Steelcase(SCS) - 2022 Q1 - Quarterly Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q This document is the quarterly report filed with the SEC for the period ended May 28, 2021 Registrant Information This section identifies Steelcase Inc. as the registrant, a large accelerated filer, for the quarterly period ended May 28, 2021, with its Class A Common Stock traded on the New York Stock Exchange. It also provides details on outstanding common stock shares as of June 22, 2021 - Steelcase Inc. is a large accelerated filer, indicating it meets specific market capitalization and reporting requirements[3] Title of each class | Title of each class | Trading symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :-------------------------------------- | | Class A Common Stock | SCS | New York Stock Exchange | Outstanding Common Stock as of June 22, 2021 | Class of Stock | Shares Outstanding | | :--------------- | :----------------- | | Class A Common Stock | 90,582,958 | | Class B Common Stock | 25,096,994 | Table of Contents This section provides an organized listing of all chapters and sub-sections within the quarterly report PART I. FINANCIAL INFORMATION This part contains the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents Steelcase Inc.'s unaudited condensed consolidated financial statements and notes for Q1 2022 Condensed Consolidated Statements of Operations This statement details the company's revenues, costs, and net loss for the three-month periods ended May 28, 2021 Condensed Consolidated Statements of Operations (Three Months Ended) | Metric | May 28, 2021 (in millions) | May 29, 2020 (in millions) | Change (YoY) | | :----------------------------- | :------------------------- | :------------------------- | :----------- | | Revenue | $556.6 | $482.8 | +15.3% | | Cost of sales | $401.9 | $360.1 | +11.6% | | Gross profit | $154.7 | $122.7 | +26.1% | | Operating expenses | $186.5 | $157.4 | +18.5% | | Goodwill impairment charge | $— | $17.6 | -100% | | Operating loss | $(31.8) | $(52.3) | +39.2% | | Net loss | $(28.1) | $(38.1) | +26.3% | | Basic EPS | $(0.24) | $(0.33) | +27.3% | | Diluted EPS | $(0.24) | $(0.33) | +27.3% | | Dividends declared and paid per common share | $0.100 | $0.070 | +42.9% | Condensed Consolidated Statements of Comprehensive Income (Loss) This statement presents the net loss and other comprehensive income (loss) components for the three-month periods Condensed Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended) | Metric | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :------------------------------------ | :------------------------- | :------------------------- | | Net loss | $(28.1) | $(38.1) | | Total other comprehensive income (loss), net | $1.2 | $(8.6) | | Comprehensive loss | $(26.9) | $(46.7) | - Total other comprehensive income (loss), net improved significantly from a loss of $8.6 million in Q1 2020 to a gain of $1.2 million in Q1 2021, primarily due to foreign currency translation adjustments[12] Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity at period ends Condensed Consolidated Balance Sheets (Period End) | Metric | May 28, 2021 (in millions) | February 26, 2021 (in millions) | Change (QoQ) | | :-------------------------------- | :------------------------- | :------------------------------ | :----------- | | Cash and cash equivalents | $397.2 | $489.8 | -18.9% | | Total current assets | $992.1 | $1,045.4 | -5.29% | | Total assets | $2,289.6 | $2,354.0 | -2.8% | | Total current liabilities | $498.2 | $515.0 | -3.26% | | Total liabilities | $1,359.3 | $1,393.5 | -2.5% | | Total shareholders' equity | $930.3 | $960.5 | -3.14% | - Cash and cash equivalents decreased by $92.6 million quarter-over-quarter, contributing to a reduction in total current assets and total assets[15] Condensed Consolidated Statements of Changes in Shareholders' Equity This statement outlines changes in shareholders' equity from net loss, dividends, and share repurchases Changes in Shareholders' Equity (Three Months Ended) | Metric | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :------------------------------------ | :------------------------- | :------------------------- | | Total shareholders' equity, beginning of period | $960.5 (Feb 26, 2021) | $960.5 (Feb 28, 2020) | | Net loss | $(28.1) | $(38.1) | | Dividends paid | $(12.1) | $(8.4) | | Common stock repurchases | $(4.3) | $(42.3) | | Total shareholders' equity, end of period | $930.3 | $881.0 | - Shareholders' equity decreased by $30.2 million in Q1 2022, primarily due to net loss and dividend payments, partially offset by an increase in additional paid-in capital[18] Condensed Consolidated Statements of Cash Flows This statement summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Three Months Ended) | Activity | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :------------------------------------------ | :------------------------- | :------------------------- | | Net cash used in operating activities | $(63.6) | $(93.4) | | Net cash used in investing activities | $(13.0) | $(2.7) | | Net cash provided by (used in) financing activities | $(16.8) | $193.7 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(93.1) | $96.3 | | Cash and cash equivalents and restricted cash, end of period | $402.5 | $643.4 | - The company experienced a net decrease in cash and cash equivalents of $93.1 million in Q1 2022, a significant shift from a $96.3 million increase in Q1 2021. This was primarily driven by cash used in operating and investing activities, and a shift from cash provided by financing activities to cash used in financing activities[21] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the condensed consolidated financial statements 1. BASIS OF PRESENTATION The condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and Regulation S-X, and do not include all information for complete annual statements. All adjustments are considered normal and recurring. Fiscal year references relate to the year ending in February - Interim financial statements are prepared under GAAP and Regulation S-X, with fiscal years ending in February[26][27] 2. NEW ACCOUNTING STANDARDS The company evaluates all new Accounting Standards Updates (ASUs) issued by FASB and has concluded that those not disclosed are either not applicable or not expected to materially affect its consolidated financial statements - No new accounting standards are expected to have a material effect on the financial statements[28] 3. REVENUE Revenue is disaggregated by product category and geographic location, showing an overall increase in Q1 2022 compared to Q1 2021 across all segments and regions. Contract liabilities (customer deposits) also increased during the period Disaggregated Revenue by Product Category (Three Months Ended) | Product Category | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :-------------------------------- | :------------------------- | :------------------------- | | Americas | | | | Desking, benching, systems and storage | $185.1 | $168.4 | | Seating | $118.2 | $96.5 | | Other | $73.0 | $69.0 | | EMEA | | | | Desking, benching, systems and storage | $54.8 | $43.9 | | Seating | $33.9 | $31.0 | | Other | $34.9 | $24.6 | | Other | | | | Desking, benching, systems and storage | $10.8 | $10.7 | | Seating | $14.5 | $12.2 | | Other | $31.4 | $26.5 | | Total Revenue | $556.6 | $482.8 | Reportable Geographic Revenue (Three Months Ended) | Geographic Region | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :------------------ | :------------------------- | :------------------------- | | United States | $359.3 | $323.5 | | Foreign locations | $197.3 | $159.3 | | Total Revenue | $556.6 | $482.8 | Changes in Customer Deposits (Three Months Ended May 28, 2021) | Item | Amount (in millions) | | :------------------------------------------ | :------------------- | | Balance as of February 26, 2021 | $33.7 | | Recognition of revenue related to beginning of year customer deposits | $(18.3) | | Customer deposits received, net of revenue recognized during the period | $26.8 | | Balance as of May 28, 2021 | $42.2 | 4. EARNINGS (LOSS) PER SHARE Earnings (loss) per share is computed using the two-class method, which accounts for participating securities. Both basic and diluted EPS were $(0.24) for Q1 2022, an improvement from $(0.33) in Q1 2021 Earnings (Loss) Per Share (Three Months Ended) | Metric | May 28, 2021 | May 29, 2020 | | :------------------------------------------ | :----------- | :----------- | | Net Loss (in millions) | $(28.1) | $(38.1) | | Basic Shares (in millions) | 118.3 | 117.3 | | Diluted Shares (in millions) | 118.3 | 117.3 | | Earnings (loss) per share (Basic) | $(0.24) | $(0.33) | | Earnings (loss) per share (Diluted) | $(0.24) | $(0.33) | - Anti-dilutive performance units excluded from diluted EPS computation were 0.5 million in Q1 2022 and 0.3 million in Q1 2021[36] 5. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) improved from $(40.0) million at February 26, 2021, to $(38.8) million at May 28, 2021, primarily due to net other comprehensive income of $1.2 million during the period, driven by foreign currency translation adjustments Changes in Accumulated Other Comprehensive Income (Loss) (Three Months Ended May 28, 2021) | Component | Balance as of Feb 26, 2021 (in millions) | Net OCI (L) during period (in millions) | Balance as of May 28, 2021 (in millions) | | :------------------------------------ | :--------------------------------------- | :-------------------------------------- | :--------------------------------------- | | Unrealized gain (loss) on investments | $0.3 | $0.2 | $0.5 | | Pension and other post-retirement liability adjustments | $(6.6) | $(0.1) | $(6.7) | | Derivative amortization | $(7.6) | $0.2 | $(7.4) | | Foreign currency translation adjustments | $(26.1) | $0.9 | $(25.2) | | Total | $(40.0) | $1.2 | $(38.8) | Reclassifications from Accumulated Other Comprehensive Income (Loss) (Three Months Ended) | Detail of Components | May 28, 2021 (in millions) | May 29, 2020 (in millions) | Affected Line in Condensed Consolidated Statements of Operations | | :------------------------------------------------ | :------------------------- | :------------------------- | :------------------------------------------------------------- | | Amortization of pension and other post-retirement actuarial losses (gains) | $(0.1) | $(0.2) | Other income (expense), net / Income tax benefit | | Derivative amortization | $0.2 | $0.2 | Interest expense / Income tax benefit | | Total reclassifications | $0.1 | $— | | 6. FAIR VALUE The company measures certain financial instruments at fair value, including foreign exchange forward contracts and long-term investments. Total debt is carried at cost but its fair value is estimated using discounted cash flow analysis. The company uses derivatives to manage foreign exchange and interest rate exposures, not for speculation - The fair value of total debt was $566.8 million as of May 28, 2021, compared to its carrying amount of $483.7 million[42] Fair Value of Financial Instruments (May 28, 2021) | Fair Value of Financial Instruments | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | Total (in millions) | | :---------------------------------- | :-------------------- | :-------------------- | :-------------------- | :------------------ | | Assets: | | | | | | Cash and cash equivalents | $397.2 | $— | $— | $397.2 | | Restricted cash | $5.3 | $— | $— | $5.3 | | Foreign exchange forward contracts | $— | $0.8 | $— | $0.8 | | Auction rate security | $— | $— | $2.8 | $2.8 | | Total Assets | $402.5 | $0.8 | $2.8 | $406.1 | | Liabilities: | | | | | | Foreign exchange forward contracts | $— | $(0.5) | $— | $(0.5) | | Total Liabilities | $— | $(0.5) | $— | $(0.5) | - The auction rate security, measured using Level 3 inputs, increased in value from $2.6 million to $2.8 million during the quarter[43] 7. INVENTORIES Total inventories increased to $227.6 million as of May 28, 2021, from $193.5 million at February 26, 2021, driven by increases in both raw materials/work-in-process and finished goods Inventories (Period End) | Inventory Category | May 28, 2021 (in millions) | February 26, 2021 (in millions) | | :------------------------- | :------------------------- | :------------------------------ | | Raw materials and work-in-process | $137.1 | $126.0 | | Finished goods | $113.2 | $86.4 | | Revaluation to LIFO | $(22.7) | $(18.9) | | Total Inventories | $227.6 | $193.5 | - The portion of inventories determined by the LIFO method increased from $89.1 million to $96.5 million[45] 8. SHARE-BASED COMPENSATION The company grants Performance Units (PSUs) and Restricted Stock Units (RSUs) to employees. PSU expense for Q1 2022 was $5.2 million, and RSU expense was $7.7 million. Significant numbers of PSUs and RSUs were granted during the quarter, with remaining unrecognized compensation expense for both Performance Units (PSUs) Expense and Tax Benefit (Three Months Ended) | Metric | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :------- | :------------------------- | :------------------------- | | Expense | $5.2 | $0.2 | | Tax benefit | $1.3 | $0.1 | Restricted Stock Units (RSUs) Expense and Tax Benefit (Three Months Ended) | Metric | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :------- | :------------------------- | :------------------------- | | Expense | $7.7 | $7.6 | | Tax benefit | $1.9 | $2.3 | - As of May 28, 2021, there was $1.3 million of unrecognized compensation expense for PSUs (weighted-average period of 1.9 years) and $10.8 million for RSUs (weighted-average period of 2.1 years)[53][56] 9. LEASES The company has operating leases for various assets expiring through 2031. Operating lease cost remained stable at $13.1 million for Q1 2022 and Q1 2021. The weighted-average remaining lease term is 6.5 years with a discount rate of 3.8% Lease Expense (Three Months Ended) | Lease Component | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :-------------------- | :------------------------- | :------------------------- | | Operating lease cost | $13.1 | $13.1 | | Sublease rental income | $(0.4) | $(0.3) | | Total | $12.7 | $12.8 | Supplemental Lease Information (Three Months Ended) | Information | May 28, 2021 | May 29, 2020 | | :------------------------------------------ | :----------- | :----------- | | Operating cash flows used for operating leases | $13.4 | $12.6 | | Leased assets obtained in exchange for new operating lease obligations | $1.6 | $0.5 | | Weighted-average remaining term | 6.5 years | 7.0 years | | Weighted-average discount rate | 3.8 % | 4.0 % | Future Minimum Lease Payments as of May 28, 2021 | Fiscal Year | Amount (in millions) | | :------------ | :------------------- | | 2022 | $39.0 | | 2023 | $45.5 | | 2024 | $40.1 | | 2025 | $37.8 | | 2026 | $30.1 | | Thereafter | $72.4 | | Total lease payments | $264.9 | | Less interest | $(30.4) | | Present value of lease liabilities | $234.5 | 10. REPORTABLE SEGMENTS Steelcase operates through three reportable segments: Americas, EMEA, and Other (Asia Pacific and Designtex), plus a Corporate category for unallocated expenses. All segments showed revenue growth in Q1 2022 compared to Q1 2021, and operating losses improved in Americas and EMEA, while increasing in the Other category and Corporate - The Americas segment serves customers in the U.S., Canada, the Caribbean Islands, and Latin America. The EMEA segment serves customers in Europe, the Middle East, and Africa. The Other category includes Asia Pacific and Designtex[64][65][66] Reportable Segment Revenue (Three Months Ended) | Segment | May 28, 2021 (in millions) | May 29, 2020 (in millions) | Change (YoY) | | :-------- | :------------------------- | :------------------------- | :----------- | | Americas | $376.3 | $333.9 | +12.7% | | EMEA | $123.6 | $99.5 | +24.2% | | Other | $56.7 | $49.4 | +14.8% | | Total | $556.6 | $482.8 | +15.3% | Reportable Segment Operating Loss (Three Months Ended) | Segment | May 28, 2021 (in millions) | May 29, 2020 (in millions) | Change (YoY) | | :-------- | :------------------------- | :------------------------- | :----------- | | Americas | $(15.0) | $(23.5) | +36.2% | | EMEA | $(5.7) | $(24.6) | +76.8% | | Other | $(5.3) | $(1.6) | -231.3% | | Corporate | $(5.8) | $(2.6) | -123.1% | | Total | $(31.8) | $(52.3) | +39.2% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance and condition for Q1 2022. It highlights a 15% revenue growth, broad-based across all segments, and an improved operating loss. The discussion also covers non-GAAP financial measures, segment-specific performance, liquidity, capital resources, and forward-looking statements - Revenue grew 15% in Q1 2022 compared to the prior year, with orders growing 11% YoY and 25% QoQ (compared to Q4 2021), indicating strengthening demand as companies plan for return-to-office[81] - Cost of sales as a percentage of revenue decreased by 240 basis points, driven by lower overhead and labor costs, despite approximately $7 million in inflation from higher commodity and logistics costs[82][86] - Backlog of customer orders was approximately 20% lower than the prior year but 39% higher than at the end of Q4 2021, with most expected to ship in Q2 2022[83] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures used by management to assess performance - Non-GAAP financial measures used include organic revenue growth (excluding acquisitions, divestitures, and currency effects) and adjusted operating loss (excluding goodwill impairment charges)[76] Reconciliation of Operating Loss to Adjusted Operating Loss (Three Months Ended) | Metric | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :-------------------------- | :------------------------- | :------------------------- | | Operating loss | $(31.8) | $(52.3) | | Add: goodwill impairment charge | $— | $17.6 | | Adjusted operating loss | $(31.8) | $(34.7) | Financial Summary & Overview This section summarizes the company's financial performance and key operational highlights Q1 2022 Organic Revenue Growth by Segment | Segment | Q1 2021 Revenue (adjusted) (in millions) | Q1 2022 Revenue (in millions) | Organic Growth $ (in millions) | Organic Growth % | | :-------- | :--------------------------------------- | :---------------------------- | :----------------------------- | :--------------- | | Americas | $348.6 | $376.3 | $27.7 | 8 % | | EMEA | $109.6 | $123.6 | $14.0 | 13 % | | Other | $51.1 | $56.7 | $5.6 | 11 % | | Consolidated | $509.3 | $556.6 | $47.3 | 9 % | - Consolidated revenue grew 15% in Q1 2022, with organic revenue growth of 9% after adjusting for a $12.8 million dealer acquisition and $13.7 million in currency translation effects[79][85] Results of Operations (Consolidated) This section analyzes consolidated financial results, detailing revenue, cost of sales, operating expenses, and net loss Consolidated Statement of Operations Data (Three Months Ended) | Metric | May 28, 2021 (in millions) | % of Revenue | May 29, 2020 (in millions) | % of Revenue | | :------------------------ | :------------------------- | :----------- | :------------------------- | :----------- | | Revenue | $556.6 | 100.0 % | $482.8 | 100.0 % | | Cost of sales | $401.9 | 72.2 % | $360.1 | 74.6 % | | Gross profit | $154.7 | 27.8 % | $122.7 | 25.4 % | | Operating expenses | $186.5 | 33.5 % | $157.4 | 32.6 % | | Operating loss | $(31.8) | (5.7)% | $(52.3) | (10.8)% | | Net loss | $(28.1) | (5.0)% | $(38.1) | (7.9)% | - Net loss improved to $28.1 million in Q1 2022 from $38.1 million in Q1 2021, partly due to the absence of a $17.6 million goodwill impairment charge present in the prior year[84] - Operating expenses increased by $29.1 million, influenced by higher variable compensation and discretionary spending, partially offset by workforce reductions[88] Interest Expense, Investment Income and Other Income (Expense), Net This section details non-operating income and expense, including interest, investment income, and foreign exchange impacts Interest Expense, Investment Income and Other Income (Expense), Net (Three Months Ended) | Metric | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :------------------------------------------ | :------------------------- | :------------------------- | | Interest expense | $(6.4) | $(7.3) | | Investment income | $0.2 | $0.8 | | Equity in income of unconsolidated affiliates | $1.3 | $1.9 | | Foreign exchange gain (loss) | $(0.2) | $0.1 | | Net periodic pension and post-retirement credit, excluding service cost | $(0.2) | $— | | Miscellaneous income (expense), net | $(1.7) | $2.0 | | Total interest expense, investment income and other income (expense), net | $(7.0) | $(2.5) | - Total interest expense, investment income and other income (expense), net, decreased by $4.5 million, primarily due to a $2.8 million gain from the partial sale of an investment in Q1 2021 and higher miscellaneous expenses in Q1 2022[90] Business Segment Review This section analyzes the financial performance of each reportable business segment Americas Segment The Americas segment's operating loss improved by $8.5 million in Q1 2022, driven by a 13% revenue increase and a 320 basis point decrease in cost of sales as a percentage of revenue. Organic revenue growth was 8% Americas Segment Statement of Operations Data (Three Months Ended) | Metric | May 28, 2021 (in millions) | % of Revenue | May 29, 2020 (in millions) | % of Revenue | | :------------------ | :------------------------- | :----------- | :------------------------- | :----------- | | Revenue | $376.3 | 100.0 % | $333.9 | 100.0 % | | Cost of sales | $272.5 | 72.4 % | $252.3 | 75.6 % | | Operating loss | $(15.0) | (4.0)% | $(23.5) | (7.0)% | - Organic revenue growth for Americas was 8%, after adjusting for a $12.8 million dealer acquisition and $1.9 million in currency translation effects[94] - Operating expenses increased by $13.7 million, partially offset by a $10 million benefit from workforce reductions[96] EMEA Segment The EMEA segment's operating loss improved significantly by $18.9 million in Q1 2022, largely due to the absence of a $17.6 million goodwill impairment charge from the prior year. Revenue increased by 24%, with organic growth of 13% EMEA Segment Statement of Operations Data (Three Months Ended) | Metric | May 28, 2021 (in millions) | % of Revenue | May 29, 2020 (in millions) | % of Revenue | | :------------------ | :------------------------- | :----------- | :------------------------- | :----------- | | Revenue | $123.6 | 100.0 % | $99.5 | 100.0 % | | Cost of sales | $89.5 | 72.4 % | $75.3 | 75.7 % | | Operating loss | $(5.7) | (4.6)% | $(24.6) | (24.7)% | | Goodwill impairment charge | $— | — | $17.6 | 17.7 % | | Adjusted operating loss | $(5.7) | (4.6)% | $(7.0) | (7.0)% | - Adjusted for the goodwill impairment charge, EMEA's operating loss improved by $1.3 million, driven by higher revenue and lower cost of sales as a percentage of revenue[98] - Organic revenue growth for EMEA was 13%, after adjusting for $10.1 million of currency translation effects[99] Other Category (Asia Pacific and Designtex) The Other category, comprising Asia Pacific and Designtex, saw its operating loss increase by $3.7 million in Q1 2022. While revenue grew by 15% (11% organic), this was offset by higher operating expenses and an increase in cost of sales as a percentage of revenue Other Category Statement of Operations Data (Three Months Ended) | Metric | May 28, 2021 (in millions) | % of Revenue | May 29, 2020 (in millions) | % of Revenue | | :------------------ | :------------------------- | :----------- | :------------------------- | :----------- | | Revenue | $56.7 | 100.0 % | $49.4 | 100.0 % | | Cost of sales | $39.9 | 70.4 % | $32.5 | 65.8 % | | Operating loss | $(5.3) | (9.3)% | $(1.6) | (3.2)% | - Cost of sales as a percentage of revenue increased by 460 basis points, driven by unfavorable business mix, currency translation effects, and higher logistics costs[106] - Operating expenses increased due to higher wage and benefit expenses (following temporary pay reductions in the prior year) and increased discretionary spending[106] Corporate Corporate operating expenses increased in Q1 2022, primarily due to higher deferred compensation expense, increased wage and benefit expenses (compared to temporary reductions in the prior year), and variable compensation expense, partially offset by higher COLI income Corporate Operating Expenses (Three Months Ended) | Metric | May 28, 2021 (in millions) | May 29, 2020 (in millions) | | :----------------- | :------------------------- | :------------------------- | | Operating expenses | $5.8 | $2.6 | - The increase in corporate operating expenses was driven by $3.0 million of higher deferred compensation expense, higher wage and benefit expenses, and $0.9 million of variable compensation expense, partially offset by $1.9 million of higher COLI income[108] Liquidity and Capital Resources The company's liquidity position, including cash and cash equivalents, COLI, and credit facilities, is expected to be sufficient for foreseeable needs. Cash used in operating activities decreased, while cash used in investing activities increased due to higher capital expenditures. Financing activities shifted from providing cash to using cash, mainly due to reduced borrowings and increased dividends Liquidity Sources (Period End) | Liquidity Source | May 28, 2021 (in millions) | February 26, 2021 (in millions) | | :-------------------------- | :------------------------- | :------------------------------ | | Cash and cash equivalents | $397.2 | $489.8 | | Company-owned life insurance | $168.9 | $169.5 | | Availability under credit facilities | $265.5 | $265.9 | | Total liquidity sources available | $831.6 | $925.2 | - Cash used in operating activities decreased to $63.6 million in Q1 2022 from $93.4 million in Q1 2021, driven by lower annual payments for variable compensation and retirement plan contributions[113][114] - Capital expenditures increased to $18.4 million in Q1 2022 from $9.4 million in Q1 2021, reflecting investments in manufacturing, IT, and product development[115] - Financing activities shifted from providing $193.7 million in Q1 2021 to using $16.8 million in Q1 2022, primarily due to no new borrowings on the global committed bank facility and increased dividends[113][116] - Total consolidated debt as of May 28, 2021, was $483.7 million, primarily consisting of $444.2 million in term notes due in 2029 with a 5.6% effective interest rate[125] - The company announced a quarterly dividend of $0.145 per share for Q2 2022, an increase from $0.10 per share paid in Q1 2022[116][128] Critical Accounting Estimates This section discusses critical accounting estimates that could materially impact financial results - No material changes in critical accounting estimates occurred during Q1 2022[129] Recently Issued Accounting Standards This section updates on new accounting standards and their potential impact on financial statements - Refer to Note 2 for information on recently issued accounting standards[130] Forward-looking Statements This section cautions that forward-looking statements are subject to risks and uncertainties - The report contains forward-looking statements based on management's beliefs and assumptions, which are subject to various risks and uncertainties including economic conditions, pandemics, cyberattacks, regulatory changes, and input costs[131] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that the company's market risks, including foreign currency exchange, interest rates, commodity prices, and fixed income and equity prices, remained consistent with those disclosed in its prior annual report - No material changes in foreign exchange risk, interest rate risk, commodity price risk, or fixed income and equity price risk occurred during Q1 2022[132][133][134][135][136] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of May 28, 2021, concluding they were effective. There were no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of May 28, 2021[137] - No material changes to internal control over financial reporting occurred during the first fiscal quarter[138] PART II. OTHER INFORMATION This part includes additional information not covered in financial statements, such as risk factors and equity sales Item 1A. Risk Factors This section refers readers to the company's Annual Report on Form 10-K for a detailed explanation of business risks, stating that no material changes to these risk factors occurred during Q1 2022 - No material changes to the risk factors set forth in the Form 10-K for the fiscal year ended February 26, 2021, occurred during Q1 2022[140] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity during Q1 2022, which primarily involved repurchases to satisfy tax withholding obligations for equity awards. The company had $56.4 million remaining under its $150 million share repurchase program Summary of Share Repurchase Activity (Q1 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | :------------------ | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | | 2/27/2021 - 4/2/2021 | 353,196 | $14.16 | — | | 4/3/2021 - 4/30/2021 | — | $— | — | | 5/1/2021 - 5/28/2021 | — | $— | — | | Total | 353,196 | | — | - All repurchased shares were made to satisfy participants' tax withholding obligations upon the issuance of shares under equity awards[144] - As of May 28, 2021, $56.4 million remained available under the $150 million share repurchase program approved in January 2016[118][145] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act) and various Inline XBRL documents - Exhibits include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF, 104)[146] Signatures The report is signed on behalf of Steelcase Inc. by Robin L. Zondervan, Vice President, Corporate Controller & Chief Accounting Officer, on June 25, 2021 - The report was signed by Robin L. Zondervan, Vice President, Corporate Controller & Chief Accounting Officer, on June 25, 2021[150]