Steelcase(SCS) - 2023 Q2 - Quarterly Report

PART I. Financial Information This section presents unaudited financial statements, management's analysis, market risks, and controls Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements and accompanying notes Condensed Consolidated Statements of Operations Presents revenues, costs, gross profit, operating income, and net income (loss) over specified periods Condensed Consolidated Statements of Operations (Unaudited) (in millions, except per share data) | Metric | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Revenue | $863.3 | $724.8 | $1,604.0 | $1,281.4 | | Cost of sales | $612.5 | $518.0 | $1,160.7 | $919.9 | | Gross profit | $250.8 | $206.8 | $442.4 | $361.5 | | Operating income | $28.9 | $33.9 | $16.3 | $2.1 | | Net income (loss) | $19.6 | $24.7 | $8.2 | $(3.4) | | Basic EPS | $0.17 | $0.21 | $0.07 | $(0.03) | | Diluted EPS | $0.17 | $0.21 | $0.07 | $(0.03) | | Dividends declared and paid per common share | $0.145 | $0.145 | $0.290 | $0.245 | Condensed Consolidated Statements of Comprehensive Income (Loss) Details net income (loss) and other comprehensive income (loss) components for total comprehensive income (loss) Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (in millions) | Metric | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income (loss) | $19.6 | $24.7 | $8.2 | $(3.4) | | Total other comprehensive income (loss), net | $(20.8) | $(12.1) | $(39.2) | $(10.9) | | Comprehensive income (loss) | $(1.2) | $12.6 | $(31.0) | $(14.3) | - Foreign currency translation adjustments were a significant negative contributor to other comprehensive income (loss), with a $(21.3) million impact for the three months ended August 26, 2022, and $(39.9) million for the six months ended August 26, 2022[13] Condensed Consolidated Balance Sheets Presents a snapshot of the Company's assets, liabilities, and shareholders' equity at specific points in time Condensed Consolidated Balance Sheets (in millions) | Asset/Liability | August 26, 2022 | February 25, 2022 | | :------------------------------------------ | :-------------- | :---------------- | | Cash and cash equivalents | $52.2 | $200.9 | | Accounts receivable, net | $413.3 | $340.4 | | Inventories | $396.7 | $326.2 | | Total current assets | $952.9 | $959.2 | | Total assets | $2,302.6 | $2,261.0 | | Accounts payable | $274.2 | $243.6 | | Short-term borrowings and current portion of long-term debt | $118.1 | $5.1 | | Total current liabilities | $725.1 | $567.2 | | Total liabilities | $1,503.2 | $1,408.8 | | Total shareholders' equity | $799.4 | $852.2 | - Cash and cash equivalents decreased significantly from $200.9 million to $52.2 million, while short-term borrowings increased from $5.1 million to $118.1 million, indicating a shift in liquidity management[16] - Goodwill increased from $242.8 million to $277.0 million, and other intangible assets, net, increased from $85.5 million to $123.0 million, reflecting recent acquisitions[16] Condensed Consolidated Statements of Changes in Shareholders' Equity Outlines changes in common shares, paid-in capital, retained earnings, and accumulated other comprehensive income Key Changes in Shareholders' Equity (in millions, except share data) | Metric | Three Months Ended Aug 26, 2022 | Six Months Ended Aug 26, 2022 | | :-------------------------------------- | :------------------------------ | :---------------------------- | | Common shares outstanding, end of period | 112,762,002 | 112,762,002 | | Additional paid-in capital, end of period | $13.7 | $13.7 | | Accumulated other comprehensive income (loss), end of period | $(89.8) | $(89.8) | | Retained earnings, end of period | $875.5 | $875.5 | | Total shareholders' equity | $799.4 | $799.4 | - Accumulated other comprehensive income (loss) significantly declined from $(50.6) million at the beginning of the six-month period to $(89.8) million, primarily due to foreign currency translation adjustments[19][41] Condensed Consolidated Statements of Cash Flows Categorizes cash flows into operating, investing, and financing activities, impacting cash balances Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions) | Activity | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Net cash used in operating activities | $(74.4) | $(61.6) | | Net cash used in investing activities | $(115.3) | $(6.5) | | Net cash provided by (used in) financing activities | $43.3 | $(59.9) | | Effect of exchange rate changes on cash and cash equivalents | $(2.0) | $(0.6) | | Net decrease in cash, cash equivalents and restricted cash | $(148.4) | $(128.6) | | Cash and cash equivalents and restricted cash, end of period | $58.6 | $367.0 | - Net cash used in investing activities increased substantially from $(6.5) million in the prior year to $(115.3) million, primarily due to acquisitions, net of cash acquired, totaling $(105.4) million[22][138] - Financing activities shifted from using cash $(59.9) million to providing cash $43.3 million, driven by significant borrowings on the global committed bank facility ($266.8 million) partially offset by repayments ($187.0 million)[22][139] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Basis of Presentation Describes accounting principles and conventions for unaudited interim financial statements - The financial statements are unaudited and prepared in accordance with GAAP for interim financial information, not including all disclosures for complete annual statements[27] - All references to 'Steelcase,' 'we,' 'our,' 'Company' refer to Steelcase Inc. and its subsidiaries, with fiscal years ending in February[28] 2. New Accounting Standards Discusses assessment of recently issued accounting standards and their expected financial impact - The Company has assessed all issued but not yet adopted Accounting Standards Updates (ASUs) and concluded that none are expected to have a material effect on its consolidated financial statements[29] 3. Revenue Disaggregates revenue by product category and geographic segment, detailing customer deposits Disaggregated Revenue by Product Category and Segment (in millions) | Product Category Data | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Americas | | | | | | Desking, benching, systems and storage | $303.4 | $244.3 | $563.7 | $429.4 | | Seating | $203.3 | $165.5 | $359.5 | $283.7 | | Other | $144.9 | $113.5 | $249.2 | $186.5 | | EMEA | | | | | | Desking, benching, systems and storage | $49.4 | $41.7 | $105.1 | $96.5 | | Seating | $45.7 | $55.7 | $99.0 | $89.6 | | Other | $42.7 | $41.5 | $90.1 | $76.4 | | Other | | | | | | Desking, benching, systems and storage | $14.1 | $14.5 | $25.8 | $25.3 | | Seating | $22.3 | $16.2 | $39.7 | $30.7 | | Other | $37.5 | $31.9 | $71.9 | $63.3 | | Total Revenue | $863.3 | $724.8 | $1,604.0 | $1,281.4 | Reportable Geographic Revenue (in millions) | Reportable Geographic Revenue | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :---------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | United States | $634.6 | $493.5 | $1,136.3 | $852.8 | | Foreign locations | $228.7 | $231.3 | $467.7 | $428.6 | | Total Revenue | $863.3 | $724.8 | $1,604.0 | $1,281.4 | - Customer deposits increased from $53.4 million to $65.3 million during the six months ended August 26, 2022, including $24.3 million from the Halcon acquisition[34] 4. Earnings (Loss) Per Share Explains computation of basic and diluted earnings (loss) per share using the two-class method - Earnings per share are computed using the two-class method, accounting for participating securities like restricted stock units[36] Earnings (Loss) Per Share (in millions, except per share data) | Metric | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net Income (Loss) used in calculation | $18.9 | $24.1 | $7.9 | $(3.3) | | Basic Shares (in millions) | 112.8 | 114.9 | 112.8 | 115.2 | | Diluted Shares (in millions) | 113.3 | 115.5 | 113.3 | 115.2 | | Basic EPS | $0.17 | $0.21 | $0.07 | $(0.03) | | Diluted EPS | $0.17 | $0.21 | $0.07 | $(0.03) | 5. Accumulated Other Comprehensive Income (Loss) Details components and changes in accumulated other comprehensive income (loss), including foreign currency Changes in Accumulated Other Comprehensive Income (Loss) (in millions) | Component | Balance as of Feb 25, 2022 | Net OCI (Loss) during period (6 months) | Balance as of Aug 26, 2022 | | :------------------------------------------ | :------------------------- | :-------------------------------------- | :------------------------- | | Unrealized gain on investment | $0.3 | $0.0 | $0.3 | | Pension and other post-retirement liability adjustments | $5.2 | $0.2 | $5.4 | | Derivative amortization | $(6.7) | $0.5 | $(6.2) | | Foreign currency translation adjustments | $(49.4) | $(39.9) | $(89.3) | | Total | $(50.6) | $(39.2) | $(89.8) | - Foreign currency translation adjustments were the primary driver of the decrease in accumulated other comprehensive income (loss), contributing $(39.9) million to the net other comprehensive loss for the six months ended August 26, 2022[41] 6. Fair Value Describes fair value measurements of financial instruments, including derivatives and debt - The Company uses derivative financial instruments, specifically foreign exchange forward contracts, to manage exposures to foreign exchange rates and interest rates, not for speculative purposes[47] Fair Value of Financial Instruments (in millions) | Instrument | August 26, 2022 (Total) | February 25, 2022 (Total) | | :------------------------------ | :---------------------- | :------------------------ | | Assets: | | | | Cash and cash equivalents | $52.2 | $200.9 | | Restricted cash | $6.4 | $6.1 | | Foreign exchange forward contracts | $1.8 | $1.0 | | Auction rate security | $2.6 | $2.6 | | Liabilities: | | | | Foreign exchange forward contracts | $(0.7) | $(0.3) | - The fair value of total debt was $538.3 million as of August 26, 2022, compared to its carrying amount of $563.5 million[46] 7. Inventories Provides a breakdown of inventory components: raw materials, work-in-process, and finished goods Inventories (in millions) | Category | August 26, 2022 | February 25, 2022 | | :------------------------ | :-------------- | :---------------- | | Raw materials and work-in-process | $276.4 | $208.2 | | Finished goods | $153.7 | $146.9 | | Revaluation to LIFO | $33.4 | $28.9 | | Total Inventories | $396.7 | $326.2 | - Inventories increased by $70.5 million from February 25, 2022, to August 26, 2022, primarily driven by an increase in raw materials and work-in-process[49] 8. Short-Term Borrowings Details the Company's short-term borrowing arrangements, including its global committed bank facility - The Company has a $250.0 million global committed bank facility expiring in 2025, with $79.8 million outstanding as of August 26, 2022, at an effective interest rate of 3.75%[52] - Borrowings under the facility in Q2 2023 were used to fund a portion of the Halcon acquisition and support global operating requirements[52] - The Company was in compliance with all covenants under the facility as of August 26, 2022, and the facility does not restrict cash dividend payments or share repurchases[53] 9. Share-Based Compensation Outlines accounting for performance units and restricted stock units, including expense and tax benefits - Performance Units (PSUs) are issued to employees, earned over a three-year period based on performance and market conditions (Total Shareholder Return)[55] PSU Expense and Tax Benefit (in millions) | Metric | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :---------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Expense (credit) | $(0.2) | $0.4 | $3.9 | $5.6 | | Tax benefit | $0.0 | $0.1 | $1.0 | $1.4 | - Restricted Stock Units (RSUs) awarded during the six months ended August 26, 2022, totaled 1,068,507 units, with restrictions lapsing one to three years after the grant date[61] RSU Expense and Tax Benefit (in millions) | Metric | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :---------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Expense | $3.3 | $1.5 | $11.2 | $9.2 | | Tax benefit | $0.8 | $0.4 | $2.8 | $2.3 | 10. Leases Describes operating lease arrangements, lease costs, and future minimum lease payments - The Company has operating leases for various facilities and equipment expiring through 2036, with options to renew or terminate[65] Lease Expense and Cash Flow Information (in millions) | Metric | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Operating lease cost, net of sublease income | $13.0 | $12.7 | $24.5 | $25.4 | | Operating cash flows used for operating leases | $13.6 | $13.4 | $27.1 | $26.8 | | Leased assets obtained in exchange for new operating lease obligations | $10.3 | $15.7 | $13.5 | $17.3 | Future Minimum Lease Payments as of August 26, 2022 (in millions) | Fiscal Year Ending in February | Amount | | :----------------------------- | :----- | | 2023 | $23.3 | | 2024 | $49.0 | | 2025 | $44.7 | | 2026 | $34.9 | | 2027 | $28.1 | | Thereafter | $53.0 | | Total Lease Payments | $233.0 | | Less: Interest | $23.6 | | Present Value of Lease Liabilities | $209.4 | 11. Acquisitions Details recent acquisitions, including purchase prices, intangible assets, and goodwill recognized - In Q3 2022, Steelcase acquired Viccarbe Habitat, S.L. for $34.9 million in cash, with up to an additional $15.1 million in contingent consideration and $7.0 million based on milestones and continued employment[70] - The Viccarbe acquisition resulted in $11.7 million in identifiable intangible assets (trademark, dealer relationships, know-how/designs) and $25.8 million in goodwill, recorded in the EMEA segment[71][72] - In Q2 2023, Steelcase acquired Halcon Furniture LLC for $127.5 million (adjusted for customer deposits and working capital), funded by cash and borrowings[75] - The Halcon acquisition resulted in $51.8 million in identifiable intangible assets (dealer relationships, trademark, know-how/designs, backlog) and $36.9 million in goodwill, recorded in the Americas segment[76][77] 12. Reportable Segments Provides financial information for the Company's Americas, EMEA, and Other reportable segments - The Company operates through three reportable segments: Americas, EMEA, and Other (Asia Pacific and Designtex), with unallocated corporate expenses reported as Corporate[80][81][82][83][85] Reportable Segment Revenue and Operating Income (Loss) (in millions) | Segment | Three Months Ended Aug 26, 2022 Revenue | Three Months Ended Aug 27, 2021 Revenue | Six Months Ended Aug 26, 2022 Revenue | Six Months Ended Aug 27, 2021 Revenue | | :-------- | :-------------------------------------- | :-------------------------------------- | :------------------------------------ | :------------------------------------ | | Americas | $651.6 | $523.3 | $1,172.4 | $899.6 | | EMEA | $137.8 | $138.9 | $294.2 | $262.5 | | Other | $73.9 | $62.6 | $137.4 | $119.3 | | Total | $863.3 | $724.8 | $1,604.0 | $1,281.4 | | | Operating Income (Loss) | Operating Income (Loss) | Operating Income (Loss) | Operating Income (Loss) | | Americas | $43.5 | $44.7 | $42.3 | $29.7 | | EMEA | $(6.8) | $(1.6) | $(5.5) | $(7.3) | | Other | $(1.3) | $(4.2) | $(4.2) | $(9.5) | | Corporate | $(6.5) | $(5.0) | $(16.3) | $(10.8) | | Total | $28.9 | $33.9 | $16.3 | $2.1 | Reportable Segment Total Assets (in millions) | Segment | August 26, 2022 | February 25, 2022 | | :-------- | :-------------- | :---------------- | | Americas | $1,358.1 | $1,110.4 | | EMEA | $420.0 | $475.2 | | Other | $227.0 | $227.6 | | Corporate | $297.5 | $447.8 | | Total | $2,302.6 | $2,261.0 | 13. Restructuring Activities Describes restructuring actions, including costs for employee terminations and business exit - In Q4 2022, the Board approved restructuring actions to exit the technology business, incurring $4.7 million in costs in the Americas segment, primarily for severance and business exit costs[89] - Restructuring costs included $1.8 million for employee termination and $2.4 million for business exit costs in Q1 2023, plus a $0.5 million impairment charge in Q2 2023[89] 14. Subsequent Events Discloses significant events after the balance sheet date, including planned operational spending reductions - On September 21, 2022, the Board authorized actions to reduce operational spending, including the elimination of up to 180 salaried positions in the Americas and Corporate functions, expected to incur approximately $8 million in restructuring costs in Q3 2023[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition, operations, liquidity, and capital resources Financial Summary Provides an overview of reportable segments and the use of non-GAAP financial measures - The Company's reportable segments are Americas, EMEA, and Other, with Corporate covering unallocated expenses[95] - Non-GAAP financial measures used include organic revenue growth, adjusted operating income (loss), and adjusted earnings per share, which are reconciled to GAAP measures[94] Results of Operations Analyzes consolidated revenue, gross profit, operating income, and net income (loss) Consolidated Statement of Operations Data (in millions, except per share data) | Metric | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Revenue | $863.3 | $724.8 | $1,604.0 | $1,281.4 | | Gross profit | $250.8 | $206.8 | $442.4 | $361.5 | | Operating income | $28.9 | $33.9 | $16.3 | $2.1 | | Net income (loss) | $19.6 | $24.7 | $8.2 | $(3.4) | | Diluted EPS | $0.17 | $0.21 | $0.07 | $(0.03) | - Q2 2023 revenue increased 19% year-over-year to $863.3 million, driven by strong order backlog, significant pricing benefits (approximately $80 million), and the Halcon acquisition[98][101] - Year-over-year pricing benefits of approximately $80 million exceeded inflation by approximately $30 million in Q2 2023[98] - Q2 2023 operating income decreased by $5.0 million to $28.9 million, but excluding a prior-year land sale gain, operating income increased due to higher volume and pricing benefits, partially offset by higher operating expenses[100] - Year-to-date 2023 net income was $8.2 million, a significant improvement from a net loss of $3.4 million in the prior year, with operating income increasing by $14.2 million to $16.3 million[104] Organic Revenue Growth by Segment | Segment | Q2 2023 Organic Growth % | Year-to-date 2023 Organic Growth % | | :-------- | :----------------------- | :--------------------------------- | | Americas | 21% | 28% | | EMEA | 12% | 24% | | Other | 21% | 17% | | Consolidated | 20% | 26% | Interest Expense, Investment Income and Other Income (Expense), Net Details interest expense, investment income, and other net income (expense) components Interest Expense, Investment Income and Other Income (Expense), Net (in millions) | Metric | Three Months Ended Aug 26, 2022 | Three Months Ended Aug 27, 2021 | Six Months Ended Aug 26, 2022 | Six Months Ended Aug 27, 2021 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Interest expense | $(7.2) | $(6.4) | $(13.6) | $(12.8) | | Investment income | $0.3 | $0.1 | $0.4 | $0.3 | | Total other income, net | $4.4 | $1.8 | $7.5 | $1.0 | | Total interest expense, investment income and other income, net | $(2.5) | $(4.5) | $(5.7) | $(11.5) | - Interest expense increased due to borrowings on the global committed bank facility in Q2 2023[109] - Total other income, net, increased by $2.6 million in Q2 2023 and $6.5 million year-to-date, primarily driven by higher income from unconsolidated affiliates and foreign exchange gains[109] Business Segment Review Provides a detailed review of financial performance for each reportable segment Americas Reviews Americas segment's revenue growth, operating income, and cost of sales performance - Americas revenue increased by 25% in Q2 2023 and 30% year-to-date, driven by higher volume (including acquisitions like Halcon) and pricing benefits[113] - Q2 2023 operating income decreased by $1.2 million, but adjusted operating income improved by $2.0 million, excluding a prior-year land sale gain[112] - Cost of sales as a percentage of revenue decreased by 120 basis points in Q2 2023 due to higher volume and pricing benefits, net of inflation[114] EMEA Analyzes EMEA segment's revenue, operating results, and impact of currency translation and inflation - EMEA revenue decreased by 1% in Q2 2023 due to unfavorable currency translation effects offsetting pricing benefits, but increased 12% year-to-date[118] - Q2 2023 operating results decreased by $5.2 million, primarily due to higher cost of sales as a percentage of revenue driven by inflation[117][119] - Year-to-date operating results improved by $1.8 million, driven by higher revenue and lower operating expenses as a percentage of revenue[117] Other Examines Other segment's revenue and operating results, driven by volume and pricing benefits - The Other category's revenue increased by 18% in Q2 2023 and 15% year-to-date, driven by higher volume and pricing benefits across India, Southeast Asia, Designtex, and Japan[123] - Operating results improved by $2.9 million in Q2 2023 and $5.3 million year-to-date, attributed to higher revenue, lower cost of sales, and reduced operating expenses as a percentage of revenue[122] Corporate Discusses changes in unallocated corporate operating expenses, including COLI income and spending - Corporate operating expenses increased by $1.5 million in Q2 2023 and $5.5 million year-to-date, primarily due to lower Company-owned life insurance (COLI) income and higher spending, partially offset by lower deferred compensation expense[128] Non-GAAP Financial Measures Defines and explains the Company's use of non-GAAP financial measures - Organic revenue growth excludes the impact of acquisitions, divestitures, and foreign currency translation effects to provide a consistent comparison[130] - Adjusted operating income (loss) and adjusted earnings per share exclude amortization of purchased intangible assets and restructuring costs to offer a more consistent view of operating performance[131][132] Liquidity and Capital Resources This section analyzes the Company's cash flows, liquidity sources, and capital expenditure plans Liquidity Sources (in millions) | Source | August 26, 2022 | February 25, 2022 | | :-------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $52.2 | $200.9 | | Company-owned life insurance | $161.7 | $168.0 | | Availability under credit facilities | $136.4 | $262.0 | | Total liquidity sources available | $350.3 | $630.9 | - Net cash used in operating activities increased to $(74.4) million year-to-date 2023, primarily due to increased inventory levels and accounts receivable[136][137] - Net cash used in investing activities significantly increased to $(115.3) million year-to-date 2023, mainly due to acquisitions[136][138] - Net cash provided by financing activities was $43.3 million year-to-date 2023, driven by borrowings on the global committed bank facility[136][139] - The Company expects its liquidity position, credit facilities, and future cash generation to be sufficient to finance known or foreseeable liquidity needs[146] - Planned capital expenditures for 2023 are estimated at $50 million to $60 million, and a quarterly dividend of $0.10 per share was announced for Q3 2023[148] Critical Accounting Estimates Confirms no material changes to the critical accounting estimates previously disclosed - There have been no material changes to the critical accounting estimates identified in the Annual Report on Form 10-K for the fiscal year ended February 25, 2022[151] Recently Issued Accounting Standards Refers to Note 2 for information on recently issued accounting standards - Refer to Note 2 of the condensed consolidated financial statements for information on recently issued accounting standards[152] Forward-looking Statements Highlights forward-looking statements and associated risks and uncertainties impacting future financial conditions - The report contains forward-looking statements regarding future events, plans, and financial conditions, which are subject to risks and uncertainties including economic conditions, acts of terrorism, cyberattacks, and changes in costs or demand[153] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risks, including foreign currency, interest rates, and commodity prices - No material changes occurred in foreign exchange risk, interest rate risk, commodity price risk, or fixed income and equity price risk during Q2 2023[155][156][157][158] Item 4. Controls and Procedures Management confirmed effective disclosure controls and no material changes to internal financial reporting controls - Disclosure controls and procedures were evaluated and deemed effective as of August 26, 2022[160] - No material changes occurred in internal control over financial reporting during the second fiscal quarter[161] PART II. Other Information This section covers risk factors, equity security sales, and required exhibits for the report Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K - No material changes to the risk factors set forth in the Annual Report on Form 10-K for the fiscal year ended February 25, 2022[164] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Share repurchases in Q2 2023 were solely for tax withholding on equity awards, not public plans Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in millions) | | :------------------- | :----------------------------- | :--------------------------- | :------------------------------------------------------------------------------------------------- | | 5/28/2022 - 7/1/2022 | 198 | $11.92 | $6.4 | | 7/2/2022 - 7/29/2022 | — | — | $6.4 | | 7/30/22 - 8/26/2022 | — | — | $6.4 | | Total | 198 | | | - All 198 shares repurchased in Q2 2023 were to satisfy participants' tax withholding obligations upon the issuance of shares under equity awards[167] - As of August 26, 2022, $6.4 million remained available under the $150 million share repurchase program approved in 2016[141][166] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications and 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)[169] SIGNATURES This section contains the required signatures for the Form 10-Q, certifying its submission by the CFO - The report was signed by David C. Sylvester, Senior Vice President, Chief Financial Officer, on September 23, 2022[174]