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Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul style="list-style-type: disc;"><li><p>In a week when the broad market indexes retreated by ~3%, the positive earnings report from Steelcase, Inc. (SCS) provided a boost for all the Commercial/Contract Furniture issues.</p></li><li><p>SCS results supported a view that demand in the office furniture sector had troughed.</p></li><li><p>CFO Dave Sylvester noted that the weekly pace of orders in its Americas segment was steady through its fiscal 2Q and into 3Q and that the Y/Y order comparison for the first few weeks of September was up by ~18%. For details, see our update note from September 22.</p></li></ul>

In a week when the broad market indexes retreated by ~3%, the positive earnings report from Steelcase, Inc. (SCS) provided a boost for all the Commercial/Contract Furniture issues.SCS results supported a view that demand in the office furniture sector had troughed.CFO Dave Sylvester noted that the weekly pace of orders in its Americas segment was steady through its fiscal 2Q and into 3Q and that the Y/Y order comparison for the first few weeks of September was up by ~18%. For details, see our update note from September 22.

Furniture/Furnishings Weekly - SCS Results Boost Commercial/Contract Furniture Sector

Equity Bottom-Up

<ul style="list-style-type: disc;"><li><p>We are raising our estimates following an upbeat conference call and follow-up with SCS management.</p></li><li><p>Our adjusted 3QFY24 estimate, now at $0.25, is up from $0.21 and at the midpoint of guidance.</p></li><li><p>Full-year FY24 guidance is now $0.80-0.90. Our new FY24 EPS estimate is $0.88, up from $0.71 pre-release and near the top end of guidance.</p></li></ul>

We are raising our estimates following an upbeat conference call and follow-up with SCS management.Our adjusted 3QFY24 estimate, now at $0.25, is up from $0.21 and at the midpoint of guidance.Full-year FY24 guidance is now $0.80-0.90. Our new FY24 EPS estimate is $0.88, up from $0.71 pre-release and near the top end of guidance.

Steelcase, Inc. - Early 3Q Order Flow Rebounding; Raising Estimates

<div><div><div><div><ul style="list-style-type: disc;"><li><p>Post Tuesday’s close, Steelcase reported 2QFY24 adjusted EPS of $0.31 and revenue of $855 million, both better than consensus of $0.20 and $829 million.</p></li><li><p>Deliveries accelerated as supply chain constraints abated. Pricing and margin improvements gained traction, aiding sales and buoying gross margin to 33.2%, up 411 bps versus 2QFY23 and 195 bps above our estimate, which we felt was aggressive.</p></li><li><p>Steelcase delivered a 6.2% 2QFY24 adjusted operating margin, ~+2% Y/Y and 170 bps above our estimate.</p></li></ul></div></div></div></div>

Post Tuesday’s close, Steelcase reported 2QFY24 adjusted EPS of $0.31 and revenue of $855 million, both better than consensus of $0.20 and $829 million.Deliveries accelerated as supply chain constraints abated. Pricing and margin improvements gained traction, aiding sales and buoying gross margin to 33.2%, up 411 bps versus 2QFY23 and 195 bps above our estimate, which we felt was aggressive.Steelcase delivered a 6.2% 2QFY24 adjusted operating margin, ~+2% Y/Y and 170 bps above our estimate.

Steelcase, Inc. - 2QFY24 Beats on Strong Deliveries; Order Trends Still Pressured

<div><div><div><div><ul style="list-style-type: disc;"><li><p>Steelcase reports 2QFY24 after market close on Tuesday, September 19, with its earnings conference call on Wednesday, September 20 at 8:30 am ET.</p></li><li><p>We expect 2Q24 EPS of $0.20 (also consensus) on revenue of $827.8 million (consensus of $829 million). Our EPS estimate is a penny lower than last year on lower revenue.</p></li><li><p>Following 1Q24 results, we shaved our 2Q24 revenue estimates by ~$20 million, but with evidence of better execution on gross margin, our earnings estimate ticked down by only $0.01.</p></li></ul></div></div></div></div>

Steelcase reports 2QFY24 after market close on Tuesday, September 19, with its earnings conference call on Wednesday, September 20 at 8:30 am ET.We expect 2Q24 EPS of $0.20 (also consensus) on revenue of $827.8 million (consensus of $829 million). Our EPS estimate is a penny lower than last year on lower revenue.Following 1Q24 results, we shaved our 2Q24 revenue estimates by ~$20 million, but with evidence of better execution on gross margin, our earnings estimate ticked down by only $0.01.

Steelcase, Inc - Preview: 2QFY24 Expected to Improve Sequentially

<ul><li>This note follows up on the Steelcase 1QFY24 earnings release, management’s earnings conference call, and our earnings analysis note from June 22.</li><li>Herein, we refresh our estimates for Steelcase.</li><li>Steelcase has been tied to the fortunes of commercial/contract furniture, where the company is a global leader. </li></ul>

This note follows up on the Steelcase 1QFY24 earnings release, management’s earnings conference call, and our earnings analysis note from June 22.Herein, we refresh our estimates for Steelcase.Steelcase has been tied to the fortunes of commercial/contract furniture, where the company is a global leader. 

United States

Steelcase Inc. designs and manufactures products used to create high performance work environments.  The Company's products include office furniture, furniture systems, interior architectural products, technology products, seating, and related products and services.  Steelcase has operations in various countries.

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Steelcase Inc Cl A (SCS US)

Furniture/Furnishings Weekly - SCS Results Boost Commercial/Contract Furniture Sector

In a week when the broad market indexes retreated by ~3%, the positive earnings report from Steelcase, Inc. (SCS) provided a boost for all the...

Water Tower Research

Steelcase, Inc. - Early 3Q Order Flow Rebounding; Raising Estimates

We are raising our estimates following an upbeat conference call and follow-up with SCS management. Our adjusted 3QFY24 estimate, now at $0.25, is...

Water Tower Research

Steelcase, Inc. - 2QFY24 Beats on Strong Deliveries; Order Trends Still Pressured

Post Tuesday’s close, Steelcase reported 2QFY24 adjusted EPS of $0.31 and revenue of $855 million, both better than consensus of $0.20 and $829...

Water Tower Research

Steelcase, Inc - Preview: 2QFY24 Expected to Improve Sequentially

Steelcase reports 2QFY24 after market close on Tuesday, September 19, with its earnings conference call on Wednesday, September 20 at 8:30 am ET.

Water Tower Research

Update Note – Steelcase, Inc. (SCS)

This note follows up on the Steelcase 1QFY24 earnings release, management’s earnings conference call, and our earnings analysis note from June 22.

Water Tower Research

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