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SI

STEELCASE INC (SCS)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 delivered solid top-line and margin expansion: Revenue $779.0M (+7% YoY), gross margin 33.9% (+170 bps YoY), and adjusted EPS $0.20 vs $0.16 LY; GAAP EPS $0.11 . Versus S&P Global consensus, revenue beat ($759.9M*) and adjusted EPS beat ($0.13*) by a wide margin. Values retrieved from S&P Global.
  • Americas strength (revenue +9% YoY; adj. operating margin 6.7%) offset International softness (revenue +1% YoY; operating loss) as large corporate demand remained healthy while education/government softened and Germany/France lagged .
  • Backlog ended Q1 at ~$801M (+2% YoY), and Q2 guidance implies flat to +4% revenue growth with adjusted EPS of $0.36–$0.40, while gross margin is guided to ~33.0–33.5% despite ~$20M tariff/inflation headwinds offset by price .
  • Management highlighted continued momentum with large corporate customers (especially tech), restructuring actions to fund growth and address Europe, and tariff recovery/pricing actions; tariff impact was ~$(7)M net of price in Q1 .

What Went Well and What Went Wrong

What Went Well

  • Broad-based Americas growth and profitability: Americas revenue +9% YoY to $603.6M; adj. operating margin reached 6.7% (up ~200 bps YoY) on higher volume and cost actions . CEO: “We delivered strong revenue growth, led by our large corporate customers who are investing to reimagine their workplaces” .
  • Sustained margin expansion: Company gross margin 33.9% (+170 bps YoY) driven by volume, $6M lower restructuring, and cost reduction benefits, partly offset by tariffs .
  • Positive demand signals and product momentum: Management saw “strong order growth from our large technology customers” and positive reception to hybrid-collaboration solutions like Ocular and the Jean Nouvel seating collection showcased at Design Days/Neocon .

What Went Wrong

  • International profitability and SMB exposure: International posted a modest revenue uptick (+1% YoY) but operating loss widened, with weakness concentrated in Germany/France SMB; management initiated European actions with unions/works councils to reduce costs .
  • Education/government softness: U.S. education and government orders declined due to changes in federal funding policies, offsetting large corporate strength in the Americas .
  • Tariff and FX headwinds: Q1 included ~$(7)M tariff impact net of pricing in the Americas and FX-related other expense; Q2 guide embeds ~$20M tariff/inflation headwind offset by pricing .

Financial Results

Headline P&L vs Prior Quarters

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue ($M)$794.9 $788.0 $779.0
Gross Margin %33.4% 31.9% 33.9%
Operating Margin % (GAAP)5.2% 1.2% 3.3%
Diluted EPS (GAAP)$0.16 $0.23 $0.11
Adjusted EPS$0.30 $0.26 $0.20

Q1 FY26 Actual vs S&P Global Consensus and Company Q1 Guide

MetricCompany Guide (given 3/26/25)S&P Global ConsensusQ1 FY26 Actual
Revenue ($M)$760–$785 $759.9*$779.0
Diluted EPS (GAAP)$0.10–$0.14 $0.13*$0.11
Adjusted EPS$0.13–$0.17 $0.13*$0.20

Values retrieved from S&P Global.

Segment Revenue

Segment Revenue ($M)Q3 FY25Q4 FY25Q1 FY26
Americas$614.7 $608.1 $603.6
International$180.2 $179.9 $175.4
Total$794.9 $788.0 $779.0

KPIs and Balance Sheet

KPIQ3 FY25Q4 FY25Q1 FY26
Backlog (end of period, $M)~$664 ~$694 ~$801
YoY Orders (Organic)(1%) +9% (1%)
Adj. EBITDA TTM ($M)$283.6 $262.3 $265.8
Total Liquidity ($M)$576.6 $558.3 $391.5
Total Debt ($M)$446.9 $447.1 $447.3
CFO (Operating CF, $M)——$(141.1)

Guidance Changes

Q1 FY26: Prior Guidance vs Actual

MetricPeriodPrevious Guidance (3/26/25)ActualResult
Revenue ($M)Q1 FY26$760–$785 $779.0 Within high end
Diluted EPS (GAAP)Q1 FY26$0.10–$0.14 $0.11 In-range
Adjusted EPSQ1 FY26$0.13–$0.17 $0.20 Above

Q2 FY26: Current Guidance

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q2 FY26—$860–$890 Introduced
Gross Margin %Q2 FY26—~33.0–33.5 Introduced
Operating Expenses ($M)Q2 FY26—$230–$235 Introduced
Interest & Other (net, $M)Q2 FY26—~$(3) Introduced
Effective Tax RateQ2 FY26—~27% Introduced
Diluted EPS (GAAP)Q2 FY26—$0.27–$0.31 Introduced
Adjusted EPSQ2 FY26—$0.36–$0.40 Introduced

Management also noted the Q2 gross margin guide assumes ~$20M of tariff/inflation headwinds offset by pricing in the Americas .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25, Q4 FY25)Current Period (Q1 FY26)Trend
Large corporate demandQ3: LC orders strengthened late in quarter; Americas +7% organic revenue . Q4: Americas orders +12%; backlog +11% YoY .Continued growth, especially in tech; strong win rates and backlog +2% YoY .Improving
Education/Gov’tQ3: Gov’t drove Americas order growth .Education/gov’t orders declined on funding changes; seasonal mix lowers Q2 fixed-cost leverage at Smith System .Deteriorating
International (EMEA/Asia)Q3: Intl below expectations; actions to reduce cost . Q4: Considering more actions; aim breakeven adj. op income FY26 .Asia improved to profitability; EMEA weakness (Germany/France SMB) triggers restructuring with unions/works councils .Mixed (Asia up, EMEA down)
Tariffs/Pricing—Q1 tariff impact ~$(7)M net of price; Q2 embeds ~$20M headwind offset by pricing .Headwind managed by pricing
Product & Hybrid collaboration—Strong reception for Ocular, Campers & Dens, Jean Nouvel collection; design events catalyzing orders .Positive momentum
Cost actionsQ3: Restructuring added ~$5M annualized savings by start of FY26 . Q4: Target mid‑single digit organic revenue and margin expansion in FY26 .Americas salaried reductions (~$20M annualized); Europe procedures initiated to lower cost base .Accelerating actions

Management Commentary

  • “We delivered strong revenue growth, led by our large corporate customers who are investing to reimagine their workplaces.” – Sara Armbruster, CEO .
  • “We incurred $9 million of restructuring costs in the Americas… related to the exit of approximately 85 salaried employees… to prioritize investments in our strategic growth initiatives.” – Dave Sylvester, CFO .
  • “Gross margin… improvement of 170 basis points… driven by higher volume in the Americas, $6 million of lower restructuring costs, and benefits from cost reduction initiatives, partially offset by approximately $7 million of higher tariff costs, net of pricing benefits.” – Release .
  • “In addition, we have initiated procedures with applicable unions and works councils in Europe… to further reduce our cost structure… to improve profitability in our International segment.” – CFO .
  • “Our customer conversations remain very active… many arrived prepared to move forward with final design decisions… reinforcing the relevance of our solutions in a changing world of work.” – CEO .

Q&A Highlights

  • Mix dynamics: Roughly one-third of Q1 Americas orders from education/government and two-thirds from corporate/SMB/health/consumer; growth in the latter offset declines in education/gov’t .
  • Pricing/tariff timing: Tariff recovery charge effective Mar 29; mid‑June price increase created pull-forward within Q2 weeks but no meaningful Q2→Q1 pull-forward; Q2 guide assumes ~$20M tariff/inflation offset by pricing .
  • International path: Actions underway with European unions/works councils to restore profitability at current demand levels; Asia showing improving orders and profitability .
  • Demand drivers: Hybrid collaboration, conference room modernization, and tech sector re-acceleration cited as catalysts for large corporate demand .
  • Full-year posture: Still targeting mid‑single digit organic revenue growth and adjusted operating margin expansion in FY26, subject to tariff/macro developments .

Estimates Context

  • Q1 FY26 vs S&P Global consensus: Revenue $779.0M vs $759.9M* (beat); adjusted EPS $0.20 vs $0.13* (beat). Values retrieved from S&P Global. Actuals per company disclosures .

Where estimates may adjust:

  • Given Q1 upside on revenue/margins and Q2 guide implying flat to +4% revenue growth with margin resilience (33.0–33.5%), Street models may need to lift FY26 adjusted EPS assumptions particularly for Americas margin carry and tariff recovery, while trimming International profitability contributions given EMEA actions/timeline .

Key Takeaways for Investors

  • Americas-led beat: Strong large corporate demand and cost controls drove margin expansion and an adjusted EPS beat; International remains the swing factor as EMEA restructuring progresses .
  • Tariff headwinds manageable: Management is offsetting tariffs with pricing; Q2 guide embeds ~$20M tariff/inflation fully offset by pricing, keeping gross margin ~33–33.5% .
  • Mix watch: Education/government softness and seasonal dynamics will cap Q2 fixed-cost leverage vs prior summers; monitor Smith System mix and K‑12 funding trends .
  • Backlog supporting Q2: Backlog +2% YoY to ~$801M and early Q2 order strength (with some price-related pull-forward) underpin the revenue range .
  • International catalyst: Cost-reduction initiatives in Europe and improving Asia profitability are medium-term margin levers; timing of EMEA actions is the key variable .
  • FY26 trajectory intact: Management reiterated targets for mid-single digit organic growth and adjusted operating margin expansion, supported by large corporate project pipeline and pricing discipline .
  • Product cycle tailwind: New hybrid-collaboration solutions (e.g., Ocular) and premium design lines are resonating with customers, reinforcing share gains in enterprise refresh cycles .

Values retrieved from S&P Global.