Steelcase (NYSE:SCS) Q2 2026 Earnings Call September 25, 2025 08:30 AM ET Company ParticipantsSara Armbruster - CEO and PresidentDave Sylvester - CFO and Senior Vice PresidentConference Call ParticipantsJoseph Gomes - Senior Research AnalystSteven Ramsey - Senior Equity AnalystReuben Garner - AnalystMike O'Meara - Director, Investor Relations, and Financial AnalystModeratorGood morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Steelc ...

Financial Data and Key Metrics Changes - The company reported second quarter revenue of $897 million, exceeding expectations and marking a 5% increase year-over-year, the highest quarterly results in the past five years [4][8] - Adjusted earnings per share were $0.45, also above the estimated range, driven by higher revenue and favorable gross margins [8][9] - Organic revenue growth was 4%, with 3% growth in the Americas and 8% growth internationally [9] Business Line Data and Key Metrics Changes - The Americas segment achieved an adjusted operating margin of 11%, while the international segment improved adjusted operating results by $5 million compared to the prior year [4][9] - Orders grew by 6% in the second quarter, with an 8% increase in the Americas, primarily driven by large corporate customers [5][10] - The international segment saw strong order growth in India, offset by declines in Germany and France due to macroeconomic challenges [5][10] Market Data and Key Metrics Changes - The international segment posted 13% revenue growth, including 8% organic growth, with particularly strong results from India [4][9] - The Americas growth was partially offset by a decline from education customers, influenced by changes in federal funding policies [9][10] - Demand in the Asia-Pacific region improved, while EMEA faced challenges primarily in Germany and France [25][26] Company Strategy and Development Direction - The company is focused on transforming workplace environments to support new ways of working, capitalizing on the ongoing trend of redesigning office spaces [6][40] - The proposed merger with HNI Corporation is expected to enhance market reach and combine industry-leading brands [7][45] - The company is committed to executing its strategy during the transition period and anticipates significant benefits from the merger [7][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in large corporate demand, noting that it is occurring at a higher level than anticipated [15] - The company is seeing a consistent theme of clients rethinking their office spaces to enhance creativity, collaboration, and connection [22][40] - Management did not provide forward-looking guidance due to the pending merger but remains encouraged by the momentum in the business [8][11] Other Important Information - The company incurred $10 million in restructuring costs in the international segment, primarily related to the exit of salaried employees in EMEA [9] - Total liquidity at the end of the quarter was $427 million, with total debt at $447 million [11] Q&A Session Summary Question: Can you break out the outperformance in terms of volume versus price increases? - Management indicated that the 8% order growth in the Americas was primarily driven by volume rather than price increases, which contributed only a couple of percent [13] Question: Are there plans for additional price increases? - Management refrained from commenting on future pricing actions but noted that they were able to offset year-over-year inflation and tariff costs with earlier pricing actions [14] Question: How do current end markets compare to earlier expectations? - Management stated that end markets are more favorable than anticipated, with strong demand from large corporate customers despite declines in the education sector [15] Question: What is the demand profile in the Americas? - Management noted that clients are rethinking their office spaces, focusing on outcomes and redesigning spaces to support collaboration and connection [22] Question: Can you clarify the profitability improvement in international markets? - Management confirmed that both Asia-Pacific and EMEA improved profitability, with Asia-Pacific showing demand improvement, particularly in China [25][26]

Financial Data and Key Metrics Changes - The company reported second quarter revenue of $897 million, which was above the estimated range due to stronger than expected orders from large corporate customers and favorable shipment timing in the Americas segment [9] - Adjusted earnings per share were $0.45, exceeding estimates driven by higher revenue and favorable gross margins [9] - Organic revenue growth was 4% year-over-year, with 3% growth in the Americas and 8% growth internationally [10] Business Line Data and Key Metrics Changes - The Americas segment achieved an adjusted operating margin of 11%, remaining flat compared to the prior year [10] - The international segment improved adjusted operating results by $5 million compared to the prior year, driven by cost reduction actions [4][5] - Orders grew by 6% in the second quarter, with an 8% increase in the Americas, primarily from large corporate customers [11] Market Data and Key Metrics Changes - The international segment posted 13% revenue growth, including 8% organic growth, with strong results from India [4] - In the Americas, order growth was driven by the financial services and technology sectors, while education customers experienced a decline [11] - The international order decline was primarily due to weaknesses in Germany and France, offset by growth in India and Japan [11] Company Strategy and Development Direction - The company is focused on transforming workplace environments to support new ways of working as employees return to the office [6][47] - The proposed merger with HNI Corporation is expected to expand market reach and combine industry-leading brands [7] - The company is aligning resources to focus on the best opportunities in markets facing macroeconomic challenges [5] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in large corporate demand, noting it is occurring at a higher level than anticipated [15] - The company is encouraged by the momentum sustained into the second quarter, particularly from large corporate customers [12] - Management highlighted the need for customers to redesign their spaces to attract talent and support new working styles [42] Other Important Information - The company incurred $10 million in restructuring costs in the international segment, primarily related to the exit of salaried employees in EMEA [10] - Total liquidity at the end of the quarter was $427 million, with total debt at $447 million [12] Q&A Session Summary Question: What was the breakdown of volume versus price increases in the outperformance? - Management indicated that the 8% order growth in the Americas was primarily driven by volume rather than price increases, which contributed only a couple of percent [15] Question: Are there plans for additional price increases? - Management refrained from commenting on future pricing actions but noted that they were able to offset year-over-year inflation and tariff costs with earlier pricing actions [16] Question: How do current end markets compare to earlier expectations? - Management stated that the end markets are more favorable than previously anticipated, with strong demand from large corporate customers [17] Question: What is the demand profile in the Americas? - Management noted that clients are rethinking their office spaces, focusing on outcomes and redesigning spaces to support collaboration and connection [24] Question: How did profitability improve in the international segment? - Management highlighted improvements in both Asia-Pacific and EMEA, with Asia-Pacific showing demand improvement and EMEA benefiting from revenue growth and cost reductions [27][28]

Core Viewpoint - Steelcase (SCS) reported quarterly earnings of $0.45 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, and showing an increase from $0.39 per share a year ago, indicating a strong performance in the office furniture sector [1][2] Financial Performance - The company achieved revenues of $897.1 million for the quarter ended August 2025, surpassing the Zacks Consensus Estimate by 2.58% and up from $855.8 million year-over-year [2] - Over the last four quarters, Steelcase has consistently exceeded consensus EPS estimates [2] Stock Performance - Steelcase shares have increased approximately 42.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 13.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $814.95 million, and for the current fiscal year, it is $1.05 on revenues of $3.27 billion [7] - The trend of earnings estimate revisions is mixed ahead of the earnings release, which could influence future stock movements [6] Industry Context - The Business - Office Products industry is currently ranked in the top 7% of over 250 Zacks industries, suggesting a favorable outlook for companies within this sector [8]

EXHIBIT 99.1 Steelcase Reports Second Quarter Fiscal 2026 Results GRAND RAPIDS, Mich., Sept. 24, 2025 (GLOBE NEWSWIRE) -- Steelcase Inc. (NYSE: SCS) today reported second quarter revenue of $897.1 million, net income of $35.0 million, or $0.29 per share, and adjusted earnings per share of $0.45. In the prior year, Steelcase reported revenue of $855.8 million, net income of $63.1 million, or $0.53 per share, and adjusted earnings per share of $0.39. As previously announced, on August 3, 2025, the company ent ...

Financial Performance - Steelcase Inc. reported second quarter revenue of $897.1 million, a 5% increase from $855.8 million in the prior year. Net income was $35.0 million, or $0.29 per share, down from $63.1 million, or $0.53 per share, in the previous year [1][22][42] - Adjusted earnings per share increased to $0.45 from $0.39 year-over-year [17][29] - Gross margin was 34.4%, approximately flat compared to the prior year despite higher tariff and restructuring costs [6][8] Revenue and Order Growth - Revenue grew 5% year-over-year, with organic revenue growth of 4%. The Americas segment saw a 3% organic growth, while International revenue grew by 13% [3][6] - Orders increased by 6% compared to the prior year, with an 8% growth in the Americas and a 1% decline in International orders [4][6] Business Segments - In the Americas, revenue was $707.1 million, a 3% increase from $688.0 million. The International segment reported revenue of $190.0 million, a 13% increase from $167.8 million [23][24] - Operating income for the Americas was $67.7 million, down from $102.0 million, while the International segment reported an operating loss of $14.6 million [23][24] Merger Agreement - Steelcase entered into a merger agreement with HNI Corporation, with a total consideration of approximately $2.2 billion expected to close by the end of 2025, subject to shareholder and regulatory approvals [2] Operating Expenses and Costs - Operating expenses increased to $247.1 million, up $42.0 million from the prior year, driven by lower gains on the sale of land and merger transaction costs [9][22] - Restructuring costs included $11.9 million in the second quarter, contributing to the decrease in operating income [7][9] Liquidity and Debt - Total liquidity at the end of the second quarter was $426.8 million, a decrease of $80.3 million compared to the prior year. Total debt stood at $447.4 million [11]

Group 1: Earnings Report - Steelcase Inc. is set to release its second-quarter earnings results on September 24, with analysts expecting earnings of 37 cents per share, a decrease from 39 cents per share in the same period last year [1] - The company projects quarterly revenue of $873.6 million, an increase from $855.8 million a year earlier [1] - HNI announced its intention to acquire Steelcase for approximately $2.2 billion on August 4 [1] Group 2: Dividend Information - Steelcase currently offers an annual dividend yield of 2.37%, translating to a semi-annual dividend of 10 cents per share, or 40 cents annually [2] - To earn $500 monthly from dividends, an investment of approximately $253,500 or around 15,000 shares is required, while a more modest goal of $100 monthly would need about $50,700 or 3,000 shares [2] - The dividend yield can fluctuate based on changes in the stock price and dividend payments [2][3] Group 3: Stock Performance - Steelcase shares gained 0.1% to close at $16.90 on Monday [4]

Earnings Report - Steelcase Inc. is set to release its second-quarter earnings results on September 24, with analysts expecting earnings of 37 cents per share, a decrease from 39 cents per share in the same period last year [1] - The company projects quarterly revenue of $873.6 million, up from $855.8 million a year earlier [1] Acquisition News - HNI announced plans to acquire Steelcase for approximately $2.2 billion on August 4 [1] Dividend Information - Steelcase currently offers an annual dividend yield of 2.37%, translating to a semi-annual dividend of 10 cents per share, or 40 cents annually [2] - To earn $500 monthly from dividends, an investment of approximately $253,500 or around 15,000 shares is required, while a more modest $100 monthly would need about $50,700 or 3,000 shares [2] Dividend Yield Calculation - The dividend yield is calculated by dividing the annual dividend payment by the stock's current price, with examples illustrating how changes in stock price affect yield [3] - Changes in dividend payments also impact yield; an increase in dividends raises yield if the stock price remains constant, while a decrease lowers it [4] Stock Performance - Steelcase shares gained 0.1% to close at $16.90 on Monday [4]

Core Viewpoint - The Ademi Firm is investigating Steelcase for potential breaches of fiduciary duty and other legal violations related to its transaction with HNI Corporation [1]. Group 1: Transaction Details - In the transaction, Steelcase shareholders will receive $7.20 in cash and 0.2192 shares of HNI common stock [1].

Company Overview - Steelcase Inc. is a global design and thought leader in the world of work, aiming to help the world work better [2] - The company collaborates with over 30 creative and technology partner brands to research, design, and manufacture furnishings and solutions for various work environments, including offices, homes, and educational and health settings [2] - Steelcase employs approximately 11,300 individuals and focuses on improving the wellbeing of people and the planet [2] Upcoming Financial Results - Steelcase will webcast a discussion of its second quarter fiscal year 2026 financial results on September 25, 2025, at 8:30 a.m. ET [1] - A news release detailing the financial results will be issued on September 24, 2025, after the market closes [1] - A link to the webcast will be available on the company's investor relations website, and a replay will be accessible shortly after the call concludes [1]