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

Summary of HNI Corporation and Steelcase Acquisition Conference Call Industry and Companies Involved - **Industry**: Workplace furnishings and office solutions - **Companies**: HNI Corporation and Steelcase Core Points and Arguments 1. **Acquisition Announcement**: HNI Corporation announced its agreement to acquire Steelcase for approximately $2.2 billion, with a share price of $18.3 for Steelcase shareholders, reflecting an enterprise value multiple of about 5.8 times pro forma adjusted EBITDA [17][20][24] 2. **Strategic Rationale**: - The acquisition aims to combine complementary dealer networks, brand portfolios, and customer segments, enhancing the ability to serve a broader range of customers from small businesses to large corporations [6][7][8] - HNI and Steelcase will unite their innovation and operational capabilities to deliver advanced solutions to customers [8][19] - The transaction is expected to be highly accretive, with projected annual run rate cost synergies of $120 million [20][21] 3. **Financial Highlights**: - Post-acquisition, HNI shareholders will own approximately 64% of the combined company, while Steelcase shareholders will own 36% [17] - The combined company is expected to generate annual net sales of approximately $5.8 billion and pro forma EBITDA of $745 million, resulting in an adjusted EBITDA margin of nearly 13% [22] - The net leverage is expected to be around 2.1 times at closing, allowing for continued balance sheet flexibility [17][21] 4. **Integration Plans**: - There are no plans to change dealer partnerships, brand distribution, or sales forces, emphasizing a commitment to existing dealer networks [6][28] - The integration process will focus on generating strong cash flow to quickly deleverage and maintain a flexible balance sheet [21] 5. **Market Positioning**: - The acquisition positions the combined entity to capture industry growth as office work trends accelerate, unlocking new opportunities across various customer segments, including healthcare, education, and hospitality [8][19][24] 6. **Future Growth Expectations**: - HNI anticipates extending its consecutive years of double-digit non-GAAP earnings growth to at least six years with the addition of Steelcase [24] - The focus will be on investments in people, distribution, and operational capabilities to enhance the ease of doing business for dealer partners [42] Other Important but Potentially Overlooked Content 1. **Commitment to Values**: Both companies share a commitment to integrity, operational excellence, and environmental responsibility, which will guide their integration efforts [23] 2. **Regulatory Considerations**: The transaction is subject to shareholder approval and regulatory clearances, but no significant issues are anticipated [18][71] 3. **Revenue Synergies**: While no revenue synergies are included in the initial projections, there is optimism about potential opportunities as the companies integrate and understand each other's dealer networks better [40][66] 4. **Cultural Integration**: The leadership from both companies expressed confidence in the cultural fit and collaborative spirit that will drive the success of the integration [13][76]

Core Insights - Purple Innovation, Inc. reported a net loss of $17.3 million for Q2 2025, which exceeded expectations, while adjusted EBITDA improved to $(2.4) million, an improvement from $(4.1) million in the previous year [1][6][5] - The company experienced a 12.6% decline in net revenue to $105.1 million compared to $120.3 million in Q2 2024, attributed to shipment delays and reduced wholesale door counts [3][4] - The launch of the Rejuvenate 2.0 collection has seen strong demand, more than doubling the initial launch of Rejuvenate 1.0, contributing to a positive outlook for the second half of 2025 [2][8] Financial Performance - Gross profit for Q2 2025 decreased to $37.7 million, with a gross margin of 35.9%, down 480 basis points year-over-year, impacted by tariffs and costs associated with new product launches [4] - Operating expenses were reduced by 18.2% to $51.9 million, primarily due to lower advertising spend and previous restructuring efforts [5] - The company maintains a cash position of $34.2 million as of June 30, 2025, an increase from $29.0 million at the end of 2024 [7] Strategic Initiatives - The company is on track with its expansion plans with Mattress Firm and is seeing increased interest from partners like Walmart and Costco, which is expected to drive future growth [2][8] - Purple Innovation is reiterating its full-year 2025 revenue outlook in the range of $465 to $485 million, with adjusted EBITDA expected to be flat to positive $10 million [8]

Financial Data and Key Metrics Changes - Non-GAAP earnings per share increased by more than 40% year over year, reaching $1.11, driven by better-than-expected volume growth [5][8][10] - Consolidated non-GAAP gross margin expanded by 90 basis points year on year to 42.9% [10] - Non-GAAP operating margin expanded by 200 basis points year over year to 11%, marking the highest EBIT margin on record for the second quarter [10][25] Business Line Data and Key Metrics Changes - In the Workplace Furnishings segment, organic net sales increased by more than 8% year over year, with contract brands revenue up nearly 15% [10][12] - Residential Building Products revenue increased by more than 5% year over year, with new construction channel revenue up over 4% and remodel retrofit sales growing over 7% [12][24] Market Data and Key Metrics Changes - Orders in the Workplace Furnishings segment grew across all major office brands, with a 3% increase in SMB orders [13][14] - In Residential Building Products, orders decreased approximately 2% year over year, but there was a return to year-over-year order improvement in May and June [15][68] Company Strategy and Development Direction - The company continues to focus on investing to drive revenue growth and expand margins, with a strong emphasis on operational efficiencies and market connectivity [33][24] - The company is optimistic about long-term opportunities in the housing market and is investing in new products and programs to increase awareness among homeowners [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategies and the ability to manage through varying macroeconomic conditions, anticipating continued revenue growth and margin expansion [13][24] - The company expects to see elevated earnings visibility through 2026, with a modest increase in the earnings outlook for 2025 [25][24] Other Important Information - The company has recognized approximately $0.24 of EPS benefit from initiatives, with an expected additional benefit of $0.50 to $0.60 over the next eighteen months [25][26] - The balance sheet remains strong, with gross debt leverage at 1.4 times, and the company continues to deploy cash through dividends and stock repurchases [32][25] Q&A Session Summary Question: What is driving the increased visibility or earnings outlook? - Management indicated increased confidence in network optimization and synergy work, leading to a modest increase in the full-year EPS outlook [36][37] Question: Is the SMB business showing signs of life? - Management noted that the SMB business is returning from a temporary lull due to tariff impacts, with contract business performing well [39][40] Question: How is the residential side performing despite market challenges? - Management highlighted strong competition and growth initiatives, with revenue up despite a challenging environment [42][44] Question: Where is the company investing in the workplace furnishing side? - Investments are focused on increasing people capacity, streamlining dealer experiences, and accelerating product cycles [53][54] Question: What is the expected margin range for the workplace business? - Management indicated a target margin range of 12% for the workplace business, with current initiatives expected to drive further expansion [56] Question: How are large contract customers feeling about business conditions? - Management reported that large customers are investing in their in-office models and moving forward with capital projects [84][86] Question: How much of the revenue growth in Residential Building Products is from volume versus pricing? - Management indicated that the growth is primarily driven by pricing, with volume expected to increase in the second half of the year [87]

Financial Data and Key Metrics Changes - Non-GAAP earnings per share increased by 41% year over year to $1.11, driven by better-than-expected volume growth [8][9] - Consolidated non-GAAP gross margin expanded by 90 basis points year on year to 42.9% [9] - Non-GAAP operating margin expanded by 200 basis points year over year to 11%, marking the highest EBIT margin on record for the second quarter [9][24] Business Line Data and Key Metrics Changes - In the Workplace Furnishings segment, organic net sales increased by more than 8% year over year, with contract brands revenue up nearly 15% [9][10] - Residential Building Products revenue increased by more than 5% year over year, with new construction channel revenue up over 4% and remodel retrofit sales growing over 7% [11][12] - Workplace Furnishings non-GAAP EBIT margin expanded by 120 basis points year over year to 13.1% [10] Market Data and Key Metrics Changes - Orders in the Workplace Furnishings segment grew across all major office brands, with a 3% increase in SMB orders [13][14] - Residential Building Products orders decreased approximately 2% year over year, but showed improvement in May and June [15][16] Company Strategy and Development Direction - The company continues to focus on investing in growth initiatives across both segments, with a strong emphasis on market connectivity and product development [22][50] - The company is optimistic about long-term opportunities in the housing market despite current challenges, and is enhancing its product offerings to increase market share [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a fourth consecutive year of double-digit non-GAAP earnings improvement, supported by margin expansion and revenue growth [6][24] - The company remains focused on operational efficiencies and has high visibility for significant profit growth driven by ongoing initiatives [24][30] Other Important Information - The company has recognized approximately $0.24 of EPS benefit from its initiatives, with an expected additional benefit of $0.50 to $0.60 over the next eighteen months [24] - The company continues to maintain a strong balance sheet, with gross debt leverage at 1.4 times [30] Q&A Session Summary Question: What is driving the increased earnings outlook? - Management indicated that confidence in network optimization and synergy work has led to a modest increase in the full-year EPS outlook [34] Question: Is the SMB business showing signs of improvement? - Management noted that the SMB business is rebounding from a temporary lull due to tariff impacts, indicating a return to growth [36][37] Question: How is the residential segment performing despite market challenges? - Management highlighted strong competition and growth initiatives as key factors contributing to outperformance in the residential segment [39][40] Question: Where is the company investing in the workplace furnishings segment? - Investments are focused on increasing people capacity, streamlining dealer experiences, and accelerating product cycles [50] Question: What is the expected margin range for the workplace business? - Management indicated a target margin range of 12% for the workplace business, with room for expansion due to ongoing initiatives [52] Question: How is the company managing cash flow and capital expenditures? - Management expects free cash flow growth to align with earnings per share growth, projecting an increase in cash flow generation [68]

HNI Corporation Overview - HNI Corporation's TTM (Trailing Twelve Months) revenue is $2.53 billion[8] - HNI Corporation's TTM Non-GAAP EBITDA is $322.7 million[8] - HNI Corporation's 2024 Cash Dividends totaled $63.6 million[8] - HNI Corporation's five-year average free cash flow is $137 million, exceeding $3.00 per share[8] Workplace Furnishings Segment - HNI expects total savings of $80-$85 million compared to 2022, with $45-$50 million benefiting 2025 and 2026, equating to $0.70-$0.80 of incremental EPS[6,34] - HNI anticipates KII (Kimball International) synergies to reach $60 million by the end of 2026, more than double the initial projection from mid-2023[6,34] - HNI expects total net savings from the Mexico facility ramp to reach $20-$25 million by the end of 2026[6,34] - HNI expects total savings of $11 million by the end of 2026 from Hickory consolidation, which are included in KII synergies[6,34] - Industry shipments remain 12% below pre-COVID levels[57,58] - 2024 industry volume (adjusted for pricing actions/inflation) is approximately 35% below 2019 levels[57,58] Residential Building Products Segment - Approximately 20-25% of HNI's new home business flows through its vertically-integrated installing distribution model[67] - 61% of all mortgage rates are below 4%, creating a "lock-in" effect that is positive for future remodel/retrofit activity[75]

Core Insights - Steelcase Inc. reported first quarter revenue of $779.0 million, a 7% increase from $727.3 million in the prior year, with net income rising to $13.6 million from $10.9 million [1][23][38] - The company experienced organic revenue growth of 7%, driven by a 9% increase in the Americas, while international revenue saw a 1% decline [1][16] - The backlog at the end of the first quarter was approximately $801 million, a 2% increase compared to the previous year [11] Financial Performance - Adjusted earnings per share for the first quarter were $0.20, up from $0.16 in the prior year [18] - Operating income increased by 45% to $25.5 million, with adjusted operating income rising to $39.0 million, an increase of $10.8 million [3][4][23] - Gross margin improved to 33.9%, reflecting a 170 basis point increase from the previous year [4][6] Revenue Breakdown - Revenue from the Americas segment was $603.6 million, a 9% increase, while international revenue was $175.4 million, a 1% increase [14][25] - The Americas accounted for 77.5% of total revenue, while international revenue made up 22.5% [14] Orders and Market Dynamics - Orders adjusted for currency translation effects declined modestly, with a 1% decrease in the Americas and a 1% increase in international orders [2] - The decline in the Americas was attributed to decreases from government and education customers, despite growth from large corporate clients [2][3] Strategic Initiatives - The company initiated restructuring actions in the Americas aimed at reducing annualized spending by approximately $20 million [6] - Steelcase is focusing on investments in strategic initiatives and growth areas, particularly in response to weak demand in Germany and France [6] Outlook - For the second quarter of fiscal 2026, Steelcase expects revenue in the range of $860 to $890 million, translating to flat to 4% growth compared to the prior year [11][20] - Projected adjusted earnings per share for the second quarter are estimated to be between $0.36 to $0.40 [22]

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Financial Results Announcement - Steelcase Inc. will webcast a discussion of its first quarter fiscal year 2026 financial results on June 26, 2025, at 8:30 a.m. ET [1] - A news release detailing the financial results will be issued on June 25, 2025, after the market closes [1] Annual Meeting of Shareholders - Steelcase Inc. will hold its Annual Meeting of Shareholders on July 9, 2025, via live webcast at 11:00 a.m. ET [2] - The webcast will be accessible online, and a replay will be available after the event concludes [2] Company Overview - Steelcase Inc. is a global design and thought leader focused on improving work environments [3] - The company collaborates with over 30 creative and technology partner brands to research, design, and manufacture furnishings and solutions for various workspaces [3] - Steelcase employs approximately 11,300 individuals and aims to enhance the wellbeing of people and the planet [3] - The company's solutions are distributed through a global network of expert dealers in around 790 locations [3]

Financial Data and Key Metrics Changes - Non-GAAP EPS increased nearly 20% year over year, reaching $0.44 per share [5][8] - Revenue growth returned in both segments, with Workplace Furnishings revenue slightly increasing and Residential Building Products revenue growing 7% year over year [8][10] - Consolidated non-GAAP gross and operating margins expanded year over year, with non-GAAP operating margin at the highest first quarter level since 2007 [8][9] Business Line Data and Key Metrics Changes - Workplace Furnishings segment saw a slight revenue increase, but non-GAAP EBIT margin compressed by 20 basis points year over year due to a different mix of business [9][10] - Residential Building Products revenue increased 7% year over year, with remodel retrofit business growing 13% and operating profit growing 16% [11][12] Market Data and Key Metrics Changes - Contract customer revenue increased 4% year over year, while shipments to small and medium-sized businesses (SMB) declined approximately 5% [9][10] - Orders in the Residential Building Products segment increased 8% year over year, with remodel retrofit orders up double digits [15][16] Company Strategy and Development Direction - The company remains focused on investing to drive revenue growth and expanding margins, with a cautious yet confident outlook for 2025 [6][32] - Continued investment in new product development and strengthening relationships with builders is emphasized to enhance market position [22][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledges heightened macroeconomic uncertainty but expresses confidence in strategies and customer commitment to long-term investments [13][38] - The company expects continued earnings improvement driven by margin expansion and revenue growth, despite potential demand volatility [12][23] Other Important Information - The company maintains a strong balance sheet and cash flow generation, with a gross debt leverage ratio of 1.3 times [30][31] - Ongoing initiatives in Mexico and KII synergies are expected to contribute an additional $0.70 to $0.80 of EPS through 2026 [23][24] Q&A Session Summary Question: What was the SMB order number this last quarter? - SMB orders were slightly down 5% for Q1 [36] Question: Are there any changes in order patterns or buying activity due to increased uncertainty? - There is a lot of uncertainty, but the backlog looks encouraging, and customers are committed to long-term investments [38] Question: Was the hospitality business affected by tough comparisons this quarter? - Yes, it was a tough comp, and there is some volatility in demand, particularly in custom business [40] Question: Did you see any improvement in the transactional part of the SMB business in April? - Orders started to pick back up over the last five weeks, indicating resilience [47] Question: What are the end market assumptions for the second half? - Limited market help is expected, but strategic initiatives are anticipated to drive low single-digit growth [55] Question: How do you expect earnings visibility to translate into free cash flow? - Expected free cash flow from transformational efforts is projected to be $45 million to $50 million, enhancing financial flexibility [64]