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SI

STEELCASE INC (SCS)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue was $788.0M and adjusted EPS was $0.26, with gross margin +70 bps YoY to 31.9%; EPS benefited from $0.11/share favorable tax items, while adjusted operating income fell YoY due to International weakness and higher OpEx .
  • Versus S&P Global consensus, EPS beat by ~$0.05 (actual $0.26 vs $0.206*) and revenue was ~in line/slightly below (actual $788.0M vs $790.9M*); EBITDA missed consensus as mix and costs weighed on profitability . Values retrieved from S&P Global.
  • Orders grew 9% organically, led by Americas +12%, marking the sixth consecutive quarter of YoY orders growth in the Americas; backlog ended Q4 at ~$694M (+11% YoY), supporting Q1 FY2026 revenue guidance of $760–$785M and adjusted EPS of $0.13–$0.17 .
  • Management introduced tariff recovery pricing and a June list price increase to offset higher tariffs, and targets FY2026 mid-single-digit organic revenue growth with modest adjusted operating margin expansion; International aims for breakeven adjusted OI for FY2026 .
  • Near-term stock catalysts: strong backlog/order momentum, tariff recovery price actions, and potential West Coast/large corporate project acceleration; watch International demand/mix, ERP-related cost headwinds, and tariff/USMCA outcomes .

What Went Well and What Went Wrong

What Went Well

  • Broad-based orders strength: “Our 12 percent order growth in the Americas was broad-based… strong growth from large corporate and government customers” and six straight quarters of YoY orders growth in the Americas .
  • Persistent margin improvement: 11th straight quarter of YoY gross margin expansion; Q4 GM reached 31.9% (+70 bps YoY) driven by cost reduction initiatives in the Americas .
  • Backlog/liquidity set up FY2026: Backlog ~$694M (+11% YoY) and total liquidity ~$558.3M (exceeding total debt $447.1M); dividend maintained and buybacks continued ($26.5M repurchases in FY2025) .

What Went Wrong

  • International underperformance: Q4 International revenue -7% YoY; adjusted operating income swung to a loss, driven by weaker SMB demand in EMEA/APAC, unfavorable mix, higher costs and discounting; management is evaluating additional cost actions .
  • Adjusted operating income decline: Company Q4 adjusted OI fell to $14.4M vs $34.4M prior year; CFO noted shortfalls in both segments and higher OpEx (additional week, employee costs, IT/ERP) .
  • Margin headwinds from mix/tariffs: Americas mix skewed to large corporate/government with lower gross margins; ERP costs and anticipated tariff increases drive FY2026 OpEx and GM risk (pricing actions intended to offset) .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$855.8 $794.9 $788.0
Adjusted EPS ($)$0.39 $0.30 $0.26
Gross Margin (%)34.5% 33.4% 31.9%
Operating Margin (%)10.5% 5.2% 1.2%
Adjusted Operating Income ($USD Millions)$68.5 $47.3 $14.4
Organic Orders Growth (%)-1% (company) -1% (company) +9% (company)

Notes:

  • Q4 diluted EPS $0.23 GAAP; adjusted EPS $0.26 includes $0.11/share from favorable tax items net of variable compensation .
  • Q4 YoY organic revenue declined 5% (Americas -3%, International -10%) after adjusting for the additional week .

Q4 FY2025 Segment Breakdown

SegmentRevenue ($M)YoY %Operating Income ($M)Operating Margin (%)
Americas$608.1 +5% $15.8 2.6%
International$179.9 -7% $(6.3) (3.5%)
Total$788.0 +2% $9.5 1.2%

KPIs and Balance Sheet

KPIQ4 FY2025Prior Year/Context
Organic Orders Growth+9% total; Americas +12%; International +1% Sixth consecutive Americas orders growth quarter
Backlog~$694M (+11% YoY) Supports Q1 FY2026 guide
Adjusted EBITDA (Trailing 4Q)$262.3M; 8.3% of revenue Down vs Q3 trailing 9.0%
Total Liquidity$558.3M +$72.8M YoY
Total Debt$447.1M Liquidity > Debt
Dividend$0.10 per share declared Consistent payout
Share Repurchases2.1M shares, $26.5M cost; $79.9M remaining authorization Ongoing buybacks

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ResultChange
Revenue ($M)Q4 FY2025$770–$795 $788.0 actual Delivered within range
Adjusted EPS ($)Q4 FY2025$0.20–$0.24 $0.26 actual (incl. $0.11 tax items) Beat range (tax-aided)
Revenue ($M)Q1 FY2026N/A$760–$785 New
Adjusted EPS ($)Q1 FY2026N/A$0.13–$0.17 New
Gross Margin (%)Q1 FY2026N/A~33%, incl. ~$9M tariff headwind New
OpEx ($M)Q1 FY2026N/A$230–$235 (incl. $4.3M amort.) New
Interest/Other ($M)Q1 FY2026N/A~$(2) New
Effective Tax Rate (%)Q1 FY2026N/A~27% New
FY2026 TargetsFY2026N/AMid-single-digit organic rev growth; modest adj. OI margin expansion; International breakeven adj. OI; ~$10M net interest/investment/other; ~27% ETR New
Pricing ActionsFY2026N/AJune list price increase; tariff recovery charge on new Americas orders Implemented

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2025)Previous Mentions (Q3 FY2025)Current Period (Q4 FY2025)Trend
Return-to-office projectsLarge corporate/government/education momentum; Smith System strong; hybrid workplace redesign Improving large corporate project activity; healthcare strength; dealer surveys turning up west coast tech Americas orders +12%; market share gains; backlog +11% Accelerating in Americas
AI/technology initiativesAI-ready workplace design narrative; community-based design; circularity initiatives Continued workplace transformation leadership AI-driven analytics on 5M workplace applications; dealer/customer insights Expanding use cases
International demand/cost actionsSoft APAC/EMEA; India good; restructuring savings; aiming Q3 profitability Mix/discounting pressure; green shoots in China/EMEA; laminate supplier disruption Q4 miss vs expectations; SMB weakness; additional cost structure actions; FY2026 breakeven target Under pressure; cost-focused
Tariffs/pricingNot a major Q2 focusTariff risk flagged; inventory actions; maquiladora sensitivity Tariff recovery charge; June list price increase; $9M Q1 tariff headwind assumed Pricing actions to offset
ERP programTarget go-live Q2 FY2026; costs to rise at cutover FY2026 OpEx +$20M swing; ramp-down inefficiency; later benefits FY2026 OpEx +~$10M (call); FY2026 largely flat OpEx leverage; benefits later Near-term cost; LT benefits
Vertical marketsEducation/healthcare/small-mid business growth (Americas) Government strong; project vs continuing mix Large corporate/government SMB/healthcare led orders; retail lagged Broad-based strength ex-retail

Management Commentary

  • “This was our sixth consecutive quarter of year-over-year order growth in the Americas, reflecting our continued gains in market share.” — CEO Sara Armbruster .
  • “Setting [tax items] aside, adjusted earnings fell below our estimated range, driven by shortfalls in both the Americas and International segments.” — CFO Dave Sylvester .
  • “We are targeting to offset higher tariff and related inflationary costs with appropriate pricing actions… We also announced a tariff recovery charge in the Americas.” — CFO Dave Sylvester .
  • “Our fourth quarter International results did not meet our expectations… we’re considering additional actions to lower our cost structure.” — CFO Dave Sylvester .

Q&A Highlights

  • Orders pacing: Seasonal pattern building from Jan–Mar; near-term orders likely strong ahead of tariff recovery charge taking effect; West Coast tech demand improving per dealer checks .
  • International profitability path: Expect some growth plus cost structure actions; aiming breakeven adjusted OI in FY2026 with first-half losses and second-half profitability .
  • Tax items/variable comp: Favorable tax regulation change and tax strategies recorded in Q4; variable comp adjusted alongside tax effects .
  • Buybacks: Repurchased 2–3M shares in FY2025; expect similar approach in FY2026 .
  • Tariff recovery mechanics: Stated as % of list price; flexible up/down based on tariff landscape and exemptions (USMCA) .

Estimates Context

MetricQ2 2025 Consensus*Q2 2025 ActualQ3 2025 Consensus*Q3 2025 ActualQ4 2025 Consensus*Q4 2025 Actual
Revenue ($USD Millions)864.2*$855.8 795.9*$794.9 790.9*$788.0
Primary EPS ($)0.3725*$0.39 0.22*$0.30 0.206*$0.26
EBITDA ($USD Millions)83.7*Adj. EBITDA $89.5 58.9*Adj. EBITDA $47.3 53.2*Adj. EBITDA $40.4
# of Estimates (Revenue)4*—4*—5*—
# of Estimates (EPS)4*—5*—5*—

Interpretation:

  • Q4: EPS beat; revenue ~in line/slight miss; EBITDA below consensus. Mix (large corporate/government) and higher costs compressed profitability; tax items (+$0.11/share) lifted EPS .
  • Q3: EPS and revenue effectively in line-to-better; Q3 gross margin strong but International softer; laminate supplier issue noted .
  • Q2: EPS beat aided by Americas mix and operational cost reductions; adjusted EBITDA exceeded consensus .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Americas demand and market share gains are intact; backlog +11% YoY supports Q1 FY2026 guide and mid-single-digit FY2026 growth target .
  • Margin trajectory has improved materially since FY2022, but near-term mix (large corporate/government), tariff headwinds, and ERP costs temper adjusted OI in FY2026; pricing actions (list price increase, tariff recovery) aim to offset .
  • International remains the swing factor; expect first-half FY2026 losses and second-half profitability as cost actions and selective growth take hold .
  • Watch West Coast tech/large corporate projects as potential incremental catalysts; management cites stronger presales/activity levels .
  • Adjusted EPS beat in Q4 was tax-aided; excluding tax items, CFO said adjusted earnings fell below range—model conservatively for Q1 FY2026 given tariff costs and OpEx .
  • Capital allocation remains balanced: dividend maintained ($0.10) and buybacks continuing; liquidity exceeds debt .
  • Near-term trading: positive setup on orders/backlog and pricing power vs macro/tariff uncertainty and International weakness; monitor USMCA/tariff developments and ERP timing/costs .