Steelcase ((SCS)) has held its Q4 earnings call. Read on for the main highlights of the call.
Steelcase’s recent earnings call painted a picture of robust performance in fiscal 2025, particularly in the Americas, where growth and improved margins were highlights. Despite some challenges in the international segment and trade uncertainties, the company expressed optimism about its strategic initiatives and future growth prospects.
Strong Fiscal 2025 Performance
Steelcase reported impressive fiscal 2025 results, with adjusted earnings per share reaching $1.12, surpassing the top end of their target range. The company achieved an adjusted operating margin of 5%, with the Americas segment performing exceptionally well at 7%.
Order Growth and Market Share Gains
The fourth quarter saw a 9% increase in orders, driven by a 12% growth in the Americas. This marks the sixth consecutive quarter of year-over-year order growth in the region, accompanied by significant market share gains.
Improved Gross Margin
Steelcase celebrated its 11th consecutive quarter of year-over-year gross margin expansion, with an improvement of over 500 basis points since fiscal 2022, showcasing effective cost management and operational efficiency.
Positive Demand Signals
There were encouraging signs of increased office leasing activity in the US, with a 24% rise in Q4 leasing compared to Q3 and a 23% increase year-over-year, marking the highest quarter in three years.
International Segment Improvement
The international segment showed signs of improvement in the first half of the year, thanks to cost reductions and positive demand signals from large and national accounts, although challenges remain.
Cash Flow and Shareholder Returns
Steelcase generated $100 million in free cash flow and returned $84 million to shareholders, reflecting a strong commitment to delivering value to its investors.
Revenue Decline
Despite strong performance in other areas, fourth-quarter revenue declined 5% organically, with a 3% decline in the Americas and a 10% decline internationally, impacted by lower beginning backlog and an unfavorable business mix.
International Segment Challenges
The international segment faced higher manufacturing costs and operating expenses, with a notable decline in small to midsize business, particularly in Germany, France, and India.
Tariff and Trade Uncertainty
Steelcase is navigating new tariffs and global trade uncertainties, necessitating pricing actions, inventory purchases, and supply chain adjustments.
Guidance
Looking ahead to fiscal 2026, Steelcase is targeting mid-single-digit organic revenue growth and a modest improvement in adjusted operating margin. Despite challenges such as new tariffs and global trade uncertainties, the company plans capital expenditures and cloud computing costs of $70 million to $80 million. It also aims to break even in its International segment, with anticipated profitability in the second half of the year.
In conclusion, Steelcase’s earnings call highlighted a strong fiscal 2025 performance, particularly in the Americas, with positive demand signals and strategic initiatives supporting future growth. While challenges persist in the international segment and due to trade uncertainties, the company’s forward-looking guidance reflects cautious optimism for fiscal 2026.