Dave Sylvester: Yeah, for a relatively long time, and it remains true today. We’ve had someone connecting to a customer visit virtually because we wanted them involved in that particular customer, and they were in just a different part of the country at that time. So, we’ve been leveraging virtual connections as part of our customer visits for quite a while. And so, that remains part of our approach. We’ve also — Sara has pushed hard on reallocation of resources as we’ve been pursuing different strategies. So, the reduction in aviation was really in some ways in response to the need to invest more significantly in local experiences. It was also in recognition that the large corporate customers were flying our corporate jets less and less, primarily because of governance restrictions.
They were still coming to see us. They just weren’t flying on our aircraft. And that’s really why we built a corporate aviation group some 40 or 50 years ago was for the large corporates. And the central team actually continues to support visits here, but they also support visits out in the different locations, either virtually or traveling.
Budd Bugatch: Okay. I think that’s very interesting and exciting. Does it change the selling — the time of the selling cycle? And I got a few other questions, if I could.
Sara Armbruster: I don’t know that we’ve got the evidence to say it changes the timing of the selling cycle, but I do think that what it’s allowed us to do is create maybe more agile and even more tailored and bespoke experiences for specific clients because, again, every one of our showrooms and every one of our experiences reflects Steelcase and the Steelcase portfolio and the Steelcase brand and Steelcase insights. But they also all have a bit of different local flavor that’s more tailored to that market. So, certain markets are more A&D-driven. Certain markets have a higher preponderance of, say, higher education focus. So, we’ve been able to, I think, weave that into those experiences. And so, I think certainly being able to meet customers where they are, in that sense, hopefully helps them get to decisions faster and more effectively. But we don’t have hard data to…
Dave Sylvester: Yeah. The sales cycle doesn’t seem like it’s really changed from beginning to end. But what has changed, probably more a result of the supply chain disruptions that the whole industry faced, is the lead times on orders. Pre-pandemic, we used to average more in the eight-week range. And from the supply chain disruptions, we were as high as 14 weeks, I think, and it hasn’t come back down to pre-pandemic levels. So, we’re still in kind of this 10-week, 11-week range. So, orders are coming in a little bit sooner, which isn’t a bad thing. It gives us more visibility. But it does mean that our backlog doesn’t turn quite as quickly as it used to.
Budd Bugatch: That is interesting. I had not fully appreciated that. David, you talked a little bit about the order volatility during the quarter with plus 4% in December, minus 1% in January, and plus 10% in February. Anything to read into that? And to any extent, do you want to talk a little bit about March? But what do you — what caused that volatility? Was February last year particularly weak?
Dave Sylvester: I don’t think so. I think maybe a little bit of it was the timing of when the seasonality kicked in last year versus the timing this year. But we don’t — I wouldn’t say we saw anything extraordinarily noteworthy to share. I just thought — I figured we’d get the question about the months, so I thought I would share them. And I did think it was interesting that the first three weeks have stayed at the same rate of growth over prior year as February. But I don’t — again, it could be that seasonality is just showing up a little bit sooner this year than it did last year. What I like about our order patterns is that we’re seeing continued growth and continuing business because we saw — we predicted that and we’ve seen it for four straight quarters.
And I really like that our project opportunity pipeline that has shown growth at the high-confidence — across high-confidence projects is starting to materialize into project order growth over the last two quarters.
Budd Bugatch: But combining that with your previous comment about the fact that the backlog is turning slower would mean that orders that come in during a particular quarter, if you might have delivered half of the orders or a third of the orders, you’ll now deliver fewer of those, and more goes to a larger backlog at the end, so you’d be growing that backlog.
Dave Sylvester: That’s right. That’s what happened last quarter. In Q3, you might remember, we had 15% order growth, I think, was the total, right, Mike? And we were a little bit short on our revenue forecast because we had extended delivery times. So they weren’t what we were — had been seeing.
Budd Bugatch: Yeah, it just changes the way we have to model the quarter between those items. A couple other just quick questions. Acquisitions, you talked about being open to them, but you’ve got two that you did during the last couple of years, Viccarbe and HALCON. Any commentary on — color on how they are performing integrated into the corporation, impact on the business? HALCON, you wanted to move upscale a little bit. Viccarbe was, I think in Spain, if I remember right.
Sara Armbruster: Yeah. No, I think overall, we’re really happy with those acquisitions and the performance. I think Viccarbe has added sort of a new element to our portfolio that’s getting rave reviews from architects and designers. So, we’re really excited about that. I think with HALCON, they have just continued to be tremendously successful in ways that are both driven by HALCON, as well as the ability to kind of cross-sell and leverage sort of HALCON relationships and the HALCON portfolio, along with some of the traditional Steelcase relationships. So, we’ve been really happy with how that’s been working. So, I think overall, we feel really good about both of those transactions, and they are part of the family.
