Steelcase Inc.

Good morning, my name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the Stillcase fourth quarter fiscal 2023 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Mr. O'Mara, you may begin the conference.

Thank you, Regina. Good morning, everyone. Thank you for joining us for the recap of our fourth quarter fiscal 2023 financial results. Here with me today are Sarah Armbruster, our president and chief executive officer, and Dave Sylvester, our senior vice president and chief financial officer. Our fourth 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 hi, everyone, and thanks for joining our call today. Our fourth quarter results were better than we expected as both revenue and EPS finished above the guidance range we provided in December. Stronger orders, higher pricing benefits, and improved fulfillment rates combined to generate the increased sales. We continue to drive improvement in our growth margin, which is up 370 basis points on a year-over-year basis as our pricing actions continue to recover the inflation we've been absorbing. We also continue to optimize our spending by shifting investment to our most critical initiatives and driving efficiencies in our processes. On the supply chain side, we saw significant improvement in our operational metrics as our network of suppliers stabilized their performance and as we benefited from adjustments in our own operations. At the end of the fourth quarter, 96% of our products were at standard lead times. On the cost side, we still are experiencing inflationary pressures in EMEA due to energy prices and in some commodities in the Americas, such as plastics, aluminum, and packaging. But on an overall basis, we've seen inflation levels begin to moderate. Dave will cover the quarter's results in more detail shortly. And I'd like to comment now on the three main pillars of our strategy and the results we're delivering. Fiscal 2023 was a pivotal year for Steelcase. We delivered 17% revenue growth and significantly higher earnings as compared to fiscal 2022. We overcame a second year of extraordinary inflationary pressure and supply chain challenges. And I'm proud of our employees for the tremendous commitment and resiliency they showed in delivering these results. As we look towards fiscal 2024, we're committed to improving our overall financial performance. We aim to balance delivering higher short-term profits with supporting the investments needed to deliver our longer-term strategy. Regarding our strategy, one of our core initiatives is to lead the workplace transformation that's arisen in the past few years. Many business leaders want their people to spend time together. And in recent months, a notable number of larger companies in the United States have announced workplace strategies that emphasize the importance of an in-office presence. The large corporations we serve increasingly want to imagine, test, and implement alternative structures to the work week to bring people together in predictable, consistent ways. And we've seen opportunity creation in the Americas grow on a year-over-year basis for eight of the last nine months. In addition, our win rates have remained solid, and we saw a sequential strengthening in project orders from our large corporate customers this quarter. The second pillar of our strategy is our diversification efforts, which are centered around educational institutions, small to mid-sized companies, and consumers. In education, our Smith System business is a leader in providing solutions for K through 12 classrooms, and this business grew 13% this year. after growing nearly 50% in fiscal 2022. Our AMQ business is aimed at serving the needs of small and mid-sized companies who frequently desire a fast, simple purchasing experience. And we achieved great results with AMQ delivering 32% growth this year. Our consumer business grew 7% on a global basis, primarily driven by the expansion of our programs in EMEA and Asia Pacific. So many of our customers, whether the world's largest companies or a local community college or a small business, are asking Steelcase for guidance. And our insights are key to helping them make decisions about their spaces. So for this reason, we continue to invest in product innovation for every customer segment we serve with the goal of leading. We're committed to solving some of today's biggest workspace challenges and finding new ways to integrate technology to keep teams connected and help people collaborate. And Steelcase's longstanding leadership in product design and innovation now is bolstered even further by the incredible work of the teams at Bacarbe, Halcon, and Orangebox, along with partner brands like West Elm. And we're innovating beyond product and across segments. We're investing in and reinventing our go-to-market model and creating new experiences for our customers. So whether it's local tailored showroom experiences for our corporate customer or new digital tools to enable a small business, we're taking a fresh look at how we help customers engage with us in the ways they desire. As we make these choices and bring innovation to the customer experience, I expect we will accelerate our positive momentum. Next, we continue to focus on driving higher levels of profitability, which is our third pillar. While some of the things we're working on are large-scale changes, such as business transformation and larger footprint changes in our operations, we remain equally committed to going after near-term and more incremental improvement opportunities. So whether it's a packaging change to improve performance while reducing costs, or the rearrangement of factory floor space to improve flow, we're pursuing numerous ideas to generate value now. Finally, I'd like to highlight that even while we focus on leading workplace transformation, diversifying the customer and market segments we serve, and increasing our profitability, we're not letting up on our ESG ambitions. This past year saw significant progress against our ESG goals, and here are a few of the ways we're sharing our expertise to better serve our customers, partner with our suppliers, and support our dealers. Steelcase continues to lead the industry in new products with BIFMA-level certification and is continuously exploring new innovations in materials chemistry and product sustainability, with a recent great example being the launch of the carbon-neutral Series 1 chair. As we strive for greater circularity in our own business, we're also developing and launching ways to pass that along to our customers through products and services that consider the full lifecycle of our solutions. And in addition to reducing carbon emissions in our owned operations, we're also partnering with suppliers to help them set their own science-based targets for carbon emissions. And we're working with our dealers to help them as they expand their commitments to diversity by sharing resources and tools to guide and inspire them. There's more I could share, but I think the best evidence of progress is the recognition we're getting from others who see that progress too. In fact, this past year alone, we were named a world's most admired company by Fortune, a Forbes best employer for women, and a Forbes Best Employer for New Graduates, and we earned a perfect score on the Human Rights Campaign's Corporate Equality Index. So I'm not only proud of our progress and excited about what lies ahead, but I'm convinced we have the right strategy to lead the workplace transformation, drive growth as we diversify the customers and markets we serve, and improve our profitability. This strategy, along with the efforts of everyone at Steelcase, is yielding results. We achieved gains in fiscal 2023 in a difficult environment, and we look forward to the potential of fiscal 2024. So with that, I'll turn it over to Dave to review the financial results and our fiscal 2024 outlook.