Good morning. My name is Rex, and I will be your conference operator today. At this time, I would like to welcome everyone to the Steelcase second quarter fiscal 2023 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Thank you. Mr. O'Meara, you may begin your conference. Thank you, Rex. Good morning, everyone. Thank you for joining us for the recap of our second quarter fiscal 2023 financial results. Here with me today are Sara Armbruster, our President and Chief Executive Officer, and Dave Sylvester, our Senior Vice President and Chief Financial Officer. Our second quarter earnings release, which crossed the wires yesterday, is accessible on our website. This conference call is being webcast, and this webcast is a copyrighted production of Steelcase Inc. A replay of this webcast will be posted to ir.steelcase.com later today. Our discussion today may include references to non-GAAP financial measures and forward-looking statements. Reconciliations to the most comparable GAAP measures and details regarding the risks associated with the use of forward-looking statements are included in our earnings release, and we are incorporating by reference into this conference call the text of our safe harbor statement included in the release. Following our prepared remarks, we will respond to questions from investors and analysts. I will now turn the call over to our President and Chief Executive Officer, Sara Armbruster. Thanks, Mike, and good morning, everyone. I'm pleased to share that our earnings this quarter were better than expected, and we've delivered significantly higher order growth in the Americas than the rest of our industry over the past year. Our win rates remain strong, and halfway through the year, our financial results are on target. These results are due in part to the great work our teams are doing to implement pricing actions designed to combat the continued inflationary pressure our industry is experiencing, and I'm proud of the progress we're making. Dave will cover our results in more detail in a few minutes, but I'd like to spend my time today on two things, reinforcing our strategy and outlining our plans to lower planned spending in certain parts of our business. First, our strategy remains centered on work, and that includes leading the hybrid work transformation. We remain committed to helping people create places that work better because we believe people will continue to come together in person to imagine and to create and to achieve, even if the patterns that shape where and how they work continue to change. Our investments in innovation have led to new additions to the Steelcase portfolio, such as our new architectural product, Everwall. Acquisitions like Orangebox, Viccarbe, and most recently, HALCON, demonstrate our commitment to leading the hybrid work transformation. We're seeing early positives from the HALCON acquisition as our teams are responding to the strong sales activity in the professional services sector, and we're starting to realize cost benefits from our shared purchasing power. Partnerships with technology companies like Microsoft, Zoom, Crestron, and others, along with our own innovations, are also core to our strategy and investment mix as we help our customers solve for the hybrid transformation. We believe our strategy is working. Aside from the increased market share, as I mentioned a minute ago, our customer interactions indicate that we're well-positioned to be successful in our core business, which serves large leading organizations. There have been some very recently released data points which show an uptick in the return-to-office level in many cities in the U.S. The reality is some companies have paused their investments as they define their own workplace strategies or weigh their choices in a volatile macroeconomic environment. The lagging return to office that so many companies are facing, primarily in the Americas, along with the possibility of a recession, are likely contributing to slower decision-making. We've begun to see the impact of that slowdown on our incoming order volume level in the Americas, and we believe others in our industry are feeling that same downward pressure. Despite the positive trends I just mentioned, this last quarter, our order volume was down 8% in our Americas core business, meaning our Americas segment, excluding the recent acquisitions and our own dealers. At the same time, inflationary pressures persist and remain significant. Supply chain disruptions also continue to impact our profitability. We've taken actions to address those challenges, but they're still substantial factors. As we've been sharing with you over the past several quarters, we've been making trade-offs to mitigate the impacts of these headwinds, such as holding back on portions of our spending plans. For example, we've slowed our rate of planned spending increases in both the Americas and Asia Pacific and will continue to drive fitness throughout every part of our business and region to enhance our profitability. We're also committed to sustaining investments in our future by right-sizing our core business in the Americas and corporate functions. This move will position us to organize more fully around our plan to reinvest for growth and to diversify our revenue while remaining more profitable at current levels of volume. We're taking actions to reduce our planned spending levels, and this, unfortunately, will require a reduction in our current headcount. I also expect to communicate additional detail in the future regarding how we intend to evolve our operational model to drive greater efficiency and resiliency. Even with these reductions in planned spending, we remain appropriately invested in our core business, as we do believe companies will continue to look to Steelcase as they reimagine their workplaces and invest in the hybrid solutions they need to grow and innovate. Our continued focus on investing to support growth through leading the hybrid work transformation, appropriately scaling our core business, and increasing our fitness complements the opportunities we see to add more diversity to the markets and customers we serve. That's another key element of our strategy. Our AMQ business is one example of how we're already executing our focus to serve small and mid-sized customers. AMQ revenue grew 50% this quarter against the prior year by meeting the unique needs of this customer set. Over the past quarter, we've improved our speed of delivery through enhancements to our operational model and created an improved customer experience through new digital tools that will allow us to better reach and serve this segment. Our education business also continues to flourish. Smith System had the highest quarterly revenue in its history this quarter, growing by more than 50% over the prior year. Finally, our retail business revenue grew 17% versus prior year, and we continue to allocate increased investments to this business to drive more significant growth. One final area of our strategy that remains a key focus is our commitment to ESG. This quarter, we continued our series of global educational webinars for suppliers to encourage them to set science-based carbon targets and to consider sustainability improvements in the packaging of incoming parts. We also published our first chemical ingredient declare labels for two of our products to demonstrate our commitment to material health and transparency. In addition to that environmental progress, I'm excited to share we've been recognized by Forbes twice, as being one of America's best employers for women and as a best employer for new graduates. Steelcase was again honored by the Civic Fifty as one of the most community-minded companies in the nation. This is our third year in a row on the Civic Fifty list, and we're pleased to be again named amongst so many other great organizations making a difference in their business and their communities. In closing, despite the economic hurdles facing our industry, I'm proud of the ways we've navigated the challenges over these past 18 months. We've taken aggressive actions to achieve our targets during the first half of the year, and we're seeing success on multiple fronts as we execute our strategy. We're making the necessary adjustments to prioritize our investments and right-size our business, and we believe that will lead to improved profitability and more diversified growth opportunities in the future. With that, I'll turn it over to Dave to review the financial results and our outlook more deeply. Thank you, Sara. Good morning, everyone. My comments today will provide some color around our second quarter results, including comparisons to the outlook we provided in June. I will also cover the balance sheet and cash flow, our outlook for the third quarter, and our targets for the remainder of the fiscal year. Beginning with the comparison to the outlook we provided in June, second quarter revenue was slightly below the range, while earnings were better than we expected. For revenue, we grew 20% organically compared to the prior year, with double-digit growth across all segments. We estimate that pricing benefits represented approximately one-half of the growth. Q2 order growth was below our expectations in the Americas and negatively impacted our revenue within the quarter. In addition, the euro continued to weaken against the U.S. dollar and resulted in approximately $5 million of additional unfavorable currency translation effects compared to our estimate. Despite our lower-than-expected revenue, our earnings for the second quarter exceeded the range we forecasted in June. Our better performance was driven by the Americas and included higher benefits from our pricing actions, a favorable inventory adjustment, and timing of some operating expenses. In addition, we recorded a non-operating gain on the sale of a remaining investment in an unconsolidated affiliate. Inflation continues to be significant and over the last six quarters aggregates to $270 million. For the first time since fiscal 2021, our year-over-year pricing benefits exceeded inflation this quarter. Over the coming quarters, we expect inflationary pressures to remain, but we anticipate the benefits from our pricing actions, including the surcharge, will continue to accumulate and more fully offset the cumulative inflationary costs we've incurred. EMEA posted an operating loss of $6.8 million in the quarter, which was below our expectations. Revenue was impacted by project slippages, and our operating results were also impacted by accelerating inflation and some inefficiencies in our operations. In response to the higher inflation, EMEA announced a 5% price increase in September that will be effective in October. As it relates to cash flow on the balance sheet, we ended the quarter with $52 million in cash and $214 million in total liquidity. We deployed approximately $220 million of cash in the second quarter, which was funded by $61 million of adjusted EBITDA in the quarter, a $64 million reduction in cash balances, $79 million of net borrowings under our credit facility, and $8 million of proceeds from the sale of our remaining investment in an unconsolidated affiliate. The uses of cash included the acquisition of HALCON for $105 million, which was net of adjustments related to customer deposits and working capital. Beyond HALCON, working capital increased by $69 million, driven by receivables and the sequential revenue growth in Q2. We also funded capital expenditures of $15 million, dividends of $17 million, and our semi-annual bond interest of $12 million. We are now expecting capital expenditures to total between $50 million and $60 million for the full year. Moving to orders, we saw second quarter order growth of 5% as compared to the prior year, which was driven by 7% growth in the Americas and 4% growth in EMEA. In the Americas, pricing drove approximately 14% growth, which more than offset an estimated decline in volume of approximately 7%. In EMEA, the order increase was also driven by pricing, with volume being flat versus prior year. The 8% decline in the other category, which was also a combination of pricing and volume, was driven by Asia-Pacific, which experienced weakness across all markets except India. Presales activity remains positive, as does general near-term sentiment from many of our sales leaders and dealers. Recent opportunity creation in most markets was higher compared to prior year. Our win rates in the Americas were strong in Q2, and customer visits to Grand Rapids are almost fully booked through the end of the calendar year. However, orders in our Americas core business seem to reflect a softening in demand patterns in the second quarter compared to the last several quarters. This appears consistent with the latest industry data published by BIFMA for June and July. In addition, during the first three weeks of September, our orders have declined by approximately 20% versus the prior year. It's possible the slow return to office trend in the U.S. could be having an impact. It's also possible that reduced CEO confidence is impacting capital spending in our sector. Decision-makers have a lot to deal with at the moment, and they're also facing a lot of near-term uncertainty. Inflation and supply chain disruptions are impacting almost every industry. Labor challenges are impacting productivity on many fronts. Rising interest rates are pressuring the outlook for GDP growth, and the geopolitical unrest remains concerning. As a result, we are planning to implement additional actions in the third quarter, which target further reduction of our planned level of spending. These actions target approximately $20 million of annualized spending and are expected to include the elimination of up to 180 salaried positions across the Americas core business and corporate functions. These reductions approximate 8% of the related salaried workforce and will bring the cumulative reduction compared to pre-pandemic levels in fiscal 2020 to approximately 20%. We expect most of these reductions will be implemented during the third quarter and result in restructuring costs of approximately $8 million. These actions, along with some reprioritization of our remaining resources, will help us remain invested in our most important strategic initiatives and provide some additional protection in the event of continued uncertainty and impact on our demand environment. In light of these trends, we also adjusted our dividend this quarter in order to strengthen our liquidity profile and support a higher allocation of capital to reinvestments in the business in pursuit of our longer-term strategy. Moving to the outlook, consolidated backlog of approximately $946 million at the end of the second quarter was 38% higher than prior year and continued to include a higher than normal percentage of orders expected to ship beyond the next quarter. As a result, we expect to report revenue within the range of $825 million-$850 million, which represents year-over-year organic growth of 12%-15% and includes 10% driven by pricing. Excluding restructuring costs and amortization of purchased intangible assets, we expect to report adjusted earnings per share of $0.17-$0.21 for the third quarter. In addition to the projected range of revenue, the earnings estimate reflects the following projections. We expect gross margin of 29.0%-29.5%, driven by pricing benefits net of inflation of approximately $55 million when compared to the prior year. Sequentially unfavorable business mix due to the summer strength of Smith System and lower manufacturing efficiency due to decreased production volume in the third quarter. We also expect operating expenses of $215-$220 million, which includes $7 million of amortization expense related to purchased intangible assets and an expected $7 million gain on the sale of an underutilized facility in adjacent lands, as well as some prioritized investments in marketing and product development, higher spending in a few corporate functions, and continued investments in our employees. Lastly, we expect interest expense and other non-operating items to net to approximately $5 million of expense, and we are projecting an effective tax rate of approximately 27%. For the fourth quarter, depending on the level of volume, we expect sequentially improved gross margin due to accumulating benefits from our pricing actions and operating expenses of between $215-$220 million. We continue to work towards our full-year targets, but given the uncertainty in the demand environment, we are not able to provide an update regarding the achievability of our targets at this time. In summary, we're doing everything we can to drive profitability while protecting our investments in our most important strategic initiatives. Fiscal 2023 has been an extraordinary challenge, and that's saying a lot following the initial impact of the pandemic in fiscal 2021 and the beginning of supply chain disruptions and accelerating inflation in fiscal 2022. We're managing through it, and we're gaining share while continuing to invest in our longer-term strategy. From there, I'll turn it over for questions. At this time, I would like to remind everyone in order to ask a question, press star and then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Reuben Garner. Your line is open. Thank you. Good morning, everybody. Good morning. Maybe elaborating on the thought process on the cuts to both some corporate headcount as well as the dividend. It sounds like you've got mixed signals. Some of the pipeline activity remains robust, but recently demand trends are not where you want them to be. Can you walk us through, you know, you know, how you came to the decision to make those or take those actions? You know, is there any risk that some of the order weakness is more driven by pull forward with your pricing actions kinda mid, late summer? Will you be able to kinda handle a ramp back up if this was a temporary slowdown for whatever reason? Well, you've got a lot of questions in that single question there, Reuben, so let me try to break it down. You know, if you refer back to March when we communicated our targets for the fiscal year, and the revenue growth that we were pursuing, an underlying assumption was continuing improvement in our overall order patterns. We believed that would be linked to continued improvement in return to office and increased demand to support the hybrid transformation of work. That's played out. It has been improving. We've seen improved demand, but it's not tracking at the level that we originally planned. What we see right now is increased uncertainty on the horizon. I mean, it's no secret that there are dark clouds related to the economy and other factors, and therefore, we felt it was prudent to take some action. Now, I will tell you that we spent a lot of time balancing the level of action we should take because we are gaining market share, and we do see clients continuing to move toward returning to the office and making investments. We did not wanna jeopardize our ability to continue to gain market share, but we felt it appropriate to adjust given that it wasn't playing out as we had initially planned. Okay. And then the next question, I'll try to be a little bit more concise. The price cost tailwinds that you've got for the remainder of the year, can you talk about where price cost stands today relative to pre-pandemic levels? You know, how far behind are you still in kinda catching up from some of the inflation? And then what kind of risk is there on the pricing front if there is this volume or if this slowdown in volume continues through the back half of the year, what kind of competitive risk to pricing and bids do you see that could kinda put that gross margin trajectory at risk? Maybe Mike O'Meara can handle the first part, and I'll comment on the second part. Sure. Reuben, obviously inflation has been extraordinary, and as of now, there's really no signs of any relief on the inflationary front. We quantified so far we've accumulatively experienced $270 million of inflationary costs over the last six quarters, which is really when it all started to ramp up. Our pricing actions obviously take time to become implemented, and we've started to make a dent in that, but we're still quite a bit in the hole. Over the next few quarters, we should, because of the timing, assuming inflation levels, which is sort of our best estimate at this point, we would expect to start to offset that more fully. Even in another couple quarters, we'll still be behind cumulatively, even though we'll start to post some good year-over-year tailwind improvement. We need to continue the pricing actions in order to kinda make up for the hole we're in, even though we'll start to see some benefits on a year-over-year basis. Reuben, on the second part of your question related to the competitive dynamics in a lower volume scenario, I would just remind you that we're in a lower volume scenario today. I mean, the industry has not recovered to pre-pandemic levels of volume. In fact, we're still significantly behind. Yet the industry overall, the dynamics of competitiveness have remained, I would say, reasonable. I think that's largely driven by the fact that we're all dealing with the same levels of inflationary pressures. I think we often are working with the same suppliers, and our products have the same material content. I imagine everyone is feeling the same pressure that we're feeling, and we'll see what happens in the future. So far it's remained like it has in the past, a competitive environment, but not an unreasonably competitive environment. Okay. Thanks. Last one for me. Sara, there's a comment in the release that mentions that your strategy is unchanged, but you talk about diversification. I was wondering if you could kind of elaborate on what that might mean going forward. Sure. I'm happy to. You're correct. We have not shifted our strategy, but remember, our strategy, as we've communicated it, has had a couple of components to it. One of those certainly is to continue to focus on leading the hybrid work transformation. This is our core business with your typical big corporate customer, which is so important to us, and we've been successful. As Dave mentioned, we've got nice win rates. We're We're gaining share. We will continue to invest in that hybrid work transformation for those typical kind of corporate customers. I think the diversification is an acknowledgment of the fact that we've also seen really nice traction and growth, and we've been investing in and will continue to invest in other opportunities, whether that be healthcare, whether that be the mid-market business model that we're building around AMQ or things like consumer or retail or healthcare. Those have been parts of our business that we want to make sure we continue to invest in, and we continue to grow because we see some really nice market opportunities, some really great potential to grow, and we believe that we can continue to bring the kinds of solutions to market that will allow us to be successful. I would say we're doing both. We wanna make sure we take a balanced approach, both to continuing to focus on our core corporate market, but also make sure that we are explicitly investing in and supporting these other areas that will allow us in total to have a more diversified set of markets and customers that we serve. Sara, I know I said last question. If I could quickly follow up. Are those organic investments? I mean, with the cuts that you're making, are you also reallocating resources, or is this a, you know, potential for M&A in some of these areas? How are you viewing it? Well, I think, you know, certainly you've seen, you know, historically that those have been areas that in some cases we've used M&A to drive, like the acquisition of Smith System to really expand our education business. I think, you know, we've always said that acquisitions, when it's the right opportunity, and we think it fits our strategy, that it, you know, is part of what we look at. There may certainly be things like that again in the future. You're also right to mention reallocation of resources. You know, where we see growth, where we see big market opportunity, where we see a lot of nice tailwinds in terms of market opportunities are in some of those other segments. Where we have the ability to increase investment, relatively speaking, or shift resources that might be working on the core business to help accelerate some of our initiatives in those other areas, we're pursuing those opportunities as well. Great. Thanks, guys. Good luck going forward. Thanks. Thanks, Drew. Your next question comes from the line of Budd Bugatch. Your line is open. Good morning. Just accept my congratulations on managing the profitability and the work that you've done on that. I know these are very challenging times. I do wanna go back, Dave. You used a phrase on the visits called fully booked for the balance of the year for visits to Grand Rapids. I'm curious, though, can you give us maybe a little bit more color on that activity in terms of how that compares to last year and maybe several other quarters that you had? Sequentially to give us some feel for what you're seeing in terms of the sales activity. I know the order activity is modestly disappointing, at least over the first three weeks of this quarter. It's actually at or above FY 20 levels. We are, I mean, we're essentially fully booked, and at the end of FY 20 we were pretty full, but not entirely full. We are squeezing in a lot of even shorter day trips to accommodate customer requests to come see us. It's right now if you wanted to come to Grand Rapids, we would either have to bump somebody before the end of the calendar year or look for and hope for a cancellation, and we're just not seeing a lot of that. The interest level and the activity level remains quite high. Can you give us some color as to the kind of customers you're seeing? Are these traditional Steelcase customers? Are they Fortune One Thousand? Do they reflect the diversification efforts that Sara highlighted in her written language a few moments ago in terms of the markets you're trying to serve? Yeah. We've actually been really pleased with the diversity of the kinds of customers that have come to visit. I should mention as well that we have not changed our criteria or our threshold in terms of who we wanna welcome as guests to the organization. We've been able to see some really, I think, you know, really exciting clients with really exciting opportunities. I mean, just the other day we had a group that I spent some time with that represented a parochial K through twelve school district that was looking to make big investments to sort of transform learning across, you know, their facilities. They were a terrific group. We're also seeing, you know, big Fortune One Thousand kinds of clients. We're seeing a lot of mid-market activity. We've actually recently invested in more of a mid-market showroom and some new tools here on campus to help support those customers if they choose to make a visit. Many don't, but for those who do, we wanna be able to show them what's possible and help them think about their workspaces. We really have seen a pretty diverse, you know, mix of customers as well as I would say a number of customers and customer visits who aren't customers yet. Clients we haven't worked with in the past, but who are maybe thinking differently or asking new kinds of questions since the pandemic and are excited to talk to Steelcase and explore the possibilities when maybe they hadn't in the past. It's been quite a mix. If I could just finish on that particular issue, the sales cycle for these new diversification markets, I know there are various, extended sales cycles for some of the markets that you serve, but how do you look at that? That may be. I know it's a fuzzy question, but I think it's an important one to get an idea of how soon we could expect maybe some of those diversification efforts to wind up in orders and wind up in sales and shipments. Well, maybe I'll start with a thought on that and maybe Dave or Mike can chime in and add more. You know, I think one of the things that we've really tried to acknowledge as we've invested in these different markets is to make sure we clearly have an understanding of what the dynamics and the nature of those markets are. For example, that mid-market that we're pursuing with our investments in AMQ, that type of customer is typically a customer who wants the process to be quick and simple. This is the kind of customer who might call and say, "Look, I need 20 chairs and 20 desks, and I want them in two weeks." Right? Very different sales cycle and dynamic that is much faster on average than you might see for a Fortune One Thousand kind of, you know, company operating in a very different way. A lot of our investments have been, you know, driven at just that, to say, how can we make sure we can respond and we can derive a faster sales cycle for the kinds of customers who wanna move quickly. Likewise, for the customers who are more deliberative and are planning a much more significant project or new construction where the process naturally might take longer, we of course know how to support them as well. We're really trying to be conscious of those differences and design what we're doing to support them. Okay. On the first three weeks of this quarter, is there any more color you can give us? Is this? Does it reflect geographical disparities? I know the RTO issue, the return to office issue, is one that's confusing a lot of people these days and the subject of a lot of conversation and written ink in all the media. Where was there any? When you're looking at that order comparison, is there a color as to what the source of that weakness might be? Maybe I'll start that answer with a qualitative comment, and then we can try to answer that with maybe some quantitative data as well. You know, it's interesting, Bud, you ask that question because last week and this week, between the two weeks, we've had all of our Americas dealers here in Grand Rapids to reconnect in person and to, you know, talk about new products, new opportunities, you know, really, come together, to work as a team on how we advance all these opportunities. I really tried to kind of push on that as I anecdotally talked to our dealers from all over the Americas, so every part of the U.S., plus Latin America, Canada, you know, et cetera. I would say overall the sentiment was quite positive. It was really hard to kind of poke on dealers from a particular part of the country or a particular region, you know, that expressed a sentiment that was quite different. While we know that geographically you see different dynamics perhaps in big cities than you might in rural America, at least qualitatively as I spent, you know, the last two weeks with our dealers, there was a lot of positivity. You know, certainly questions about a potential recession, certainly questions about some of the, you know, day-to-day challenges we all face. It was hard to discern a geographic difference in those conversations. Okay. Thank you. Yeah. I'm always hesitant to draw any conclusion from three weeks of order patterns. It's a pretty short period of time, and it is still, you know, it's at the longer end of the tail following our significant price increase and surcharge that we put into effect in the middle of July. There could be some impact that's continuing to linger. It's just really hard to tell. Because it was down 20% and because we saw a unit volume decline in our order patterns in Q2 in total in the Americas core business, we felt it was important to share that information with you. I understand, and we thank you for that. The $55 million guided benefit of price over cost, can you give us kind of what you think the pieces of that would be in terms of incremental inflation and incremental price realization? Yeah, Bud. It's about $75 million of pricing and about $20 million of inflation on a year-over-year basis versus the third quarter last year. That $75 million includes the effect of the 6% surcharge, is that right? 'Cause that's better than we saw in the second quarter, right? That's correct. Yes. Yes. And- It's the July price increase becoming more fully implemented and the surcharge. How do you think that breaks out for the rest of the year then? How long will it take to recover the $270 or the cumulative inflation? It'll be more than $270 by the time you cover it, but. Yeah. Depending on volume, the fourth quarter could be a little higher because those things will continue to become more implemented. We don't have a full view on how long it'll take us to recover the $270, but it will still be behind as of the end of the fourth quarter. Yeah. It's likely into next year. Okay. The $20 million spending that reflects of up to the 180 positions that you're gonna be cutting, is that an annual savings, Dave? Yeah. You used the phrase spending. It's a targeted annual savings of $20 million, which could include up to 180 salaried positions that are eliminated. In those salaried positions, it's between core and Americas. How does that break out between those two? It's the Americas kind of core business and corporate functions. By core business I mean, you know, not Smith System, not AMQ, not e-commerce. It's kind of the large company, large city core business of Steelcase, you know, and the corporate functions. How does that break out? Corporate versus corporate function versus Americas? I don't know that I have that breakdown. Okay. You know, a large part of corporate is allocated to the Americas anyway. As far as the corporate functions, it includes all of the corporate functions of HR, IT, operations, finance, facilities, et cetera. Got it. Sara said that you are pleased with HALCON. You've owned it since early June. How is that performing versus your expectations financially? So far so good. They're dealing with what we're dealing with, supply chain disruption and inflation, and they're working through a significant backlog that we acquired. There's a tremendous amount of enthusiasm, excitement about them joining the Steelcase family. Our dealers are excited about it. The sales organization feels good about it. We've received positive feedback from A&D as well. We're feeling, you know, very good out of the gate about the acquisition of HALCON. Okay. If I heard you right, you said the operating expense expectation for the fourth quarter is the same as it is for the third quarter. Is that correct? $215-$220? Did I? I may have heard that wrong. Yeah. I think that's right. I don't have another projected gain on a facility sale for the fourth quarter. Okay. That's. Yeah. That will include the amortization of the $7 million and- Yes. What it should include some of the reduction on the operating expense, right? From the. Yeah the restructuring effect. I'm just curious as to what additional- Yeah. Essentially. Additional costs. Essentially, we're replacing the land gain that we have in Q3, we're replacing in Q4 with the benefits associated with the reductions. Okay. All right. The debt is up higher because of the acquisition of HALCON. What is the debt to trailing adjusted EBITDA? What's that metric and as of for your debt coverage? It's in between 2x and 3x. Our trailing adjusted EBITDA, our trailing four-quarter metric, is about $150-$160 million. Our total debt is in the $550 million range right now. I mean, we borrowed to fund the acquisition of HALCON, but we also borrowed because we have a significant amount of incremental inventory in response to the supply chain disruptions that we have. I hope that we will continue to see improvement in the supply chain disruption and that our operations team will be able to continue to pull inventory levels back to a more normal level. If that happens, and our earnings trajectory remains relatively consistent or better than what we did in the second quarter, then I think you'll see that credit facility paid off by the end of the year. That's the goal, is the end of the year. That's kind of where I was going. Your metric, does that include the COLI impact is reducing net debt? Is that- Yeah. Is Koli included in that? Yes. Well, actually, I wasn't including Koli. I mean, net debt would obviously be smaller. Okay. Yeah. You know, continuing. Finally for me, I'm sure the dividend issue was a major conversation on the board. Talk about the philosophy of what you think. You raised it because you thought things were gonna get better faster, you brought it back down. What's the issue now? Or how does the board view that? Well, I think, you know, the board and the management team continues to operate under our long-standing capital policy of operating relatively conservatively with on-balance sheet liquidity to run the business. We allocate earnings to paying a healthy dividend. With the depletion of our liquidity, because of some of the acquisitions, some of the investments in inventory and other factors, It's not where we would like, nor are our earnings projected to hit the high end of the targets that we communicated at the beginning of the year, so we felt it was appropriate to consider an adjustment. The board was on board with that, and we reduced it back to the level that we were at, I don't know, six quarters ago, before we raised it to $0.145. Yeah. Okay. Well, again, congratulations on managing the profitability aspect of it, and best wishes on the balance of this year and then for the years after. Thank you. Thanks, Bud. Thanks, Bud. Again, if you would like to ask a question, press star then the number one on your telephone keypad. Your next question comes from the line of Steven Ramsey. Your line is open. Good morning. Wanted to start with the sales guidance being approximately $100 million or so lower than the backlog. You also said you would be shipping more beyond Q3. I guess what are the drivers of later shipping dates at this point? And is there any light in the tunnel that this would change in the next few months? It's mostly customers that are driving it. It's we had a large pull-forward of orders in advance of the price increase and surcharge. We have backlog that's scheduled out beyond 90 days. That has been the case for the last couple of quarters. I'd say it's influenced by the number of price increases we've put in place, but also influenced by supply chain disruptions. Those are not getting worse, but they're not getting significantly better, either. We still have some extended lead times, not across all of our product categories, of course, but in some cases, we have extended lead times. It's mostly the customer-requested delivery dates that's driving the scheduling of backlog. Okay. Then on the sentiment being positive but orders declining, you talked about some pull-forward effect driving the orders. Maybe can you weigh those out just a little bit more, the sentiment being positive, yet orders coming down, and if you expect that to drive a reversal of better orders in the next couple of months? Well, I mean, I think the sentiment is tied to the customer visit activity, other pre-sales activities being relatively good, and the fact that return to office continues to improve in almost every city around the US and other parts of the world that have been lagging. I think everybody's feeling okay or better, but the dark clouds on the horizon related to the economy has people concerned. It's possible that that could be having some sort of impact on the order patterns right now. Or it's also possible that it just could be extended pull-forward effect, and things will get back to growing at a decent rate in the weeks and months, quarters to come. It's so hard to tell right now. The uncertainty level is very high. Maybe the other thing I'd add to that, which again is something we see but unfortunately we can't really quantify for you, is that while there's tremendous pre-sales activity and a lot of positive sentiment, there are certainly clients who are just starting to dip their toe in the water now. For them, activity means a pilot or a test or something on a smaller scale, which won't generate the same level of order volume, you know, that a full-scale renovation or project would. I think, you know, our hope certainly is that customers who are now becoming active and starting to pilot and test and try things, that those activities will be successful, and those will lead to momentum within those clients to then move on from the pilot, you know, to pursuing a much larger scale, project or transformation of their space. That may be another dynamic that is influencing, you know, what admittedly on the surface looks like a disconnect between the sentiment and the actual level of, you know, orders that we're seeing right now. Okay. Helpful. Last one for me on Smith System. Clearly a major driver seasonally in Q2 and strong results again. Can you compare for Smith, particularly the units total sales and margins versus pre-pandemic levels? If you think longer term about capturing the full opportunity in the education vertical, is Smith enough to do that, or would you be open to acquiring to get bigger in the education vertical? Yeah, I'll stop short of providing a lot of detail on a specific business like Smith System, but I will tell you that relative to the value creation plans that we put together when we made that acquisition, they are tracking nicely. The other thing, too, that's important to note is while they do have a very strong summer, an exceptionally strong summer period, for obvious reasons, schools are closed and want classrooms to be renovated largely during that time period. That team has done a terrific job driving business in the other three quarters. It's still overweight to the summer, but they do actually very nice business in the balance of the year. As far as your second question about is it enough, I mean, they continue to perform very, very well, and they've made great decisions about being in the right position to support the growth that has been in the industry. They've gained nice share. Whether or not we do another acquisition, I would say I wouldn't rule it out, but I wouldn't also declare that it's absolutely necessary for us to continue to be successful. Okay. Helpful. Thank you. There are no further questions at this time. Ms. Armbruster, I turn the call back over to you. Great. Well, I just wanna thank you all for joining us today. We appreciate your interest in Steelcase and hope you have a great day. This concludes today's conference call. You may now disconnect.