Steelcase ((SCS)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Steelcase’s recent earnings call painted a picture of robust performance, with record revenue and earnings growth, primarily fueled by large corporate customers and improved profitability. Despite these achievements, the company faces challenges in the EMEA region and with education customers, alongside restructuring costs.
Record Revenue and Earnings Growth
Steelcase reported second-quarter revenue of $897 million and adjusted earnings of $0.45 per share, surpassing expectations and marking the highest quarterly results in the past five years. The 5% revenue increase was driven by strong growth from large corporate customers in the Americas and a 13% revenue surge in the International segment.
Strong Order Growth
The company experienced a 6% growth in orders during the second quarter, with the Americas seeing an 8% increase. This growth was largely attributed to continued demand from large corporate customers, especially in the financial services and technology sectors.
Profitability Improvements
Steelcase’s profitability saw notable improvements, with the Americas segment delivering an adjusted operating margin of 11%. The International segment also showed progress, with a $5 million improvement in adjusted operating results compared to the previous year.
Positive Trends in International Markets
The International segment posted a 13% revenue growth, with India showing particularly strong results. The Asia Pacific region performed better than expected, with China demonstrating improved demand over the last few quarters.
Challenges in EMEA Region
Performance in the EMEA region fell below expectations, hindered by ongoing macroeconomic challenges in Germany and France, which led to a 1% decline in orders.
Education Customer Decline
Order growth from education customers declined due to changes in federal funding policies, partially offsetting the growth driven by large corporate customers in the Americas.
Restructuring Costs
Steelcase incurred $10 million in restructuring costs within the International segment, primarily related to the exit of salaried employees in the EMEA region.
Forward-Looking Guidance
Looking ahead, Steelcase expects continued strong performance, with revenue growth driven by an 8% increase in the Americas and a 13% surge in the International segment, notably from India. The company also highlighted its proposed merger with HNI, anticipated to complete by the end of 2025, as a strategic move to enhance market reach.
In conclusion, Steelcase’s earnings call reflected a strong overall sentiment, with record revenue and earnings growth driven by large corporate customers. While challenges persist in certain regions and sectors, the company’s strategic initiatives and positive trends in international markets provide a promising outlook.