The following business overview is qualified in its entirety by the more detailed information included elsewhere or incorporated by reference in this Annual Report on Form 10-K (“Report”). As used in this Report, unless otherwise expressly stated or the context otherwise requires, all references to “Steelcase,” “we,” “our,” “Company” and similar references are to Steelcase Inc., a Michigan corporation, and its subsidiaries in which a controlling interest is maintained. Unless the context otherwise indicates, reference to a year relates to the fiscal year, ended in February of the year indicated, rather than the calendar year, unless indicated by a month or specific date reference. Additionally, Q1, Q2, Q3 and Q4 reference the first, second, third and fourth quarter, respectively, of the fiscal year indicated. All amounts are in millions, except share and per share data, data presented as a percentage or as otherwise indicated.

Overview

At Steelcase, our purpose is to unlock human promisehelp people do their best work by transformingcreating places that work worker and workplace.better. Through our family of brands that include Steelcase®, AMQ®, Coalesse®, Designtex®, HALCON™, Orangebox®, Smith System®, AMQ®, Turnstone®, and Orangebox®Viccarbe®, we offer a comprehensive portfolio of furniture and architectural products and technology solutionsservices designed to help customers create workplaces that supporthelp people reach their full potential at work.work, wherever work happens. Our solutions are inspired by the insights gained from our human-centered research process. We are a globally integrated enterprise, headquartered in Grand Rapids, Michigan, U.S.A., with approximately 12,70011,900 employees. Steelcase was founded in 1912 and became publicly traded in 1998, and our Class A Common Stock is listed on the New York Stock Exchange under the symbol “SCS”.

We market our products and services to businesses and organizations primarily through a network of independent and company-owned dealers, and we also sell directly to end-useconsumers in markets around the world through web-based and retail distribution channels.

Our strategic priorities align with our purpose and reflect a set of choices which we believe will position us for growth. We are focused on leading the transformation of work, where employees shift between working in the office and working remotely over the course of a week. We aim to do this by offering innovative solutions to our customers that support the growing needs for privacy, social connection and collaboration in this new era of work. We also aim to deepen our presence in key adjacent growth opportunities, including certain geographic and vertical markets such as learning, health and home, and to enhance our capabilities to better serve smaller and mid-sized customers. We extendare focused on creating value by using our reachbusiness to help organizations work better, through retail, web-based salesmarket-leading performance in our approach to our people, our products and technology distribution channels.the planet. Our strategic priorities also include profitability initiatives to drive fitness, reduce complexity and maximize efficiency, reallocating resources toward our highest priorities and maintaining a strong balance sheet to support our growth objectives.

Our Offerings

Our brands provide an integrateda comprehensive portfolio of furniture settings, user-centered technologies and interior architectural products for both individual and collaborative work across a range of price points. We have expanded our offerings through investments in product development, acquisitions and marketing partnerships. Our furniture portfolio includes panel, fence and beam-based furniture systems, seating, storage, fixed and height-adjustable desks, benches and tables and complementary products such as worktoolswork accessories, lighting, mobile power and screens. Our seating products include task chairs which are highly ergonomic, seating that can be used in collaborative orenvironments and casual settings and specialty seating for specific vertical markets such as healthcareeducation and education. Our technology solutions support group collaboration by integrating furniture and technology.healthcare. Our interior architectural products include full and partial height walls and free-standing architectural pods. We also offer services designed to reduce costs and enhance the performance of people, space and real estate. Among theseThese services areinclude workplace strategy consulting, data-driven space measurement, lease origination services and furniture and asset management and hosted event experiences.management.

Steelcase sub-brandsbrand extensions include:

Led by intuition, backed by research and driven by design, Coalesse creates thoughtful furnishings that bring new life to the modern workplace.workplace and ancillary settings. The brand blends beauty and utility into their designs to help customers make great spaces that inspire great work, by empowering social connection, creative collaboration, focus and rejuvenation.

Designtex offers applied materials that enhance environments and is a leading resource for applied surfacesurfaces knowledge, innovation and sustainability. Designtex products include premium fabrics and surface materials and imaging solutions designed to enhance seating, walls, workstations and floors. These materials provide privacy, way-finding,wayfinding, motivation, communications and artistic expression.

Smith System is a leading designer and manufacturer of high qualityhigh-quality furniture for the pre-K-12 education market. Smith System offers desking, seating, lounge and storage products. Smith System aims to help schools create outstandingdesigns and manufactures products that support inspired learning environments where students thrive throughand better learning outcomes – addressing the useneeds of the student, the demands of the curriculum and the realities of space, maintenance and budget.

Viccarbe offers contemporary furniture for high-performance collaborative and social spaces, including contract, hospitality, retail and outdoor settings. Viccarbe's collection is the result of years of collaboration spaces, makerspaces and tech labs.

Marketing Partnerships

We have entered intomaintain marketing partnerships with a number of other companies, including Bolia, Blu Dot, Mitchell Gold + Bob Williams,Bolia, Carl Hansen & Son, Crestron, EMU, Established & Sons, Extremis, FLOS, the Frank Lloyd Wright Foundation, Goodee, Kartell, Logitech, m.a.d. furniture, Mattiazzi, Microsoft, Moooi, Nanimarquina, PolyVision, Tom Dixon, West Elm FLOS, Viccarbe, Officebricks, m.a.d. furniture design, Microsoft and Extremis, thatZoom. These partnerships are intended to allow us to offermarket additional products and services to our dealers and customers whichthat are complementary to our products and services.services and leverage our scale. These partnerships take several forms, the most common of which involves us purchasing and reselling the partner’s products to our dealers and customers. In other situations, we market the partner’s products to our dealers and customers and receive a fee from the partner, and we typically transport and deliver those products to our dealers and customers for a fee. We also have marketing partnerships where we co-develop products with our partner that we manufacture or source from third parties or where we and our partner agree to co-market our products and services to customers. Most of our marketing partnerships are on a regional basis. 

Joint Ventures and Other Equity Investments

Customer and Dealer Concentrations

Manufacturing and Logistics

We have manufacturing and distribution operations throughout North America (in the U.S. and Mexico), Europe (in the Czech Republic, France, Germany, Spain the U.K. and the Czech Republic)U.K.) and in Asia (in China, MalaysiaIndia and India)Malaysia). Our global manufacturing and distribution operations are largely centralized under a single organization to serve our customers’ needs across multiple brands and geographies.

Our manufacturing model is predominately make-to-order with standard lead times that typically rangingrange from twofour to six weeks. We manufacture our products using lean manufacturing principles, including continuous one-piece flow and platformed processes and products, which allow us to achieve efficiencies and cost savings and minimize the amount of inventory on hand. We largely purchase direct materials and components from a global network of integrated suppliers as needed to meet demand. We also purchase finished goods manufactured by third parties predominantlypredominately on a make-to-order basis.

Our physical distribution system utilizes commercial transport, dedicated fleet and company-owned delivery services. We utilize a network of regional distribution centers in the Americas and EMEA to maintain efficientminimize freight and delivery costs and improve service to our dealers and customers.

Raw Materials

Our material costs represented approximately 60%Approximately 61% of our cost of sales in 20202023 related to raw materials, components and included raw materialsfinished goods purchased from a significant number of suppliers around the world. ThoseThe raw materials that we purchase and that are used in the manufacture of the components and finished goods that we purchase include steel, petroleum-based products aluminum, other metals, wood, particleboard(including plastics and other materials and components. We have not historically experienced any significant difficulties in obtaining these raw materials.

Research, Design and Development

Our extensive global research—a combination of user observations, feedback sessions and sophisticated analyses—has helped us develop social, spatial and informational insights into work effectiveness. We maintain collaborative relationships with external world-class innovators, including leading universities, think tanks and knowledge leaders, to expand and deepen our understanding of how people work.

Understanding patterns of work enables us to identify and anticipate user needs across the globe. Our design teams explore and develop prototypical solutions to address these needs. These solutionsneeds, which vary from furniture architecture and technologyarchitectural solutions to single products or enhancements to existing products and across different vertical market applications such as healthcare and higher education. Organizationally, global design leadership directs strategy and project work, which is distributed to design studios around the world and sometimes involves external design services.

Our marketing team evaluates product concepts using several criteria, including financial return metrics, and chooses which products will be developed and launched. Designers then work closely with engineers and suppliers to co-develop products and processes that incorporate innovative user features with efficient manufacturing practices. Products are tested for performance, quality and compliance with applicable local standards and regulations.

We incurred $50.6, $53.7$44.4, $45.4 and $44.0$48.1 in research, design and development expenses in 2020, 20192023, 2022 and 2018,2021, respectively. In addition, we sometimes pay royalties to external designers of our products as the products are sold, and these costs are not included in research and development expenses.

Intellectual Property

We generate and hold a significant number of patents in a number of countries in connection with the operation of our business. We also hold a number of trademarks that are very important to our identity and recognition in the marketplace. We do not believe that any material part of our business is dependent on the continued availability of any one or all of our patents or trademarks or that our business would be materially adversely affected by the loss of any of such, except the “Steelcase,” "AMQ," “Coalesse,” “Designtex,"Designtex," "HALCON," “Orangebox,” "Smith System," “AMQ,” "Turnstone" and “Orangebox”“Smith System” trademarks.

We occasionally enter into license agreements under which we pay a royalty to third parties for the use of patented products, designs or process technology. We have established a global network of intellectual property licenses with our subsidiaries.

Environmental Matters

We are subject to a variety of federal, state, local and foreign laws and regulations relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment (“Environmental Laws”). We believe our operations are in substantial compliance with all Environmental Laws. We do not believe existing Environmental Laws have had or will have any material effects upon our capital expenditures, earnings or competitive position.

Under certain Environmental Laws, we could be held liable, without regard to fault, for the costs of remediation associated with our existing or historical operations. We could also be held responsible for third-party property and personal injury claims or for violations of Environmental Laws relating to contamination. We are a party to, or otherwise involved in, proceedings relating to several contaminated properties being investigated and remediated under Environmental Laws, including as a potentially responsible party in several Superfund site cleanups. Based on our information regarding the nature and volume of wastes allegedly disposed of or released at these properties, the total estimated cleanup costs and other financially viable potentially responsible parties, we do not believe the costs to us associated with these properties will be material, either individually or in the aggregate. We have established reserves that we believe are adequate to cover our anticipated remediation costs. However, certain events could cause our actual costs to vary from the established reserves. These events include, but are not limited to: a change in governmental regulations or cleanup standards or requirements; undiscovered information regarding the nature and volume of wastes allegedly disposed of or released at these properties; the loss of other

Available Information

We are not including the information contained on our website as a part of, or incorporating it by reference into, this Report.

The following risk factors and other information included in this Report should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we do not know about currently, or that we currently believe are less significant,not material, may also adversely affect our business, operating results, cash flows and financial condition. If any of these risks actually occur, our business, operating results, cash flows and financial condition could be materially adversely affected.

The coronavirus pandemic has had,Macroeconomic and is expectedWorkplace Trends Risk Factors

In order to reduce our cash outflows during this period of time, we have implemented temporary layoffs for our manufacturing employees at locations where operations have been temporarily reduced or suspended, and we have temporarily reduced the pay and/or working hours for much of our salaried workforce. While these actions were intended to allow us to avoid permanent layoffsAdvances in response to the COVID-19 pandemic, they may have a negative impact on our employee retention in the future. We have also reduced spending on product development and strategic initiatives, which may have a material impact on our growth strategies in the future.

Our revenue is generated predominantly from the office furniture industry, and demand for office furniture is influenced by macroeconomic factors, such as corporate profits, non-residential fixed investment, white-collar employment and commercial office construction and vacancy rates.rates, which can be difficult to predict. The U.S. and European office furniture industries went through twoindustry has experienced periodic major declines in demand, in the past two decades, driven by global economic downturns. During these downturns, our revenue declined substantially and our profitability was significantly reduced. Although we have made a number of changes to adapt our business model to weather these types of events and we believe that demand for office furniture is not as heavily influenced by macroeconomic factors today as it has been historically, ourOur revenues and profitability couldcan be, and currently are being, impacted in the future by adverse changes in these macroeconomic factors. TheseAdaptations of our business to changing macroeconomic factors are difficult to predict,can result in material restructuring costs, and if we are unsuccessful in further adaptingmaking such adaptations, our business as economic cyclical changes occur, ouroperating results may be adversely affected.

Our longer-term success depends on our ability to successfully develop, implement and manage strategies that will preserve our position as the world’s largest office furniture manufacturer, as well as expand our offerings into adjacent and emerging markets. In particular, our diversification and growth strategies, which include:

If these strategies to diversify and increase our revenues are not sufficient, or if we do not execute these strategies successfully, our global market leadershipshare and profitability may be adversely affected.

We manufacture most of our products on a regional basis, and as a result, we often export products from where they are manufactured to where they are sold.sold within the region. We also source raw materials, components and finished goods from a global network of suppliers. In particular in 2020,2023, approximately 35% of the products we sold to customers in the U.S., including U.S. government agencies, were manufactured outside of the U.S., predominantly by our subsidiaries in Mexico, which operate as maquiladoras. Changes in tariffs or trade agreements could impact the cost of importing our products into the countries where they are sold and the cost of raw materials and components sourced from other countries, which in turn could adversely impact our gross margins and our price competitiveness. In addition, changes in U.S. government procurement rules requiring a certain amount of domestic content in finished goods, or requiring finished goods to be produced in the U.S., could have an adverse impact on our business, operating results or financial condition.

Many of our products are currently produced in only one location in each of the three geographic regions in which we operate (the Americas, EMEA and Asia Pacific), certain components are manufactured in only one location globally and our manufacturing model is predominately make-to-order. As a result, any issue which impacts the production capabilities of one of our manufacturing locations, such as natural disasters, global health issues, severe weather events, pandemics, disruptions in the supply of materials or components, systems and equipment failures or disruptions caused by labor activities, could have an adverse impact on our business, operating results or financial condition.

Our business is dependent on our ability to manage our relationships with our independent dealers. From time to time, we or a dealer may choose to terminate our relationship, or the dealer could face financial insolvency or difficulty in transitioning to new ownership, and establishing a new dealer in a market can take considerable time and resources. Disruption of dealer coverage within a specific local market could have an adverse impact on our business within the affected market. The loss or termination of a significant number of dealers or the inability to establish new dealers could cause difficulties in marketing and distributing our products and have an adverse effect on our business, operating results or financial condition. In the event that a dealer in a strategic market experiences financial difficulty, we may choose to make financial investments in the dealership, which would reduce the risk of disruption but increase our financial exposure. Alternatively, we may elect to purchase and operate dealers in certain markets, which would also would require use of our capital and increase our financial exposure.

In certain cases, our diversification and growth strategies into adjacent markets such as healthcare and education, and the increasing complexity of our technology and architectural products are driving the need for our dealers to develop additional capabilities and invest in additional resources to support suchour products and markets. Some of our smaller dealers do not have the scale to leveragesupport such investments, and as a result, we have seen and may continue to see increased consolidation within our dealer network. This increased concentration and size of dealers could increase our exposure to the risks discussed above.

We have net goodwill of $233.6 and indefinite-lived intangible assets of $8.9$276.8 as of February 28, 2020.24, 2023. Goodwill and other acquired intangible assets with indefinite lives areis not amortized but areis evaluated for impairment annually in Q4 or whenever an event occurs or circumstances change such that it is more likely than not that an impairment may exist. Poor performance in portions of our business where we have goodwill, or intangible assets, including failure to achieve projected performance from acquisitions, or declines in the market value of our equity, may result in impairment charges, which would adversely affect our results of operations.

We are subject to income taxes in the U.S. and various foreign jurisdictions, and more than 38% of our income tax expense in 2020 related to the U.S. federal corporate income tax. As of February 28, 2020, we had net deferred tax assets of $117.8 based on the effective rates in the jurisdictions where the net deferred tax assets are held. Thejurisdictions. Our future effective tax rate could be affected by changes in the mix of our earnings in countries with differing statutory tax rates, changes in the valuation of our deferred tax assets and liabilities or changes in tax laws or their interpretation. SuchIn addition, such tax

We have deferred tax assets related to net operating loss ("NOL") and tax credit carryforwards totaling $39.3$36.5 and $19.1,$17.9, respectively, against which valuation allowances totaling $5.2$3.1 have been recorded. NOL carryforwards are primarily related to foreign jurisdictions. Tax credit carryforwards consist of U.S. foreign tax credits and foreign investment tax credits. We may be unable to generate sufficient taxable income from future operations in the jurisdictions in which we maintain deferred tax assets related to NOL and tax credit carryforwards, or implement tax, business or other planning strategies, to fully utilize the recorded value of our NOL and tax credit carryforwards. These deferred tax assets are recorded in various currencies that are also subject to foreign exchange risk, which could reduce the amount we may ultimately realize. Additionally, future changes in tax laws or interpretations of such tax laws may limit our ability to fully utilize our NOL and tax credit carryforwards.

Product defects can occur within our participation in a multi-employer pension plan could increase.

We have operations at locations throughout the U.S. and around the world. None of our owned properties are mortgaged or are held subject to any significant encumbrance. We believe our facilities are in good operating condition and, at present, are sufficient to meet our volume needs currently and for the foreseeable future. Our global headquarters is located in Grand Rapids, Michigan, U.S.A. Our owned and leased principal manufacturing and distribution center locations with greater than 100,000 square feet are as follows:

We are involved in litigation from time to time in the ordinary course of our business. Based on known information, we do not believe we are a party to any lawsuit or proceeding that is likely to have a material adverse effect on the Company.

Not applicable.

Our executive officers are:

Common Stock

Fourth Quarter Share Repurchases

There were noThe following is a summary of share repurchasesrepurchase activity during Q4 2020. As2023:

The following review of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes thereto included elsewhere within this Report.

Financial Summary

Our reportable segments consist of the Americas segment, the EMEA segment and the Other category. Unallocated corporate expenses are reported as Corporate.

The current year results of operations are presented in comparison to the prior year within the sections below. For a discussion of the 20192022 results of operations in comparison to 2018,2021, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 20192022 Annual Report on Form 10-K.

Overview

In 2020,2023, our operating income grew 40%revenue, gross margin and earnings per share improved compared to the prior year. Revenue grew by 8%, with an increaseyear as year-over-year pricing benefits exceeded year-over-year inflation impacts. During 2022 and the first half of 8%2023, broad-based supply chain disruptions, such as labor shortages and delays in long distance supply chains, impacted our ability to manufacture and complete deliveries to our customers, and we experienced significant inflation in steel, fuel and other commodities. In response to the inflationary pressures, we implemented multiple list price increases globally in 2022 and 2023 and a temporary surcharge in the Americas 9% in EMEA2023. As of the end of 2023, the benefits of our cumulative pricing actions approximated the cumulative inflation we incurred over the past two years, and 7%we expect to have continued gross margin improvement from our pricing actions in 2024. In addition, supply chain disruptions began to ease in the Other category. Assecond half of 2023 which led to reduced lead times and faster order fulfillment.

Our 17% revenue growth in 2023 was driven by the benefits of our pricing actions and increased volume, including revenue from our acquisition of HALCON in Q2 2023. We had a resultstrong order backlog at the start of strong performance by all segments, we delivered our highest annual revenuethe year and operating incomebroad-based order growth in nearly 20 years. Costthe Americas and EMEA in the first half of sales as a percentage of revenue decreased by 100 basis points in 2020the year. In Q3 2023, orders declined compared to 2019, driven by pricing benefits, lower commodity coststhe prior year in connection with softening industry demand patterns, and higher absorption of fixed costs, partially offset by unfavorable shifts in business mix. We also sold PolyVision Corporation ("PolyVision") in Q4 2020 for net proceeds2023, the year-over-year order declines improved compared to Q3 2023, primarily due to increased project orders from large corporate customers. At the end of $72.6the year, our backlog of customer orders was approximately $690, which resultedwas 14% lower than the prior year. In response to the softening demand patterns in a gain on sale, net of related tax and variable compensation impacts, of $19.7. 

We recorded net income of $199.7$35.3 and diluted earnings per share of $1.66$0.30 in 20202023 compared to net income of $126.0$4.0 and diluted earnings per share of $1.05$0.03 in 2019. In 2020, the results included a gain from the sale of PolyVision, which had the effect of increasing net income by $19.7 after taking into account related variable compensation expense and tax benefits. In 2019, the results included (1) a charge related to a multi-employer pension plan, which had the effect of decreasing net income by $5.5 after taking into account the related variable compensation and tax effects, and (2) charges related to the redemption of debt, which had the effect of decreasing net income by $12.3 after taking into account the related tax effects.2022. Operating income of $257.0$65.5 in 20202023 represented an increase of $73.4, or 40%,$45.4 compared to the prior year. The increase was driven by higher revenue across all segments and lower costpricing benefits, net of sales andinflation, higher volume, partially offset by higher operating expenses as a percentageand $19.2 of revenue.

Revenue of $3,723.7$3,232.6 in 20202023 represented an increase of $280.5,$459.9 or 8%, compared to the prior year. The increase reflected growth of 8% in the Americas, 9% in EMEA and 7% in the Other category. The growth in 2020 was driven primarily by overall industry growth, acquisitions, benefits from list price adjustments and $48.4 from an additional week in 2020. Organic revenue growth was 5%16.6% compared to the prior year, driven by growth across all segments. Approximately $325 of the increase was related to higher pricing benefits, and approximately $210 was related to higher volume (which included growthapproximately $65 from acquisitions), partially offset by approximately $78 of 5%unfavorable currency translation effects, primarily in EMEA. Revenue increased by 22.9% in the Americas, 6%1.9% in EMEA and 7%4.6% in the Other category. Organic revenue growth was $480.3 or 17% compared to the prior year, with 20% in the Americas, 13% in EMEA and 8% in the Other category.

Cost of sales as a percentage of revenue decreasedimproved by 100 basis points to 67.4% of revenue in 20202023 compared to 2019, with 30 basis points of the decrease attributable to the pension charge in the prior year. The remaining decreaseimprovement was driven by approximately $170 of higher pricing benefits, lower commodity costs,net of inflation, and the benefits of higher absorption of fixed costs and benefits from gross margin improvement initiatives,volume, partially offset by unfavorable shifts in business mix (which included growth in third-party productsapproximately $33 of higher fixed overhead costs and services, which have a lower than average gross margin).labor inefficiencies and

We recorded restructuring costs of a valuation allowance$19.2 in the U.K. The 2019 rate reflected $6.1 of net discrete tax benefits, primarily related to a $3.3 increaseAmericas in foreign tax credits and a $1.7 reversal of a valuation allowance in the Czech Republic.2023. See Note 1721 to the consolidated financial statements for additional information.

Interest Expense, Investment Income and Other Income, Net