Steelcase(US:SCS)2023-06-22 15:05Financial 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]