Steelcase(US:SCS)2022-09-22 16:11Financial Data and Key Metrics Changes - The second quarter revenue grew 20% organically compared to the prior year, with double-digit growth across all segments, although it was slightly below the expected range [25][27] - Earnings for the second quarter exceeded expectations, driven by higher pricing benefits and favorable inventory adjustments [27][28] - Inflationary pressures have accumulated to $270 million over the last six quarters, but for the first time since fiscal 2021, year-over-year pricing benefits exceeded inflation this quarter [28] Business Line Data and Key Metrics Changes - The AMQ business revenue grew 50% this quarter compared to the prior year, focusing on small and midsized customers [17] - The education business, particularly Smith System, achieved its highest quarterly revenue in history, growing by more than 50% year-over-year [18] - Retail business revenue grew 17% versus the prior year, with increased investments allocated to drive further growth [18] Market Data and Key Metrics Changes - Order volume in the Americas core business was down 8%, indicating a slowdown in demand patterns [13] - EMEA posted an operating loss of $6.8 million, impacted by project slippages and inflation [29] - The Americas saw a 7% growth in orders, while EMEA experienced a 4% growth, with Asia Pacific showing weakness except for India [32] Company Strategy and Development Direction - The company remains focused on leading the hybrid work transformation and is committed to helping organizations adapt to new workplace strategies [10][12] - Investments in innovation and acquisitions, such as Halcon, are part of the strategy to enhance market share and diversify revenue [12][15] - The company is adjusting its operational model to drive greater efficiency and resiliency while reducing planned spending levels [15][35] Management's Comments on Operating Environment and Future Outlook - Management noted that the return to office levels are improving, but some companies are pausing investments due to economic uncertainty [13] - The company is planning to implement additional actions to reduce spending, targeting approximately $20 million in annualized savings [35] - Despite challenges, management believes the strategy is working, with positive customer interactions and a strong backlog of approximately $946 million [37][41] Other Important Information - The company has been recognized for its commitment to ESG, including educational webinars for suppliers and transparency in material health [19][21] - The company adjusted its dividend to strengthen liquidity and support capital allocation for reinvestments [36][102] Q&A Session Summary Question: Can you elaborate on the thought process behind the cuts to corporate headcount and the dividend? - Management acknowledged mixed signals in pipeline activity and decided to take action due to increased economic uncertainty while balancing market share gains [49][50] Question: What is the current status of price-cost dynamics relative to pre-pandemic levels? - Management indicated that cumulative inflationary costs have reached $270 million, and while pricing actions are starting to offset these costs, they are still behind [55][56] Question: How is the acquisition of Halcon performing? - Management reported positive feedback and enthusiasm regarding the Halcon acquisition, which is dealing with similar supply chain challenges [92] Question: What is the sentiment regarding order patterns despite positive presales activity? - Management noted that while sentiment is positive, economic concerns may be impacting order patterns, and there is uncertainty about future demand [112][113] Question: Is the company considering further acquisitions in the education vertical? - Management stated that while they are open to acquisitions, they do not see it as necessary for continued success in the education market [117]