Steelcase Inc. (NYSE:SCS) Q1 2024 Earnings Call Transcript

Sara Armbruster: Well, I think as we look at those different market segments, we’re certainly aware of the fact that there may be differences in products, the types of products, the price points, the features and functionality that apply. Clearly, a healthcare setting has different needs and different requirements than somebody’s home office. So, we continue to obviously draw on our historical strength and innovation and our capabilities there to serve those needs as well as some of the acquisitions we’ve made. I think the other thing that we’ve been focused on and investing in and we’ll continue to do so is acknowledging that the customer purchase journey is different as well. So if you think about the path you might take as a consumer in researching and evaluating and then purchasing perhaps ergonomic task chair for your home office, that’s a different journey than the journey that a chief nursing officer might pursue in thinking about how to open a new clinic.

And we have been really mindful of making sure that we are not only understanding those pathways, but also making sure that we’re kind of reorienting our business model and our tools and our systems and process as appropriate to make sure that we can create the experiences for those different kinds of customers that they really value and that allow them to kind of navigate that research and ultimately purchase journey really successfully.

Reuben Garner: Great. Thanks, guys. Good luck going forward.

Sara Armbruster: Thanks.

Operator: [Operator Instructions] Your next question comes from the line of Steven Ramsey from Thompson Research Group. Your line is open.

Steven Ramsey: Hi. Good morning. You talked about project demand overall being down a bit in the quarter. Can you maybe go into some detail on key customer types and trends in that project demand between large customers, SMBs, et cetera, if there’s anything positive or diverging within the different customer groups?

Dave Sylvester: I don’t recall hearing or seeing anything that jumped out across the customer groups. I also don’t think it’s unusual at this state of a recovery — an economic recovery and return to office for project activity to trail continuing business. I think it’s typically what we’ve seen in the past as corporations restart activity either because of economic recovery or because, in this case, maybe more RTO, return to office, for them to look to their existing continuing agreements to modify spaces, workplaces, or to just get back to the routine of the various projects or activity levels that they had when they were in the office. But I don’t remember seeing anything that stood out on the project side.

Steven Ramsey: Okay. Helpful. And then thinking about full year ’24 and the project versus continuing trends you’ve seen thus far, do you expect these trends to continue and basically continuing projects flattish to modest growth for the year while project is a negative contributor for the year, or do you think there’s any move in the two lines?

Dave Sylvester: I would — I think it’s reasonable to expect that project activity will improve. Whether or not it will grow year-over-year by any kind of significant amount remains to be seen. But project activity is generally what’s tracked in our pipeline, and it generally what is related to the pre-sales activity of visits and mock ups and things like that, which have been pretty good. So I feel like it should — could show an improving trend in the back half of the year. And if I think of kind of what we assumed in our underlying targets for the full fiscal year, we assumed large company with improve, and therefore, you would expect some of that to include project activity.

Steven Ramsey: Okay. Helpful. And then another question thinking about full year ’24 and being ahead of pace for the year. Can you maybe go into any particular line items or anything notable that may not show up on the income statement where you are tracking ahead for your full year targets?