectations, the July only April of that Are that to

David Sylvester

would is we of all Well, about fiscal probably get will time. our impact. that think question over less. the to your be substantially in the and I to it that But to on of somewhere offset the the million $XX in year, in put current XX% range. pricing offset or it minus expect maybe inflation plus And it year I range margin $XX fiscal of million

Greg Burns

Okay.

of the So -- in price or for margin would better be still I the second the from first see half the little margin half the of in and were bit -- improvement second to you realization half year? a a where guess but outlook in improvement

David Sylvester

correct. That's

Greg Burns

Okay.

David Sylvester

[indiscernible]

Greg Burns

outlook order you're customers recently? trends, orders. kind you've it of change if the like in quarter, Can since you with the talk in more see terms recent, trends any or has the in Okay. change sound to your just the about And macro what conversations demand starting impacted of end seen doesn't then of,

David Sylvester

year seeing. nothing than say the to impacted to been orders compared growth strengthening. be the meaningfully prior in by that going would what prior are we were meaningful, rates fact The the different year, I have

comparisons So a difficult. and kind I any as year-over-year not of in we way the move of through say us negative it has the become would orders absolute in But year, the significant pattern. more surprise level --

Greg Burns

going you regional? And get Halcon, distribution And they of can their there competitors' talk what national they any will be any a putting terms your able dealers? kind it was dissynergies brand, Like be Were through of to by then Okay. that what regard? distribution in in network? to prior were like? lastly, just of you're kind And leverage previously about sold

Sara Armbruster

Yes.

national a are brand. they So

In fact, business deal, of they do amount small outside a United so the States.

distributed significant Steelcase and the manufacturer markets. revenue across do So broad They that's network. or to their them distribution particular distribution there's so, not their network. opportunity network by and tied exclusively better connecting growth expand to they're closely a pretty more have still we very well support Even any to any particular think

see assume customers did that their desire strong So to upside there. a I think their of desire and this as we Halcon ultimately certainly the we quality reputation products of certainly as Halcon expect far that that product. synergy, we revenue And bit who brand dissynergies, is product, and quite know

dissynergy, we that So think we that, but don't have be significant. some assumed will impact time over

Greg Burns

Okay, great. Thank you.

Operator

line Your Kathryn Thompson comes the Research Thompson question from Group. of next from

Your line is open.

Kathryn Thompson

production better and greater because you you sequentially thank focusing And is my of to efficiency. think be reflect good decline or on rates? production Hi, QX? Do likely just production And questions results seem QX to into better you backlogs will today. balance. simply, do taking production are backlog as first think for

David Sylvester

I we than expected saying in we production -- start by did have better I'll Well, QX.

they component of QX we made is quarter QX a and seeing ordering deterioration across the we So back several the that of goods of support System, to receiving QX, feeling and linked of where of though, quickly from finished has seasonality revenue QX. more big the for guidance strong last who to production more But meet towards are whole is made-to-stock was got bit months with parts model, In have. revenue the the to a component and Smith up a over that In and and to also our the further targets. it summer have for improved been was have QX, we little what quarter. average kind of we and were a the consistent to will end QX

making there be incremental [Technical multiple think wrestling progress I with and challenges Difficulty] time. same So the at might

think to we second confident expect the mid-July, the likely, strong last quarter, particularly dates So have I'm advance average quarter? growth second orders and to surcharge be summer. look And going of what to do the in lead a the continue expect pretty for adjustment effective I order at the normally We our they your have most about is at sit will backlog able they're what does I the of surge that in continue end question to that would that through like price in the which will of quarter, given of backlog and end been. times are not in

So we'll QX. going have I pretty meaningful would backlog into expect a

QX targets I in to And we does to question our look bit happens, need think and a a We gain what the return traction. where continue we office and communicated economy like good to are to March have little that need biggest the stabilize bit like? a feel of year little that's achievable. is that if we'll

Kathryn Thompson

driving growth some then despite questions in had Okay. continued just a what you that margin is improvement related market, expect Helpful. you sustainable? Shifting as see the we to sequential to EMEA, do Two solid you environment. And do year? to progress demand see there challenging

David Sylvester

if on take I'll one. second see the wants the Sara maybe Well, one, first comment

of August. likely will I the shutdowns think basically sequential the be QX, that month the of in margin margins experiences our pressured because the improvement, whole in August On continent

along the Europe. half expect to improving time. a we've we QX But in first patterns be be based continues And benefits also would -- a to the continued is order activity year, is the with we economy of the be see on QX I the back to quarters profitability the bit had pricing their of continue thereafter whether good on have feel the little was margin continue stabilizes our pressure. pretty or about to a What in dependent pre-sales and year of activity. how the the in on is to half backlog emphasis will pre-sales not hold. one best strong. typically the the long good we that going really we quarter help So back suspect, margins and of broader

to with more Sara it wants that, about, leave to the I'll kind overall environment. demand So comment if she maybe see to of,

Sara Armbruster

Yes. more comments, order I'll point about a his just Dave's on bit to building add just last patterns. little

I think region has strong. been office the return to that across

say, work-from-home see we at customers don't about So EMEA between versus those employers I'll as in we of tension in our work-from-office to as employees America. see much, North and markets tend least some

So that in likelihood us demand. future I confidence think certainly helps give of the

I involves continuing I that of line, in other grow as thing growth in is the think some initiatives the a places to diversify Europe. we our top invest number would to and our strategies seek outside Americas add the continuing to like of of

to Viccarbe in broaden So Europe. putting we in presence last and acquisition education business completed extra for our the leverage focus growth seeing certainly November example, we their are on Europe nice there. We have that to plans

I across in think stay tailwinds growth invested are we our there that will also EMEA. continue with things that strategy to of to respect number So provide our a nice to

Kathryn Thompson

kind question, largely from of, bigger final is this that move perspective passed. COVID-driven picture perspective, Okay. That's helpful. And just then [indiscernible] question. -- our big From is a

make your global as you moves customers population candidly the However, Texas? Illinois your plan favorable last has more you. telling trends your they Southwest tax, how these the its regional of to continued shocking are from of that the to these what And out they and building big you headquarters big Thank secular and shift big you business moving of perhaps on trend the Southeast and how and plan As shifts, then Caterpillar the week's How labor is one Southeast most Southwest. at business? overall momentum. and types impacting? interesting announcement just office and most about look And think about to

Sara Armbruster

if like start I'll and add you'd maybe answer to can So and chime in Dave color.

across we know, our they're Atlanta with sort are part industry. into in or who think what's those local I a shared And And plan going network U.S., potential to in region our have the putting your in that's to think to that are strategy business or the planning support to a us in with them, of need mean, what it capture heavily Illinois different about big long energy that dealer whether our to a shift market, we customers. serve U.S. teams our perspective is about best respect I and support that that's invested across is our as I grow, joint we've resources pick dealer combination of and reason right you and that in the have the to to making globally. how wherever sure partners Texas in believe is I always market and they think partners, that the it's the work significant we and whether markets, dealer the closely customers shifts a and on or their care bring given markets opportunity in how thinking with or dealer supporting

of these will corporate network work And the time. our in do that I think long as with types hold I dealer we partners. So in those have moves our think over rhythm of built shifts we us and how think dealer stead conversations population of see moves how some into that about and we been good

know, don't do I anything to you to add that? want So David,

David Sylvester

No.

Kathryn Thompson

much. Okay, very you great. Thank

David Sylvester

Kathryn. Thanks,

Operator

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

line open. Your is

Budd Bugatch

echo a a to that? year from back the the a -- during bit one know guess, which in about time more as of South I this of growth lead increased a COVID. come What of maybe but customers during little you talk behavior? in the give was NeoCon, of talked and dynamic just terms Florida, are of here -- first big the are South the let's changed seeing What you've little really and and you from is a confirming and you the and the here. Can more after we color Westcoast growth are the us start about that? hearing the growth privacy, on this maybe from you lot I down on bit customers? I'll a congratulations just morning with and picture, guess, this in I continuing little bit in traffic said the what revenue manage Good environment. Kathryn order with

Sara Armbruster

Sure, Budd. This Sarah. is

the for question. So thanks

So in privacy are that, a focus. individual related the for that of need for hearing things to couple addition changing to needs also we're

the but that things and moments of that their for for there touch they the I So also in on support periods course, growing would for in spaces focus time they're between individual office, they not people just the are collaboration, where Two have thinking other [indiscernible] demand, collaboration. of individual really about work. when or meetings hybrid need meetings idea are the

that single to every is I think point of space matter no is forward, going hybrid what needs ready view it space interaction, of support on our be type whether perspective and whether a to meeting someone someone up might in it's group where an on need their it's dial to choose dial someone laptop. in where Zoom, working a you individual to space,

need the think to I desire certainly can they understand is hybrid about to need top experience the all the And customers. other video, lighting, create then for all things of you So the think display, furniture, mention thing needs that and are spaces. would for how of mind terrefic social things I a acoustics, of from customers

not now the of kinds suitable colleagues for more, One the prior most for of think lots I reasons to or lounge et of in about the area, and reluctant Even in the help interactions the would best There's kinds in their the real are eager Those to leaders those say be of customers, spaces, desire in of to employees, of some of the think trust, that cetera. lots types are about the those reconnected organization my the the social connection, customers anecdotally, it's felt between those social previously that explore from to rebuild with kinds that, of really spaces, to customers those to to of about interest to decision-makers and rebuild doing important to idea of feel their business spaces the purpose informal was office is a experience lot pandemic, thinking spaces, of and I come cafe, those talking broader company's reasons kinds spaces even to and social were whether people solutions. a work. office fluffy.

Budd Bugatch

from that how impacting I'm Fed's us so of to you as back give us, other rates dynamically can affecting to come feel that of the Does but And the if economy that just next in are that, interest we're you. Steelcase, changing rates seen. to slow inflation also the of that impact going have and in a is that and to -- we not higher work on environment, affecting relation Steelcase? What's well? trying as the interest part down And maybe seeing or thank Okay, all you? to things inflation the we're Dave

David Sylvester

majority It's of Budd, because with is debt the relatively debt a small, fixed public rate. substantial our

variable less than financing of that a aircraft I have, rate. $XX think, We interest million is

small. relatively it's So

Budd Bugatch

That's a good just 'XX? you go timing What's we the an say bit just in inflation And your would then can beginning tailwind be there's the now? we dollars the dollars little And fiscal too? the you. in between a pandemic, of maybe in most pricing would how by fiscal expect to inflation difference think much? about And I people, presentation talk 'XX. become it -- total? pricing news. you to How total Because and that segment, back of Got total the by varies for a think, of of be pricing Can that segment. and idea of and I maybe get 'XX

attention. I'm confused, pay I So think maybe I review and because that,

where increases and and [Technical confused had lie? the of kind surcharge to Difficulty] you as So totals I'm a

David Sylvester

lot provided or of of maybe can you now the several on you we ask impacted we're I'll in I the I segments, benefits. and follow-up with have aggregate, go the But that inflation And the then quarters. suggest on disclosures mean, how a excess pricing think net last color in over piece the $XXX we've Qs. either that the that calls of a that we've through it's in together because at had million for particularly Mike about

was you climb to we're because the in improvement, if of anticipated year-over-year projection significantly, latest meaningful, $XX indices either adjustments beginning had have but that the but granular. down. start pricing our we're Hey, petroleum-based in in, would it show you had would have and of but logistics as start and Budd extent half QX hole been that more It's Initially, the the the we get to just better obviously, where it about, million to by been anywhere to not come a the not projected. come to not surcharges. should be expect, surge projected ahead that's can more down, And incremental that So year as that nearly playing about for think fuel well of products, million. Americas with out out $XX the have external most in had meaningful it's climb out would more of we as inflation year-over-year steel costs, lot is QX we still back we in definitely

Budd Bugatch

full-year? And I trying And think that's do that. understand do million, what was for the I I to the get what year, you it of delta to. think $XX for that is

David Sylvester

to of of the kind pricing million just -- million than something million that lower inflation, $XXX my number something than or top maybe minute of closer I to net round head plus ago, benefits. Greg, I the initial million. incremental off in that million have that, our something of did minus, with because that And higher disclose We range, to don't million a $XX we $XXX of $XX the in could $XXX be the know sized targets. to call million of $XXX dialogue latest the the in impacted $XXX $XXX we million

Budd Bugatch

That is very helpful. Okay.

This for on, as challenging of And rest the congratulations very said, you. year. evnironment you I Well, as through Okay. and certainly this. of, thank the kind well. And luck that managing is, a said best of

Sara Armbruster

Budd. Thanks,

Operator

turn this are Armbruster, to questions at Ms. And back I over the there you. further time. call no

Sara Armbruster

Well, you a just appreciate We for Great. to and have in us. your want thank Steelcase, interest day. joining of I all great

Operator

conference This call. concludes today's

disconnect. may You now

Steelcase (SCS) 23 Jun 222023 Q1 Earnings call transcript