4Q Results; Guidance Roughly In Line; Americas Orders Show Strength
After the close Wednesday, Steelcase reported 4QFY24 non-GAAP adjusted EPS of $0.23, ahead of our $0.22 estimate and consensus of $0.21. 4QFY24 global revenue was $775 million, modestly missing our estimate by ~$9 million. FY24 non-GAAP adjusted EPS was $0.93, up from $0.56 in FY23, and revenue was $3.16 billion, down 2.6%. Guidance in line with published estimates. Management expects adjusted EPS of $0.08-0.12 in 1QFY25 and $0.85-1.00 in FY25. Pre-report consensus estimates were $0.10 and $0.93, respectively. Our take. Results and guidance data points confirm that the office furniture market seems to have stabilized and is poised for modest growth, tied to long-term GDP growth, following the pandemic and the aftermath. 4QFY24 incoming orders grew 4% company-wide, with 8% growth in the Americas. The Americas order growth is a strong positive, comprising three welcome trends: (1) improved pricing (also reflected in gross margin +140 bps Y/Y); (2) a demand uptick as leaders of large corporations gain confidence to invest in refurbishing offices to lure workers’ return; and (3) a high Steelcase win rate in competitive projects. The Steelcase financial condition is strong. 4QFY24 cash of $319 million implies net debt less than $130 million (legacy analysis), net cash (incl. CSV COLI), and gross debt/TFQ EBITDA of ~1.7x. Inventory and receivables are now at pre-pandemic levels of ~40 days CGS and ~40 days sales, respectively. The stock trades at ~6.4x EV/trailing EBITDA versus its historical norm of ~8x. See our summary of the company and segment results below. We will update our estimates after today’s call at 8:30 am ET.Steelcase provides furniture settings, user-centered technologies and interior architectural products. The company's furniture portfolio includes panel, fence and beam-based furniture systems, storage, fixed and height-adjustable desks, benches and tables and complementary products. The company's seating products include task chairs and seating for specific vertical markets. The company's technology solutions support group collaboration by integrating furniture and technology. The company's interior architectural products include full and partial height walls and architectural pods. The company also provides services, including workplace strategy consulting, data-driven space measurement, and lease origination services.
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