SCS - Earnings call 3 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Steelcase Third Quarter Fiscal 2024 Conference Call. [Operator Instructions]Thank you. Mr. your begin may you conference. O'Meara,

Mike O'Meara

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

our Executive Armbruster, with on President Vice our and is line of measures with in incorporating Financial earnings, risks this statement turn remarks, and of details President the Steelcase Here forward-looking This webcast Harbor webcast -- and now a are quarter call Chief non-GAAP Dave Sara website. third crossed and today being and our Reconciliations conference we release, me our to to questions will of replay this and Chief is statements. regarding conference the call will are text respond included of Chief financial prepared copyrighted accessible the discussion GAAP which include posted we associated Inc. forward-looking Officer; over Safe Officer.Our Sara our be webcast, statements Senior the and our earnings reference into included investors are Sylvester, A analysts.I and yesterday, today.Our our to the Armbruster. by Officer, the to today this call will President the comparable production from and measures use Executive the later references in release.Following most is ir.steelcase.com may wires to

Sara Armbruster

joining thanks call and Mike, for the and everyone, hello, Thanks, today.

driving. transformation I'd our our to proud of for on thank price sales employees our profit evidenced our improvement by they're for third basis of margin quarter reallocate the growth and is of which and are continuing our Our like improvement fitness year-over-year to resources initiatives, we're teams improvements all reflect increases progress initiatives. capturing points.I'm the our team results who and operations continued gross making to XXX drive support

certain relocation against first the year. our the and our overall We've additional our will International Additionally, the announced distribution operations, we're These year. highlight the and California making of quarter, adjusted in nearly levels both further [ of changes Asia that Phoenix, operating in benefiting from we We closure. adjustment this operating overall will $X figures announced tune actions.Our million delivered the will the another quarter loss where footprint Americas we against $XX our expect exclude in prior adjusted distribution that center in in us to some EMEA actions up of sequentially stable open the also over improvements and We're in manufacturing Rancho additional year structure seen the our of businesses, beyond Pacific Malaysia recorded. our this we if our income in recorded second and grew which orders compare Atlanta announced our momentum third year seeing to seating consolidation lower Mexico Cucamonga, at to earnout strategy.Our aimed over the implementing our ] or from previously quarter. now efficiency.We relatively turnaround production we've the begun the enable And and provide of make cost year-over-year improvement. operations savings our to segment, recently to earlier X% million strong improving the international XX% business the we we half we're $X our of efficiency also center continuing I'll into pursue million results in distribution teams regional segment profitability delivered which continue quarter

segment. in Asia over grew Pacific. quarter growth Americas, XX% were growth by included in XX% that or large XX% and year-over-year led orders and corporate our strong XX% grew orders the international customer In Our growth third our

I while corporate which large growth well perform. We've lead guidance say insights-based that the customer we areas help order their such recent research offering customers settings, those spaces consistent Those headwinds and continuing X important help employees such look to to rigorous leveraging reflected our invested differentiated educational the the been product believe also offerings segments achieving increase some places innovation foster classroom factors is and a maintain solve social with posted the they're our they workspaces a will win selections are as and to their seeking focus, They're new and clinical in as segments host and past verticals.Orders innovation years progress performance administrative and that spaces being. last workplace to create have eye Customers to environments, as of needs, segment the most rooted to strive to with goals. in providing most others, our rates. broader customer healthcare products product other to customers see coming the healthcare the engage experienced that's wins, us enhance collaborate, in believe new strengthening in their of we're and in sustainability. also are trend we in and year in that environmental significant win selection are ourselves for furniture processes collective an of on and of business.As over to continued invest few throughout looking and We we a workplace to basis. of at in our strong such build stayed as and And for the spaces them position connections, in in transformation

to steps deliberate taken answer we've to curate this portfolio call. product our and grow So,

that best encourage in having Work on into our Better in role work that instead and positive business work customers. a an exclusively This has with PDF, for in we've creating have region Better we our to releasing drive also mesh carbon-neutral this most of work expanded carbon-neutral and options spring.This as Report. and and task seating we our incredible their last offerings Pacific, magazine strategy to offer do Steelcase options recently connecting comfort of for seating EMEA in So, and we expanding innovative to task details profitability recently Impact to carbon-neutral closing, chair Ology launched impact in our online to have Migration the the stable Americas launched the demonstrate quarter, Better the well-being. launched people example, adds height-adjustable meet ergonomic we I support excited with pressing evolving Steelcase improved Planet Leaders demand and in to aspiration. Karman and better, year, in customer year-over-year Asia People, SE it our portfolio the to our celebrate AMQ solutions our into our our levels to is to are people that price a strategy provide reinforce that is expectations well-being has to to to I'd published team made positioned points. we Ology planet tables believe improvements. global that range work the the solutions places continued believe needs.So, investments help by in and equipped report an help both and meet needs today performance broad done and wins We uniquely areas.Finally, dive central at and in these our our integrated and conversations opportunity we been we like the and them we you our our their to of We've also enhancements have

markets it We We and the settle investment diversify our Dave are a customers optimistic increase. improve we the profitability.So transformation, into review with that to stronger strategy I'll financial over executing their regarding and to lead our as turn in-office focused the share outlook. results levels details our and more workplace companies presence, that, on will remain to serve,

David Sylvester

our additional will these favorable our items land the quarter gains aside, with by we which on cover of assets. cash our results and around third than from benefits our benefits third impact assets.Setting a share the in good will third fiscal adjusted outlook earnings comparison we our valuation preliminary fixed gains of the and third share provide sale Those the items morning, operating quarter as third some by a the comments the the orders, more sheet, lower-than-expected well were our in balance a and per the the I provided some quarter as lower quarter included line $X.XX of our an Sara, revenue in was you, about to for $X.XX color of sale in acquisition expenses. was included fourth share, liability gross including of quarter margin My earnout had Thank comments and XXXX.Our some the September, per results benefited quarter outlook and expectations today as decrease approximately offset everyone. projected results, and guidance thoughts more also flow. fixed for regarding range

sequential because in Our not to in revenue issues. a expected, as our couple the Americas slightly part of disruption on due was patterns below $XXX supplier expectations, a we to fulfillment basis did had isolated million of continue order improve

revaluation. from of capital $XX the the in of been the fourth of earnout operating million, Americas by by manage our quarter versus represented the $XX partially pricing gross million fixed expenses, and quarter earnout higher-than-expected of mostly their was it Our our asset Americas the by and education strength earnout and adjusted higher EBITDA flow our third segments, sheet, improved the offset as driven by quarter.Our $XX to driven during down aggregated the relates levels.Our offset operating benefits International International. business and resolved of portion from reduction a the strengthened $XXX setting million actively liquidity end revenue was debt after a the seasonality of as favorable Smith the income and and of generated $XXX collected in working quarter operations, we the continued third balance quarter. operating $XX driven our million the in have summer the decrease we at were and $XXX Adjusted $XX at of second was total adjustment, improvement The of adjustment.As both to and aside gross was a to and million our sequential working the million expenses receivables totaled million International land in decrease was these be which portion decline during the we $XXX in million in by driven margin, revenue, cash expect $X The on them lower sequential the We in to gains driven teams typical million. cash a our by results on System, improvement liquidity by million addition a total in quarter. by the situations margin was segment.Moving across comparison to lower-than-expected inventory

in improvement a point on trailing the Our over basis quarter frame was across International. project EBITDA basis continued over included growth prior second by part X in was our continuing The by the grew such strength modestly our some EMEA, In Americas prior offset by the is weeks growth year-over-year revenue, line XX% increase in Pacific of over and growth compared declines Asia primarily by an QX orders driven or million, the quarter, The Pacific. XX% year business, partially China. X outlook the first expectations UK.Turning X.X% a in $XXX XX% and driven the reflecting grew Southeast Iberia, quarter during in customers was prior in in in year other to India large of France orders grew by corporate and while and versus offset in International XX% in order year. year.Orders driven were the The compared by growth orders growth XX% quarter. with adjusted was notable in to same grew X% and of modestly Asia included and fourth our QX and Americas time softness and for XXX sequential and the in the as the the to last markets, Asia both primarily

to due and the backlog year, prior customer XX% impacted chain to beginning extended our was had by was accumulated that in compared orders supply which frames. part disruptions time delivery However, down

compared we within of million, revenue to result, report which would a to year. range expect approximately million prior basis be flat the to As $XXX organic on $XXX a an

approximately and to of compares per expect million, between to $XXX report approximately which of tax year.In the we're net assets. adjusted purchased expense XX.X%, to to million earnings projecting amortization approximately adjusted $X.XX rate And million related items non-operating the which $X.X $X.XX to includes expenses $XXX estimated of we in range gross lastly, and an other to expect We of million intangible projected of prior expense, $X estimate interest operating $X.XX, XX%. to effective of and earnings between includes the addition favorably revenue, projected margin share of

revenue about the for quarters the will is next organic a last earnings offices business. and about quarter.We growth begin lag that with companies number sale the earnout week, begin believe we to orders the growth As positively fiscal last recorded emphasizing At fiscal likely improved fiscal time, current to minimum that order revaluation we impacted to XXXX. United items of in the optimistic that growth in year. has XXXX, target States lower the than customer presence expect remain projected year it's a our growing compared asset any for recorded days backlog X in prior levels like over Thus, and in to number X the same over think revenue we gains are as the XXXX, their of it of physical adjusted order expect per we quarters the in

the committed While target on initiatives profitability outlook.We organic our to revenue based scenario in other remain fiscal our and more we investments focused to fund growth plausible to segment. improvement between continue on growth XXXX remain strategies, International and current and of for midterm help margin levels our X% X%, diversification a lower growth of revenue in improving to fitness organic is level the a gross we

it detailed for reiterate, questions. we year in we plan and there, performance over target So, to a provide again will March.From turn to more to next we operating improved expect outlook

Operator

[Operator first of Garner comes Benchmark the line question Instructions] Company. from Reuben Your from The

Reuben Garner

to push-out out maybe because just seems you are Can me can what and it maybe start math strength? the fulfillment despite of maybe early revenue outlook, maybe backlog there, the appears into you 'XX why a being trail where this year of to Dave, order little help with me your next some ended with fiscal be orders the of through from walk -- challenges. you orders pushed part like might bit 'XX

David Sylvester

down year modeling we're the compared be to and simply Reuben, revenue Well, that rates. year growth still next impact will backlog that will last

XX% is orders down or So impact least a and at Y, X/X backlog of X at backlog growth. by decline to if the the is going that grow revenue in

So say, the it's talking that of, significant disruption currently. There's not happening in I just would about. math really that we're business a lot

that extended the dates. of for a entire delivery industry. suppliers have We couple that have suppliers Frankly, they're deliver

times in back So here just but of quick this, lead we're not alone think we they very where supply the I have our times.And going didn't lead they everyone from were reiterate come a they're whether It's because was to kind ago, our probably experiencing. that didn't really high things were disruptions down pretty resolved and would that to be extend normal we'll year to all of chain continue that significantly. they

modestly last, flat the third So and in they again or, the down them them second and quarter. projected think, they with come in sorry, in quarters. quarter of down the stayed each quarters we -- saw come We stayed or the X to X quarter, I fourth

revenue So it don't by, million, $XX know, like impacted our $XX I million.

Reuben Garner

been that order then maybe referenced then sort are And the customers. you detail markets, within driving of last large finance, that what's Great. of years? U.S., whether any have you Can back it areas kind Okay. under give couple geographical -- And the be the that? us more healthcare, comments technology, we've on any of end on strength, bouncing pressure

David Sylvester

eye any think markets. particular the few of actually more would or was they I by areas this surprisingly, the but sector, We're be in one And West that don't earlier business was an tech you particular keeping or throughout -- on course, a driven remember had suggested and weak, of the would particular year. that the and seeing Coast data year have been we've vertical a okay one it nice region, some business this that year. generated continues

markets. So, nothing and notable vertical verticals across really

Reuben Garner

me. for then last And Okay. one

this balance good far So sheet's pretty cash year, flow, in shape. strong

comments cash uses changes kind go-forward cash? for it, about of of flow, in to any on and then how plans Just any think

David Sylvester

strategy and have bolt-on our on Well, growth primarily, initiatives. we we help our used some acquisitions to remain growth of accelerate focused

still in growth not market, our right one an might we're out eye that keeping strategy. right the found the for help the But we've to So possibilities price. date, various at

of So quarter. dividend, as -- hopes and we'll in the continue you'll the repurchase one to remember, that shares right our sit on last strong liquidity continue authorization we think that I price to some to a also find to will the fund help the right increased the accelerate Board we at strategies.We

at will extent a the liquidity. means we to our continue shares, some opportunities as buy to of using look to we back that also of So have

Operator

next comes Your Greg the from of question Burns line from Sidoti.

Gregory Burns

quarter of you in or anything the up, bridge you in. would understand happened expect lines terms that to quarter, that just do expect be that or number With the could you in consensus of where in maybe how the us the guidance, from fourth where much just growth do fourth where I'm of organic what to reported was because divestitures organic trying with up maybe third lines variances coming quarter? what

David Sylvester

was a high that share divestiture with the you were a did mention the And about not there. decent-sized that have it. of did a about. divestiture talked We you dealer, thinking them. dealer all modest we there hadn't Well, quarter in but wallet impact. probably It's have We has -- a

the exactly well they're third-party as margin but $XX supplemental quarter, don't per customer, million more is the service that lose impact. per products know what between that dealer quarter it's than any as we and incremental probably their So and of revenue the I selling.

Gregory Burns

terms in strict of getting their back-to-office then more And -- you with companies Okay. I mentioned All policies. right. guess,

you -- there? your over activity pipeline of we've how Like, any meaningful having you're the the pipeline change talked with still couple is looking? about it of status Or is conversations of what In what customers, has or have quo with terms kind seen -- you've of anything quarters? last activity

David Sylvester

looks I'll has several bad. start it not But opportunity among pretty strong good. but rate the the our opportunities okay, has creation, been great, been Well, with quarters. for last not which win quite

comments Sara has high of I analyst in be and or the than our that earnings think release in quotes the previously the pipeline year. our that confidence higher part calls, either helped mentioned has in prior on

got they're a about in that and that we're won So, high customer it's We've or we think competed our pipeline in we long -- that. and we projects of have and feel pretty nice history, backlog we've already for deep good a well. because either positioned confidence we're relationship,

So, our high over frankly is pipeline, growth which when at prior of the the we portion it part most important year. it, confidence showing look of is

Operator

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

Steven Ramsey

issues on the Maybe to that clarify delivery quarter. the impacted

a First, And cost I assume is then confirm or you then What better deliveries times versus levels? now that. issue year-over-year. this third maybe are one to add simply delivery Maybe a can And on. pre-pandemic timing? are

David Sylvester

They our we a they but It's supplier delivery the our Steven. lot function were based exactly again things. on stayed customer, it We Americas were better date closer come levels then third reliability.So a maybe FY a how peaked do Xs the I by they and down what were our ago. 'XX way in that this weeks We the into times requested quarter, of don't it weeks -- are our XX at at thought ago, we X.X weeks. had and inside acknowledge core lead to compares of XX.X XX in of year quarter, question, and in averaging weeks. to a weeks. the it it is peaked year than And are these I bit and of were down think, I XX good been a that at trending remember pre-pandemic QX. they what XX.X XX.X Yes, from weeks. might like weeks, in little QX business think And

Steven Ramsey

helpful. That's Okay.

driven and of verticals is corporate customers? large customer long-term other how outlook, growth of that much XXXX push that to How base? of your by the much some is diversify On that

David Sylvester

don't believe, ready office vertical that expect say really present continuing today we continue we're that past, markets. healthcare, think to believe of targeted talked know know But year, I being -- identifying every I about the see see will example, a we seeing we'll We've and earlier its and the across we'll the to our Well, fiscal stronger in clinical growth vertical also don't the declines in market. across the correlated return I target growth trend, that's an as people being to and change.That positive talk more to which growth on admin by vertical our activity trend. in is to company but driven is side. we and with I And needs large on I'm it for side momentum, that said, the markets. rates began

I'd we So, should be But to very for that we'd that in in that that able March. to yet are vertical. large today. going in know I and and vertical trends target to across we're how to degree to co, compares what don't that share be what Might growth that don't for indicating I we growth if that detail able more strong, are indicating -- be remains total, things positive target surprised be particular. vertical education. know That in weren't a targeting us,

Steven Ramsey

continued Last understand. of you workers industry, the Totally there's think office and RTO for leg days momentum an catalyst coming office next thing it Or more from of just about more kind months Sure. beyond growth the being of furnishings in me, incremental forward? the years? back the grinding thinking just is do the in

David Sylvester

back into Sara quickly not Well, maybe I'll need -- pile to feel office, I'll let then I'll the I say on. do I just mean, start are talk of yes. I not I support Sara configured belief is the when to people working, only the get think But they're strong I'm people a together. -- which ways that new to I wants better about. have more office sure and

Sara Armbruster

And jump I'll No, Yes. would I that. agree. into

said, work. office will, support are interest are sector. we continued return ways think our is beyond that, to our offices answer I general yes. I configured business as Dave looking think in the not believe, mean, in to I just to But drive and certainly, the people

support.I privacy that's of whether I organizations those about personal thinking So and to I'll would open think sense level business. I supporting trends trying no connections beyond is also continue say, there questions social and even provide rebuild whether say, of are that, in future broader, be from that's engagement kind different support past to are that's make investments the can collaboration, all going macro to also our focus, think the helping in be that lots to the of will whether and that I well-being, that think things to

businesses kind and For cause about look them lots opportunity a leading like interesting really were questions Mexico a AI to for different also example, team geographic companies around for how jobs to our different how City probably nearshoring world of much to entire and I is of and down of growth as have of is cropping ago, was real choices kinds companies driving there think the things new opportunity.I make about up. with the weeks need of change from couple trend talking all boom or of in we or going hiring the they that's

things. we So solution thinking changes landscape at those broader help also to to kinds those our in how our I innovation about and think looking organizations we're as they target and always the adapt can of

are across that for business. there happening things for to provide likely our multiple us potential be growth think I So

Operator

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

Beryl Bugatch

quarter. the on Congratulations

and of noise try get me the Let here. out

from you're guidance from a reported to margin couple me think, for for a Let you third at what upcoming just questions. get ask Dave, for, Is XX.X%, for way I quarter on the XX.X% and looking third. the the of fourth? gross you're you there in guidance, to the reported quarter, what

David Sylvester

XX equipment our facilities. the Yes, to to and when enhance January bit it have -- through In do of see the the we of with tend we production slows go February and a down that that in quarters. week Asia, little where our Europe. maintenance kind That's also increase situation. inefficiencies or And driver Chinese in really that that's Year, or between work opportunity X we in really a we shut the in we we see maintenance down and has February and leverage New January maintenance to biggest for annual our global a days,

Beryl Bugatch

a there. from persistent International. That been can the -- of in lot quarter? that we the for going persistent? Is forward vacation sense. maybe exception do work Okay. lower good makes of look profits And has see the quarterly expenses? do Congratulations with Obviously, You International, operating see on we going

David Sylvester

to they little benefits, win their uptick office -- realize for.And in a working and pricing is we levels do been in are days teams both like we'll for project a certainly, will that continuing think I surfaced more expect in saw lot It's might degree the Yes, -- environment. that XX are But year on our a are we XXX compete higher we environments.So, it office And we're projecting cost nice are very Europe lot level in profitability that the of in there days it working -- creation that EMEA or in change driving like. just feel of in Asia it have and traditionally The opportunity on large based X yes, need -- then activity in we last relatively recognize with Americas. hard, trending. Asia like in opportunities And you to of just they Pacific number fact, how activity the is is There that are, looks they back a I good. Europe and actually to the feels what a has and than QX, next and the macroeconomic to fact rate see reduction, and feel we well. as The the have bad. not decent. actually

So I right we're right the think the applications, and we have sales teams, effectively. competing

Beryl Bugatch

of share office and seen getting Okay. how share gaining being And and you want win that behavior back you've are recently? written forward pushback heard I that large say maybe -- and over you those my is to of how out to the happening and successfully CEOs the seen large us a talked notably on people front? holiday customers, that we've and both the give are office seem corporate -- going into about customers people before in their be looks either with me, wish, we're the you what last what's corporate mean, and we've Can back feel that Sara, be seeing? seem they state rates all they about. seeing for what or how most the

Sara Armbruster

Sure.

certainly we've So, doing employees to time. in with are we many that. for many work leading I working encourage back companies that the And think of hard their be office period some to organizations seen

First, clear making place terrific the a more office their to by they're highlighting it is make but that really by really that help importantly, sure about work. people what being their do expectations, about best can that

amenities? talked that the work put think are of those the their are work?And really with tools? in What trying we to support a I the are what which office So, about support terms better investments are that What minute I behaviors, ago. that like can behind the companies ways in spaces

believe are How we that connect human to spaces How those those that and a kind they're of terrific we do support people that thinking kinds we people innovation? with focus? it we how about do the critical they'll deeply another How to support find space, we I really these looking in, create you are personal sustainability organizations for can support well-being? So a those thinking do to environments great and that work to becomes supportive, create collaboration organizations hear in time do their goals goals?So, they draw. think people seeing we support environment ways? people spend create from and evidence places And with, the about for things How continue at I foster one when like, great energizing and and of some ways, there. think that and

I that's say across think organizations. large base, broadly with seeing So client I our would especially what we're

Beryl Bugatch

certainly and everybody for so the on hopefully, for Year. far a healthy and and wishes New holiday happy peaceful a happy and happy Congratulations and, a progress season best year to this holidays

David Sylvester

Thank you.

Sara Armbruster

Thank you.

Operator

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

Sara Armbruster

I today. you us as thank in Thanks. happy and all always for your to wish interest everyone holidays. joining Well, Steelcase, appreciate want We a

Operator

call. This concludes today's conference

disconnect. now may You

Steelcase (SCS) 20 Dec 232024 Q3 Earnings call transcript