Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ (Address of principal executive offices) (Zip Code) (616) 247-2710 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 24, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Nu ...

Financial Data and Key Metrics Changes - The company reported third quarter revenue of $778 million, slightly below expectations due to order fulfillment issues in the Americas [22] - Adjusted earnings per share included benefits from a decrease in acquisition earn-out liability and gains from asset sales, contributing approximately $0.10 per share [21] - Gross margin improved by 360 basis points year-over-year, driven by higher pricing benefits and lower operating expenses [8][23] Business Line Data and Key Metrics Changes - The Americas segment showed strong profitability improvement, with orders growing 16% year-over-year, primarily driven by large corporate customers [12][27] - The International segment reported over $9 million in adjusted operating income, a significant turnaround from a nearly $15 million adjusted operating loss in the first half of the year [10] - Orders in the International segment grew 10% year-over-year, with over 40% growth in the Asia Pacific region [11][27] Market Data and Key Metrics Changes - Overall orders grew 15% year-over-year, with a sequential increase of 1% compared to the second quarter [11][27] - In the Americas, order growth was led by large corporate customers, while International orders were bolstered by strong performance in Asia Pacific, particularly in India and Southeast Asia [12][27] - EMEA orders grew modestly, with notable growth in France and Iberia, offset by declines in other markets like the UK [27] Company Strategy and Development Direction - The company is focused on leading workplace transformation and diversifying its customer base while improving profitability [17][30] - Recent product launches emphasize innovation and sustainability, aligning with customer demands for environmentally friendly solutions [15][16] - The company is actively pursuing bolt-on acquisitions to accelerate growth initiatives, although no suitable opportunities have been identified yet [42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about increasing investment levels as companies settle into a stronger in-office presence [17] - The company anticipates revenue growth to lag behind order growth in fiscal 2025 due to a lower beginning backlog compared to the prior year [30] - Management highlighted the importance of creating engaging office environments to encourage employee presence and productivity [56][75] Other Important Information - Total liquidity strengthened by $110 million during the quarter, with cash generated from operations amounting to $120 million [25][26] - The company expects fourth quarter revenue to range between $765 million and $790 million, approximately flat on an organic basis compared to the prior year [28] Q&A Session Summary Question: Can you help with the backlog math and why next year revenue might trail orders? - Management indicated that a decline in backlog compared to last year will impact revenue growth rates, as a portion of the backlog decline will affect revenue [37] Question: What is driving order strength among large customers? - Management noted that order strength is broad-based across various verticals, with no significant weakness observed in expected areas [41] Question: Can you clarify on the delivery issues that impacted the quarter? - Management confirmed that delivery times have improved year-over-year, although they remained flat compared to the previous quarter [69] Question: How much of the growth is driven by large corporate customers? - Management expects continued momentum from large corporate customers, correlating with a stronger return to the office [70] Question: What are the catalysts for growth in the office furnishings industry? - Management believes that beyond the return to office, there are broader macro-level trends, such as near-shoring and AI growth, that will provide opportunities for the business [75]

4 Sense of belonging 5 Feel shared purpose 6 Connect with leaders 7 Socialize Source: Steelcase Global Research, Late 2022 Our Brand Promise We help people do their best work by creating places that work better. Steelcase serves leading organizations with 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, as well as our online Steelcase store and other retail partners. ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 25, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-13873 ________________________________________________________ ...

Steelcase Inc. (NYSE:SCS) Q2 2024 Earnings Conference Call September 20, 2023 8:30 AM ET Company Participants Mike O'Meara - IR Sara Armbruster - President and CEO Dave Sylvester - SVP and CFO Conference Call Participants Greg Burns - Sidoti Reuben Garner - Benchmark Budd Bugatch - Water Tower Research Steven Ramsey - Thompson Research Group Budd Bugatch - Water Tower Research Operator Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone ...

PART I Financial Information [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Unaudited Q1 FY2024 financials show a return to profitability with $1.5 million net income and positive operating cash flow [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 FY2024 revenue increased 1.5% to $751.9 million, with gross profit up 22.4%, leading to $1.5 million net income Q1 FY2024 vs Q1 FY2023 Statement of Operations (in millions, except per share data) | Metric | Q1 2024 (ended May 26, 2023) | Q1 2023 (ended May 27, 2022) | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $751.9 | $740.7 | +1.5% | | **Gross Profit** | $234.6 | $191.6 | +22.4% | | **Operating Income (Loss)** | $7.3 | $(12.6) | Improved by $19.9M | | **Net Income (Loss)** | $1.5 | $(11.4) | Improved by $12.9M | | **Diluted EPS** | $0.01 | $(0.10) | Improved by $0.11 | | **Dividends per Share** | $0.100 | $0.145 | -31.0% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $2,125.5 million, while liabilities also fell, resulting in a slight increase in shareholders' equity Balance Sheet Comparison (in millions) | Account | May 26, 2023 | February 24, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $40.2 | $90.4 | | Total current assets | $815.9 | $884.0 | | **Total assets** | **$2,125.5** | **$2,202.8** | | Total current liabilities | $533.6 | $603.3 | | **Total liabilities** | **$1,296.4** | **$1,376.6** | | **Total shareholders' equity** | **$829.1** | **$826.2** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow turned positive to $11.3 million, with a net cash decrease of $50.6 million for the quarter Cash Flow Summary (in millions) | Activity | Three Months Ended May 26, 2023 | Three Months Ended May 27, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $11.3 | $(55.1) | | Net cash used in investing activities | $(11.2) | $(7.3) | | Net cash used in financing activities | $(50.3) | $(20.7) | | **Net decrease in cash** | **$(50.6)** | **$(84.4)** | - The significant use of cash in financing activities was primarily due to a **$32.2 million repayment** on a note payable and **$12.1 million** in dividend payments[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail segment realignment, Q1 2024 restructuring costs of $8.1 million, and HALCON acquisition accounting completion - In Q1 2024, the company realigned its reportable segments into Americas and International (aggregating EMEA and Asia Pacific), with all prior period data reclassified for this change[76](index=76&type=chunk)[78](index=78&type=chunk)[81](index=81&type=chunk) - New restructuring actions were announced in Q1 2024 due to declining order volume and inflation, involving workforce reductions across regions, resulting in **$8.1 million** of restructuring costs during the quarter[85](index=85&type=chunk)[86](index=86&type=chunk) - The purchase accounting for the HALCON acquisition, which occurred in Q2 2023, was completed, adding **$51.8 million** in identifiable intangible assets and **$36.6 million** in goodwill to the Americas segment[72](index=72&type=chunk)[73](index=73&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2024 profitability to pricing actions, with revenue up 2% and gross margin improving 530 bps - Q1 2024 revenue benefited from pricing actions, but volume declines substantially offset these benefits, particularly in the International segment, with orders declining **7% year-over-year** but growing **21% sequentially** from Q4 2023[93](index=93&type=chunk) - The company reported a significant improvement in profitability, with operating income of **$7.3 million** compared to a loss of **$12.6 million** in the prior year, driven by higher pricing benefits[94](index=94&type=chunk) Non-GAAP Financial Measure Reconciliation | Measure | Q1 2024 (ended May 26, 2023) | Q1 2023 (ended May 27, 2022) | | :--- | :--- | :--- | | **Adjusted Operating Income (Loss)** | $19.7M | $(4.6)M | | **Adjusted EPS** | $0.09 | $(0.05) | | **Organic Revenue Growth** | 0% | N/A | [Business Segment Review](index=23&type=section&id=Business%20Segment%20Review) Americas segment drove profitability with 5% revenue growth, while International segment's operating loss widened Segment Performance (in millions) | Segment | Revenue (Q1'24) | Revenue Change (YoY) | Operating Income (Loss) (Q1'24) | Operating Income (Loss) (Q1'23) | | :--- | :--- | :--- | :--- | :--- | | **Americas** | $572.8 | +5% | $19.8 | $(10.7) | | **International** | $179.1 | -9% | $(12.5) | $(1.9) | - Americas' operating income improvement was driven by higher pricing benefits of approximately **$65 million** and operational efficiencies, partially offset by lower volume and higher variable compensation[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - International's increased operating loss was driven by lower volume (approx **$30 million** impact), higher operating expenses, and **$6.8 million** in restructuring costs, which more than offset pricing benefits[108](index=108&type=chunk)[109](index=109&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity was $470.3 million, with operating cash flow improving to $11.3 million, sufficient for future needs Liquidity Sources (in millions) | Source | May 26, 2023 | February 24, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $40.2 | $90.4 | | Company-owned life insurance | $159.7 | $157.3 | | Availability under credit facilities | $270.4 | $269.7 | | **Total liquidity sources available** | **$470.3** | **$517.4** | - In Q1 2024, the company borrowed and repaid **$67.2 million** under its global facility to fund operations and a **$31.8 million** balloon payment for a matured note[125](index=125&type=chunk) - Planned capital expenditures for fiscal 2024 are expected to be approximately **$70 to $80 million**, an increase from **$59.1 million** in 2023[134](index=134&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in market risk exposures, including foreign currency, interest rate, and commodity price risks - The nature of market risks, including foreign exchange, interest rate, commodity price, and fixed income/equity price risks, has not materially changed during Q1 2024[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that as of May 26, 2023, the company's disclosure controls and procedures were effective[144](index=144&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the first fiscal quarter[145](index=145&type=chunk) PART II Other Information [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported in the current period - There have not been any material changes to the risk factors set forth in the company's most recent Annual Report on Form 10-K[148](index=148&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 429,624 shares for $3.3 million to cover tax obligations, with $6.4 million remaining Q1 2024 Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | 02/25/2023 - 03/31/2023 | 429,624 | $7.71 | | **Total** | **429,624** | **$7.71** | - All shares were repurchased to satisfy participants' tax withholding obligations upon the issuance of shares under equity awards[151](index=151&type=chunk) - As of May 26, 2023, **$6.4 million** remained available for repurchase under the Board-approved program from January 2016[150](index=150&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Credit Agreement and required certifications - Exhibits filed include the Third Amended and Restated Credit Agreement, Sarbanes-Oxley Section 302 and 906 certifications, and various Inline XBRL data files[153](index=153&type=chunk) Signatures The report was signed on June 23, 2023, by Nicole C. McGrath, VP, Corporate Controller & Chief Accounting Officer - The Form 10-Q report was signed and authorized by Nicole C. McGrath, Vice President, Corporate Controller & Chief Accounting Officer, on June 23, 2023[156](index=156&type=chunk)[158](index=158&type=chunk)

Financial Data and Key Metrics Changes - The company reported consolidated revenue of $752 million, which was flat on an organic basis compared to the prior year, with a 2% growth in the Americas offset by a 7% decline in International [15][21] - Adjusted earnings per share for Q1 exceeded expectations, benefiting from operational efficiencies and pricing actions taken in response to inflation [13][16] - The company expects Q2 revenue to be in the range of $815 million to $840 million, reflecting a 3% to 6% decline year-over-year, with adjusted earnings per share projected between $0.19 and $0.23 [20][21] Business Line Data and Key Metrics Changes - Revenue from the Americas was driven by faster order fulfillment and higher-than-expected incoming orders, while the consumer retail segment experienced a shortfall [14] - Orders in the first quarter declined by 7% year-over-year, with a 6% decline in the Americas and an 11% decline in International [17] - The company noted a year-over-year growth in EMEA new project opportunity creation of 10%, despite a decline in overall orders [19] Market Data and Key Metrics Changes - The International revenue decline was attributed to a lower beginning backlog and macroeconomic concerns, leading to restructuring actions in EMEA and Asia Pacific [15] - In Asia Pacific, there was double-digit growth across all other markets, indicating some regional resilience [19] - The company observed that many larger customers regretted putting projects on hold during the last 18 months, indicating a potential shift in investment activity [4] Company Strategy and Development Direction - The company aims to lead workplace transformation and diversify its customer and market segments while improving profitability [9][30] - New product innovations showcased at the NeoCon trade show included solutions for mobile workers and enhanced seating offerings, emphasizing sustainability [32][33] - The company is focused on reducing costs and optimizing its distribution system, including the closure of a regional distribution center [6][21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of the year, despite navigating an uncertain environment [9][30] - The company is seeing positive signs in customer conversations, with a focus on returning to the office and evolving workplace needs [51][78] - Management acknowledged challenges in international markets but noted improvements in operational agility and supply chain reliability [12][19] Other Important Information - The company generated $11 million in cash from operating activities in Q1, with a reduction in working capital contributing to this positive cash flow [37] - Liquidity at the end of the quarter totaled $200 million, with total debt at $447 million, reflecting a decrease due to the payoff of a maturing aircraft loan [38] - The company is committed to achieving its fiscal 2024 targets while navigating the current economic landscape [21] Q&A Session Summary Question: Can you provide more color on the activity with large corporate customers? - Management noted that many customers are now engaging with real projects and plans to evolve their office spaces, indicating a shift from hypothetical discussions to actionable plans [58] Question: How is the company addressing the sales cycle length? - Management observed that there is a trend of customers having clearer plans and timelines, suggesting a reduction in the length of the sales cycle [93] Question: What are the expectations for project activity moving forward? - Management believes project activity will improve, although significant year-over-year growth remains uncertain [84] Question: How is the company managing its operational efficiencies? - Management highlighted improvements in logistics and operational efficiencies, contributing to better gross margins despite ongoing inflation [95]

We believe the office will continue to be very relevant for innovation, culture and collaboration Efforts to diversify the customers and markets we serve brings additional growth potential Recent price-cost tailwinds expected to continue $3.2B $210M 1.1x 770 12,000 innovative design, sustainability Named a 2022 Most Responsible Company by Newsweek Eight-time perfect score recipient of the Human Rights Campaign's Best Places to Work for LGBTQ Equality Investor Presentation FY2024 First Quarter FY2023 Third Q ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) Steelcase Inc. is a global furniture and architectural products company focused on hybrid work, operating through Americas, EMEA, and Other segments - Steelcase's purpose is to create high-performing work environments through its comprehensive portfolio of furniture, architectural products, and services under brands like Steelcase®, AMQ®, Coalesse®, and others[13](index=13&type=chunk) - The company's strategic priorities focus on supporting hybrid work models, growing in key markets like learning and health, enhancing capabilities for smaller customers, and improving profitability and efficiency[16](index=16&type=chunk) - Steelcase operates globally with manufacturing and distribution in North America, Europe, and Asia, utilizing a make-to-order model based on lean manufacturing principles[43](index=43&type=chunk)[44](index=44&type=chunk) Research, Design and Development Expenses (in millions) | Fiscal Year | Expense | | :--- | :--- | | 2023 | $44.4 | | 2022 | $45.4 | | 2021 | $48.1 | - As of February 24, 2023, the company had approximately **11,900 employees**, with about **7,100 in manufacturing and distribution**. Approximately 2,600 employees outside the U.S. are represented by unions or workers' councils[60](index=60&type=chunk) [Reportable Segments](index=5&type=section&id=Reportable%20Segments) Operations are segmented into Americas, EMEA, and Other, each serving distinct geographic markets with varying competitive landscapes - The Americas segment serves customers through approximately 380 dealer locations. The five largest independent dealers accounted for about **19% of the segment's 2023 revenue**[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - The EMEA segment serves customers through approximately 320 dealer locations. The five largest independent dealers accounted for about **12% of the segment's 2023 revenue**[33](index=33&type=chunk)[34](index=34&type=chunk) - The Other category consists of Asia Pacific operations, which sell through approximately 70 dealer locations, and Designtex, which sells applied materials primarily in North America[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) [Manufacturing and Logistics](index=6&type=section&id=Manufacturing%20and%20Logistics) Global make-to-order manufacturing faced FY2023 supply chain disruptions, leading to increased inventory and efficiency focus - The manufacturing model is predominantly make-to-order, using lean principles to minimize inventory. The company purchases direct materials and components from a global network of suppliers as needed[44](index=44&type=chunk) - During 2023, manufacturing faced supply chain disruptions, including material and labor shortages and shipping delays, which began in 2022. These issues started to ease in the second half of 2023[45](index=45&type=chunk) [Human Capital Resources](index=8&type=section&id=Human%20Capital%20Resources) The company fosters a people-centered culture, investing in employee development, well-being, and DEI initiatives - Core values guiding the company include acting with integrity, treating people with dignity and respect, and protecting the environment[56](index=56&type=chunk) - The company is committed to advancing diversity, equity, and inclusion by building diverse teams, ensuring equitable access to development, and creating an inclusive culture[57](index=57&type=chunk) - As of February 24, 2023, the company had approximately **11,900 employees**, with around **7,100 in manufacturing and distribution**[60](index=60&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from macroeconomic shifts, supply chain disruptions, global operations, financial factors, and cybersecurity threats - Macroeconomic risks include failure to respond to changing workplace trends (like increased working from home), cyclical downturns influencing demand for office furniture, and challenges in implementing growth strategies[67](index=67&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - Manufacturing and supply chain risks involve significant inflation in raw material and input costs, reliance on a global network of suppliers subject to disruption, and changes in tariffs or trade agreements[73](index=73&type=chunk)[76](index=76&type=chunk)[79](index=79&type=chunk) - Global footprint risks stem from the complexities of operating in many countries, including political instability, differing business practices, and vulnerability to currency exchange rate fluctuations[84](index=84&type=chunk)[85](index=85&type=chunk) - Financial risks include the potential for goodwill impairment charges, adverse effects from changes in corporate tax laws, and limitations on utilizing net operating loss carryforwards[88](index=88&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk) - General risks involve the integrity and security of IT systems against cyberattacks, potential security breaches of software offerings, and losses related to product defects and warranty claims[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) [Unresolved Staff Comments](index=15&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the U.S. Securities and Exchange Commission - None[97](index=97&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) Steelcase maintains global owned and leased properties, including manufacturing and distribution centers, deemed sufficient for operations Principal Manufacturing and Distribution Locations (>100,000 sq. ft.) | Segment/Category | Number of Locations | Owned | Leased | | :--- | :--- | :--- | :--- | | Americas | 15 | 6 | 9 | | EMEA | 6 | 5 | 1 | | Other category | 2 | — | 2 | | **Total** | **23** | **11** | **12** | [Legal Proceedings](index=15&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine litigation, none of which is expected to materially impact its financial condition - The company is not a party to any lawsuit or proceeding that is likely to have a material adverse effect on its financial condition[99](index=99&type=chunk) [Mine Safety Disclosures](index=15&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure item is not applicable to the company's operations - Not applicable[100](index=100&type=chunk) [Information About Our Executive Officers](index=16&type=section&id=Supplementary%20Item.%20Information%20About%20Our%20Executive%20Officers) This section lists the company's executive officers, detailing their age and current positions Executive Officers | Name | Age | Position | | :--- | :--- | :--- | | Sara E. Armbruster | 52 | President and Chief Executive Officer, Director | | Donna K. Flynn | 55 | Vice President, Global Talent Management | | Robert G. Krestakos | 61 | Vice President, Global Operations | | Nicole C. McGrath | 46 | Vice President, Corporate Controller & Chief Accounting Officer | | Steven D. Miller | 48 | Vice President, Chief Technology Officer | | Lizbeth S. O'Shaughnessy | 61 | Senior Vice President, Chief Administrative Officer, General Counsel and Secretary | | Allan W. Smith, Jr. | 55 | Senior Vice President, Chief Revenue Officer | | David C. Sylvester | 58 | Senior Vice President, Chief Financial Officer | Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=17&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Steelcase Class A Common Stock trades on NYSE; the company has outstanding shares and a remaining share repurchase program - As of April 11, 2023, there were **93,538,673 shares of Class A Common Stock** and **20,414,413 shares of Class B Common Stock** outstanding[109](index=109&type=chunk) Fourth Quarter 2023 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | 11/26/2022 - 12/30/2022 | 6,314 | $6.85 | | 12/31/2022 - 01/27/2023 | 2,901 | $7.49 | | 01/28/2023 - 02/24/2023 | — | $— | | **Total** | **9,215** | | - The share repurchase program approved in January 2016 has approximately **$6.4 million remaining** for future purchases[112](index=112&type=chunk)[113](index=113&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2023 saw improved revenue and operating income driven by pricing, despite softening demand and restructuring costs, with strong liquidity Consolidated Financial Summary (in millions, except per share data) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Revenue | $3,232.6 | $2,772.7 | | Gross Profit | $919.4 | $761.5 | | Operating Income | $65.5 | $20.1 | | Net Income | $35.3 | $4.0 | | Diluted EPS | $0.30 | $0.03 | - Organic revenue grew by **17% in FY2023**, driven by pricing actions and increased volume. Revenue increased by **22.9% in the Americas**, **1.9% in EMEA**, and **4.6% in the Other category**[123](index=123&type=chunk) - The company implemented multiple price increases in 2022 and 2023 to combat significant inflation. By the end of FY2023, cumulative pricing actions approximated cumulative inflation over the past two years[120](index=120&type=chunk) - In response to softening demand patterns in Q3 2023, the company took actions to reduce operational spending, including workforce reductions, resulting in **$19.2 million of restructuring costs**[121](index=121&type=chunk)[122](index=122&type=chunk) [Business Segment Disclosure](index=22&type=section&id=Business%20Segment%20Disclosure) Americas segment revenue and operating income significantly increased, while EMEA and Other segments experienced revenue growth but operating losses Americas Segment Performance (in millions) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Revenue | $2,340.8 | $1,905.0 | | Operating Income | $103.8 | $44.4 | | Adjusted Operating Income | $141.2 | $54.9 | EMEA Segment Performance (in millions) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Revenue | $610.1 | $598.5 | | Operating Income (Loss) | $(3.4) | $3.3 | | Adjusted Operating Income | $1.2 | $7.6 | Other Category Performance (in millions) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Revenue | $281.7 | $269.2 | | Operating Loss | $(6.3) | $(3.2) | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity decreased to $517.4 million, but operating cash flow improved significantly, with sufficient resources for future needs Liquidity Sources (in millions) | Source | Feb 24, 2023 | Feb 25, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $90.4 | $200.9 | | Company-owned life insurance | $157.3 | $168.0 | | Availability under credit facilities | $269.7 | $262.0 | | **Total** | **$517.4** | **$630.9** | Consolidated Cash Flow Summary (in millions) | Activity | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Operating | $89.4 | $(102.6) | | Investing | $(134.8) | $(65.5) | | Financing | $(62.9) | $(120.0) | - Material cash requirements include debt obligations of **$35.7 million in 2024**, operating lease payments of **$52.5 million in 2024**, and planned capital expenditures of **$70 to $80 million in 2024**[167](index=167&type=chunk) [Critical Accounting Estimates](index=29&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve significant judgment in goodwill impairment, income taxes, and pension benefit calculations - Goodwill is tested for impairment annually at the reporting unit level. As of February 24, 2023, the company had **$276.8 million in goodwill**, with no impairment charges recorded for the year[88](index=88&type=chunk)[172](index=172&type=chunk)[174](index=174&type=chunk) - The company's annual effective tax rate is subject to judgment regarding the ability to realize deferred tax assets and the evaluation of tax positions. As of February 24, 2023, net deferred tax assets were **$109.3 million**[175](index=175&type=chunk)[90](index=90&type=chunk) - Pension and post-retirement benefit obligations are measured using key actuarial assumptions. For FY2023, the weighted average discount rate for pension obligations was increased to **4.80% from 2.50%**, resulting in a significant actuarial gain[183](index=183&type=chunk)[184](index=184&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency, interest rates, commodity prices, and equity prices, managed through various strategies - The company is exposed to foreign currency risk, primarily from the euro, Canadian dollar, and Mexican peso. A hypothetical **10% strengthening of the U.S. dollar** would have increased 2023 operating income by approximately **$14.3 million**[194](index=194&type=chunk)[195](index=195&type=chunk) - Commodity price fluctuations for materials like steel and fuel are a key risk. Changes in these costs increased cost of sales by approximately **$150 million in 2023**[201](index=201&type=chunk)[202](index=202&type=chunk) - Interest rate risk is mainly from cash equivalents and a floating-rate loan of **$32.2 million**. A **1% increase in rates** would have an immaterial impact on net income[198](index=198&type=chunk)[199](index=199&type=chunk) - Equity price risk exists on **$54.3 million of variable life COLI investments**. A **10% adverse change** in the equity portion would reduce 2023 net income by approximately **$4 million**[203](index=203&type=chunk)[204](index=204&type=chunk) [Financial Statements and Supplementary Data](index=35&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the consolidated financial statements, management's internal control report, and the independent auditor's unqualified opinion - Management assessed its internal control over financial reporting as effective as of February 24, 2023, based on the COSO framework[210](index=210&type=chunk) - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on both the consolidated financial statements and the effectiveness of internal control over financial reporting[215](index=215&type=chunk)[224](index=224&type=chunk) Consolidated Balance Sheet Summary (in millions) | | Feb 24, 2023 | Feb 25, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$2,202.8** | **$2,261.0** | | Total Current Assets | $884.0 | $959.2 | | **Total Liabilities** | **$1,376.6** | **$1,408.8** | | Total Current Liabilities | $603.3 | $567.2 | | **Total Shareholders' Equity** | **$826.2** | **$852.2** | [Notes to the Consolidated Financial Statements](index=44&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Detailed notes provide disclosures on accounting policies, assets, liabilities, acquisitions, and segment reporting, crucial for financial understanding - In Q3 2022, the company acquired Viccarbe for **$34.9 million** plus contingent consideration. In Q2 2023, it acquired HALCON for **$127.5 million**. These acquisitions added significant goodwill and intangible assets[474](index=474&type=chunk)[478](index=478&type=chunk) - Total debt as of February 24, 2023, was **$481.2 million**, primarily consisting of **$445.5 million in senior notes due in 2029**[378](index=378&type=chunk) - The company has operating lease obligations with a present value of **$214.6 million** as of February 24, 2023[471](index=471&type=chunk) - In FY2023, the company initiated restructuring actions, including workforce reductions and winding down its customer aviation function, resulting in restructuring costs of **$18.7 million**[492](index=492&type=chunk)[493](index=493&type=chunk)[499](index=499&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=88&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes or disagreements with its accountants regarding accounting or financial disclosure matters - None[502](index=502&type=chunk) [Controls and Procedures](index=88&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls in Q4 - The CEO and CFO concluded that as of February 24, 2023, the company's disclosure controls and procedures were effective[503](index=503&type=chunk) - No changes in internal control over financial reporting occurred during the fourth fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[504](index=504&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, and Other Matters](index=89&type=section&id=Item%2010%2C%2011%2C%2013%2C%20and%2014) Information on directors, executive compensation, corporate governance, and related matters is incorporated by reference from the 2023 Proxy Statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accountant fees is incorporated by reference from the 2023 Proxy Statement[509](index=509&type=chunk)[510](index=510&type=chunk)[514](index=514&type=chunk)[515](index=515&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=89&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details securities authorized for issuance under equity compensation plans, including outstanding rights and available shares Equity Compensation Plan Information as of February 24, 2023 | Plan Category | Number of securities to be issued upon exercise (a) | Weighted-average exercise price (b) | Number of securities remaining available for future issuance (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 4,353,499 | n/a | 4,173,814 | Part IV [Exhibit and Financial Statement Schedules](index=90&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits, including Schedule II detailing valuation and qualifying accounts Schedule II: Valuation and Qualifying Accounts (in millions) | Account | Balance at Feb 26, 2021 | Balance at Feb 25, 2022 | Balance at Feb 24, 2023 | | :--- | :--- | :--- | :--- | | Allowance for Losses on Accounts Receivable | $8.7 | $8.0 | $6.5 | | Reserve for Excess and Obsolete Inventory | $33.8 | $35.7 | $41.2 | | Valuation Allowance for Deferred Income Tax Assets | $6.6 | $3.7 | $4.3 | [Form 10-K Summary](index=94&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary of the Form 10-K report - None[527](index=527&type=chunk)

Steelcase Inc. (NYSE:SCS) Q4 2023 Earnings Conference Call March 23, 2023 8:30 AM ET Company Participants Mike O'Meara - Director, Investor Relations and Financial Planning and Analysis Sara Armbruster - President and Chief Executive Officer David Sylvester - Senior Vice President and Chief Financial Officer Conference Call Participants Reuben Garner - The Benchmark Company Greg Burns - Sidoti & Company Steven Ramsey - Thompson Research Group Rex Henderson - Water Tower Research Operator Good morning. My na ...