Steelcase ((SCS)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Steelcase revealed a generally positive sentiment, highlighting a strong start to the fiscal year with significant revenue growth and positive momentum from large corporate customers, particularly in the Americas. The company received favorable feedback on new product launches, although challenges remain in the education, government, and EMEA markets, compounded by tariff and inflationary pressures. Despite these hurdles, Steelcase is effectively navigating the current economic landscape.
Strong Start to Fiscal 2026
Steelcase kicked off Fiscal 2026 with a robust performance, reporting a 7% revenue growth in the first quarter. This growth propelled a 25% increase in adjusted earnings per share, reaching $0.20. The company also achieved a 5% adjusted operating margin, marking an improvement of 110 basis points from the previous year.
12th Consecutive Quarter of Gross Margin Expansion
The company celebrated its 12th consecutive quarter of gross margin expansion, with a notable 170 basis point improvement in Q1. This consistent growth underscores Steelcase’s effective cost management strategies and operational efficiencies.
Positive Momentum from Large Corporate Customers
Order growth in the Americas was significantly driven by large corporate customers, particularly within the technology sector. This growth helped offset declines in the education and government sectors, showcasing the company’s strong foothold in the corporate market.
New Product Launches at Design Days
Steelcase introduced innovative products during Design Days, including the Jean Nouvel Seating Collection and the Ocular collection. These launches received positive feedback from customers and architects, indicating a successful reception in the market.
Health Segment Growth
The health segment saw increased orders and revenue, fueled by rising demand for healthcare services and the need for more healthcare space. This growth highlights Steelcase’s ability to capitalize on expanding market opportunities.
Asia Pacific Performance
The Asia Pacific region exceeded expectations, contributing positively to Steelcase’s international segment. This performance was a bright spot amidst mixed results in other international markets.
Challenges in Education and Government Sectors
Order declines from education and government customers, attributed to changes in federal funding policies, posed challenges to overall growth. These sectors remain areas of concern for the company.
EMEA Region Underperformance
The EMEA region faced difficulties, with declines in Germany and France due to macroeconomic challenges and a downturn in small to midsized businesses. This underperformance highlights regional economic vulnerabilities.
Impact of Tariffs and Inflation
Steelcase anticipates that higher tariff costs and inflation will impact gross margins, with approximately $20 million in costs expected for the second quarter. These factors present ongoing financial challenges for the company.
Forward-Looking Guidance
Looking ahead, Steelcase provided guidance for the second quarter, expecting revenue between $860 million and $890 million. Adjusted earnings per share are projected to be between $0.36 and $0.40. While the company noted a slight decline in total orders compared to the prior year, there was a 7% increase on a two-year stack basis, reflecting a positive long-term trend.
In summary, Steelcase’s earnings call painted a picture of a company experiencing strong growth and positive momentum, particularly from large corporate customers. While challenges persist in certain sectors and regions, Steelcase’s strategic initiatives and new product launches are positioning it well for future success. The company’s forward-looking guidance suggests continued optimism and resilience in navigating economic headwinds.