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.

Thank you, Sarah, and good morning, everyone. Today, I will cover our fourth quarter results, share a few summary remarks about the fiscal year, and provide some color about our outlook for the first quarter and our targets for fiscal 2024. Regarding the fourth quarter, our financial results were significantly better than we expected. Revenue of $802 million reflected organic growth of 6% compared to the prior year. And the organic growth was driven by the Americas, which grew 10%, while EMEA grew 2%. The other segment declined 10%, driven by Asia Pacific and the impacts of the COVID-related restrictions in China earlier in the year, as well as broader economic uncertainty. Revenue in the Americas benefited from stronger orders than we anticipated, especially in December, and notably related to project business from our large corporate customers. In addition, supply chain improvements enabled faster order fulfillment patterns, which resulted in less orders being pushed out at the end of the quarter. Our better than expected adjusted earnings were driven by the Americas, primarily due to the stronger revenue, but favorable pricing and better operational efficiencies also contributed. This favorability was partially offset by lower volume and higher inflation in EMEA. Operating expenses were slightly above our Q4 estimate due primarily to higher variable compensation expense driven by our better-than-expected earnings. We continued to benefit from the actions we took earlier in the year to reduce spending and headcount, which helped offset a $5 million charge related to an earn-out liability associated with a recent acquisition, which is outperforming our initial value creation plan. Consistent with our Q4 estimate, we recorded $9 million of gains from the sale of fixed assets. As it relates to cash flow in the balance sheet, we generated strong free cash flow in Q4 driven by stronger than expected earnings and a reduction in working capital primarily due to lower inventory. As a result, we repaid the remaining $34 million of borrowings under our global credit facility and cash balances increased by $35 million. At the end of the quarter, our liquidity totaled $248 million and total debt aggregated to $481 million, including $32 million of term debt related to our aircraft financing. The aircraft financing matures on May 1st, and we expect to pay off this financing during the first quarter. Depending on the timing of the expected sales of our aircraft, the payoff may be funded by a combination of the sales proceeds, cash on hand, or temporary borrowings under our credit facility. At the end of the fourth quarter, our ratio of debt to trailing four-quarter adjusted EBITDA approximated 2.3 times, and it's less than two times on a net debt basis taking into consideration our cash balances. Regarding orders in the quarter, we posted a year over year order decline of 8% in the fourth quarter, including declines of 9% in the Americas and 24% in the other category, while EMEA grew 2%. The decline in the Americas moderated as compared to the 16% year over year decline in the third quarter, but the year over year comparisons trended unfavorably over the course of the quarter, before improving over the first three weeks of March. Specifically, orders in the Americas declined by 3% in December, 6% in January, and 19% in February versus the prior year. And in the first three weeks of March, orders in the Americas grew by 4% and were approximately flat on a consolidated basis. Turning to our outlook for the first quarter, We expect to report revenue within a range of $710 to $735 million, which would reflect a moderate decline year over year, yet we expect to report adjusted earnings per share of between one and five cents, which would be an increase compared to a five cent adjusted loss per share in the prior year. In addition to the projected range of revenue, the earnings estimate includes Estimated gross margin of approximately 29.5%, which is approximately 350 basis points higher than the prior year. Operating expenses of between $205 to $210 million, which includes $10 million of expected gains from the sale of fixed assets. And lastly, we expect interest expense and other non-operating items to net to approximately $4 million, and we are estimating an effective tax rate of 27%. As we look to the full fiscal year of 2024, we are approaching the demand environment with cautious optimism. More large corporations in the U.S. are requiring their employees to return to their offices for a minimum number of days, and project opportunity creation in the Americas has grown compared to the prior year in eight of the last nine months. However, we are beginning the year with a backlog that is 14% lower on a consolidated basis than the prior year, and the overall macroeconomic and geopolitical environment remains relatively unstable. As a result, we are targeting the following for fiscal 2024. For revenue, we are targeting moderate organic revenue growth, which includes projected pricing benefits largely offset by a decline in volume. As it relates to volume, we expect a decline from large corporate customers, which is being driven by our lower beginning backlog, but is expected to improve over the course of the year. And we expect this decline to be partially offset by volume growth across the customer segments of education, health, and small to mid-sized corporate companies. For gross margin, We are targeting between 30.5% and 31.5% for fiscal 2024, with the improvement compared to fiscal 2023 primarily driven by projected pricing benefits net of moderate inflation. As a reminder, we estimate the cumulative benefits from our pricing actions over the last two years now approximate the cumulative inflation we absorbed through the end of fiscal 2023. For operating expenses, we are planning higher investments in strategic initiatives and higher employee costs, partially offset by a full year of benefits from the actions we implemented in the second half of fiscal 2023. Lastly, I'll share some other details for your fiscal 2024 modeling. We are targeting for non-operating items to net to approximately $16 million. We are estimating an effective tax rate of 27% and we are targeting capital expenditures of between 70 to $80 million. Taking all of these estimates into consideration, we are targeting adjusted earnings of between 55 to 75 cents per share for fiscal 2024. In closing, we navigated a very challenging environment during fiscal 2023. fraught with additional inflation and supply chain disruptions, as well as continued hesitancy by our largest corporate customers to mandate a more significant presence in their offices. And yet, we delivered strong growth in revenue and earnings while advancing our longer term strategy. As we begin fiscal 2024, our beginning backlog is lower than prior year, and broader uncertainty remains relatively high. However, we believe we are well positioned to deliver our targeted level of revenue and earnings growth. We project additional benefits from our pricing actions. We believe volume growth across our education, health, and mid-market segments will help offset some of the expected decline from large corporate customers. And we believe the tide is turning on return to office for our larger customers, which will help drive increased investment in their workspaces over the course of the year. From there, we will turn it over for questions.

At this time, I'd like to remind everyone, in order to ask a question, simply press star 1 on your telephone keypad. Our first question comes from the line of Ruben Garner with the Benchmark Company. Please go ahead.

Thank you. Good morning, everybody. Hi, Ruben. Good morning.

Can we start with the top-line outlook, I guess both for the coming quarter and beyond? I was wondering if you could help backlog down, I think you said 14% year-over-year. Your orders were down this past quarter 8%, I think, consolidated, and the outlook for the quarter is significantly better than both of those. Is that just a product of the recent kind of stabilization and order rates that you talked about, and then if you could maybe give some color on the full year volume versus price assumed to kind of get to that modest growth for FY24.

Yeah, I mean, your first question related to the outlook for the first quarter and its connection to backlog or being better than backlog is exactly what you summarized. I mean, as we look at our opportunity creation and pipeline of projects that our sales organization are working on that has improved data the last nine months. We've been waiting for it to start to show up in orders, and it feels like it is starting to show up a bit more significantly. Not only did we see improvement in our order patterns for the first three weeks of March, which is not a month and is not a quarter of orders, but more importantly, we saw in December some of that project activity starts showing up in our order patterns from our larger corporate customers. So what's embedded in the guidance is a belief that not only will we ship our backlog, not only will our education and healthcare and mid-market business continue at its pace, but that the larger corporate companies will start to get back into the game a little bit more meaningfully as well. Does that answer your first question?

Yes.

And then the volume versus price for the full year outlook to get to growth. I guess a better way to ask it is what kind of volume declines can you withstand from pricing actions you already have in place?

Well, we're not going to share those details. I mean, we do have projected pricing benefits for the year that we've embedded into our guidance. I just kind of gave you a high level assumption that pricing benefits will be offset by a volume decline, which is being driven by large corporate customers. So you're going to have to make some assumptions on your own for those different components. But you can imagine as we're now going into the third year of capturing pricing benefits and the fact that inflation has been slowing down at least, that our pricing benefits are expected to slow down as well, meaning they won't be at the same size next year that they were this year.

Got it. And in the prepared remarks or in the press release, you talked about increased investment in the SG&A line on some of these strategic initiatives. I was wondering if you could, one, you know, quantify what kind of investments you're making, any specifics you could give on what exactly those investments are. Is it people? Is it new products? And then I guess what kind of plans do you have if maybe the top line environment is a little worse than you're expecting? Is that something where you can pull back or would you likely continue to invest just because of the long-term vision you have for those opportunities?

Well, maybe I'll start with the long-term vision, and then Dave can talk about some of the quantification. I mean, we've talked pretty consistently about how we continue to try to balance delivering short-term profits with staying invested in the longer-term strategy. So with respect to the specific initiatives that those investments are going after, I mean, it's really spread across a number of the things I talked about, our commitment to staying invested in product innovation to solve you know, our customers' most pressing workplace needs, our continued investment in the diversification strategy and helping support initiatives like our mid-market initiative or education business continue to grow. You know, it's really kind of across the board in terms of those three pillars. So, at a high level, you know, we have been committed to those three important strategies and we remain committed to those three important strategies. And as, you know, we have the opportunity to continue to invest in those to drive those forward, that's what we're doing. So, at a high level. That's how I would describe kind of where the money will go.

Yeah. And at a more detailed level, you might be disappointed in my answers. I'll give you the quick answer is I think you asked four or five questions in there. And I think the answer to all of them is yes, that we are investing in people. We are investing in growth in our strategies. We are investing in our profitability enhancements. We didn't size it for you guys, because frankly, we will use that as a lever, you know, if our top line and gross margin assumptions don't play out fully. I mean, if I look back at fiscal 2023, we didn't spend the initial plan that we put in place because the top line and gross margins didn't play out as we planned. So we adjusted our expectations prioritized and remained invested, but not at the level that we had initially planned. So it's a lever that we'll use and we'll be quite careful given our cautious optimism, but we also feel pretty good about where we're positioned. And I'll tell you again, eight of the last nine months of opportunity creation growing over the prior year is what we feel pretty good about.

I think you gave me too much credit. I don't know if I got four or five in, but I'll check tape. Thank you, guys, and congrats on the strong close to the year, and good luck. Thanks. Thanks.

Your next question comes from the line of Greg Burns with Sidoti. Please go ahead.

Morning. How big is China? How far below pre-pandemic levels is that business operating, and are you seeing any improvements there now that China is kind of backing off some of their COVID restrictions?

Yeah, Greg, we haven't disclosed the size of China. I mean, you could, you know, make an estimate based on the size of the other category. You know that it's Asia and design techs. And I think most people have a rough idea of the mix of those two businesses. And we've talked about China and India being our primary markets that we target. So it's down considerably from its peak, but importantly, the activity levels that we're seeing across Asia in general. In fact, Sarah and I just were looking at a mock-up activity that our head of the region had shared with us earlier in the week, and it is pretty strong at the moment. So we're It's too early to be bullish on a recovery in Asia, but we feel pretty good about some of the early signs that we're seeing of things coming back in the broader market, including China.

Okay. Obviously, there's been some consolidation going on in the industry. What are your thoughts on amplifying some of these organic investments with M&A, and do you feel there's any areas where you might benefit from like kind of a scale acquisition?

Well, I think, you know, we are always, as we said previously, thinking about both organic and inorganic opportunities to invest in the business. We remain pretty active in keeping our eyes open and asking those questions in terms of what might make sense for our strategy and what might be the right next move. So I would say we continue to ask those questions as we always do. And we continue to look at opportunities to drive our strategy forward.

Okay. And lastly, with the conversations you're having around some of the projects now that we've gone through COVID, companies are trying to understand what their offices are going to look like post-COVID. Do you feel like the expectations for what an office looks is going to look like have changed drastically? Do you have the product portfolio to kind of address where the office is headed, or do you feel like you need to maybe fill in any gaps in where everything's evolving toward?

Yeah, so I feel really good about where we're positioned. I mean, you'll recall that over the past couple of years during the pandemic, You know, we made the explicit choice to remain committed to the office. So we stayed invested in product development. We did a ton of research to better understand the very question you're asking throughout the pandemic. We made moves like the acquisition of Halcon to help support what we felt was going to be the portfolio that we would need to be successful. And in terms of what we're seeing right now, I wish Eddie Schmidt, our head of Americas, were here right now, but he's not because he's actually out there calling on large companies and he's was recently out on the East Coast. He was on the West Coast last week. He's in Europe this week. And it's been interesting to hear him reflect on the energy, I would say, that many of these organizations are bringing to their spaces and really thinking about what's next and what's required for them to be successful. And two key things, for sure, among several that have come out of those recent conversations are the continued desire to create more privacy and options for privacy for individuals within the workplace. And then also investment in really terrific social spaces. So having more informal collaboration, social kind of spaces that are a draw for people to come back to the office, as well as creating the opportunity for people to come together in different kinds of ways within an office. And I think on both those fronts, privacy and social spaces, we've done a lot of work over the past couple of years, both through acquisitions and our own product development, as well as the partnerships we've developed to give us, I think, a pretty competitive portfolio to allow us to be successful.

Great. Thank you. Thanks, Greg.

Your next question comes from the line of Steven Ramsey with Thompson Research Group. Please go ahead.

Hi. Good morning. On the backlog and order decline, that context for the fourth quarter, March better, but lower corporate volumes being the driver Are volumes better through that time period in the education, SMB, and health markets? And do you expect non-corporate verticals to have better volumes throughout the year?

The first part of your question was related to the quarters orders or the first three weeks more recent order patterns. I wasn't quite sure what you were getting at.

Sure. I'm guessing what I'm asking is lower corporate volumes clearly a driver, but were volumes in the non-corporate verticals positive through the prior months?

Not sure I know that specifically in the last few months, but we have been seeing fairly consistent growth from the non-large corporate verticals, and we expect that to continue over the course of next year. Large company has a low backlog going into the year, and we expect activity from large corporate will improve over the course of the year, but it will be a drag on volume at least through the first half.

Okay.

Okay. Helpful. That kind of gets to my next question on the 2024 draft. top line guide with the mixed demand trends driving that. Do you think ultimately the second half of FY24 is showing better volumes across the board? Is that part of the assumption behind the sales guidance?

Yeah. That's right.

Okay.

Okay. Helpful. And then on the pricing front for FY24, Does that mean more incremental actions on pricing, or is this prior actions flowing through in that carryover being assumed?

It's prior actions flowing through.

Okay, helpful. And then last one for me. You talked more on the last call about the long-term for North America office potentially being reduced as a total addressable market. pre-COVID levels. Your commentary on this call is pretty positive on how people are thinking about their office space. Do you think that changes that long-term viewpoint?

I wish it did. I think it's too early to call any change in that. I mean, we're in a pretty big hole. Large corporate has largely been on the sideline for the better part of three years. It didn't go to zero, but it obviously substantially declined. So I don't have any new information relative to what we said last quarter. We still think that the overall industry is more likely than not to be under some pressure due to the hybrid transformation and the number of days that people spend in the office and the amount of spend that large companies have on their workspaces. Once all this settles down after the reinvention of the office over the next, say, couple of years. But we'll wait and see what happens, how a large company comes back. If you double click on some of the information that Eddie has shared from his trips and travels to go see our large corporate, You don't hear the same amount of dialogue from large company about real estate consolidation that we heard a year ago or two years ago. I mean, that was what everybody was talking about. Now the dialogue, it's not to say that it's not happening or won't happen at all, but the dialogue is much more about what needs to change inside the office to get employees back into the office more significantly and to help them work more effectively and to manage hybrid work, which is here to stay. We're going to have people distributed for the foreseeable future, if not forever. And the offices aren't set up to handle living on video, so to speak. So that just seems to be driving more of the dialogue. But the short answer is we don't have an update from what we said 90 days ago about longer-term industry trends.

That's all very helpful. Thank you. Thanks, Stephen.

Again, if you would like to ask a question, press star then the number one on your telephone keypad. Your next question comes from the line of Rex Henderson with Water Tower Research. Please go ahead.

Good morning and congratulations on a fine quarter. I wanted to draw attention to a comment that you made in the press release and which you made, Sarah, you made on your comments about part of the beat on for this quarter was due to increased project orders from large corporate customers. Can you reconcile that? You know, kind of the common wisdom these days is that it's the mid-market that's doing better and big corporations are not. And you've mentioned that in your guidance is also for lower orders for large corporate. Can you tell me a little bit more about what those projects were, how sustainable they are, and kind of, you know, how that continues to flow through next year, if at all.

Yeah, maybe I can give some color on the comments. I think one of the things that we've seen from large corporations recently is more investment in, I'll say, significant projects. So we've talked in previous quarters about how Many of our larger customers have been interested in discussion and conversation, and some of them had moved into pilots or small-scale, I'll say, tests of new space ideas. But I think more recently, we've seen more energy, more interest, and more actual orders that tie to true action where customers, at least some customers, are making decisions you know, bigger investments to renovate an entire building or to move into a new location. And obviously just kind of the scale of those types of projects, you know, generates higher revenue for us because they're bigger. So I think the reference to large corporate projects is some evidence that we're seeing more and more customers who've been thinking and talking and experimenting and piloting starting to make bigger commitments to their future workplace strategy.

Yes, Rex. Go ahead. Well, I was just going to add a little bit. Some of the specifics of the product that's being ordered or looked at is really emphasizing what Sarah was talking about in her scripted remarks. I mean, privacy is a big deal in the future, privacy in the open plan, privacy or private office applications. Collaboration also is a big deal. where architectural walls are under higher demand right now. So it just speaks to more substantive change. Now, full transparency, we also have some large orders that are being thought about that are just more freshening up the office. Clients want new chairs for when their employees come back or something like that. But the common themes are what Sarah summarized. Privacy and collaboration are a big deal. Which is great, I think, for the industry for the next couple of years as our clients deal with what it's going to mean to have people back in the office more significantly and living on video, they're going to need to facilitate collaboration and privacy. That's going to be change, and change is good for us in the industry.

And you mentioned that the first three weeks of March, order levels have been improving. Is this sort of activity contributing to that?

Yes.

All right.

You're still expecting, though, lower large corporation orders for the year. Could this kind of activity change that outlook over the coming year?

Well, I'd maybe clarify. We weren't projecting orders from large companies. We were projecting revenue from large companies. okay all right and that's based on backlog at the moment yeah exactly so we start with a low backlog and it will take a while for large corporate to really get that engine restarted if it in fact is going to you know more significantly restart okay all right and secondly i wanted to turn a little bit to other and and to and to asia you've already mentioned that that uh you know china's been had been a challenge but you're seeing some uh

bump in activity uh any any idea how long how long it takes for that activity to convert into into orders and sales and what you expected how that to pace through the year no i don't i'm not prepared today to i guess publicly project that i mean we're working very closely with our asia pacific leadership team

I mean, you can see from the results that we posted in the other category that we were losing money in that region. So we're very carefully looking at the demand environment and what our expectations are for the next 90 days, 180 days. We feel pretty good about the mid term, longer term outlook for the region. We don't think like things have changed in a significant kind of way that that would suggest our strategy needs to be adjusted significantly, but we're also not keen about losing any kind of significant amount of money in the near term either.

All right.

Okay. Thanks for taking my call, and again, congratulations. Thanks, Rex. Thanks.

There are no further questions at this time. Ms. Armbruster, I turn the call back over to you.

Great. Well, I just want to thank you all for joining, and I'd also like to invite you to join us for our Investor Day planned on May 4th in New York City, which we will also webcast. I'll be there along with several members of our leadership team to discuss our strategy and review our longer-term targets. So we look forward to seeing you, and we appreciate your interest in Steelcase as we continue to focus on driving improved results. Have a great day.

This concludes today's conference call. You may now disconnect.