Steelcase(SCS)2023-12-20 16:01Financial Data and Key Metrics Changes - The company reported third quarter revenue of 0.10 per share [21] - Gross margin improved by 360 basis points year-over-year, driven by higher pricing benefits and lower operating expenses [8][23] Business Line Data and Key Metrics Changes - The Americas segment showed strong profitability improvement, with orders growing 16% year-over-year, primarily driven by large corporate customers [12][27] - The International segment reported over 15 million adjusted operating loss in the first half of the year [10] - Orders in the International segment grew 10% year-over-year, with over 40% growth in the Asia Pacific region [11][27] Market Data and Key Metrics Changes - Overall orders grew 15% year-over-year, with a sequential increase of 1% compared to the second quarter [11][27] - In the Americas, order growth was led by large corporate customers, while International orders were bolstered by strong performance in Asia Pacific, particularly in India and Southeast Asia [12][27] - EMEA orders grew modestly, with notable growth in France and Iberia, offset by declines in other markets like the UK [27] Company Strategy and Development Direction - The company is focused on leading workplace transformation and diversifying its customer base while improving profitability [17][30] - Recent product launches emphasize innovation and sustainability, aligning with customer demands for environmentally friendly solutions [15][16] - The company is actively pursuing bolt-on acquisitions to accelerate growth initiatives, although no suitable opportunities have been identified yet [42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about increasing investment levels as companies settle into a stronger in-office presence [17] - The company anticipates revenue growth to lag behind order growth in fiscal 2025 due to a lower beginning backlog compared to the prior year [30] - Management highlighted the importance of creating engaging office environments to encourage employee presence and productivity [56][75] Other Important Information - Total liquidity strengthened by 120 million [25][26] - The company expects fourth quarter revenue to range between 790 million, approximately flat on an organic basis compared to the prior year [28] Q&A Session Summary Question: Can you help with the backlog math and why next year revenue might trail orders? - Management indicated that a decline in backlog compared to last year will impact revenue growth rates, as a portion of the backlog decline will affect revenue [37] Question: What is driving order strength among large customers? - Management noted that order strength is broad-based across various verticals, with no significant weakness observed in expected areas [41] Question: Can you clarify on the delivery issues that impacted the quarter? - Management confirmed that delivery times have improved year-over-year, although they remained flat compared to the previous quarter [69] Question: How much of the growth is driven by large corporate customers? - Management expects continued momentum from large corporate customers, correlating with a stronger return to the office [70] Question: What are the catalysts for growth in the office furnishings industry? - Management believes that beyond the return to office, there are broader macro-level trends, such as near-shoring and AI growth, that will provide opportunities for the business [75]