Steelcase 4Q17 Earnings Call Notes

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Steelcase’s (SCS) CEO James Keane on Q4 2017 Results

Decline in demand for traditional private offices and cubicles

“In the Americas, our project business remains strong with project order growth of 17% in the quarter compared to the prior year. Day-to-day business continues to be considerably softer likely because of the ongoing decline in demand for traditional private offices and open plan cubicles. Customers are shifting can use solutions like our Ology height-adjustable desk inline which delivered strong growth again this quarter.”

New workspaces

“We also believe our customers are looking for more than just trending offices, customers are trying to grow, but the job market is tight so they can’t just hire more people. They need to more fully engage their existing workforce and we know the workplace is strongly correlated with engagement. They want offices that up practically support creativity and innovation by helping their people do their best work. This would be genesis of our recently announced alliance with Microsoft. We’re going to be working together on a couple of fronts to solve the customer issues about how to integrate space and technology to unlock creativity and productivity of people. ”

Thoughts on international environment

“And if you go market-by-market I tell you that Middle East where we’re still feeling the pressures of oil prices. We have some of the larger countries in Western Europe where election concerns and issues in their own countries might be a factor. In the UK, yes our business has struggled and part of it has been because of Brexit, part of it is also things that we’ve addressed that were issues internally before. And I would say that some of the issues that we’re faced we’re hearing about in Western Europe might be related to things going out of the U.S. So there’s concern about exported balances and so on that any time there’s a destruction and a cause for people to lose confidence, we can see that show up in order pattern. So I can speculate that there might have been a factor there related to political and economic and stability, I can’t prove it, I can’t give you any examples for example of any particular customers who chose to pull back, I have many stories like that, which would give me more confidence that we were hearing specific like that. So we’re not hearing that, but we have – we wonder about the same thing you’re wondering about.”

David Sylvester

Growth overall but declines in some verticals

“Turning to vertical markets in the Americas, we experienced growth in six of the 10 vertical markets we track including five with double digit percentage growth rates. This growth was dampened by declines in the technical professional, education, healthcare and information technology sectors some of which reported strong order growth in the fourth quarter of the prior year.”

year over year strength

“Since June, we have talked about the year-over-year strength we were seeing in our pipeline of project activity in the Americas, which continues to reflect meaningful growth compared to this time last year as well as sequentially compared to the third quarter.”