Steelcase, Inc. Q1 FY2026 earnings call

• Strong Q1 results with 7% revenue growth, adjusted EPS up 25%, and 12th consecutive gross margin expansion.
• Strategic pillars: Leading workplace transformation with strong performance in large corporate customers, seen at Design Days event; expanding reach with different dynamics in education, health, etc.; strengthening profitability with volume growth and cost reduction efforts.
• At Design Days, unveiled new products like Ocular collection and Jean Nouvel Seating Collection, receiving positive responses.
• In education, changing federal policy impacts buying patterns; in health, customers moving forward with projects as demand grows; in International, initiated cost reduction procedures in Europe.

In the first quarter, Steelcase delivered 7% revenue growth, with adjusted earnings per share of $0.20 up 25% versus the prior year. Adjusted operating margin was 5%, 110 basis points higher than the prior year, with the Americas posting a 6.7% margin. It was the 12th consecutive quarter of year-over-year gross margin expansion. Total orders in Q1 saw less than 1% decline compared to the prior year and were up 7% on a 2-year stack basis. In the Americas, order growth from large corporate customers was offset by declines from education and government customers. In international, growth in many markets was offset by declines in Germany and France due to macroeconomic challenges.

• Second quarter revenue expected to be within $860M to $890M, organic growth up to 3% compared to prior year. Adjusted earnings per share expected between $0.36 and $0.40. Gross margin approximately 33% to 33.5%. Operating expenses between $230M to $235M. Interest expense and other nonoperating items net to ~$3M expense. Effective tax rate ~27%.
• Full year target mid-single-digit organic revenue growth and expand adjusted operating margin.

• Impact of tariff and trade policies. - Macro-economic challenges in Germany and France affecting International segment. - Uncertainty in education funding impacting orders from education and government customers.

Q: Thoughts on additional price increases?

A: Have history of managing inflation via pricing, procurement teams negotiate inflation away, and if continued inflation, will follow historical pattern.

Q: CEO confidence and large corporate business?

A: Positive CEO sentiment leads to investment in business, and many organizations recognize need to invest in workplace, as seen in examples like financial services firm needing to expand space.