Slides
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Investor Presentation FY2025 Third Quarter FY2023 Third Quarter
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An industry leader in a changing workplace Efforts to diversify revenue base Experienced management team and conservative capital policy Mid-term targets include $50M+ of operational cost reductions Investment Thesis: After several years of significant disruption, we believe the office will continue to be very relevant for innovation, culture and collaboration.
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$3.7 $2.6 $2.8 $3.2 $3.2 $- $1 $2 $3 $4 $0 $100 $200 $300 $400 FY25 Target 5.0% FY24 Mid-Term (3-4 years) Financial Targets 7.2% 3.9% 0.9% % = adjusted operating income margin Adjusted Operating Income ($ Millions) Revenue ($ Billions) RevenueAdjusted Operating Income 3.1% 6 – 7% FY20 FY21 FY22 FY23 Mid-Term Targets 6-7% Adjusted operating income margin Average annual organic revenue growth 4-6% ~5% Free cash flow as a % of revenue
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Our Balance Sheet Provides Stability Through Business Cycles FY2025 Third Quarter *COLI: Company-owned life insurance **Cash and Cash Equivalents $0 $500 $1,000 $1,500 Liquidity Profile Capital Base Equity Debt ST Investments Cash** Credit Facility COLI* ($ Millions) Net Debt ($ Millions) -$250 $0 $250 FY20 FY21 FY22 FY23 FY24 FY25 Q3 Net Debt / Adjusted EBITDA -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 FY20 FY21 FY22 FY23 FY24 TFQ TFQ = Trailing Four Quarters
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$3.2B Revenue in FY2024 $264M Adjusted EBITDA in FY2024 A respected leader with strong global market share differentiated by our research-based approach to innovation. -0.1x Net debt to Adjusted EBITDA (FY2024 year-end) ~11,300 Employees (FY2024 year-end) ~770 Steelcase dealer locations as well as our online Steelcase store and other retail partners Leading Global Office Furniture Market Manufacturers Revenue* *Most recently published trailing four quarters data **Retail segment excluded ***Workplace Furnishings only ($ in Billions) $1.9 $2.6 $2.7 $3.2 HNI*** Haworth MillerKnoll** Steelcase
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~770 Steelcase dealer locations 65+ Steelcase locations in 17 countries Unique Global Capabilities 15 Manufacturing locations including 8 outside North America Steelcase FY2024 Segment Revenue Americas 77% International 23% (Mix %)
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Research Drives Innovation and Breakthrough Design Steelcase invests in human-centered research about the ways and places people work, directly and in collaboration with leading research organizations, to uncover insights that lead us to innovation and breakthrough design. Select Research Partners • Arizona State University • ARUP • Battelle • Edith Cowan University • Future Today • Georgia Tech • Illinois Institute of Technology, Institute of Design • Institute for the Future • Kantar • Logitech • Microsoft • MIT Media Labs • Multistudio • Oregon Institute of Technology • Signify • Skidmore, Owings & Merrill • University of Glasgow • University of Melbourne • University of Michigan • University of New South Wales Sydney • Virginia Tech Research driven insights inform everything we do from new product development to customer resources.
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Most leaders expect people to work in the office most of the time (3+ days per week). Leaders’ new workplace priorities put the wellbeing of employees first. Employees want more access to privacy, spaces for wellbeing and places for hybrid collaboration in the office. Steelcase and its broad portfolio is well positioned to help customers because our global research and insights inform the designs of new products, solutions and spaces in all the places where work happens. Our Research Steelcase Global Research ~69,000 Employees 11 Countries 15 Primary Studies Key Findings The #1-way leaders plan to promote office presence is by improving the workplace. People are struggling. Work- life balance has dropped steadily for the past three years. Employees want the office to provide them with more spaces for privacy, wellbeing and hybrid collaboration. Source: Steelcase Global Research March 2023-Ongoing
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Top Reasons People Come to the Office 1 Collaboration 2 Focus work 3 Access tools and technology 4 Sense of belonging 5 Feel shared purpose 6 Connect with leaders 7 Socialize Source: Steelcase Global Research, Late 2023 What People Want What the Research Says To improve employee experiences, people want space improvements: 1. More individual privacy 2. Spaces that support wellbeing 3. Hybrid collaboration spaces 4. Easy access to power 5. Individual enclaves with technology
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Our Brand Promise We help people do their best work by creating places that work better. Steelcase serves leading organizations with furnishings and solutions for the many places where work happens — including learning, health and work from home. Our solutions come to life through our community of expert Steelcase dealers, as well as our online Steelcase store and other retail partners.
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Small + Medium Businesses Education Healthcare Consumer Government Owned dealers and Designtex Large Corporate Chart represents Americas FY24 percentage of revenue by customer segment Revenue Mix by Customer Segment
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Our Strategic Priorities Our strategy is reinforced by an unwavering external focus, a deep commitment to insights-based product innovation, and a resilient dedication to create seamless and inspiring customer experiences. Lead the transformation of the workplace Use our business to help the world work better Improve our profitability Diversify the customer and market segments we serve
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Lead the transformation of the workplace • Grow our market share in serving large corporate companies • Be the most trusted partner in the new ways of working • Lead in product innovation • Deliver seamless work experiences by integrating technology + place
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Diversify the customer and market segments we serve • Build on our strong momentum in education with Steelcase Learning • Drive higher market share among small and medium businesses • Amplify our Steelcase Health business • Expand our consumer business
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Improve our profitability • Capture benefits from pricing actions • Optimize operations - pursuing lean, efficient platforms and mid-term target (3-4 years) of $50M+ operational cost reductions • Drive value through business transformation • Re-allocate investments toward strategic priorities
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People + Planet We’re doing better for the planet by transforming our business and committing to a net- zero future to build a more sustainable and resilient world. To do this we: Reduce Our Carbon Footprint Design for Circularity Choose and Use Materials Responsibly Doing our best work for the places we all share starts with designing better futures for the wellbeing of people and the planet. To do this we: Help Communities Thrive Foster Inclusion Act With Integrity We’re doing better for people by building community and belonging where everyone feels seen, heard and valued, in the workplace and the world.
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Products 66% Transportation 16% Operations 18% 990,640 Total metric tons of carbon dioxide-equivalent (MTCO2e) Products We are reducing carbon emissions embodied in our products by choosing and using materials responsibly and designing for circularity. Operations We are investing in energy efficiency, onsite solar and waste reduction strategies in our operations to achieve both our 2030 carbon-reduction goals and our 2050 net-zero goal. Transportation We are transforming our distribution, delivery, travel and commuting practices to reduce carbon emissions. We plan to transform the way we do business, cutting carbon emissions over 90% (from fiscal 2020) by 2050 to reach a net-zero future. Our Commitment to a Net-Zero Future Benefits Our Customers’ Sustainability Goals Steelcase sources of carbon emissions mix (Fiscal 2020)
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Capital Allocation Priorities Our capital allocation philosophy contains a balance of reinvestment in the business, acquisitions, dividends, and opportunistic share repurchases. Capital Expenditures and Research & Development ($ Millions) Dividends and Share Repurchases ($ Millions) $0 $100 FY21 FY22 FY23 FY24 Capital Expenditures Research & Development $0 $100 FY21 FY22 FY23 FY24 TFQ Dividends Repurchases Acquisitions (calendar year acquired) 20222017 2018 2019 2020 2021 2023
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Appendix
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Forward Looking Statements From time to time, in written and oral statements, the company discusses its expectations regarding future events and its plans and objectives for future operations. These forward-looking statements discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to the company, based on current beliefs of management as well as assumptions made by, and information currently available to, the company. Forward-looking statements generally are accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “target” or other similar words, phrases or expressions. Although the company believes these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements and vary from the company's expectations because of factors such as, but not limited to, competitive and general economic conditions domestically and internationally; acts of terrorism, war, governmental action, natural disasters, pandemics and other Force Majeure events; cyberattacks; changes in the legal and regulatory environment; changes in raw material, commodity and other input costs; currency fluctuations; changes in customer demand; and the other risks and contingencies detailed in the company’s most recent Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. Steelcase undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
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End of Fiscal Year 2024 Americas Number of Steelcase dealer locations ~ 380 Employees – non-manufacturing ~ 2,600 Employees – manufacturing ~ 4,600 Number of primary manufacturing locations Michigan – 2 Alabama – 1 Mexico – 2 Texas – 1 Minnesota – 1 Segment Revenue, Adjusted OI Margin and Select Statistics Revenue (US$ Millions) $2,436 $2,420 $2,439 FY23 FY24 TFQ Adjusted Operating Income Margin* (Percent of Revenue) 4.4% 6.6% 7.5% FY23 FY24 TFQ Americas
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U.S. Industry Macro-Factors Corporate Profits After-Tax (U.S.) With IVA and CCA Adjustments (Year-over-Year % Change) Unemployment (U.S.) Unemployment Rate (%) The Conference Board Measure of CEO Confidence (U.S.) Sources: BEA, BLS, CEO Conference Board, AIA, CBRE. Non-Residential Fixed Investment (U.S.) Equipment (In US$, Billions) Architectural Billing Index (U.S.) Real Estate Absorption (U.S.) (per million sq ft) -30 -20 -10 0 10 20 30 -20% -10% 0% 10% 20% 30% 40% 50% 60% Q3 2019 Q3 2024 Q3 2019 Q3 2024 Nov 2019 Nov 2024 Oct 2019 Oct 2024 Nov 2019 Nov 2024 0 200 400 600 800 1,000 1,200 1,400 1,600 0% 2% 4% 6% 8% 10% 12% 14% 16% 0 10 20 30 40 50 60 70 80 90 20 25 30 35 40 45 50 55 60 65 Q3 2019 Q3 2024
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Segment Revenue, Adjusted OI Margin and Select Statistics Revenue (US$ Millions) $797 $740 $715 FY23 FY24 TFQ Adjusted Operating Income (Loss) Margin* (Percent of Revenue) -0.8% -0.3% -0.6% FY23 FY24 TFQ International End of Fiscal Year 2024 International Number of Steelcase dealer locations ~ 390 Employees – non-manufacturing ~ 2,000 Employees – manufacturing ~ 2,100 Number of primary manufacturing locations France – 1 China – 1 Germany – 1 Malaysia – 1 Spain – 1 India – 1 Czech Republic – 1 U.K. – 1
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International Industry Macro-Factors Germany Real GDP Growth France Real GDP Growth UK Real GDP Growth -2% -1% 0% 1% 2% 3% 4% 5% -5% -4% -2% -1% 1% 3% 4% 6% 7% 9% 10% -5% -4% -2% -1% 1% 3% 4% 6% 7% 9% 10% Q3 2021 Q3 2024 Q3 2021 Q3 2024 Q3 2021 Q3 2024 Source: Federal Reserve Bank of St. Louis, National Bureau of Statistics of China, ONS, Mospi. -5% 0% 5% 10% 15% China Real GDP Growth Q3 2021 Q3 2024 -5% 0% 5% 10% 15% India Real GDP Growth Q3 2021 Q3 2024
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Historical Shares Outstanding Shares (Millions) 0 20 40 60 80 100 120 140 160 180 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Q1 FY25 Q2 FY25 Q3 FY25 Class A Shares Class B Shares 139.214.1 19.694.0 Class B 17%
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Non-GAAP Financial Measures This presentation contains certain non-GAAP financial measures. A “non- GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the condensed consolidated statements of income, balance sheets or statements of cash flows of the company. The non-GAAP financial measures used within this presentation are: (1) adjusted operating income (loss), which represents operating income (loss), excluding amortization of purchased intangible assets, goodwill impairment charges, restructuring costs (benefits) and gains (losses) on the sale of land, net of variable compensation impacts, (2) adjusted operating income (loss) margin, which represents adjusted operating income (loss) as a percentage of revenue, (3) adjusted EBITDA, which represents earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted to exclude share- based compensation, restructuring costs (benefits), goodwill impairment charges, gains (losses) on the sale of land, net of variable compensation impacts, and gains (losses) on pension plan settlements, (4) net debt, which represents total debt less cash and cash equivalents and COLI and (5) net debt to adjusted EBITDA ratio, which represents net debt divided by adjusted EBITDA. Pursuant to the requirements of Regulation G of the Securities and Exchange Commission, the company has provided a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial measure. These measures are supplemental to, and should be used in conjunction with, the most comparable GAAP measures. Management uses these non-GAAP financial measures to monitor and evaluate financial results and trends.
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Non-GAAP Financial Measures Adjusted Operating Income ($ millions) FY20 FY21 FY22 FY23 FY24 TFQ Operating Income 257.0 43.0 20.1 65.5 117.8 174.3 Amortization of purchased intangible assets 12.4 16.2 14.8 22.8 17.2 17.1 Goodwill impairment charge – 17.6 – – – – Restructuring costs – 28.6 – 19.2 22.5 14.9 Gains on the sale of land, net of variable compensation impacts – (4.5) (10.3) (6.2) (0.8) (27.9) Adjusted Operating Income 269.4 100.9 24.6 101.3 156.7 178.4 Revenue 3,723.7 2,596.2 2,772.7 3,232.6 3,159.6 3,153.2 Adjusted Operating Income Margin 7.2% 3.9% 0.9% 3.1% 5.0% 5.7%
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Non-GAAP Financial Measures FY22 FY23 FY24 TFQ Operating Income Margin 1.1% 3.2% 5.9% 7.9% Amortization of purchased intangible assets 0.5% 0.7% 0.6% 0.5% Restructuring costs – 0.8% 0.1% 0.3% Gains on the sale of land, net of variable compensation impacts (0.6)% (0.3)% (0.0)% (1.2)% Adjusted Operating Income Margin 1.0% 4.4% 6.6% 7.5% Americas Adjusted Operating Income Margin (Percent of Revenue) FY22 FY23 FY24 TFQ Operating Income (Loss) Margin (0.1)% (1.5)% (3.5)% (2.7)% Amortization of purchased intangible assets 0.6% 0.6% 0.6% 0.7% Restructuring costs – – 2.6% 1.0% Gains on the sale of land, net of variable compensation impacts 0.1% 0.1% 0.0% 0.4% Adjusted Operating Income (Loss) Margin 0.6% (0.8)% (0.3)% (0.6)% International Adjusted Operating Income (Loss) Margin (Percent of Revenue)
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Non-GAAP Financial Measures Adjusted EBITDA, Net Debt and Net Debt / Adjusted EBITDA ($ millions) FY20 FY21 FY22 FY23 FY24 TFQ* Net Income $200 $26 $4 $36 $81 $114 Income Tax (Benefit) $45 $(0) $(2) $16 $26 $38 Interest Expense $27 $27 $26 $28 $26 $25 Depreciation and amortization $86 $86 $83 $90 $84 $81 Share-based compensation $16 $20 $15 $21 $25 $23 Restructuring costs – $28 – $19 $23 $15 Goodwill impairment charges – $18 – – – – Gains on the sale of land, net of variable compensation impacts – $(5) $(10) $(6) $(1) $(28) Loss on pension plan settlement – – – – – $15 Adjusted EBITDA $374 $200 $116 $204 $264 $284 Total Debt $484 $484 $483 $481 $446 $447 Cash and COLI $701 $659 $369 $248 $485 $577 Net Debt $(217) $(175) $114 $233 $(39) $(130) Net Debt / Adjusted EBITDA -0.5x -0.9x 0.9x 1.1x -0.1x -0.5x Revenue $3,724 $2,596 $2,773 $3,233 $3,160 $3,153 Adjusted EBITDA/Revenue % 10.0% 7.7% 4.1% 6.2% 8.4% 9.0% * All metrics shown on a trailing four quarter basis except Total Debt, Cash and COLI and Net Debt which are shown as of FY25 Q3.