Steelcase Inc.

Good morning. My name is Dexter, and I will be your conference operator today. At this time, I would like to welcome everyone to the Steelcase third quarter fiscal 2022 conference call. All lines of face will mute to prevent any background noise. After the first remarks, there will be a question and answer session. If you would like to ask questions during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Mr. Romero, you may begin your conference.

Thank you, Dexter. Good morning, everyone, and happy holidays. Thank you for joining us for the recap of our third quarter fiscal 2022 financial results. Here with me today are Sarah Armbooster, our president and chief executive officer, and Dave Sylvester, our senior vice president and chief financial officer. Our third 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, Sarah Armbruster.

Thanks, Mike, and good morning, everyone. With my time today, I'll share a summary of our third quarter financial results and then provide an update on our strategic priorities before handing the call over to Dave to discuss our results in more detail. Our third quarter results saw very strong order growth, but we continue to be impacted by a significant number of supply chain challenges and inflationary costs. in our America segment, which impacted our results. Our order growth of 40% was broad-based across all segments, including in all of our main geographic markets and across multiple markets. Similar to last quarter, several parts of our business approached or exceeded pre-pandemic order levels in our third quarter. Specifically, orders at Smith Systems, AMQ, and in our Asia Pacific region were all higher than in the same period in FY20. And orders in our EMEA segment were within 6% for the third quarter of fiscal 20 levels. These businesses have been key parts of our growth strategy, and it's good to see that growth materialize. I'm really proud of how our teams have remained hyper-focused on keeping our commitments and delivering results in these areas. It's this kind of dedication that gives me confidence as we look to implement our broader growth strategies going forward. Unfortunately, and similar to last quarter, due to ongoing supply chain challenges, we did not ship everything we'd expected to ship in the third quarter, which cost more of our revenue to ship out of the quarter than we'd anticipated. Labor and raw material shortages are impacting some of our suppliers. Ocean freight continues to be challenged by availability and port congestion, and we continue to experience trucking availability and other logistical challenges. These issues are causing extended lead times, production delays, and adjustments to delivery schedules. We know supply chain issues are impacting many industries, including ours, and our teams are working every day to overcome these challenges and meet our customer commitments. Our operations teams have been pursuing numerous actions to address these challenges, including sourcing more products locally, transitioning to new suppliers, utilizing overtime to stay on schedule, increasing inventory levels as buffers, and utilizing expedited freights to compensate for transportation delays. And we have not experienced any significant change in our order or project pipeline cancellation levels. if these issues are impacting our industry more broadly. So although our revenue was below our expectations for the quarter, our strong order growth supports our confidence in the recovery. And that confidence is bolstered by our aspiration to help people do their best work by creating places that work better. We believe work is going through one of the most significant transitions in our lifetime, And solving for what people want and need to thrive at work remains a rich source of opportunity. So that's why our strategy remains centered on work. And as I talk with CEOs and business leaders, they resoundingly continue to express a broad desire to bring employees together in person to strengthen their culture, support learning, assimilate new employees, and offer more inclusive career experiences. So while return to office plans vary from company to company, they almost, without exception, involve some aspect of hybrid work. And we believe that provides incredible opportunities for Steelcase. As decision makers visit our work-life centers and talk with our researchers and designers, they're hungry for our insights and looking for help in navigating how to make hybrid work. And for most, that answer will involve changing and re-equipping the office. It will require new ways of supporting privacy, rethinking of how to support individuals, places to rebuild social connections, and new kinds of spaces that bring people together to collaborate and innovate, even if those people aren't co-located. We believe all of this translates into a long-term growth opportunity for us, because no matter what an organization's workplace strategy, they'll need help to manage the shift in work. So we remain optimistic that as the pandemic recedes and COVID becomes endemic, companies will do two things. Ask their employees to spend time in the office and make significant changes to their current office environments to support hybrid work, which we believe will drive further stimulation in demand. As we look ahead to how we're planning to drive growth in the future, we're focused on four overarching strategies. First, as I mentioned, we believe we are best positioned to lead the hybrid work transformation, and this is a top priority. We plan to leverage our insights about hybrid work to drive innovation and to advise our customers. We're very excited about recent product introductions that support how people work now, such as our Flex personal workstation and the Flex work wall, plus new pod products from Orangebox. We're also collaborating with leading technology companies such as Microsoft and Zoom about how to integrate digital solutions more optimally into physical spaces as more of us are working in mixed presence modes. Partnering with other industry leaders remains a part of our innovation process and allows us to move quickly and build on each other's insights and solutions to deliver value for our customers. We've also increased our investments to drive our work from home business through new products, enhanced digital experiences, and increased capabilities such as speed of delivery. We also see opportunities to grow by deepening our presence in key adjacencies, which is a second priority. Many of our enterprise customers value Steelcase for the depth and breadth of solutions and service we provide. But we believe we can also serve customers that desire speed and simplicity. We are seeing great growth in our AMQ business, which we acquired in part due to its quick delivery capability. So we're leveraging learnings from AMQ and applying those learnings to our other brands. We're also expanding new relationships geared towards small and medium businesses. And with West Elm, for example, we're working on efforts to build on our successful retail relationship. In Asia Pacific, our presence has continued to deepen to serve a broader customer base, and we believe we will continue to drive outside growth in our largest APAC markets of China and India. We've also built on the success of our Smith System business in the Americas and used that momentum to grow our education business significantly in Asia. And we'd like to expand our education business even more broadly geographically. A third priority is to continue creating value by using our business as a force for good. Preserving the planet, empowering people, and running our business with integrity and empathy are core to who we are. And those values have never been more integrated into how we do business than they are today with our customers, how we design and manufacture our products, and how we attract and engage our employees. We've met our goal to become carbon neutral, and we're continuing to work toward our goal of a 50% reduction in emissions from Steelcase-owned and controlled facilities by 2030 using third-party verified science-based targets. Lastly, we are keenly focused on accelerating our profitability trajectory. We've implemented several recent pricing actions in response to the current inflationary headwinds. We've controlled our operating expenses, And we've seen strong order growth while we work to overcome supply chain challenges. We have a longstanding focus on fitness, which we think of as the organizational capacity to deliver outside results relative to our cost structure. And we plan to continue to vigorously reallocate resources and investments toward our highest priorities, as well as to expand our organizational capacity to achieve results. We're seeing strong interest from organizations around the world to both redesign and equip their offices as they tackle the new needs demanded by the transition to hybrid work. So while there are still challenges that lie ahead, this intense interest in work combined with our talented, committed organization and our focus on growth gives us optimism as we move into the new year. We're feeling the pulse of change and believe our long-term results will reflect our optimism. I'd now like to turn it over to Dave to cover the financials and our outlook for Q4.