Steelcase Inc. (NYSE: SCS) today reported second quarter revenue of
$863.3 million, net income of $19.6 million, or $0.17 per share,
and adjusted earnings per share of $0.21. In the prior year,
Steelcase reported revenue of $724.8 million and net income of
$24.7 million, or $0.21 per share, and had adjusted earnings per
share of $0.23.
Revenue and order growth (decline) compared to the prior year
were as follows:
| |
Q2 2023 vs. Q2 2022 |
| |
RevenueGrowth (Decline) |
|
Organic RevenueGrowth |
|
Organic OrderGrowth
(Decline) |
| |
|
|
|
|
|
|
Americas |
25 |
% |
|
21 |
% |
|
7 |
% |
| EMEA |
(1 |
)% |
|
12 |
% |
|
4 |
% |
| Other |
18 |
% |
|
21 |
% |
|
(8 |
)% |
| |
19 |
% |
|
20 |
% |
|
5 |
% |
The organic revenue growth in all segments was driven by a
strong beginning backlog and included significant pricing benefits.
Order growth in the Americas and EMEA was driven by pricing
benefits, partially offset by a decline in volume in the Americas.
The order decline in the Other category was driven by Asia Pacific
with broad-based volume declines in all markets except India which
continued its strong recovery from COVID-related restrictions in
the prior year.
"Our sales and dealer teams have delivered significantly higher
order growth than our industry in the Americas over the past year
and done an outstanding job implementing our necessary pricing
actions," said Sara Armbruster, president and CEO. "I want to thank
all of our employees for delivering better than expected earnings
this quarter by remaining diligent in combating supply chain
challenges and controlling operating expenses."
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 |
| |
|
August 26,2022 |
|
August 27,2021 |
|
August 26,2022 |
|
August 27,2021 |
|
Americas |
|
$ |
43.5 |
|
|
$ |
44.7 |
|
|
$ |
49.3 |
|
|
$ |
47.3 |
|
| EMEA |
|
|
(6.8 |
) |
|
|
(1.6 |
) |
|
|
(5.7 |
) |
|
|
(0.6 |
) |
| Other |
|
|
(1.3 |
) |
|
|
(4.2 |
) |
|
|
(1.3 |
) |
|
|
(4.2 |
) |
| Corporate |
|
|
(6.5 |
) |
|
|
(5.0 |
) |
|
|
(6.5 |
) |
|
|
(5.0 |
) |
| |
|
$ |
28.9 |
|
|
$ |
33.9 |
|
|
$ |
35.8 |
|
|
$ |
37.5 |
|
Operating income of $28.9 million in the second quarter
represented a decrease of $5.0 million compared to the prior year,
which included a $15.4 million gain from the sale of land.
Excluding the land gain in the prior year, the increase in
operating income was primarily driven by higher volume and higher
pricing benefits which improved gross margin, partially offset by
higher operating expenses.
Gross margin of 29.1 percent in the second quarter represented
an increase of 60 basis points compared to the prior year, with a
120 basis point improvement in the Americas, a 340 basis point
decline in EMEA and a 90 basis point improvement in the Other
category. Year-over-year pricing benefits of approximately $80
million exceeded year-over-year inflation by approximately $30
million. The improvement in the Americas was primarily due to
higher volume (in part driven by the seasonal strength of Smith
System), higher pricing benefits, net of inflation, and a favorable
inventory adjustment, partially offset by higher fixed overhead
costs and labor inefficiencies. The decline in EMEA was primarily
due to higher inflation, net of pricing benefits, and labor
inefficiencies. The improvement in the Other category was primarily
due to higher volume and higher pricing benefits, net of inflation,
partially offset by an unfavorable inventory adjustment.
"Inflation continues to be significant and has aggregated to
approximately $270 million over the last six quarters, but for the
first time since fiscal 2021, our year-over-year pricing benefits
exceeded inflation this quarter," said Dave Sylvester, senior vice
president and CFO. "Over the coming quarters, although inflationary
pressure is expected to remain, we anticipate the benefits from our
pricing actions will continue to accumulate and more fully offset
the cumulative inflationary costs we’ve incurred."
Operating expenses of $221.4 million in the second quarter
represented an increase of $48.5 million compared to the prior
year, which included a $15.4 million gain on sale of land. The
remaining increase was driven by $13.6 million of higher marketing,
product development and sales expenses, $8.4 million of higher
variable compensation, $7.9 million from acquisitions and $4.6
million of higher spending in other functional areas, partially
offset by $4.9 million of favorable currency translation
effects.
"In response to inflation and supply chain challenges throughout
this year, we have been pulling back on our planned level of
incremental spending while staying invested in our most critical
strategic initiatives,” said Dave Sylvester. “Due to
the recent volume decline in our incoming orders and lower than
expected return-to-office trends in the Americas, we are planning
to implement additional actions in the third quarter which target
further reduction of our planned level of spending.
These actions target approximately $20 million of annualized
spending and are expected to include the elimination of up to 180
salaried positions across the Americas core business and Corporate
functions."
Interest expense of $7.2 million in the second quarter
represented an increase of $0.8 million compared to the prior year,
primarily due to borrowings under the company's global credit
facility during the quarter.
Total liquidity, comprised of cash and cash equivalents and the
cash surrender value of company-owned life insurance, aggregated to
$213.9 million at the end of the second quarter. Total
debt was $563.5 million. Adjusted EBITDA for the
trailing four quarters was $154.1 million.
As previously announced, the company's acquisition of Halcon
Furniture LLC was completed on June 10, 2022, and was funded using
cash on hand and $68 million of borrowings under the company's
global credit facility.
The Board of Directors has declared a quarterly cash dividend of
$0.10 per share, to be paid on or before October 17, 2022, to
shareholders of record as of October 5, 2022.
"Based on the recent order and return-to-office trends, we
adjusted our dividend this quarter to strengthen our liquidity
profile and support a higher allocation of capital to reinvestment
in the business and pursuit of our longer-term strategy," said Dave
Sylvester.
Outlook
At the end of the second quarter, the company’s backlog of
customer orders was approximately $946 million, which was 38
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. Orders through
the first three weeks of the third quarter declined approximately
20% compared to the prior year. As a result, the company expects
third quarter fiscal 2023 revenue to be in the range of $825 to
$850 million. The company reported revenue of $738.2 million in the
third quarter of fiscal 2022. The projected revenue translates to
growth of 12 to 15 percent compared to the third quarter of fiscal
2022, or organic growth of 13 to 16 percent.
The company expects to report earnings per share of between
$0.08 to $0.12 for the third quarter of fiscal 2023 and adjusted
earnings per share of between $0.17 to $0.21. The estimates
includes:
- gross margin of between 29.0 to 29.5 percent, with projected
pricing benefits, net of inflation, of approximately $55 million as
compared to the prior year and sequentially unfavorable business
mix and lower manufacturing efficiency due to decreased production
volume,
- projected operating expenses of between $215 to $220 million,
which includes $7 million of amortization of purchased intangible
assets and an expected $7 million gain on sale of property,
- estimated restructuring charges of $8 million,
- projected interest expense, investment income and other income,
net, of approximately $5 million and
- a projected effective tax rate of 27 percent.
The company reported earnings per share of $0.08 and had
adjusted earnings per share of $0.10 in the prior
year.
"Our strategy remains unchanged, but we are shifting additional
effort to prioritize improvement in our profitability to fund
future investments and to add more diversification to the markets
and customers we serve," said Sara Armbruster. "Looking forward, we
continue to believe in the value of people coming together in
person to imagine, create, and achieve, which we believe will drive
investments to support new ways of working across all of the
markets we serve."
| |
|
|
|
|
|
|
|
|
|
|
|
| Business Segment
Results |
|
|
|
|
|
|
|
|
|
|
|
| (in millions) |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
(Unaudited) |
|
|
|
(Unaudited) |
|
|
| |
Three Months Ended |
|
|
|
Six Months Ended |
|
|
| |
August 26,2022 |
|
August 27,2021 |
|
% Change |
|
August 26,2022 |
|
August 27,2021 |
|
% Change |
| |
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Americas (1) |
$ |
651.6 |
|
$ |
523.3 |
|
25 |
% |
|
$ |
1,172.4 |
|
$ |
899.6 |
|
30 |
% |
| EMEA (2) |
|
137.8 |
|
|
138.9 |
|
(1 |
)% |
|
|
294.2 |
|
|
262.5 |
|
12 |
% |
| Other (3) |
|
73.9 |
|
|
62.6 |
|
18 |
% |
|
|
137.4 |
|
|
119.3 |
|
15 |
% |
| |
$ |
863.3 |
|
$ |
724.8 |
|
19 |
% |
|
$ |
1,604.0 |
|
$ |
1,281.4 |
|
25 |
% |
|
Revenue mix |
|
|
|
|
|
|
|
|
|
|
|
| Americas |
75.5 |
% |
72.2 |
% |
|
73.1 |
% |
|
70.2 |
% |
|
| EMEA |
16.0 |
% |
19.2 |
% |
|
18.3 |
% |
|
20.5 |
% |
|
| Other |
8.5 |
% |
8.6 |
% |
|
8.6 |
% |
|
9.3 |
% |
|
| Operating income
(loss) |
|
|
|
|
|
|
|
|
|
Americas |
$ |
43.5 |
|
|
$ |
44.7 |
|
|
$ |
42.3 |
|
|
$ |
29.7 |
|
|
| EMEA |
|
(6.8 |
) |
|
|
(1.6 |
) |
|
|
(5.5 |
) |
|
|
(7.3 |
) |
|
| Other |
|
(1.3 |
) |
|
|
(4.2 |
) |
|
|
(4.2 |
) |
|
|
(9.5 |
) |
|
| Corporate (4) |
|
(6.5 |
) |
|
|
(5.0 |
) |
|
|
(16.3 |
) |
|
|
(10.8 |
) |
|
| |
$ |
28.9 |
|
|
$ |
33.9 |
|
|
$ |
16.3 |
|
|
$ |
2.1 |
|
|
| |
|
|
|
|
|
|
|
|
| Operating income
margin |
|
3.3 |
% |
|
|
4.7 |
% |
|
|
1.0 |
% |
|
|
0.2 |
% |
|
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, Viccarbe and
Halcon 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 and
architectural 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 |
| Q2 2023 vs. Q2
2022 |
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
| |
Steelcase Inc. |
|
Americas |
|
EMEA |
|
Other category |
| |
|
|
|
|
|
|
|
|
Q2 2022 revenue |
$ |
724.8 |
|
|
$ |
523.3 |
|
|
$ |
138.9 |
|
|
$ |
62.6 |
|
| Acquisitions |
|
17.6 |
|
|
|
15.1 |
|
|
|
2.5 |
|
|
|
— |
|
| Currency translation
effects |
|
(20.3 |
) |
|
|
(0.7 |
) |
|
|
(18.1 |
) |
|
|
(1.5 |
) |
| Q2 2022 revenue, adjusted |
|
722.1 |
|
|
|
537.7 |
|
|
|
123.3 |
|
|
|
61.1 |
|
| |
|
|
|
|
|
|
|
| Q2 2023 revenue |
|
863.3 |
|
|
|
651.6 |
|
|
|
137.8 |
|
|
|
73.9 |
|
| Organic growth $ |
$ |
141.2 |
|
|
$ |
113.9 |
|
|
$ |
14.5 |
|
|
$ |
12.8 |
|
| Organic growth % |
|
20 |
% |
|
|
21 |
% |
|
|
12 |
% |
|
|
21 |
% |
| ADJUSTED
EARNINGS PER SHARE |
|
(Unaudited) |
|
|
|
|
| |
|
Three Months Ended |
| |
|
August 26,2022 |
|
August 27,2021 |
|
Earnings per share |
|
$ |
0.17 |
|
|
$ |
0.21 |
|
| Amortization of purchased
intangible assets, per share |
|
|
0.05 |
|
|
|
0.03 |
|
| Income tax effect of
amortization of purchased intangible assets, per share |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
| Restructuring costs, per
share |
|
|
— |
|
|
|
— |
|
| Income tax effect of
restructuring costs, per share |
|
|
— |
|
|
|
— |
|
| Adjusted earnings per
share |
|
$ |
0.21 |
|
|
$ |
0.23 |
|
| ADJUSTED
EBITDA |
|
(Unaudited) |
| |
Three Months Ended |
|
Trailing FourQuarters Ended |
| |
November 26,2021 |
|
February 25,2022 |
|
May 27,2022 |
|
August 26,2022 |
|
August 26,2022 |
|
Income (loss) before income tax expense |
$ |
12.0 |
|
|
$ |
(1.0 |
) |
|
$ |
(15.8 |
) |
|
$ |
26.4 |
|
$ |
21.6 |
| Interest expense |
|
6.5 |
|
|
|
6.4 |
|
|
|
6.4 |
|
|
|
7.2 |
|
|
26.5 |
| Depreciation and
amortization |
|
21.0 |
|
|
|
21.0 |
|
|
|
20.2 |
|
|
|
23.5 |
|
|
85.7 |
| Share-based compensation |
|
(2.0 |
) |
|
|
2.5 |
|
|
|
12.0 |
|
|
|
3.1 |
|
|
15.6 |
| Restructuring costs |
|
— |
|
|
|
— |
|
|
|
4.2 |
|
|
|
0.5 |
|
|
4.7 |
| Adjusted EBITDA |
$ |
37.5 |
|
|
$ |
28.9 |
|
|
$ |
27.0 |
|
|
$ |
60.7 |
|
$ |
154.1 |
|
PROJECTED ORGANIC REVENUE GROWTH |
|
|
|
|
|
|
|
| Q3 2023 vs. Q3
2022 |
|
|
|
|
|
|
| |
Steelcase Inc. |
|
|
|
|
| |
|
|
|
|
|
|
|
| Q3 2022 revenue |
$ |
738.2 |
|
|
|
|
|
| Acquisitions |
|
20.1 |
|
|
|
|
|
| Currency translation
effects |
|
(26.1 |
) |
|
|
|
|
| Q3 2022 revenue, adjusted |
$ |
732.2 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Q3 2023 revenue,
projected |
$ |
825 - 850 |
|
|
|
|
|
| Organic growth $ |
$ |
93 - 118 |
|
|
|
|
|
| Organic growth % |
|
13% - 16% |
|
|
|
|
|
| PROJECTED
ADJUSTED EARNINGS PER SHARE |
| |
|
Three Months Ended |
|
| |
|
November 25,2022 |
|
November 26,2021 |
|
| Earnings per share |
|
$ |
0.08 - 0.12 |
|
$ |
0.08 |
|
|
|
Amortization of purchased intangible assets, per share |
|
|
0.06 |
|
|
|
0.03 |
|
|
| Income tax effect of
amortization of purchased intangible assets, per share |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
| Restructuring costs, per
share |
|
|
0.07 |
|
|
|
— |
|
|
| Income tax effect of
restructuring costs, per share |
|
|
(0.02 |
) |
|
|
— |
|
|
| Adjusted earnings per
share |
|
$ |
0.17 - 0.21 |
|
$ |
0.10 |
|
|
| Steelcase
Inc. |
| |
(Unaudited) |
|
(Unaudited) |
| |
Three Months Ended |
|
Six Months Ended |
| |
August 26,2022 |
|
August 27,2021 |
|
August 26,2022 |
|
August 27,2021 |
|
Revenue |
$ |
863.3 |
|
|
100.0 |
% |
|
$ |
724.8 |
|
|
100.0 |
% |
|
$ |
1,604.0 |
|
|
100.0 |
% |
|
$ |
1,281.4 |
|
|
100.0 |
% |
| Cost of sales |
|
612.5 |
|
|
70.9 |
|
|
|
518.0 |
|
|
71.5 |
|
|
|
1,160.7 |
|
|
72.4 |
|
|
|
919.9 |
|
|
71.8 |
|
| Restructuring costs |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
0.9 |
|
|
— |
|
|
|
— |
|
|
— |
|
| Gross profit |
|
250.8 |
|
|
29.1 |
|
|
|
206.8 |
|
|
28.5 |
|
|
|
442.4 |
|
|
27.6 |
|
|
|
361.5 |
|
|
28.2 |
|
| Operating expenses |
|
221.4 |
|
|
25.7 |
|
|
|
172.9 |
|
|
23.8 |
|
|
|
422.3 |
|
|
26.3 |
|
|
|
359.4 |
|
|
28.0 |
|
| Restructuring costs |
|
0.5 |
|
|
0.1 |
|
|
|
— |
|
|
— |
|
|
|
3.8 |
|
|
0.3 |
|
|
|
— |
|
|
— |
|
| Operating income |
|
28.9 |
|
|
3.3 |
|
|
|
33.9 |
|
|
4.7 |
|
|
$ |
16.3 |
|
|
1.0 |
% |
|
$ |
2.1 |
|
|
0.2 |
% |
| Interest expense |
|
(7.2 |
) |
|
(0.8 |
) |
|
|
(6.4 |
) |
|
(0.9 |
) |
|
|
(13.6 |
) |
|
(0.8 |
) |
|
|
(12.8 |
) |
|
(1.0 |
) |
| Investment income |
|
0.3 |
|
|
— |
|
|
|
0.1 |
|
|
— |
|
|
|
0.4 |
|
|
— |
|
|
|
0.3 |
|
|
— |
|
| Other income, net |
|
4.4 |
|
|
0.6 |
|
|
|
1.8 |
|
|
0.2 |
|
|
|
7.5 |
|
|
0.5 |
|
|
|
1.0 |
|
|
0.1 |
|
| Income (loss) before income
tax expense (benefit) |
|
26.4 |
|
|
3.1 |
|
|
|
29.4 |
|
|
4.0 |
|
|
|
10.6 |
|
|
0.7 |
|
|
|
(9.4 |
) |
|
(0.7 |
) |
| Income tax expense
(benefit) |
|
6.8 |
|
|
0.8 |
|
|
|
4.7 |
|
|
0.6 |
|
|
|
2.4 |
|
|
0.2 |
|
|
|
(6.0 |
) |
|
(0.4 |
) |
| Net income (loss) |
$ |
19.6 |
|
|
2.3 |
% |
|
$ |
24.7 |
|
|
3.4 |
% |
|
$ |
8.2 |
|
|
0.5 |
% |
|
$ |
(3.4 |
) |
|
(0.3)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
$ |
28.9 |
|
|
3.3 |
% |
|
$ |
33.9 |
|
|
4.7 |
% |
|
$ |
16.3 |
|
|
1.0 |
% |
|
$ |
2.1 |
|
|
0.2 |
% |
| Amortization of purchased
intangible assets |
|
6.4 |
|
|
0.7 |
|
|
|
3.6 |
|
|
0.5 |
|
|
|
10.2 |
|
|
0.6 |
|
|
|
7.2 |
|
|
0.5 |
|
| Restructuring costs |
|
0.5 |
|
|
0.1 |
|
|
|
— |
|
|
— |
|
|
|
4.7 |
|
|
0.3 |
|
|
|
— |
|
|
— |
|
| Adjusted operating income |
$ |
35.8 |
|
|
4.1 |
% |
|
$ |
37.5 |
|
|
5.2 |
% |
|
$ |
31.2 |
|
|
1.9 |
% |
|
$ |
9.3 |
|
|
0.7 |
% |
|
Americas |
|
|
|
|
| |
(Unaudited) |
|
(Unaudited) |
| |
Three Months Ended |
|
Six Months Ended |
| |
August 26,2022 |
|
August 27,2021 |
|
August 26,2022 |
|
August 27,2021 |
|
Revenue |
$ |
651.6 |
|
100.0 |
% |
|
$ |
523.3 |
|
100.0 |
% |
|
$ |
1,172.4 |
|
100.0 |
% |
|
$ |
899.6 |
|
100.0 |
% |
| Cost of sales |
|
455.9 |
|
70.0 |
|
|
|
372.6 |
|
71.2 |
|
|
|
845.9 |
|
72.1 |
|
|
|
645.1 |
|
71.7 |
|
| Restructuring costs |
|
— |
|
— |
|
|
|
— |
|
— |
|
|
|
0.9 |
|
0.1 |
|
|
|
— |
|
— |
|
| Gross profit |
|
195.7 |
|
30.0 |
|
|
|
150.7 |
|
28.8 |
|
|
|
325.6 |
|
27.8 |
|
|
|
254.5 |
|
28.3 |
|
| Operating expenses |
|
151.7 |
|
23.2 |
|
|
|
106.0 |
|
20.3 |
|
|
|
279.5 |
|
23.9 |
|
|
|
224.8 |
|
25.0 |
|
| Restructuring costs |
|
0.5 |
|
0.1 |
|
|
|
— |
|
— |
|
|
|
3.8 |
|
0.3 |
|
|
|
— |
|
— |
|
| Operating income |
|
43.5 |
|
6.7 |
|
|
|
44.7 |
|
8.5 |
|
|
$ |
42.3 |
|
3.6 |
% |
|
$ |
29.7 |
|
3.3 |
% |
| Amortization of purchased
intangible assets |
|
5.3 |
|
0.8 |
|
|
|
2.6 |
|
0.5 |
|
|
|
7.9 |
|
0.7 |
|
|
|
5.2 |
|
0.6 |
|
| Restructuring costs |
|
0.5 |
|
0.1 |
|
|
|
— |
|
— |
|
|
|
4.7 |
|
0.4 |
|
|
|
— |
|
— |
|
| Adjusted operating income |
$ |
49.3 |
|
7.6 |
% |
|
$ |
47.3 |
|
9.0 |
% |
|
$ |
54.9 |
|
4.7 |
% |
|
$ |
34.9 |
|
3.9 |
% |
|
EMEA |
|
|
| |
(Unaudited) |
|
(Unaudited) |
| |
Three Months Ended |
|
Six Months Ended |
| |
August 26,2022 |
|
August 27,2021 |
|
August 26,2022 |
|
August 27,2021 |
|
Revenue |
$ |
137.8 |
|
|
100.0 |
% |
|
$ |
138.9 |
|
|
100.0 |
% |
|
$ |
294.2 |
|
|
100.0 |
% |
|
$ |
262.5 |
|
|
100.0 |
% |
| Cost of sales |
|
105.3 |
|
|
76.4 |
|
|
|
101.4 |
|
|
73.0 |
|
|
|
219.4 |
|
|
74.6 |
|
|
|
190.9 |
|
|
72.7 |
|
| Gross profit |
|
32.5 |
|
|
23.6 |
|
|
|
37.5 |
|
|
27.0 |
|
|
|
74.8 |
|
|
25.4 |
|
|
|
71.6 |
|
|
27.3 |
|
| Operating expenses |
|
39.3 |
|
|
28.5 |
|
|
|
39.1 |
|
|
28.2 |
|
|
|
80.3 |
|
|
27.3 |
|
|
|
78.9 |
|
|
30.1 |
|
| Operating loss |
|
(6.8 |
) |
|
(4.9 |
) |
|
|
(1.6 |
) |
|
(1.2 |
) |
|
$ |
(5.5 |
) |
|
(1.9 |
)% |
|
$ |
(7.3 |
) |
|
(2.8 |
)% |
| Amortization of purchased
intangible assets |
|
1.1 |
|
|
0.8 |
|
|
|
1.0 |
|
|
0.8 |
|
|
|
2.3 |
|
|
0.8 |
|
|
|
2.0 |
|
|
0.8 |
|
| Adjusted operating loss |
$ |
(5.7 |
) |
|
(4.1 |
)% |
|
$ |
(0.6 |
) |
|
(0.4 |
)% |
|
$ |
(3.2 |
) |
|
(1.1 |
)% |
|
$ |
(5.3 |
) |
|
(2.0 |
)% |
| Other
category |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(Unaudited) |
|
(Unaudited) |
| |
Three Months Ended |
|
Six Months Ended |
| |
August 26,2022 |
|
August 27,2021 |
|
August 26,2022 |
|
August 27,2021 |
|
Revenue |
$ |
73.9 |
|
|
100.0 |
% |
|
$ |
62.6 |
|
|
100.0 |
% |
|
$ |
137.4 |
|
|
100.0 |
% |
|
$ |
119.3 |
|
|
100.0 |
% |
| Cost of sales |
|
51.3 |
|
|
69.4 |
|
|
|
44.0 |
|
|
70.3 |
|
|
|
95.4 |
|
|
69.4 |
|
|
|
83.9 |
|
|
70.3 |
|
| Gross profit |
|
22.6 |
|
|
30.6 |
|
|
|
18.6 |
|
|
29.7 |
|
|
|
42.0 |
|
|
30.6 |
|
|
|
35.4 |
|
|
29.7 |
|
| Operating expenses |
|
23.9 |
|
|
32.4 |
|
|
|
22.8 |
|
|
36.4 |
|
|
|
46.2 |
|
|
33.7 |
|
|
|
44.9 |
|
|
37.7 |
|
| Operating loss |
$ |
(1.3 |
) |
|
(1.8 |
)% |
|
$ |
(4.2 |
) |
|
(6.7 |
)% |
|
$ |
(4.2 |
) |
|
(3.1 |
)% |
|
$ |
(9.5 |
) |
|
(8.0 |
)% |
|
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(Unaudited) |
|
(Unaudited) |
|
| |
Three Months Ended |
|
Six Months Ended |
|
| |
August 26,2022 |
|
August 27,2021 |
|
August 26,2022 |
|
August 27,2021 |
|
| Operating expenses |
$ |
6.5 |
|
$ |
5.0 |
|
$ |
16.3 |
|
$ |
10.8 |
|
Webcast Steelcase will discuss second 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 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 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 per
share as earnings 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 include 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.
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 |
|
Six Months Ended |
|
| |
August 26,2022 |
|
August 27,2021 |
|
August 26,2022 |
|
August 27,2021 |
|
|
Revenue |
$ |
863.3 |
|
|
$ |
724.8 |
|
|
$ |
1,604.0 |
|
|
$ |
1,281.4 |
|
|
| Cost of sales |
|
612.5 |
|
|
|
518.0 |
|
|
|
1,160.7 |
|
|
|
919.9 |
|
|
| Restructuring costs |
|
— |
|
|
|
— |
|
|
|
0.9 |
|
|
|
— |
|
|
|
Gross profit |
|
250.8 |
|
|
|
206.8 |
|
|
|
442.4 |
|
|
|
361.5 |
|
|
| Operating expenses |
|
221.4 |
|
|
|
172.9 |
|
|
|
422.3 |
|
|
|
359.4 |
|
|
| Restructuring costs |
|
0.5 |
|
|
|
— |
|
|
|
3.8 |
|
|
|
— |
|
|
|
Operating income |
|
28.9 |
|
|
|
33.9 |
|
|
|
16.3 |
|
|
|
2.1 |
|
|
| Interest expense |
|
(7.2 |
) |
|
|
(6.4 |
) |
|
|
(13.6 |
) |
|
|
(12.8 |
) |
|
| Investment income |
|
0.3 |
|
|
|
0.1 |
|
|
|
0.4 |
|
|
|
0.3 |
|
|
| Other income, net |
|
4.4 |
|
|
|
1.8 |
|
|
|
7.5 |
|
|
|
1.0 |
|
|
|
Income (loss) before income tax expense (benefit) |
|
26.4 |
|
|
|
29.4 |
|
|
|
10.6 |
|
|
|
(9.4 |
) |
|
| Income tax expense
(benefit) |
|
6.8 |
|
|
|
4.7 |
|
|
|
2.4 |
|
|
|
(6.0 |
) |
|
|
Net income (loss) |
$ |
19.6 |
|
|
$ |
24.7 |
|
|
$ |
8.2 |
|
|
$ |
(3.4 |
) |
|
| |
|
|
|
|
|
|
|
|
| Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.17 |
|
|
$ |
0.21 |
|
|
$ |
0.07 |
|
|
$ |
(0.03 |
) |
|
|
Diluted |
$ |
0.17 |
|
|
$ |
0.21 |
|
|
$ |
0.07 |
|
|
$ |
(0.03 |
) |
|
| Weighted average shares
outstanding - basic |
|
117.2 |
|
|
|
118.0 |
|
|
|
117.0 |
|
|
|
118.1 |
|
|
| Weighted average shares
outstanding - diluted |
|
117.7 |
|
|
|
118.6 |
|
|
|
117.5 |
|
|
|
118.1 |
|
|
| |
|
|
|
|
|
|
|
|
| Dividends declared and paid
per common share |
$ |
0.145 |
|
|
$ |
0.145 |
|
|
$ |
0.290 |
|
|
$ |
0.245 |
|
|
|
STEELCASE INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(in millions) |
| |
(Unaudited) |
|
|
| |
August 26,2022 |
|
February 25,2022 |
|
ASSETS |
| Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
52.2 |
|
|
$ |
200.9 |
|
|
Accounts receivable, net of allowance of $8.6 and $8.0 |
|
413.3 |
|
|
|
340.4 |
|
|
Inventories |
|
396.7 |
|
|
|
326.2 |
|
|
Prepaid expenses |
|
31.2 |
|
|
|
24.0 |
|
|
Income taxes receivable |
|
19.5 |
|
|
|
41.7 |
|
|
Other current assets |
|
40.0 |
|
|
|
26.0 |
|
| Total current assets |
|
952.9 |
|
|
|
959.2 |
|
| |
|
|
|
| Property, plant and equipment,
net of accumulated depreciation of $1,085.8 and $1,089.0 |
|
404.5 |
|
|
|
392.8 |
|
| Company-owned life insurance
("COLI") |
|
161.7 |
|
|
|
168.0 |
|
| Deferred income taxes |
|
114.6 |
|
|
|
121.2 |
|
| Goodwill |
|
277.0 |
|
|
|
242.8 |
|
| Other intangible assets, net
of accumulated amortization of $93.4 and $86.4 |
|
123.0 |
|
|
|
85.5 |
|
| Investments in unconsolidated
affiliates |
|
45.8 |
|
|
|
53.1 |
|
| Right-of-use operating lease
assets |
|
193.6 |
|
|
|
209.8 |
|
| Other assets |
|
29.5 |
|
|
|
28.6 |
|
| Total assets |
$ |
2,302.6 |
|
|
$ |
2,261.0 |
|
| |
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
| Current liabilities: |
|
|
|
|
Accounts payable |
$ |
274.2 |
|
|
$ |
243.6 |
|
|
Short-term borrowings and current portion of long-term debt |
|
118.1 |
|
|
|
5.1 |
|
|
Current operating lease obligations |
|
40.7 |
|
|
|
44.2 |
|
|
Accrued expenses: |
|
|
|
|
Employee compensation |
|
78.9 |
|
|
|
75.6 |
|
|
Employee benefit plan obligations |
|
22.0 |
|
|
|
25.4 |
|
|
Accrued promotions |
|
27.4 |
|
|
|
32.9 |
|
|
Customer deposits |
|
65.3 |
|
|
|
53.4 |
|
|
Other |
|
98.5 |
|
|
|
87.0 |
|
| Total current liabilities |
|
725.1 |
|
|
|
567.2 |
|
| |
|
|
|
| Long-term liabilities: |
|
|
|
|
Long-term debt less current maturities |
|
445.4 |
|
|
|
477.4 |
|
|
Employee benefit plan obligations |
|
111.4 |
|
|
|
126.7 |
|
|
Long-term operating lease obligations |
|
168.7 |
|
|
|
182.2 |
|
|
Other long-term liabilities |
|
52.6 |
|
|
|
55.3 |
|
| Total long-term
liabilities |
|
778.1 |
|
|
|
841.6 |
|
| Total liabilities |
|
1,503.2 |
|
|
|
1,408.8 |
|
| |
|
|
|
| Shareholders’ equity: |
|
|
|
|
Additional paid-in capital |
|
13.7 |
|
|
|
1.5 |
|
|
Accumulated other comprehensive income (loss) |
|
(89.8 |
) |
|
|
(50.6 |
) |
|
Retained earnings |
|
875.5 |
|
|
|
901.3 |
|
| Total shareholders’
equity |
|
799.4 |
|
|
|
852.2 |
|
| Total liabilities and
shareholders’ equity |
$ |
2,302.6 |
|
|
$ |
2,261.0 |
|
|
STEELCASE INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited) |
|
(in millions) |
| |
|
|
|
|
|
Six Months Ended |
| |
August 26,2022 |
|
August 27,2021 |
| OPERATING
ACTIVITIES |
|
|
|
|
Net income (loss) |
$ |
8.2 |
|
|
$ |
(3.4 |
) |
| Depreciation and
amortization |
|
43.7 |
|
|
|
41.2 |
|
| Share-based compensation |
|
15.6 |
|
|
|
15.2 |
|
| Restructuring costs |
|
4.7 |
|
|
|
— |
|
| Other |
|
(2.4 |
) |
|
|
(20.6 |
) |
| Changes in operating assets
and liabilities: |
|
|
|
|
Accounts receivable |
|
(83.6 |
) |
|
|
(58.0 |
) |
|
Inventories |
|
(67.4 |
) |
|
|
(42.0 |
) |
|
Income taxes receivable |
|
22.2 |
|
|
|
(2.2 |
) |
|
Other assets |
|
(21.2 |
) |
|
|
(18.1 |
) |
|
Accounts payable |
|
33.5 |
|
|
|
54.7 |
|
|
Employee compensation liabilities |
|
1.3 |
|
|
|
(30.7 |
) |
|
Employee benefit obligations |
|
(18.6 |
) |
|
|
(14.9 |
) |
|
Customer deposits |
|
(10.8 |
) |
|
|
14.0 |
|
|
Accrued expenses and other liabilities |
|
0.4 |
|
|
|
3.2 |
|
| Net cash used in operating
activities |
|
(74.4 |
) |
|
|
(61.6 |
) |
| |
|
|
|
| INVESTING
ACTIVITIES |
|
|
|
| Capital expenditures |
|
(28.9 |
) |
|
|
(31.8 |
) |
| Proceeds from disposal of
fixed assets |
|
5.6 |
|
|
|
16.8 |
|
| Acquisitions, net of cash
acquired |
|
(105.4 |
) |
|
|
— |
|
| Other |
|
13.4 |
|
|
|
8.5 |
|
| Net cash used in investing
activities |
|
(115.3 |
) |
|
|
(6.5 |
) |
| |
|
|
|
| FINANCING
ACTIVITIES |
|
|
|
| Dividends paid |
|
(34.0 |
) |
|
|
(29.2 |
) |
| Common stock repurchases |
|
(3.4 |
) |
|
|
(30.9 |
) |
| Borrowings on global committed
bank facility |
|
266.8 |
|
|
|
— |
|
| Repayments on global committed
bank facility |
|
(187.0 |
) |
|
|
— |
|
| Other |
|
0.9 |
|
|
|
0.2 |
|
| Net cash provided by (used in)
financing activities |
|
43.3 |
|
|
|
(59.9 |
) |
| Effect of exchange rate
changes on cash and cash equivalents |
|
(2.0 |
) |
|
|
(0.6 |
) |
| Net decrease in cash, cash
equivalents and restricted cash |
|
(148.4 |
) |
|
|
(128.6 |
) |
| 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) |
$ |
58.6 |
|
|
$ |
367.0 |
|
(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
$6.4 and $6.3 as of August 26, 2022 and August 27, 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 |
| SC-ERR |
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