Steelcase Inc. (NYSE: SCS) today reported first quarter revenue of
$727.3 million, net income of $10.9 million, or $0.09 per share,
and adjusted earnings per share of $0.16. In the prior year,
Steelcase reported revenue of $751.9 million, net income of $1.5
million, or $0.01 per share, and adjusted earnings per share of
$0.09.
Revenue decline and order growth compared to the prior year were
as follows:
| |
Q1 2025 vs. Q1 2024 |
| |
Revenue Decline |
|
|
Organic Revenue Decline |
|
|
Organic Order Growth |
| |
|
|
|
|
|
|
|
|
Americas |
(3 |
)% |
|
(1 |
)% |
|
10 |
% |
| International |
(3 |
)% |
|
(2 |
)% |
|
2 |
% |
| Steelcase Inc. |
(3 |
)% |
|
(1 |
)% |
|
8 |
% |
| |
|
|
|
|
|
|
|
Revenue decreased 3 percent in the first quarter compared to the
prior year, with a 3 percent decline in both the Americas and
International. On an organic basis, revenue decreased 1 percent,
with a 1 percent decline in the Americas and a 2 percent decline in
International. The Americas revenue was impacted by a lower
beginning backlog compared to the prior year (which was affected by
supply chain disruptions and extended delivery timeframes),
partially offset by order growth.
Orders (adjusted for the impact of a divestiture and currency
translation effects) grew 8 percent in the first quarter compared
to the prior year, including 10 percent growth in the Americas and
2 percent growth in International. The order growth in the Americas
was primarily driven by project business with large corporate
customers and our education business. The order growth in
International was driven by 4 percent growth in EMEA, partially
offset by a 3 percent decline in Asia Pacific. The growth in EMEA
reflected growth in most markets and a decline in Germany, and the
decline in Asia Pacific included declines in most markets partially
offset by strong growth in India.
“We are pleased with our first quarter results, which reflected
higher than expected adjusted earnings improvement and 10% order
growth in the Americas,” said Sara Armbruster, president and CEO.
“Similar to the prior two quarters, our order growth was driven by
our large corporate customers, as companies make investments in
their office space to support the transformation of work and other
workplace strategies. Additionally, we're excited about our
education business, which delivered strong first quarter order
growth at the start of the peak education season.”
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 24,2024 |
|
May 26,2023 |
|
May 24,2024 |
|
May 26,2023 |
|
Americas |
$ |
18.5 |
|
|
$ |
19.8 |
|
|
$ |
25.9 |
|
$ |
24.2 |
|
| International |
|
(0.9 |
) |
|
|
(12.5 |
) |
|
|
2.3 |
|
|
(4.5 |
) |
| |
$ |
17.6 |
|
|
$ |
7.3 |
|
|
$ |
28.2 |
|
$ |
19.7 |
|
| |
Operating income of $17.6 million in the first quarter
represented an increase of $10.3 million compared to the prior
year, and adjusted operating income of $28.2 million in the first
quarter represented an increase of $8.5 million compared to the
prior year. The increase was primarily due to gross margin
improvement, partially offset by the impact of lower volume.
The company recorded $6.3 million of restructuring costs in the
first quarter, which included $4.3 million of costs in the Americas
related to cost improvement initiatives and $2.0 million of costs
in International related to the closure of a distribution center
and other efforts to improve operational effectiveness.
“Our International segment delivered nearly $7 million of
year-over-year improvement in adjusted operating results despite
lower revenue, driven in part by the benefits from our prior year
restructuring actions,” said Dave Sylvester, senior vice president
and CFO. “Our teams have continued to make adjustments to lower our
cost structure in certain International markets as we manage
through the current demand environment.”
Gross margin of 32.2 percent in the first quarter included $7.0
million of restructuring costs compared to $1.4 million of
restructuring costs in the first quarter of the prior year.
Excluding restructuring costs, gross margin improved 180 basis
points compared to the prior year driven by pricing benefits,
partially offset by the impacts of lower volume.
Operating expenses of $217.5 million in the first quarter
represented a decrease of $3.1 million compared to the prior year.
The decrease was driven by $7.0 million of lower spending in
various functional areas and employee costs in International and
$4.3 million from a divestiture, partially offset by $3.7 million
of higher variable compensation expense and $3.4 million of higher
information technology costs primarily related to the company's
business transformation initiative.
The company recorded income tax expense of $3.2 million in the
first quarter, which represented an effective tax rate of
approximately 23 percent and included $0.5 million of discrete tax
benefits.
Total liquidity, which is comprised of cash and cash
equivalents, short-term investments and the cash surrender value of
company-owned life insurance, aggregated to $377.8 million at the
end of the first quarter, and represented an increase of $177.9
million compared to the prior year. Total debt was $446.5 million.
Trailing four quarter adjusted EBITDA of $273.6 million (or 8.7
percent of revenue) represented an increase of 17 percent compared
to the prior year.
During the first quarter, the company repurchased 1.5 million
shares of its Class A Common Stock under its repurchase
authorization for a total cost of $18.7 million. A total of $87.7
million remained under the company's share repurchase authorization
at the end of the first quarter.
The Board of Directors has declared a quarterly cash dividend of
$0.10 per share, to be paid on or before July 15, 2024, to
shareholders of record as of July 3, 2024.
Outlook
At the end of the first quarter, the company’s backlog was
approximately $764 million, which was 1 percent higher than the
prior year. The company expects second quarter fiscal 2025 revenue
to be in the range of $850 to $875 million. The company reported
revenue of $854.6 million in the second quarter of fiscal 2024. The
projected revenue range translates to a decline of 1 percent to
growth of 2 percent compared to the prior year, or organic growth
of 1 to 4 percent.
The company expects to report earnings per share of between
$0.33 to $0.37 for the second quarter of fiscal 2025 and adjusted
earnings per share of between $0.36 to $0.40. The company reported
earnings per share of $0.23 and adjusted earnings per share of
$0.31 in the second quarter of fiscal 2024.
The second quarter estimates include:
- gross margin of approximately 35 percent,
- projected operating expenses of between $240 to $245 million,
which includes $4.3 million of amortization of purchased intangible
assets,
- projected interest expense, net of investment income and other
income, net, of approximately $3 million and
- a projected effective tax rate of 27 percent.
“In March, we communicated our financial targets for fiscal
2025, which included organic revenue growth of 1 to 5 percent
compared to fiscal 2024, adjusted operating income of between $150
to $175 million and adjusted earnings per share of between $0.85 to
$1.00," said Dave Sylvester. “With the strength of our first
quarter results and second quarter outlook, we have increased
confidence of achieving our targets and potentially reaching the
higher end of the range for our income targets assuming relatively
stable macroeconomic and geopolitical environments.”
“I'm encouraged by the number of customers from around the world
we met with at the recent NeoCon trade show who are looking to us
for help to energize and rejuvenate their offices,” said Sara
Armbruster. “We believe our solutions are resonating as evidenced
by our continued strong win rates and three consecutive quarters of
year-over-year order growth.”
| Business Segment
Results |
|
|
|
|
|
|
| (in millions) |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
(Unaudited) |
|
|
|
| |
Three Months Ended |
|
|
|
| |
May 24,2024 |
|
May 26,2023 |
|
% Change |
|
| |
|
|
|
|
|
|
| Revenue |
|
|
|
|
|
|
|
Americas (1) |
$ |
554.4 |
|
$ |
572.8 |
|
(3)% |
|
| International (2) |
|
172.9 |
|
|
179.1 |
|
(3)% |
|
| |
$ |
727.3 |
|
$ |
751.9 |
|
(3)% |
|
| Revenue
mix |
|
|
|
|
|
Americas |
76.2 |
% |
|
76.2 |
% |
|
| International |
23.8 |
% |
|
23.8 |
% |
|
| Operating income
(loss) |
|
|
|
|
|
Americas |
$ |
18.5 |
|
|
$ |
19.8 |
|
|
| International |
|
(0.9 |
) |
|
|
(12.5 |
) |
|
| |
$ |
17.6 |
|
|
$ |
7.3 |
|
|
| |
|
|
|
|
| Operating
margin |
|
2.4 |
% |
|
|
1.0 |
% |
|
| |
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, architectural, textile and surface imaging products
that are marketed to corporate, government, healthcare, education
and retail customers primarily through the Steelcase, AMQ,
Coalesse, Designtex, HALCON, Orangebox, Smith System and Viccarbe
brands.
- The International segment serves customers in EMEA and Asia
Pacific with a comprehensive portfolio of furniture and
architectural products that are marketed to corporate, government,
healthcare, education and retail customers primarily through the
Steelcase, Coalesse, Orangebox, Smith System and Viccarbe
brands.
| QUARTER
OVER QUARTER ORGANIC REVENUE GROWTH (DECLINE) BY
SEGMENT |
| Q1 2025 vs. Q1
2024 |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
| |
Steelcase Inc. |
|
Americas |
|
International |
|
| |
|
|
|
|
|
|
|
Q1 2024 revenue |
$ |
751.9 |
|
|
$ |
572.8 |
|
|
$ |
179.1 |
|
|
| Divestiture |
|
(12.4 |
) |
|
|
(12.4 |
) |
|
|
— |
|
|
| Currency translation
effects |
|
(3.1 |
) |
|
|
(0.2 |
) |
|
|
(2.9 |
) |
|
| Q1 2024 revenue, adjusted |
$ |
736.4 |
|
|
$ |
560.2 |
|
|
$ |
176.2 |
|
|
| |
|
|
|
|
|
|
| Q1 2025 revenue |
$ |
727.3 |
|
|
$ |
554.4 |
|
|
$ |
172.9 |
|
|
| Organic growth (decline)
$ |
$ |
(9.1 |
) |
|
$ |
(5.8 |
) |
|
$ |
(3.3 |
) |
|
| Organic growth (decline)
% |
(1 |
)% |
|
(1 |
)% |
|
(2 |
)% |
|
| ADJUSTED
EARNINGS PER SHARE |
|
(Unaudited) |
(Unaudited) |
|
| |
Three Months Ended |
|
| |
May 24,2024 |
|
May 26,2023 |
|
|
Earnings per share |
$ |
0.09 |
|
|
$ |
0.01 |
|
|
| Amortization of purchased
intangible assets, per share |
|
0.04 |
|
|
|
0.04 |
|
|
| Income tax effect of
amortization of purchased intangible assets, per share |
|
(0.01 |
) |
|
|
(0.01 |
) |
|
| Restructuring costs, per
share |
|
0.05 |
|
|
|
0.07 |
|
|
| Income tax effect of
restructuring costs, per share |
|
(0.01 |
) |
|
|
(0.02 |
) |
|
| Adjusted earnings per
share |
$ |
0.16 |
|
|
$ |
0.09 |
|
|
| ADJUSTED
EBITDA |
|
(Unaudited) |
| |
Three Months Ended |
|
Trailing FourQuarters Ended |
| |
August 25,2023 |
|
November 24,2023 |
|
February 23,2024 |
|
May 24,2024 |
|
May 24,2024 |
|
Net income |
$ |
27.5 |
|
|
$ |
30.8 |
|
|
$ |
21.3 |
|
|
$ |
10.9 |
|
|
$ |
90.5 |
|
| Income tax expense |
|
9.5 |
|
|
|
9.8 |
|
|
|
5.3 |
|
|
|
3.2 |
|
|
|
27.8 |
|
| Interest expense |
|
6.6 |
|
|
|
6.4 |
|
|
|
6.3 |
|
|
|
6.2 |
|
|
|
25.5 |
|
| Depreciation and
amortization |
|
21.3 |
|
|
|
21.1 |
|
|
|
20.8 |
|
|
|
20.2 |
|
|
|
83.4 |
|
| Share-based compensation |
|
4.2 |
|
|
|
3.4 |
|
|
|
3.6 |
|
|
|
14.5 |
|
|
|
25.7 |
|
| Restructuring costs |
|
7.9 |
|
|
|
2.1 |
|
|
|
4.4 |
|
|
|
6.3 |
|
|
|
20.7 |
|
| Adjusted EBITDA |
$ |
77.0 |
|
|
$ |
73.6 |
|
|
$ |
61.7 |
|
|
$ |
61.3 |
|
|
$ |
273.6 |
|
| |
|
|
|
|
|
|
|
|
|
| Revenue |
$ |
854.6 |
|
|
$ |
777.9 |
|
|
$ |
775.2 |
|
|
$ |
727.3 |
|
|
$ |
3,135.0 |
|
| Adjusted EBITDA as a
percentage of revenue |
|
9.0 |
% |
|
|
9.5 |
% |
|
|
8.0 |
% |
|
|
8.4 |
% |
|
|
8.7 |
% |
| ADJUSTED
EBITDA |
|
(Unaudited) |
| |
Three Months Ended |
|
Trailing FourQuarters Ended |
| |
August 26,2022 |
|
November 25,2022 |
|
February 24,2023 |
|
May 26,2023 |
|
May 26,2023 |
|
Net income |
$ |
19.6 |
|
|
$ |
11.4 |
|
|
$ |
15.7 |
|
|
$ |
1.5 |
|
|
$ |
48.2 |
|
| Income tax expense |
|
6.8 |
|
|
|
5.2 |
|
|
|
8.7 |
|
|
|
1.4 |
|
|
|
22.1 |
|
| Interest expense |
|
7.2 |
|
|
|
7.6 |
|
|
|
7.2 |
|
|
|
6.6 |
|
|
|
28.6 |
|
| Depreciation and
amortization |
|
23.5 |
|
|
|
23.5 |
|
|
|
22.8 |
|
|
|
20.4 |
|
|
|
90.2 |
|
| Share-based compensation |
|
3.1 |
|
|
|
2.1 |
|
|
|
3.6 |
|
|
|
13.7 |
|
|
|
22.5 |
|
| Restructuring costs |
|
0.5 |
|
|
|
10.6 |
|
|
|
3.9 |
|
|
|
8.1 |
|
|
|
23.1 |
|
| Adjusted EBITDA |
$ |
60.7 |
|
|
$ |
60.4 |
|
|
$ |
61.9 |
|
|
$ |
51.7 |
|
|
$ |
234.7 |
|
| |
|
|
|
|
|
|
|
|
|
| Revenue |
$ |
863.3 |
|
|
$ |
826.9 |
|
|
$ |
801.7 |
|
|
$ |
751.9 |
|
|
$ |
3,243.8 |
|
| Adjusted EBITDA as a
percentage of revenue |
|
7.0 |
% |
|
|
7.3 |
% |
|
|
7.7 |
% |
|
|
6.9 |
% |
|
|
7.2 |
% |
| PROJECTED
ORGANIC REVENUE GROWTH |
| Q2 2025 vs. Q2
2024 |
|
|
|
|
| |
Steelcase Inc. |
|
| |
|
|
|
|
Q2 2024 revenue |
$ |
|
854.6 |
|
|
| Divestiture |
|
|
(12.2 |
) |
|
| Currency translation
effects |
|
|
(2.3 |
) |
|
| Q2 2024 revenue, adjusted |
$ |
|
840.1 |
|
|
| |
|
|
|
|
| Q2 2025 revenue,
projected |
$ |
850 - 875 |
|
| Organic growth $ |
$ |
10 - 35 |
|
| Organic growth % |
|
1 - 4 |
% |
| PROJECTED
ADJUSTED EARNINGS PER SHARE |
| |
Three Months Ended |
|
| |
August 23,2024 |
|
August 25,2023 |
|
| Earnings per share |
$ |
0.33 - 0.37 |
|
|
$ |
0.23 |
|
|
|
Amortization of purchased intangible assets, per share |
|
0.04 |
|
|
|
0.03 |
|
|
| Income tax effect of
amortization of purchased intangible assets, per share |
|
(0.01 |
) |
|
|
(0.01 |
) |
|
| Restructuring costs, per
share |
|
— |
|
|
|
0.07 |
|
|
| Income tax effect of
restructuring costs, per share |
|
— |
|
|
|
(0.01 |
) |
|
| Adjusted earnings per
share |
$ |
0.36 - 0.40 |
|
|
$ |
0.31 |
|
|
| Steelcase
Inc. |
|
|
|
|
|
|
|
|
| |
(Unaudited) |
|
| |
Three Months Ended |
|
| |
May 24,2024 |
|
May 26,2023 |
|
|
Revenue |
$ |
727.3 |
|
|
100.0 |
% |
|
$ |
751.9 |
|
|
100.0 |
% |
|
| Cost of sales |
|
485.9 |
|
|
66.8 |
|
|
|
515.9 |
|
|
68.6 |
|
|
| Restructuring costs |
|
7.0 |
|
|
1.0 |
|
|
|
1.4 |
|
|
0.2 |
|
|
| Gross profit |
|
234.4 |
|
|
32.2 |
|
|
|
234.6 |
|
|
31.2 |
|
|
| Operating expenses |
|
217.5 |
|
|
29.9 |
|
|
|
220.6 |
|
|
29.3 |
|
|
| Restructuring costs
(benefits) |
|
(0.7 |
) |
|
(0.1 |
) |
|
|
6.7 |
|
|
0.9 |
|
|
| Operating income |
|
17.6 |
|
|
2.4 |
|
|
|
7.3 |
|
|
1.0 |
|
|
| Interest expense |
|
(6.2 |
) |
|
(0.8 |
) |
|
|
(6.6 |
) |
|
(0.9 |
) |
|
| Investment income |
|
2.4 |
|
|
0.3 |
|
|
|
0.5 |
|
|
0.1 |
|
|
| Other income, net |
|
0.3 |
|
|
— |
|
|
|
1.7 |
|
|
0.2 |
|
|
| Income before income tax
expense |
|
14.1 |
|
|
1.9 |
|
|
|
2.9 |
|
|
0.4 |
|
|
| Income tax expense |
|
3.2 |
|
|
0.4 |
|
|
|
1.4 |
|
|
0.2 |
|
|
| Net income |
$ |
10.9 |
|
|
1.5 |
% |
|
$ |
1.5 |
|
|
0.2 |
% |
|
| |
|
|
|
|
|
|
|
|
| Operating income |
$ |
17.6 |
|
|
2.4 |
% |
|
$ |
7.3 |
|
|
1.0 |
% |
|
| Amortization of purchased
intangible assets |
|
4.3 |
|
|
0.6 |
|
|
|
4.3 |
|
|
0.5 |
|
|
| Restructuring costs |
|
6.3 |
|
|
0.9 |
|
|
|
8.1 |
|
|
1.1 |
|
|
| Adjusted operating income |
$ |
28.2 |
|
|
3.9 |
% |
|
$ |
19.7 |
|
|
2.6 |
% |
|
| Americas |
|
|
|
|
|
|
|
|
| |
(Unaudited) |
|
| |
Three Months Ended |
|
| |
May 24,2024 |
|
May 26,2023 |
|
|
Revenue |
$ |
554.4 |
|
100.0 |
% |
|
$ |
572.8 |
|
100.0 |
% |
|
| Cost of sales |
|
364.9 |
|
65.8 |
|
|
|
388.6 |
|
67.8 |
|
|
| Restructuring costs |
|
4.1 |
|
0.8 |
|
|
|
0.6 |
|
0.1 |
|
|
| Gross profit |
|
185.4 |
|
33.4 |
|
|
|
183.6 |
|
32.1 |
|
|
| Operating expenses |
|
166.7 |
|
30.1 |
|
|
|
163.1 |
|
28.5 |
|
|
| Restructuring costs |
|
0.2 |
|
— |
|
|
|
0.7 |
|
0.1 |
|
|
| Operating income |
|
18.5 |
|
3.3 |
|
|
|
19.8 |
|
3.5 |
|
|
| Amortization of purchased
intangible assets |
|
3.1 |
|
0.6 |
|
|
|
3.1 |
|
0.5 |
|
|
| Restructuring costs |
|
4.3 |
|
0.8 |
|
|
|
1.3 |
|
0.2 |
|
|
| Adjusted operating income |
$ |
25.9 |
|
4.7 |
% |
|
$ |
24.2 |
|
4.2 |
% |
|
|
International |
|
|
|
|
|
|
|
|
| |
(Unaudited) |
|
| |
Three Months Ended |
|
| |
May 24,2024 |
|
May 26,2023 |
|
|
Revenue |
$ |
172.9 |
|
|
100.0 |
% |
|
$ |
179.1 |
|
|
100.0 |
% |
|
| Cost of sales |
|
121.0 |
|
|
70.0 |
|
|
|
127.3 |
|
|
71.1 |
|
|
| Restructuring costs |
|
2.9 |
|
|
1.7 |
|
|
|
0.8 |
|
|
0.4 |
|
|
| Gross profit |
|
49.0 |
|
|
28.3 |
|
|
|
51.0 |
|
|
28.5 |
|
|
| Operating expenses |
|
50.8 |
|
|
29.3 |
|
|
|
57.5 |
|
|
32.1 |
|
|
| Restructuring costs
(benefits) |
|
(0.9 |
) |
|
(0.5 |
) |
|
|
6.0 |
|
|
3.4 |
|
|
| Operating income (loss) |
|
(0.9 |
) |
|
(0.5 |
) |
|
|
(12.5 |
) |
|
(7.0 |
) |
|
| Amortization of purchased
intangible assets |
|
1.2 |
|
|
0.6 |
|
|
|
1.2 |
|
|
0.7 |
|
|
| Restructuring costs |
|
2.0 |
|
|
1.2 |
|
|
|
6.8 |
|
|
3.8 |
|
|
| Adjusted operating income
(loss) |
$ |
2.3 |
|
|
1.3 |
% |
|
$ |
(4.5 |
) |
|
(2.5 |
)% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Webcast Steelcase will discuss first quarter
results and business outlook on a conference call at 8:30 a.m.
Eastern time.
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 income, balance sheets or statements of cash flows of
the company. The non-GAAP financial measures used are (1) organic
revenue growth (decline), (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 Growth
(Decline)The company defines organic revenue growth
(decline) as revenue growth (decline) excluding the impact of
acquisitions and divestitures and foreign currency translation
effects. Organic revenue growth (decline) 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 (decline) 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.
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; 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.
Established in 1912, Steelcase is a global design, research and
thought leader in the world of work. We help people do their best
work by creating places that work better. Along with more than 30
creative and technology partner brands, we design and manufacture
furnishings and solutions for the many places where work happens —
including learning, health and work from home. Our solutions come
to life through our community of expert Steelcase dealers in
approximately 770 locations, as well as our online Steelcase store
and other retail partners. Founded in Grand Rapids, Michigan,
Steelcase is a publicly traded company with fiscal year 2024
revenue of $3.2 billion. With approximately 11,300 global employees
and our dealer community, we come together for people and the
planet — using our business to help the world work better.
|
STEELCASE INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) |
|
(in millions, except per share data) |
| |
|
|
|
|
|
|
Three Months Ended |
|
| |
May 24,2024 |
|
May 26,2023 |
|
|
Revenue |
$ |
727.3 |
|
|
$ |
751.9 |
|
|
| Cost of sales |
|
485.9 |
|
|
|
515.9 |
|
|
| Restructuring costs |
|
7.0 |
|
|
|
1.4 |
|
|
|
Gross profit |
|
234.4 |
|
|
|
234.6 |
|
|
| Operating expenses |
|
217.5 |
|
|
|
220.6 |
|
|
| Restructuring costs
(benefits) |
|
(0.7 |
) |
|
|
6.7 |
|
|
|
Operating income |
|
17.6 |
|
|
|
7.3 |
|
|
| Interest expense |
|
(6.2 |
) |
|
|
(6.6 |
) |
|
| Investment income |
|
2.4 |
|
|
|
0.5 |
|
|
| Other income, net |
|
0.3 |
|
|
|
1.7 |
|
|
|
Income before income tax expense |
|
14.1 |
|
|
|
2.9 |
|
|
| Income tax expense |
|
3.2 |
|
|
|
1.4 |
|
|
|
Net income |
$ |
10.9 |
|
|
$ |
1.5 |
|
|
| |
|
|
|
|
| Earnings per share: |
|
|
|
|
|
Basic |
$ |
0.09 |
|
|
$ |
0.01 |
|
|
|
Diluted |
$ |
0.09 |
|
|
$ |
0.01 |
|
|
| Weighted average shares
outstanding - basic |
|
118.4 |
|
|
|
117.9 |
|
|
| Weighted average shares
outstanding - diluted |
|
119.1 |
|
|
|
118.4 |
|
|
| |
|
|
|
|
| Dividends declared and paid
per common share |
$ |
0.100 |
|
|
$ |
0.100 |
|
|
| |
|
STEELCASE INC. |
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
(in millions) |
|
| |
(Unaudited) |
|
|
|
| |
May 24,2024 |
|
February 23,2024 |
|
|
ASSETS |
|
| Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
173.2 |
|
|
$ |
318.6 |
|
|
|
Short-term investments |
|
35.7 |
|
|
|
— |
|
|
|
Accounts receivable, net of allowance of $5.8 and $6.2 |
|
324.5 |
|
|
|
338.3 |
|
|
|
Inventories, net |
|
247.6 |
|
|
|
231.0 |
|
|
|
Prepaid expenses |
|
39.5 |
|
|
|
31.9 |
|
|
|
Other current assets |
|
41.7 |
|
|
|
39.6 |
|
|
| Total current assets |
|
862.2 |
|
|
|
959.4 |
|
|
| |
|
|
|
|
| Property, plant and equipment,
net of accumulated depreciation of $1,126.6 and $1,119.2 |
|
348.2 |
|
|
|
352.9 |
|
|
| Company-owned life insurance
("COLI") |
|
168.9 |
|
|
|
166.9 |
|
|
| Deferred income taxes |
|
115.2 |
|
|
|
115.8 |
|
|
| Goodwill |
|
274.7 |
|
|
|
274.8 |
|
|
| Other intangible assets, net
of accumulated amortization of $119.3 and $115.0 |
|
90.5 |
|
|
|
94.6 |
|
|
| Investments in unconsolidated
affiliates |
|
55.5 |
|
|
|
55.7 |
|
|
| Right-of-use operating lease
assets |
|
151.9 |
|
|
|
168.6 |
|
|
| Other assets |
|
60.3 |
|
|
|
48.0 |
|
|
| Total assets |
$ |
2,127.4 |
|
|
$ |
2,236.7 |
|
|
| |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
| Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
224.6 |
|
|
$ |
211.3 |
|
|
|
Current operating lease obligations |
|
41.7 |
|
|
|
45.1 |
|
|
|
Employee compensation |
|
92.5 |
|
|
|
166.1 |
|
|
|
Employee benefit plan obligations |
|
21.3 |
|
|
|
39.9 |
|
|
|
Accrued promotions |
|
19.7 |
|
|
|
19.4 |
|
|
|
Customer deposits |
|
47.4 |
|
|
|
44.8 |
|
|
|
Other current liabilities |
|
87.9 |
|
|
|
80.5 |
|
|
| Total current liabilities |
|
535.1 |
|
|
|
607.1 |
|
|
| |
|
|
|
|
| Long-term liabilities: |
|
|
|
|
|
Long-term debt |
|
446.5 |
|
|
|
446.3 |
|
|
|
Employee benefit plan obligations |
|
98.0 |
|
|
|
104.5 |
|
|
|
Long-term operating lease obligations |
|
122.8 |
|
|
|
138.6 |
|
|
|
Other long-term liabilities |
|
51.9 |
|
|
|
53.1 |
|
|
| Total long-term
liabilities |
|
719.2 |
|
|
|
742.5 |
|
|
| Total liabilities |
|
1,254.3 |
|
|
|
1,349.6 |
|
|
| |
|
|
|
|
| Shareholders’ equity: |
|
|
|
|
|
Additional paid-in capital |
|
28.3 |
|
|
|
41.2 |
|
|
|
Accumulated other comprehensive income (loss) |
|
(66.6 |
) |
|
|
(66.9 |
) |
|
|
Retained earnings |
|
911.4 |
|
|
|
912.8 |
|
|
| Total shareholders’
equity |
|
873.1 |
|
|
|
887.1 |
|
|
| Total liabilities and
shareholders’ equity |
$ |
2,127.4 |
|
|
$ |
2,236.7 |
|
|
| |
|
STEELCASE INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) |
|
(in millions) |
| |
|
|
|
|
|
Three Months Ended |
| |
May 24,2024 |
|
May 26,2023 |
| OPERATING
ACTIVITIES |
|
|
|
|
Net income |
$ |
10.9 |
|
|
$ |
1.5 |
|
| Adjustments to reconcile net
income to net cash provided by (used in) operating activities: |
|
|
|
|
Depreciation and amortization |
|
20.2 |
|
|
|
20.4 |
|
|
Share-based compensation |
|
14.8 |
|
|
|
14.0 |
|
|
Restructuring costs |
|
6.3 |
|
|
|
8.1 |
|
|
Other |
|
(0.9 |
) |
|
|
(1.3 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
13.6 |
|
|
|
11.3 |
|
|
Inventories |
|
(16.7 |
) |
|
|
12.1 |
|
|
Cloud computing arrangements expenditures |
|
(10.9 |
) |
|
|
— |
|
|
Other assets |
|
(10.8 |
) |
|
|
(3.2 |
) |
|
Accounts payable |
|
11.6 |
|
|
|
11.3 |
|
|
Employee compensation liabilities |
|
(81.7 |
) |
|
|
(49.1 |
) |
|
Employee benefit obligations |
|
(25.9 |
) |
|
|
(19.3 |
) |
|
Accrued expenses and other liabilities |
|
10.4 |
|
|
|
5.5 |
|
| Net cash provided by (used in)
operating activities |
|
(59.1 |
) |
|
|
11.3 |
|
| |
|
|
|
| INVESTING
ACTIVITIES |
|
|
|
| Capital expenditures |
|
(12.1 |
) |
|
|
(11.7 |
) |
| Purchases of short-term
investments |
|
(36.2 |
) |
|
|
— |
|
| Liquidations of short-term
investments |
|
0.5 |
|
|
|
— |
|
| Other |
|
1.2 |
|
|
|
0.5 |
|
| Net cash used in investing
activities |
|
(46.6 |
) |
|
|
(11.2 |
) |
| |
|
|
|
| FINANCING
ACTIVITIES |
|
|
|
| Dividends paid |
|
(12.3 |
) |
|
|
(12.1 |
) |
| Common stock repurchases |
|
(27.7 |
) |
|
|
(3.3 |
) |
| Borrowings on global committed
bank facility |
|
— |
|
|
|
67.2 |
|
| Repayments on global committed
bank facility |
|
— |
|
|
|
(67.2 |
) |
| Repayments on note
payable |
|
— |
|
|
|
(32.2 |
) |
| Other |
|
— |
|
|
|
(2.7 |
) |
| Net cash used in financing
activities |
|
(40.0 |
) |
|
|
(50.3 |
) |
| Effect of exchange rate
changes on cash and cash equivalents |
|
0.1 |
|
|
|
(0.4 |
) |
| Net decrease in cash, cash
equivalents and restricted cash |
|
(145.6 |
) |
|
|
(50.6 |
) |
| Cash and cash equivalents and
restricted cash, beginning of period (1) |
|
325.9 |
|
|
|
97.2 |
|
| Cash and cash equivalents and
restricted cash, end of period (2) |
$ |
180.3 |
|
|
$ |
46.6 |
|
| |
|
|
|
|
|
|
|
(1) These amounts include restricted cash of
$7.3 and $6.8 as of February 23, 2024 and February 24,
2023, respectively.
(2) These amounts include restricted cash of
$7.1 and $6.4 as of May 24, 2024 and May 26, 2023,
respectively.
Restricted cash primarily represents funds held in escrow for
potential future workers’ compensation and product liability
claims. The restricted cash balance is included as part of Other
assets on the Condensed Consolidated Balance Sheets.
| CONTACT: |
Investor Contact: |
| |
Mike O'Meara |
| |
Investor Relations |
| |
ir@steelcase.com |
| |
|
| |
Media Contact: |
| |
Brodie Bertrand |
| |
Corporate Communications |
| |
communications@steelcase.com |
| |
|
| Source: Steelcase |
|
| SC-ERR |
|
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