Steelcase’s second quarter was shaped by robust demand from large corporate customers, particularly in the Americas, which offset challenges in the education and government sectors as well as ongoing international softness. Management credited the company’s 7% year-on-year revenue growth to strong order activity from technology and financial services clients, along with the successful launch of new workplace solutions. CEO Sara Armbruster emphasized, "Our largest clients are seeking our help to reshape space to support collaboration and connection," highlighting the evolving needs driving recent project wins. However, the company faced headwinds from reduced education sector spending, influenced by changes in federal funding policies, and continued macroeconomic pressures in Germany and France.
Is now the time to buy SCS? Find out in our full research report (it’s free).
Steelcase (SCS) Q2 CY2025 Highlights:
- Revenue: $779 million vs analyst estimates of $759.9 million (7.1% year-on-year growth, 2.5% beat)
- Adjusted EPS: $0.20 vs analyst estimates of $0.13 (50% beat)
- Adjusted EBITDA: $64.8 million vs analyst estimates of $52.33 million (8.3% margin, 23.8% beat)
- Revenue Guidance for Q3 CY2025 is $875 million at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for Q3 CY2025 is $0.38 at the midpoint, below analyst estimates of $0.41
- Operating Margin: 4.5%, up from 3.3% in the same quarter last year
- Market Capitalization: $1.29 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Steelcase’s Q2 Earnings Call
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Reuben Garner (Benchmark): Asked about the scale of education sector headwinds and their impact on overall order growth. CFO Dave Sylvester clarified that education and government accounted for roughly one-third of orders, but strong corporate demand offset this weakness.
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Gregory John Burns (Sidoti): Inquired about international restructuring and whether profitability goals could be met at current demand levels. Sylvester responded that actions are aimed at achieving sustained profitability, even if volumes do not improve.
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Steven Ramsey (Thompson Research Group): Questioned whether further cost reductions are planned in Asia and the role of automation. Sylvester explained that ongoing efficiency initiatives and facility downsizing in China are expected to drive additional cost savings.
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Steven Ramsey (Thompson Research Group): Asked about trends in Americas project versus recurring business and the outlook for conference room upgrades. Management noted strong recurring business growth and sees long-term opportunity in upgrading outdated conference room infrastructure.
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Joseph Anthony Gomes (NOBLE Capital): Raised the prospect of future price increases given inflationary pressures. Sylvester indicated that Steelcase would consider further pricing actions if inflation persists, in line with historical practice.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will be monitoring (1) the pace of large corporate office space investments and their contribution to order growth, (2) the effectiveness of cost-cutting and restructuring measures in Europe, and (3) stabilization or further declines in education sector demand as public funding policies shift. Progress on new product adoption and success in offsetting tariff and inflation impacts will also be important markers for Steelcase’s continued recovery.
Steelcase currently trades at $11.08, up from $10.63 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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