Steelcase Inc. (NYSE: SCS) today reported first quarter revenue of
$740.7 million, a net loss of $11.4 million, or $0.10 per share,
and an adjusted loss per share of $0.05. In the prior year,
Steelcase reported revenue of $556.6 million and a net loss of
$28.1 million, or $0.24 per share, and had an adjusted loss per
share of $0.22.
Revenue and order growth compared to the prior year were as
follows:
| |
Q1 2023 vs. Q1 2022 |
| |
Revenue Growth |
|
Organic RevenueGrowth |
|
Organic Order Growth |
| |
|
|
|
|
|
|
Americas |
38 |
% |
|
38 |
% |
|
25 |
% |
| EMEA |
27 |
% |
|
36 |
% |
|
19 |
% |
| Other |
12 |
% |
|
13 |
% |
|
4 |
% |
| |
33 |
% |
|
35 |
% |
|
22 |
% |
The revenue growth across all segments was driven by a strong
beginning backlog and pricing benefits, as well as broad-based
order growth in the Americas and EMEA. Revenue and order growth in
the Other category was negatively impacted by COVID-related
restrictions in China.
"We're pleased with our revenue growth of 33 percent, which was
better than expected due to stronger incoming orders and improved
order fulfillment from the adjustments we've made to mitigate the
impact of supply chain disruptions," said Sara Armbruster,
president and CEO. "In each of the most recent eight months of
reported data, our year-over-year order growth in the Americas has
outpaced our industry, and our EMEA segment has continued to
deliver strong growth for the past five quarters."
Operating income (loss) and adjusted operating income (loss)
were as follows:
|
|
Operating income (loss) |
|
Adjusted operating income (loss) |
| |
(Unaudited) |
|
(Unaudited) |
| |
Three months ended |
|
Three months ended |
| |
May 27,2022 |
|
May 28,2021 |
|
May 27,2022 |
|
May 28,2021 |
|
Americas |
$ |
(1.2 |
) |
|
$ |
(15.0 |
) |
|
$ |
5.6 |
|
|
$ |
(12.4 |
) |
| EMEA |
|
1.3 |
|
|
|
(5.7 |
) |
|
|
2.5 |
|
|
|
(4.7 |
) |
| Other |
|
(2.9 |
) |
|
|
(5.3 |
) |
|
|
(2.9 |
) |
|
|
(5.3 |
) |
| Corporate |
|
(9.8 |
) |
|
|
(5.8 |
) |
|
|
(9.8 |
) |
|
|
(5.8 |
) |
| |
$ |
(12.6 |
) |
|
$ |
(31.8 |
) |
|
$ |
(4.6 |
) |
|
$ |
(28.2 |
) |
The year-over-year improvement in operating results was driven
by the benefits of higher revenue, partially offset by lower gross
margin. The current year included $4.2 million of restructuring
costs in the Americas.
Gross margin of 25.9 percent in the first quarter represented a
decrease of 190 basis points compared to the prior year, with a 270
basis point decline in the Americas, a 60 basis point decline in
EMEA and a 100 basis point improvement in the Other category. The
decline in the Americas was primarily due to approximately $15
million of higher inflation, net of pricing benefits, partially
offset by the benefits of higher volume. The decline in EMEA was
primarily due to unfavorable currency impacts and higher overhead
costs, partially offset by the benefits of higher volume and
approximately $4 million of higher pricing benefits, net of
inflation. The improvement in the Other category was primarily due
to the benefits of higher volume and lower overhead costs,
partially offset by approximately $1 million of higher inflation,
net of pricing benefits.
"Inflationary pressures continued to grow this quarter across a
number of commodities, and we responded by announcing our fifth
price increase over the past 16 months, to be effective in July,"
said Dave Sylvester, senior vice president and CFO. "In addition,
we recently announced a surcharge in the Americas in response to
rapidly increasing costs of petroleum-based products, freight and
delivery, and we have been slowing incremental spending to help
offset some of the cost-price timing lag."
Operating expenses of $200.9 million in the first quarter
represented an increase of $14.4 million, but a decline of 640
basis points as a percentage of revenue, compared to the prior
year. The current year included $11.6 million of higher marketing,
product development and sales expenses, $6.8 million of higher
spending in other functional areas and $1.9 million from an
acquisition, partially offset by a $4.0 million gain from the sale
of land and $3.6 million of favorable currency translation
effects.
Total liquidity, comprised of cash and cash equivalents and the
cash surrender value of company-owned life insurance, aggregated to
$279.5 million at the end of the first quarter. Total debt was
$482.4 million. Adjusted EBITDA for the trailing four quarters was
$151.6 million.
The company completed the acquisition of Halcon Furniture LLC on
June 10, 2022. The purchase price of $127.5 million, plus a $3.1
million adjustment for working capital, was funded from available
cash and $68 million of borrowings under the company's global
committed bank facility.
The Board of Directors has declared a quarterly cash dividend of
$0.145 per share, to be paid on or before July 18, 2022, to
shareholders of record as of July 7, 2022.
Outlook
At the end of the first quarter, the company’s backlog of
customer orders was approximately $927 million, which was 52
percent higher than the prior year. Consistent with recent
quarters, the backlog includes a higher than historical percentage
of orders scheduled to ship beyond the end of the next quarter, and
supply chain disruptions are expected to continue. As a result, the
company expects second quarter fiscal 2023 revenue to be in the
range of $875 to $900 million. The company reported revenue of
$724.8 million in the second quarter of fiscal 2022.
The projected revenue translates to growth of 21 to 24 percent
compared to the second quarter of fiscal 2022, or organic growth of
20 to 24 percent.
The company expects to report earnings per share of between
$0.06 to $0.10 for the second quarter of fiscal 2023 and adjusted
earnings per share of between $0.11 to $0.15. The estimate
includes:
- projected pricing benefits, net of inflation, of approximately
$10 million as compared to the prior year,
- projected operating expenses of between $225 to $230
million,
- projected interest expense, investment income and other income,
net, of approximately $4 million, and
- a projected effective tax rate of 27 percent.
The company reported earnings per share of $0.21 and had
adjusted earnings per share of $0.23 in the prior year. The prior
year included a $0.09 per share benefit related to a gain from the
sale of land.
“We continue to drive our strategy to lead the hybrid work
transformation and prioritize investments to support our key growth
adjacencies,” said Sara Armbruster. “At the same time, we remain
committed to achieving our fiscal 2023 financial targets and are
implementing necessary pricing actions and other measures to
mitigate the impacts of the escalating inflationary pressures."
| |
|
|
|
|
|
| Business Segment
Results |
|
|
|
|
|
| (in millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
(Unaudited) |
|
|
| |
Three Months Ended |
|
|
| |
May 27,2022 |
|
May 28,2021 |
|
% Change |
| |
|
|
|
|
|
| Revenue |
|
|
|
|
|
|
Americas (1) |
$ |
520.8 |
|
$ |
376.3 |
|
38 |
% |
| EMEA (2) |
|
156.4 |
|
|
123.6 |
|
27 |
% |
| Other (3) |
|
63.5 |
|
|
56.7 |
|
12 |
% |
|
|
$ |
740.7 |
|
$ |
556.6 |
|
33 |
% |
| Revenue
mix |
|
|
|
|
|
Americas |
70.3 |
% |
|
67.6 |
% |
|
| EMEA |
21.1 |
% |
|
22.2 |
% |
|
| Other |
8.6 |
% |
|
10.2 |
% |
|
| Operating income
(loss) |
|
|
|
|
|
Americas |
$ |
(1.2 |
) |
|
$ |
(15.0 |
) |
|
| EMEA |
|
1.3 |
|
|
|
(5.7 |
) |
|
| Other |
|
(2.9 |
) |
|
|
(5.3 |
) |
|
| Corporate (4) |
|
(9.8 |
) |
|
|
(5.8 |
) |
|
|
|
$ |
(12.6 |
) |
|
$ |
(31.8 |
) |
|
| |
|
|
|
|
| Operating loss
margin |
|
(1.7 |
)% |
|
|
(5.7 |
)% |
|
Business Segment Footnotes
- The Americas segment serves customers in the U.S., Canada, the
Caribbean Islands and Latin America, with a comprehensive portfolio
of furniture and architectural products marketed to corporate,
government, healthcare, education and retail customers through the
Steelcase, Coalesse, AMQ, Smith System, Orangebox and Viccarbe
brands.
- The EMEA segment serves customers in Europe, the Middle East
and Africa primarily under the Steelcase, Coalesse, Orangebox and
Viccarbe brands, with a comprehensive portfolio of furniture,
architectural and technology products.
- The Other category includes Asia Pacific and Designtex. Asia
Pacific serves customers in Australia, China, India, Japan, Korea
and other countries in Southeast Asia primarily under the Steelcase
brand with a comprehensive portfolio of furniture and architectural
products. Designtex sells textiles, wall coverings and surface
imaging solutions specified by architects and designers directly to
end-use customers through a direct sales force primarily in North
America.
- Corporate expenses include unallocated portions of shared
service functions such as information technology, corporate
facilities, finance, human resources, research, legal and customer
aviation, plus deferred compensation expense and income or losses
associated with company-owned life insurance.
| |
| QUARTER
OVER QUARTER ORGANIC REVENUE GROWTH BY SEGMENT |
| Q1 2023 vs. Q1
2022 |
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
| |
Steelcase Inc. |
|
Americas |
|
EMEA |
|
Other category |
| |
|
|
|
|
|
|
|
|
Q1 2022 revenue |
$ |
556.6 |
|
|
$ |
376.3 |
|
|
$ |
123.6 |
|
|
$ |
56.7 |
|
| Acquisition |
|
3.5 |
|
|
|
1.0 |
|
|
|
2.5 |
|
|
|
— |
|
| Currency translation
effects |
|
(12.6 |
) |
|
|
(0.5 |
) |
|
|
(11.5 |
) |
|
|
(0.6 |
) |
| Q1 2022 revenue, adjusted |
|
547.5 |
|
|
|
376.8 |
|
|
|
114.6 |
|
|
|
56.1 |
|
| |
|
|
|
|
|
|
|
| Q1 2023 revenue |
|
740.7 |
|
|
|
520.8 |
|
|
|
156.4 |
|
|
|
63.5 |
|
| Organic growth $ |
$ |
193.2 |
|
|
$ |
144.0 |
|
|
$ |
41.8 |
|
|
$ |
7.4 |
|
| Organic growth % |
|
35% |
|
|
|
38% |
|
|
|
36% |
|
|
|
13% |
|
| ADJUSTED
EARNINGS (LOSS) PER SHARE |
|
(Unaudited) |
|
|
|
|
| |
|
Three Months Ended |
| |
|
May 27,2022 |
|
May 28,2021 |
|
Earnings (loss) per share |
|
$ |
(0.10 |
) |
|
$ |
(0.24 |
) |
| Amortization of purchased
intangible assets, per share |
|
|
0.03 |
|
|
|
0.03 |
|
| Income tax effect of
amortization of purchased intangible assets, per share |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
| Restructuring costs, per
share |
|
|
0.04 |
|
|
|
— |
|
| Income tax effect of
restructuring costs, per share |
|
|
(0.01 |
) |
|
|
— |
|
| Adjusted earnings (loss) per
share |
|
$ |
(0.05 |
) |
|
$ |
(0.22 |
) |
| ADJUSTED
EBITDA |
|
(Unaudited) |
| |
Three Months Ended |
|
Trailing FourQuarters Ended |
| |
August 27,2021 |
|
November 26,2021 |
|
February 25,2022 |
|
May 27,2022 |
|
May 27,2022 |
|
Income (loss) before income tax expense |
$ |
29.4 |
|
$ |
12.0 |
|
|
$ |
(1.0 |
) |
|
$ |
(15.8 |
) |
|
$ |
24.6 |
| Interest expense |
|
6.4 |
|
|
6.5 |
|
|
|
6.4 |
|
|
|
6.4 |
|
|
|
25.7 |
| Depreciation and
amortization |
|
20.5 |
|
|
21.0 |
|
|
|
21.0 |
|
|
|
20.2 |
|
|
|
82.7 |
| Share-based compensation |
|
1.9 |
|
|
(2.0 |
) |
|
|
2.5 |
|
|
|
12.0 |
|
|
|
14.4 |
| Restructuring costs |
|
— |
|
|
— |
|
|
|
— |
|
|
|
4.2 |
|
|
|
4.2 |
| Adjusted EBITDA |
$ |
58.2 |
|
$ |
37.5 |
|
|
$ |
28.9 |
|
|
$ |
27.0 |
|
|
$ |
151.6 |
| PROJECTED
ORGANIC REVENUE GROWTH |
|
Q2 2023 vs. Q2 2022 |
|
|
|
|
(Unaudited) |
|
|
|
| |
Steelcase Inc. |
|
| |
|
|
|
| Q2 2022 revenue |
$ |
724.8 |
|
| Acquisitions |
|
17.7 |
|
| Currency translation
effects |
|
(15.5) |
|
| Q2 2022 revenue, adjusted |
$ |
727.0 |
|
| |
|
|
|
| Q2 2023 revenue,
projected |
$ |
875 - 900 |
|
| Organic growth $ |
$ |
148 - 173 |
|
| Organic growth % |
|
20% - 24% |
|
| PROJECTED
ADJUSTED EARNINGS PER SHARE |
|
(Unaudited) |
|
|
| |
|
Three Months Ended |
| |
|
August 26,2022 |
|
August 27,2021 |
| Earnings per share |
|
$ |
0.06 - 0.10 |
|
|
$ |
0.21 |
|
|
Amortization of purchased intangible assets, per share |
|
|
0.07 |
|
|
|
0.03 |
|
| Income tax effect of
amortization of purchased intangible assets, per share |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
| Adjusted earnings per
share |
|
$ |
0.11 - 0.15 |
|
|
$ |
0.23 |
|
| Steelcase
Inc. |
|
|
|
|
|
|
|
| |
(Unaudited) |
| |
Three Months Ended |
| |
May 27,2022 |
|
May 28,2021 |
|
Revenue |
$ |
740.7 |
|
|
100.0 |
% |
|
$ |
556.6 |
|
|
100.0 |
% |
| Cost of sales |
|
548.2 |
|
|
74.0 |
|
|
|
401.9 |
|
|
72.2 |
|
| Restructuring costs |
|
0.9 |
|
|
0.1 |
|
|
|
— |
|
|
— |
|
| Gross profit |
|
191.6 |
|
|
25.9 |
|
|
|
154.7 |
|
|
27.8 |
|
| Operating expenses |
|
200.9 |
|
|
27.1 |
|
|
|
186.5 |
|
|
33.5 |
|
| Restructuring costs |
|
3.3 |
|
|
0.5 |
|
|
|
— |
|
|
— |
|
| Operating loss |
|
(12.6 |
) |
|
(1.7 |
) |
|
|
(31.8 |
) |
|
(5.7 |
) |
| Interest expense |
|
(6.4 |
) |
|
(0.9 |
) |
|
|
(6.4 |
) |
|
(1.1 |
) |
| Investment income |
|
0.1 |
|
|
— |
|
|
|
0.2 |
|
|
— |
|
| Other income (expense),
net |
|
3.1 |
|
|
0.5 |
|
|
|
(0.8 |
) |
|
(0.2 |
) |
| Loss before income tax
benefit |
|
(15.8 |
) |
|
(2.1 |
) |
|
|
(38.8 |
) |
|
(7.0 |
) |
| Income tax benefit |
|
(4.4 |
) |
|
(0.6 |
) |
|
|
(10.7 |
) |
|
(2.0 |
) |
| Net loss |
$ |
(11.4 |
) |
|
(1.5 |
)% |
|
$ |
(28.1 |
) |
|
(5.0 |
)% |
| |
|
|
|
|
|
|
|
| Operating loss |
$ |
(12.6 |
) |
|
(1.7 |
)% |
|
$ |
(31.8 |
) |
|
(5.7 |
)% |
| Amortization of purchased
intangible assets |
|
3.8 |
|
|
0.5 |
|
|
|
3.6 |
|
|
0.6 |
|
| Restructuring costs |
|
4.2 |
|
|
0.6 |
|
|
|
— |
|
|
— |
|
| Adjusted operating loss |
$ |
(4.6 |
) |
|
(0.6 |
)% |
|
$ |
(28.2 |
) |
|
(5.1 |
)% |
| Americas |
|
|
|
|
|
|
|
| |
(Unaudited) |
| |
Three Months Ended |
| |
May 27,2022 |
|
May 28,2021 |
|
Revenue |
$ |
520.8 |
|
|
100.0 |
% |
|
$ |
376.3 |
|
|
100.0 |
% |
| Cost of sales |
|
390.0 |
|
|
74.9 |
|
|
|
272.5 |
|
|
72.4 |
|
| Restructuring costs |
|
0.9 |
|
|
0.2 |
|
|
|
— |
|
|
— |
|
| Gross profit |
|
129.9 |
|
|
24.9 |
|
|
|
103.8 |
|
|
27.6 |
|
| Operating expenses |
|
127.8 |
|
|
24.5 |
|
|
|
118.8 |
|
|
31.6 |
|
| Restructuring costs |
|
3.3 |
|
|
0.6 |
|
|
|
— |
|
|
— |
|
| Operating loss |
|
(1.2 |
) |
|
(0.2 |
) |
|
|
(15.0 |
) |
|
(4.0 |
) |
| Amortization of purchased
intangible assets |
|
2.6 |
|
|
0.5 |
|
|
|
2.6 |
|
|
0.7 |
|
| Restructuring costs |
|
4.2 |
|
|
0.8 |
|
|
|
— |
|
|
— |
|
| Adjusted operating income
(loss) |
$ |
5.6 |
|
|
1.1 |
% |
|
$ |
(12.4 |
) |
|
(3.3 |
)% |
| EMEA |
|
|
|
|
|
|
|
| |
(Unaudited) |
| |
Three Months Ended |
| |
May 27,2022 |
|
May 28,2021 |
|
Revenue |
$ |
156.4 |
|
100.0 |
% |
|
$ |
123.6 |
|
|
100.0 |
% |
| Cost of sales |
|
114.1 |
|
73.0 |
|
|
|
89.5 |
|
|
72.4 |
|
| Gross profit |
|
42.3 |
|
27.0 |
|
|
|
34.1 |
|
|
27.6 |
|
| Operating expenses |
|
41.0 |
|
26.2 |
|
|
|
39.8 |
|
|
32.2 |
|
| Operating income (loss) |
|
1.3 |
|
0.8 |
|
|
|
(5.7 |
) |
|
(4.6 |
) |
| Amortization of purchased
intangible assets |
|
1.2 |
|
0.8 |
|
|
|
1.0 |
|
|
0.8 |
|
| Adjusted operating income
(loss) |
$ |
2.5 |
|
1.6 |
% |
|
$ |
(4.7 |
) |
|
(3.8 |
)% |
| Other
category |
|
|
|
|
|
|
|
| |
(Unaudited) |
| |
Three Months Ended |
| |
May 27,2022 |
|
May 28,2021 |
|
Revenue |
$ |
63.5 |
|
|
100.0 |
% |
|
$ |
56.7 |
|
|
100.0 |
% |
| Cost of sales |
|
44.1 |
|
|
69.4 |
|
|
|
39.9 |
|
|
70.4 |
|
| Gross profit |
|
19.4 |
|
|
30.6 |
|
|
|
16.8 |
|
|
29.6 |
|
| Operating expenses |
|
22.3 |
|
|
35.2 |
|
|
|
22.1 |
|
|
38.9 |
|
| Operating loss |
$ |
(2.9 |
) |
|
(4.6 |
)% |
|
$ |
(5.3 |
) |
|
(9.3 |
)% |
|
Corporate |
|
|
|
| |
(Unaudited) |
| |
Three Months Ended |
| |
May 27,2022 |
|
May 28,2021 |
|
Operating expenses |
$ |
9.8 |
|
$ |
5.8 |
Webcast Steelcase will discuss first quarter
results and business outlook on a conference call at 8:30 a.m.
Eastern time tomorrow.
Non-GAAP Financial MeasuresThis earnings
release contains certain non-GAAP financial measures. A “non-GAAP
financial measure” is defined as a numerical measure of a company’s
financial performance that excludes or includes amounts so as to be
different than the most directly comparable measure calculated and
presented in accordance with GAAP in the condensed consolidated
statements of operations, balance sheets or statements of cash
flows of the company. The non-GAAP financial measures used are (1)
organic revenue growth, (2) adjusted operating income (loss), (3)
adjusted earnings (loss) per share and (4) adjusted EBITDA.
Pursuant to the requirements of Regulation G, the company has
provided a reconciliation of each of the non-GAAP financial
measures to the most directly comparable GAAP financial measure in
the tables above. These measures are supplemental to, and should be
used in conjunction with, the most comparable GAAP measures.
Management uses these non-GAAP financial measures to monitor and
evaluate financial results and trends.
Organic Revenue
GrowthThe company defines organic revenue growth as
revenue growth excluding the impact of acquisitions and
divestitures and foreign currency translation effects. Organic
revenue growth is calculated by adjusting prior year revenue to
include revenues of acquired companies prior to the date of the
company’s acquisition, to exclude revenues of divested companies
and to use current year average exchange rates in the calculation
of foreign-denominated revenue. The company believes organic
revenue growth is a meaningful metric to investors as it provides a
more consistent comparison of the company’s revenue to prior
periods as well as to industry peers.
Adjusted Operating Income
(Loss) and Adjusted Earnings (Loss) Per ShareThe company
defines adjusted operating income (loss) as operating income (loss)
excluding amortization of purchased intangible assets and
restructuring costs. The company defines adjusted earnings (loss)
per share as earnings (loss) per share excluding amortization of
purchased intangible assets and restructuring costs, net of related
income tax effects.
Amortization of purchased intangible
assets: The company may record intangible assets (such as backlog,
dealer relationships, trademarks, know-how and designs and
proprietary technology) when it acquires companies. The company
allocates the fair value of purchase consideration to net tangible
and intangible assets acquired based on their estimated fair
values. The fair value estimates for these intangible assets
require management to make significant estimates and assumptions,
which includes the useful lives of intangible assets. The company
believes that adjusting for amortization of purchased intangible
assets provides a more consistent comparison of its operating
performance to prior periods as well as to industry peers. As the
company’s business strategy in recent years has included an
increased number of acquisitions, intangible asset amortization has
become more significant. In Q1 2023, the company elected to begin
adjusting operating income (loss) and earnings (loss) per share for
amortization of purchased intangible assets, as it completed the
acquisition of Halcon Furniture LLC in early Q2 2023, which is
expected to make the company’s amortization of purchased intangible
assets more significant.
Restructuring costs: Restructuring
costs may be recorded as the company’s business strategies change
or in response to changing market trends and economic conditions.
The company believes that adjusting for restructuring costs, which
are primarily associated with business exit and workforce reduction
costs, provides a more consistent comparison of its operating
performance to prior periods as well as to industry peers.
Adjusted EBITDAThe
company defines adjusted EBITDA as earnings before interest, taxes,
depreciation and amortization (“EBITDA”) adjusted to exclude
share-based compensation and restructuring costs. The company
believes adjusted EBITDA provides investors with useful information
regarding the operating profitability of the company as well as a
useful comparison to other companies. EBITDA is a measurement
commonly used in capital markets to value companies and is used by
the company’s lenders and rating agencies to evaluate its
performance. The company adjusts EBITDA for share-based
compensation as it represents a significant non-cash item which
impacts its earnings. The company also adjusts EBITDA for
restructuring costs to provide a more consistent comparison of its
earnings to prior periods as well as to industry peers.
Forward-looking Statements From time to time,
in written and oral statements, the company discusses its
expectations regarding future events and its plans and objectives
for future operations. These forward-looking statements discuss
goals, intentions and expectations as to future trends, plans,
events, results of operations or financial condition, or state
other information relating to the company, based on current beliefs
of management as well as assumptions made by, and information
currently available to, the company. Forward-looking statements
generally are accompanied by words such as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “forecast,” “intend,” “may,”
“possible,” “potential,” “predict,” “project,” “target” or other
similar words, phrases or expressions. Although the company
believes these forward-looking statements are reasonable, they are
based upon a number of assumptions concerning future conditions,
any or all of which may ultimately prove to be inaccurate.
Forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements and vary from the
company’s expectations because of factors such as, but not limited
to, competitive and general economic conditions domestically and
internationally; acts of terrorism, war, governmental action,
natural disasters, pandemics and other Force Majeure events;
cyberattacks; the COVID-19 pandemic and the actions taken by
various governments and third parties to combat the pandemic;
changes in the legal and regulatory environment; changes in raw
material, commodity and other input costs; currency fluctuations;
changes in customer demand; and the other risks and contingencies
detailed in the company’s most recent Annual Report on
Form 10-K and its other filings with the Securities and
Exchange Commission. Steelcase undertakes no obligation to update,
amend, or clarify forward-looking statements, whether as a result
of new information, future events, or otherwise.
About Steelcase Inc.Organizations around the
world trust Steelcase to help them create workplaces that help
people work better, be inspired and accomplish more. The company
designs, manufactures and partners with other leading organizations
to provide architecture, furniture and technology solutions –
accessible through a network of channels, including over 800
Steelcase dealer locations. Steelcase is a global, industry-leading
and publicly traded company with fiscal 2022 revenue of $2.8
billion. For more information, visit www.steelcase.com.
|
|
|
STEELCASE INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) |
|
(in millions, except per share data) |
| |
|
|
|
|
|
Three Months Ended |
| |
May 27,2022 |
|
May 28,2021 |
|
Revenue |
$ |
740.7 |
|
|
$ |
556.6 |
|
| Cost of sales |
|
548.2 |
|
|
|
401.9 |
|
| Restructuring costs |
|
0.9 |
|
|
|
— |
|
|
Gross profit |
|
191.6 |
|
|
|
154.7 |
|
| Operating expenses |
|
200.9 |
|
|
|
186.5 |
|
| Restructuring costs |
|
3.3 |
|
|
|
— |
|
|
Operating loss |
|
(12.6 |
) |
|
|
(31.8 |
) |
| Interest expense |
|
(6.4 |
) |
|
|
(6.4 |
) |
| Investment income |
|
0.1 |
|
|
|
0.2 |
|
| Other income (expense),
net |
|
3.1 |
|
|
|
(0.8 |
) |
|
Loss before income tax benefit |
|
(15.8 |
) |
|
|
(38.8 |
) |
| Income tax benefit |
|
(4.4 |
) |
|
|
(10.7 |
) |
|
Net loss |
$ |
(11.4 |
) |
|
$ |
(28.1 |
) |
| |
|
|
|
| Earnings (loss) per
share: |
|
|
|
|
Basic |
$ |
(0.10 |
) |
|
$ |
(0.24 |
) |
|
Diluted |
$ |
(0.10 |
) |
|
$ |
(0.24 |
) |
| Weighted average shares
outstanding - basic |
|
116.7 |
|
|
|
118.3 |
|
| Weighted average shares
outstanding - diluted |
|
116.7 |
|
|
|
118.3 |
|
| |
|
|
|
| Dividends declared and paid
per common share |
$ |
0.145 |
|
|
$ |
0.100 |
|
|
STEELCASE INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(in millions) |
| |
(Unaudited) |
|
|
| |
May 27,2022 |
|
February 25,2022 |
|
ASSETS |
| Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
116.7 |
|
|
$ |
200.9 |
|
|
Accounts receivable, net of allowance of $8.2 and $8.0 |
|
349.0 |
|
|
|
340.4 |
|
|
Inventories |
|
372.0 |
|
|
|
326.2 |
|
|
Prepaid expenses |
|
29.8 |
|
|
|
24.0 |
|
|
Income taxes receivable |
|
16.4 |
|
|
|
41.7 |
|
|
Other current assets |
|
33.7 |
|
|
|
26.0 |
|
| Total current assets |
|
917.6 |
|
|
|
959.2 |
|
| |
|
|
|
| Property, plant and equipment,
net of accumulated depreciation of $1,086.7 and $1,089.0 |
|
383.2 |
|
|
|
392.8 |
|
| Company-owned life insurance
(“COLI”) |
|
162.8 |
|
|
|
168.0 |
|
| Deferred income taxes |
|
120.8 |
|
|
|
121.2 |
|
| Goodwill |
|
241.8 |
|
|
|
242.8 |
|
| Other intangible assets, net
of accumulated amortization of $88.7 and $86.4 |
|
79.6 |
|
|
|
85.5 |
|
| Investments in unconsolidated
affiliates |
|
53.1 |
|
|
|
53.1 |
|
| Right-of-use operating lease
assets |
|
199.1 |
|
|
|
209.8 |
|
| Other assets |
|
28.8 |
|
|
|
28.6 |
|
| Total assets |
$ |
2,186.8 |
|
|
$ |
2,261.0 |
|
| |
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
| Current liabilities: |
|
|
|
|
Accounts payable |
$ |
256.9 |
|
|
$ |
243.6 |
|
|
Short-term borrowings and current portion of long-term debt |
|
37.2 |
|
|
|
5.1 |
|
|
Current operating lease obligations |
|
43.2 |
|
|
|
44.2 |
|
|
Accrued expenses: |
|
|
|
|
Employee compensation |
|
61.9 |
|
|
|
75.6 |
|
|
Employee benefit plan obligations |
|
19.5 |
|
|
|
25.4 |
|
|
Accrued promotions |
|
30.3 |
|
|
|
32.9 |
|
|
Customer deposits |
|
49.5 |
|
|
|
53.4 |
|
|
Other |
|
88.8 |
|
|
|
87.0 |
|
| Total current liabilities |
|
587.3 |
|
|
|
567.2 |
|
| |
|
|
|
| Long-term liabilities: |
|
|
|
|
Long-term debt less current maturities |
|
445.2 |
|
|
|
477.4 |
|
|
Employee benefit plan obligations |
|
115.6 |
|
|
|
126.7 |
|
|
Long-term operating lease obligations |
|
172.2 |
|
|
|
182.2 |
|
|
Other long-term liabilities |
|
52.4 |
|
|
|
55.3 |
|
| Total long-term
liabilities |
|
785.4 |
|
|
|
841.6 |
|
| Total liabilities |
|
1,372.7 |
|
|
|
1,408.8 |
|
| |
|
|
|
| Shareholders’ equity: |
|
|
|
|
Additional paid-in capital |
|
10.3 |
|
|
|
1.5 |
|
|
Accumulated other comprehensive income (loss) |
|
(69.0 |
) |
|
|
(50.6 |
) |
|
Retained earnings |
|
872.8 |
|
|
|
901.3 |
|
| Total shareholders’
equity |
|
814.1 |
|
|
|
852.2 |
|
| Total liabilities and
shareholders’ equity |
$ |
2,186.8 |
|
|
$ |
2,261.0 |
|
|
STEELCASE INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited) |
|
(in millions) |
| |
|
|
|
|
|
Three Months Ended |
| |
May 27,2022 |
|
May 28,2021 |
| OPERATING
ACTIVITIES |
|
|
|
|
Net loss |
$ |
(11.4 |
) |
|
$ |
(28.1 |
) |
| Depreciation and
amortization |
|
20.2 |
|
|
|
20.7 |
|
| Share-based compensation |
|
12.2 |
|
|
|
13.1 |
|
| Restructuring costs |
|
4.2 |
|
|
|
— |
|
| Other |
|
(4.2 |
) |
|
|
(4.7 |
) |
| Changes in operating assets
and liabilities: |
|
|
|
|
Accounts receivable |
|
(14.5 |
) |
|
|
10.1 |
|
|
Inventories |
|
(50.6 |
) |
|
|
(34.2 |
) |
|
Income taxes receivable |
|
25.3 |
|
|
|
(9.5 |
) |
|
Other assets |
|
(13.2 |
) |
|
|
(4.6 |
) |
|
Accounts payable |
|
16.7 |
|
|
|
17.8 |
|
|
Employee compensation liabilities |
|
(18.5 |
) |
|
|
(36.0 |
) |
|
Employee benefit obligations |
|
(17.2 |
) |
|
|
(18.1 |
) |
|
Customer deposits |
|
(3.0 |
) |
|
|
8.4 |
|
|
Accrued expenses and other liabilities |
|
(1.1 |
) |
|
|
1.5 |
|
| Net cash used in operating
activities |
|
(55.1 |
) |
|
|
(63.6 |
) |
| |
|
|
|
| INVESTING
ACTIVITIES |
|
|
|
| Capital expenditures |
|
(13.6 |
) |
|
|
(18.4 |
) |
| Other |
|
6.3 |
|
|
|
5.4 |
|
| Net cash used in investing
activities |
|
(7.3 |
) |
|
|
(13.0 |
) |
| |
|
|
|
| FINANCING
ACTIVITIES |
|
|
|
| Dividends paid |
|
(17.1 |
) |
|
|
(12.1 |
) |
| Common stock repurchases |
|
(3.4 |
) |
|
|
(4.3 |
) |
| Other |
|
(0.2 |
) |
|
|
(0.4 |
) |
| Net cash used in financing
activities |
|
(20.7 |
) |
|
|
(16.8 |
) |
| Effect of exchange rate
changes on cash and cash equivalents |
|
(1.3 |
) |
|
|
0.3 |
|
| Net decrease in cash, cash
equivalents and restricted cash |
|
(84.4 |
) |
|
|
(93.1 |
) |
| Cash and cash equivalents and
restricted cash, beginning of period (1) |
|
207.0 |
|
|
|
495.6 |
|
| Cash and cash equivalents and
restricted cash, end of period (2) |
$ |
122.6 |
|
|
$ |
402.5 |
|
| |
|
|
|
|
|
|
|
(1) These amounts include restricted cash of
$6.1 and $5.8 as of February 25, 2022 and February 26,
2021, respectively.
(2) These amounts include restricted cash of
$5.9 and $5.3 as of May 27, 2022 and May 28, 2021,
respectively.
Restricted cash primarily represents funds held in escrow for
potential future workers’ compensation and product liability
claims. Restricted cash is included as part of Other assets on the
Condensed Consolidated Balance Sheets.
|
CONTACT: |
Investor Contact: |
| |
Mike O’Meara |
| |
Investor Relations |
| |
(616) 246 - 4251 |
| |
|
| |
Media Contact: |
| |
Katie Woodruff |
| |
Corporate Communications |
| |
(616) 915 - 8505 |
| |
|
| Source:
Steelcase |
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