UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November~~August 26, ~~2021~~2022


or
☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-13873

STEELCASE INC.

(Exact name of registrant as specified in its charter)


Michigan		38-0819050
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
901 44th Street SE
Grand Rapids,	Michigan	49508
(Address of principal executive offices)		(Zip Code)

(616) 247-2710

(Registrant's telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock	SCS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~December 16, 2021,~~September 20, 2022, Steelcase Inc. had ~~87,021,731~~92,308,638 shares of Class A Common Stock and ~~25,074,494~~20,475,134 shares of Class B Common Stock outstanding.

Table of Contents


STEELCASE INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~November~~August 26, ~~2021~~2022 INDEX


		Page No.

PART I	Financial Information	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of ~~Income~~Operations for the Three and ~~Nine~~Six Months Ended ~~November~~August 26,, 2022 and August 27, 2021 ~~and~~ ~~November~~ 2 7 ~~, 2020~~	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and ~~Nine~~Six Months Ended ~~November~~August 2 6 , ~~2021~~2022 and ~~November~~August 27,~~, 2020~~ 2021	2
	Condensed Consolidated Balance Sheets as of ~~November~~August 2 6 , ~~2021~~2022 and February ~~26, 2021~~25, 2022	3
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three and ~~Nine~~Six Months Ended ~~November~~August 2 6 , ~~2021~~2022 and ~~November~~ 2 7 ~~, 2020~~August 27, 2021	4
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~November~~August 2 6 , ~~2021~~2022 and ~~November~~ 2 7 ~~, 2020~~August 27, 2021	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1822
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2733
Item 4.	Controls and Procedures	2834

PART II	Other Information	2835
Item 1A.	Risk Factors	2835
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2935
Item 6.	Exhibits	3036
Signatures		3137

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements:

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS (Unaudited)

(in millions, except per share data)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020			August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021
Revenue	Revenue	$	738.2	$	617.5	$	2,019.6	$	1,919.1	Revenue	$	863.3	$	724.8	$	1,604.0	$	1,281.4
Cost of sales	Cost of sales	534.6		437.3		1,454.5		1,339.7		Cost of sales	612.5		518.0		1,160.7		919.9
Restructuring costs	Restructuring costs	—		2.3		—		9.2		Restructuring costs	—		—		0.9		—
Gross profit	Gross profit	203.6		177.9		565.1		570.2		Gross profit	250.8		206.8		442.4		361.5
Operating expenses	Operating expenses	187.7		168.8		547.1		498.5		Operating expenses	221.4		172.9		422.3		359.4
Goodwill impairment charge		—		—		—		17.6
Restructuring costs	Restructuring costs	—		9.1		—		17.8		Restructuring costs	0.5		—		3.8		—
Operating income	Operating income	15.9		—		18.0		36.3		Operating income	28.9		33.9		16.3		2.1
Interest expense	Interest expense	(6.5)		(6.6)		(19.3)		(20.7)		Interest expense	(7.2)		(6.4)		(13.6)		(12.8)
Investment income	Investment income	0.1		0.2		0.4		1.2		Investment income	0.3		0.1		0.4		0.3
Other income, net	Other income, net	2.5		2.2		3.5		7.0		Other income, net	4.4		1.8		7.5		1.0
Income (loss) before income tax expense (benefit)	Income (loss) before income tax expense (benefit)	12.0		(4.2)		2.6		23.8		Income (loss) before income tax expense (benefit)	26.4		29.4		10.6		(9.4)
Income tax expense (benefit)	Income tax expense (benefit)	2.4		(6.3)		(3.6)		4.3		Income tax expense (benefit)	6.8		4.7		2.4		(6.0)
Net income		$	9.6	$	2.1	$	6.2	$	19.5
Earnings per share:
Net income (loss)										Net income (loss)	$	19.6	$	24.7	$	8.2	$	(3.4)
Earnings (loss) per share:										Earnings (loss) per share:
Basic	Basic	$	0.08	$	0.02	$	0.05	$	0.17	Basic	$	0.17	$	0.21	$	0.07	$	(0.03)
Diluted	Diluted	$	0.08	$	0.02	$	0.05	$	0.17	Diluted	$	0.17	$	0.21	$	0.07	$	(0.03)
Dividends declared and paid per common share	Dividends declared and paid per common share	$	0.145	$	0.100	$	0.390	$	0.270	Dividends declared and paid per common share	$	0.145	$	0.145	$	0.290	$	0.245

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(in millions)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020			August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021
Net income		$	9.6	$	2.1	$	6.2	$	19.5
Net income (loss)										Net income (loss)	$	19.6	$	24.7	$	8.2	$	(3.4)
Other comprehensive income (loss), net:	Other comprehensive income (loss), net:									Other comprehensive income (loss), net:
Unrealized gain (loss) on investments		(0.1)		0.3		0.1		0.2
Unrealized gain on investment										Unrealized gain on investment	0.3		—		—		0.2
Pension and other post-retirement liability adjustments	Pension and other post-retirement liability adjustments	0.4		(0.3)		0.7		(1.1)		Pension and other post-retirement liability adjustments	—		0.4		0.2		0.3
Derivative amortization	Derivative amortization	0.3		0.3		0.7		0.7		Derivative amortization	0.2		0.2		0.5		0.4
Foreign currency translation adjustments	Foreign currency translation adjustments	(13.3)		7.2		(25.1)		20.7		Foreign currency translation adjustments	(21.3)		(12.7)		(39.9)		(11.8)
Total other comprehensive income (loss), net	Total other comprehensive income (loss), net	(12.7)		7.5		(23.6)		20.5		Total other comprehensive income (loss), net	(20.8)		(12.1)		(39.2)		(10.9)
Comprehensive income (loss)	Comprehensive income (loss)	$	(3.1)	$	9.6	$	(17.4)	$	40.0	Comprehensive income (loss)	$	(1.2)	$	12.6	$	(31.0)	$	(14.3)

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

STEELCASE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)


		(Unaudited)					(Unaudited)
		November 26, 2021		February 26, 2021			August 26, 2022		February 25, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	275.2	$	489.8	Cash and cash equivalents	$	52.2	$	200.9

Accounts receivable		341.8		279.0
Allowance for doubtful accounts		(8.5)		(8.7)
Accounts receivable, net of allowance of $8.6 and $8.0						Accounts receivable, net of allowance of $8.6 and $8.0	413.3		340.4
Inventories	Inventories	286.1		193.5		Inventories	396.7		326.2

Prepaid expenses	Prepaid expenses	35.7		20.9		Prepaid expenses	31.2		24.0
Income taxes receivable	Income taxes receivable	51.0		49.5		Income taxes receivable	19.5		41.7
Other current assets	Other current assets	22.2		21.4		Other current assets	40.0		26.0
Total current assets	Total current assets	1,003.5		1,045.4		Total current assets	952.9		959.2
Property, plant and equipment, net of accumulated depreciation of $1,084.6 and $1,063.2		394.8		410.8
Property, plant and equipment, net of accumulated depreciation of $1,085.8 and $1,089.0						Property, plant and equipment, net of accumulated depreciation of $1,085.8 and $1,089.0	404.5		392.8
Company-owned life insurance ("COLI")	Company-owned life insurance ("COLI")	170.0		169.5		Company-owned life insurance ("COLI")	161.7		168.0
Deferred income taxes	Deferred income taxes	119.7		113.3		Deferred income taxes	114.6		121.2
Goodwill	Goodwill	242.7		218.1		Goodwill	277.0		242.8
Other intangible assets, net of accumulated amortization of $82.4 and $73.3		89.1		90.4
Other intangible assets, net of accumulated amortization of $93.4 and $86.4						Other intangible assets, net of accumulated amortization of $93.4 and $86.4	123.0		85.5
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	50.6		51.5		Investments in unconsolidated affiliates	45.8		53.1
Right-of-use operating lease assets	Right-of-use operating lease assets	222.7		225.4		Right-of-use operating lease assets	193.6		209.8
Other assets	Other assets	25.7		29.6		Other assets	29.5		28.6
Total assets	Total assets	$	2,318.8	$	2,354.0	Total assets	$	2,302.6	$	2,261.0
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	257.8	$	181.3	Accounts payable	$	274.2	$	243.6
Short-term borrowings and current portion of long-term debt	Short-term borrowings and current portion of long-term debt	5.0		4.7		Short-term borrowings and current portion of long-term debt	118.1		5.1
Current operating lease obligations	Current operating lease obligations	43.7		43.8		Current operating lease obligations	40.7		44.2
Accrued expenses:	Accrued expenses:					Accrued expenses:
Employee compensation	Employee compensation	79.9		90.1		Employee compensation	78.9		75.6
Employee benefit plan obligations	Employee benefit plan obligations	20.6		24.9		Employee benefit plan obligations	22.0		25.4
Accrued promotions	Accrued promotions	27.2		27.8		Accrued promotions	27.4		32.9
Customer deposits	Customer deposits	56.2		33.7		Customer deposits	65.3		53.4

Other	Other	100.6		108.7		Other	98.5		87.0
Total current liabilities	Total current liabilities	591.0		515.0		Total current liabilities	725.1		567.2
Long-term liabilities:	Long-term liabilities:					Long-term liabilities:
Long-term debt less current maturities	Long-term debt less current maturities	477.9		479.2		Long-term debt less current maturities	445.4		477.4
Employee benefit plan obligations	Employee benefit plan obligations	144.1		152.9		Employee benefit plan obligations	111.4		126.7
Long-term operating lease obligations	Long-term operating lease obligations	195.8		199.5		Long-term operating lease obligations	168.7		182.2
Other long-term liabilities	Other long-term liabilities	53.4		46.9		Other long-term liabilities	52.6		55.3
Total long-term liabilities	Total long-term liabilities	871.2		878.5		Total long-term liabilities	778.1		841.6
Total liabilities	Total liabilities	1,462.2		1,393.5		Total liabilities	1,503.2		1,408.8
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:

Additional paid-in capital	Additional paid-in capital	—		12.5		Additional paid-in capital	13.7		1.5
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(63.6)		(40.0)		Accumulated other comprehensive income (loss)	(89.8)		(50.6)
Retained earnings	Retained earnings	920.2		988.0		Retained earnings	875.5		901.3
Total shareholders’ equity	Total shareholders’ equity	856.6		960.5		Total shareholders’ equity	799.4		852.2
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	2,318.8	$	2,354.0	Total liabilities and shareholders’ equity	$	2,302.6	$	2,261.0

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(in millions, except share and per share data)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020			August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021
Changes in common shares outstanding:	Changes in common shares outstanding:									Changes in common shares outstanding:
Common shares outstanding, beginning of period	Common shares outstanding, beginning of period	113,821,358		114,776,546		114,908,676		117,202,000		Common shares outstanding, beginning of period	112,740,491		115,664,399		112,109,294		114,908,676
Common stock issuances	Common stock issuances	16,109		21,351		43,406		48,241		Common stock issuances	21,209		14,204		42,381		27,297
Common stock repurchases	Common stock repurchases	(1,764,083)		(44,201)		(3,991,083)		(3,288,795)		Common stock repurchases	(198)		(1,873,804)		(279,301)		(2,227,000)
Performance and restricted stock units issued as common stock	Performance and restricted stock units issued as common stock	104,825		139,114		1,217,210		931,364		Performance and restricted stock units issued as common stock	500		16,559		889,628		1,112,385
Common shares outstanding, end of period	Common shares outstanding, end of period	112,178,209		114,892,810		112,178,209		114,892,810		Common shares outstanding, end of period	112,762,002		113,821,358		112,762,002		113,821,358

Changes in additional paid-in capital (1):	Changes in additional paid-in capital (1):									Changes in additional paid-in capital (1):
Additional paid-in capital, beginning of period	Additional paid-in capital, beginning of period	$	—	$	1.7	$	12.5	$	28.4	Additional paid-in capital, beginning of period	$	10.3	$	21.3	$	1.5	$	12.5
Common stock issuances	Common stock issuances	0.2		0.2		0.6		0.6		Common stock issuances	0.3		0.2		0.5		0.4
Common stock repurchases	Common stock repurchases	—		(0.4)		(27.7)		(36.8)		Common stock repurchases	��		(23.4)		(3.4)		(27.7)
Performance and restricted stock units expense (credit)		(0.2)		2.0		14.6		11.3
Performance and restricted stock units expense										Performance and restricted stock units expense	3.1		1.9		15.1		14.8
Additional paid-in capital, end of period	Additional paid-in capital, end of period	—		3.5		—		3.5		Additional paid-in capital, end of period	13.7		—		13.7		—

Changes in accumulated other comprehensive income (loss):	Changes in accumulated other comprehensive income (loss):									Changes in accumulated other comprehensive income (loss):
Accumulated other comprehensive income (loss), beginning of period	Accumulated other comprehensive income (loss), beginning of period	(50.9)		(56.3)		(40.0)		(69.3)		Accumulated other comprehensive income (loss), beginning of period	(69.0)		(38.8)		(50.6)		(40.0)
Other comprehensive income (loss)	Other comprehensive income (loss)	(12.7)		7.5		(23.6)		20.5		Other comprehensive income (loss)	(20.8)		(12.1)		(39.2)		(10.9)

Accumulated other comprehensive income (loss), end of period	Accumulated other comprehensive income (loss), end of period	(63.6)		(48.8)		(63.6)		(48.8)		Accumulated other comprehensive income (loss), end of period	(89.8)		(50.9)		(89.8)		(50.9)

Changes in retained earnings:	Changes in retained earnings:									Changes in retained earnings:
Retained earnings, beginning of period	Retained earnings, beginning of period	952.2		1,002.7		988.0		1,011.3		Retained earnings, beginning of period	872.8		947.8		901.3		988.0
Net income		9.6		2.1		6.2		19.5
Net income (loss)										Net income (loss)	19.6		24.7		8.2		(3.4)
Dividends paid	Dividends paid	(16.7)		(11.7)		(45.9)		(31.8)		Dividends paid	(16.9)		(17.1)		(34.0)		(29.2)
Common stock repurchases	Common stock repurchases	(23.1)		—		(26.3)		(5.9)		Common stock repurchases	—		(3.2)		—		(3.2)
Performance and restricted stock units expense (credit)		(1.8)		—		(1.8)		—

Retained earnings, end of period	Retained earnings, end of period	920.2		993.1		920.2		993.1		Retained earnings, end of period	875.5		952.2		875.5		952.2
Total shareholders' equity	Total shareholders' equity	$	856.6	$	947.8	$	856.6	$	947.8	Total shareholders' equity	$	799.4	$	901.3	$	799.4	$	901.3

(1)Shares of our Class A and Class B common stock have no par value; thus, there are no balances for common stock.

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)


		Nine Months Ended					Six Months Ended
		November 26, 2021		November 27, 2020			August 26, 2022		August 27, 2021
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income		$	6.2	$	19.5
Net income (loss)						Net income (loss)	$	8.2	$	(3.4)
Depreciation and amortization	Depreciation and amortization	62.2		64.1		Depreciation and amortization	43.7		41.2
Goodwill impairment charge		—		17.6
Share-based compensation						Share-based compensation	15.6		15.2
Restructuring costs	Restructuring costs	—		27.0		Restructuring costs	4.7		—
Deferred income taxes		(9.6)		17.9

Non-cash stock compensation		13.4		11.9
Equity in income of unconsolidated affiliates		(4.4)		(6.7)
Dividends received from unconsolidated affiliates		4.7		5.2

Other	Other	(19.5)		(12.4)		Other	(2.4)		(20.6)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(68.6)		105.2		Accounts receivable	(83.6)		(58.0)
Inventories	Inventories	(93.4)		(16.4)		Inventories	(67.4)		(42.0)
Income taxes receivable						Income taxes receivable	22.2		(2.2)
Other assets	Other assets	(18.3)		(22.9)		Other assets	(21.2)		(18.1)
Accounts payable	Accounts payable	77.5		(47.0)		Accounts payable	33.5		54.7
Employee compensation liabilities	Employee compensation liabilities	(15.3)		(130.5)		Employee compensation liabilities	1.3		(30.7)
Employee benefit obligations	Employee benefit obligations	(13.5)		(25.2)		Employee benefit obligations	(18.6)		(14.9)
Customer deposits	Customer deposits	21.3		30.4		Customer deposits	(10.8)		14.0
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(1.8)		(0.5)		Accrued expenses and other liabilities	0.4		3.2
Net cash provided by (used in) operating activities		(59.1)		37.2
Net cash used in operating activities						Net cash used in operating activities	(74.4)		(61.6)
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(45.3)		(32.1)		Capital expenditures	(28.9)		(31.8)
Proceeds from disposal of fixed assets	Proceeds from disposal of fixed assets	17.4		7.3		Proceeds from disposal of fixed assets	5.6		16.8
Acquisition, net of cash acquired		(32.6)		—
Acquisitions, net of cash acquired						Acquisitions, net of cash acquired	(105.4)		—
Other	Other	9.2		7.0		Other	13.4		8.5
Net cash used in investing activities	Net cash used in investing activities	(51.3)		(17.8)		Net cash used in investing activities	(115.3)		(6.5)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Dividends paid	Dividends paid	(45.9)		(31.8)		Dividends paid	(34.0)		(29.2)
Common stock repurchases	Common stock repurchases	(54.0)		(42.7)		Common stock repurchases	(3.4)		(30.9)
Borrowings on global committed bank facility	Borrowings on global committed bank facility	—		250.0		Borrowings on global committed bank facility	266.8		—
Repayments on global committed bank facility	Repayments on global committed bank facility	—		(250.0)		Repayments on global committed bank facility	(187.0)		—
Other	Other	(1.6)		(2.1)		Other	0.9		0.2
Net cash used in financing activities		(101.5)		(76.6)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	43.3		(59.9)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(1.6)		1.8		Effect of exchange rate changes on cash and cash equivalents	(2.0)		(0.6)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(213.5)		(55.4)		Net decrease in cash, cash equivalents and restricted cash	(148.4)		(128.6)
Cash and cash equivalents and restricted cash, beginning of period (1)	Cash and cash equivalents and restricted cash, beginning of period (1)	495.6		547.1		Cash and cash equivalents and restricted cash, beginning of period (1)	207.0		495.6
Cash and cash equivalents and restricted cash, end of period (2)	Cash and cash equivalents and restricted cash, end of period (2)	$	282.1	$	491.7	Cash and cash equivalents and restricted cash, end of period (2)	$	58.6	$	367.0

(1)These amounts include restricted cash of ~~$5.8~~$6.1 and ~~$6.1~~$5.8 as of February ~~26, 2021~~25, 2022 and February ~~28, 2020,~~26, 2021, respectively.

(2)These amounts include restricted cash of ~~$6.9~~$6.4 and ~~$7.3~~$6.3 as of ~~November~~August 26, ~~2021~~2022 and ~~November~~August 27, ~~2020,~~2021, respectively.

Restricted cash primarily represents funds held in escrow for potential future workers’ compensation and product liability claims. Restricted cash is included as part of Other assetsin on the Condensed Consolidated Balance Sheets.

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions in Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. Results for interim periods should not be considered indicative of results to be expected for a full year. Reference should be made to the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended February ~~26, 2021~~25, 2022 (“Form 10-K”). The Condensed Consolidated Balance Sheet as of February ~~26, 2021~~25, 2022 was derived from the audited Consolidated Balance Sheet included in our Form 10-K.

As used in this Quarterly Report on Form 10-Q (“Report”), unless otherwise expressly stated or the context otherwise requires, all references to “Steelcase,” “we,” “our,” “Company” and similar references are to Steelcase Inc. 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 a calendar year. 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.

2.NEW ACCOUNTING STANDARDS

We evaluate all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ~~("FASB")~~ for consideration of their applicability to our consolidated financial statements. We have assessed all ASUs issued but not yet adopted and concluded that those not disclosed are either not applicable to us or are not expected to have a material effect on our consolidated financial statements.

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3.REVENUE

Disaggregation of Revenue

The following table provides information about disaggregated revenue by product category for each of our reportable segments:


Product Category Data	Product Category Data	Three Months Ended				Nine Months Ended				Product Category Data	Three Months Ended				Six Months Ended
		November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020			August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021
Americas	Americas									Americas
Desking, benching, systems and storage	Desking, benching, systems and storage	$	240.1	$	202.8	$	669.5	$	681.9	Desking, benching, systems and storage	$	303.4	$	244.3	$	563.7	$	429.4
Seating	Seating	143.0		121.3		426.7		412.8		Seating	203.3		165.5		359.5		283.7
Other (1)	Other (1)	117.2		92.3		303.7		286.8		Other (1)	144.9		113.5		249.2		186.5
EMEA	EMEA									EMEA
Desking, benching, systems and storage	Desking, benching, systems and storage	62.2		48.5		158.7		140.3		Desking, benching, systems and storage	49.4		41.7		105.1		96.5
Seating	Seating	61.1		61.7		150.7		138.5		Seating	45.7		55.7		99.0		89.6
Other (1)	Other (1)	44.9		33.1		121.3		89.9		Other (1)	42.7		41.5		90.1		76.4
Other	Other									Other
Desking, benching, systems and storage	Desking, benching, systems and storage	13.8		12.4		39.1		33.5		Desking, benching, systems and storage	14.1		14.5		25.8		25.3
Seating	Seating	21.3		17.2		52.0		48.1		Seating	22.3		16.2		39.7		30.7
Other (1)	Other (1)	34.6		28.2		97.9		87.3		Other (1)	37.5		31.9		71.9		63.3
		$	738.2	$	617.5	$	2,019.6	$	1,919.1		$	863.3	$	724.8	$	1,604.0	$	1,281.4

_______________________________________

(1)The ~~Other~~other product category data by segment consists primarily of products sold by consolidated dealers, textiles and surface materials, worktools, architecture ~~technology~~ and other uncategorized product lines and ~~services.~~services, less promotions and incentives on all product categories.

Reportable geographic information is as follows:


Reportable Geographic Revenue	Reportable Geographic Revenue	Three Months Ended				Nine Months Ended				Reportable Geographic Revenue	Three Months Ended							Six Months Ended
		November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020			Reportable Geographic Revenue	August 26, 2022			August 27, 2021					August 26, 2022				August 27, 2021
United States	United States	$	474.6	$	392.9	$	1,327.4	$	1,314.0				United States	$	634.6				$	493.5			$	1,136.3			$	852.8
Foreign locations	Foreign locations	263.6		224.6		692.2		605.1						Foreign locations		228.7					231.3				467.7				428.6
		$	738.2	$	617.5	$	2,019.6	$	1,919.1							$	863.3				$	724.8			$	1,604.0			$	1,281.4

Contract Balances

At times, we receive payments from customers before revenue is recognized, resulting in the recognition of a contract liability (Customer deposits) presented inon the Condensed Consolidated Balance Sheets.

Changes in the Customer deposits balance during the ~~nine~~six months ended ~~November~~August 26, ~~2021~~2022 are as follows:


	Customer Deposits
Balance as of February ~~26, 2021~~25, 2022	$	~~33.7~~53.4
Recognition of revenue related to beginning of year customer deposits	~~(30.7)~~(45.8)
Customer deposits received, net of revenue recognized during the period	~~53.2~~33.4
Customer deposits acquired (1)	24.3
Balance as of ~~November~~August 26, ~~2021~~2022	$	~~56.2~~65.3

(1)Represents customer deposits acquired from Halcon Furniture LLC ("Halcon") as of the acquisition date. See Note 11 for additional information.

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4.EARNINGS (LOSS) PER SHARE

Earnings (loss) per share is computed using the two-class method. The two-class method determines earnings (loss) per share for each class of common stock and participating securities according to dividends or dividend equivalents and their respective participation rights in undistributed earnings. Participating securities represent restricted stock units in which the participants have non-forfeitable rights to dividend equivalents during the performance period. Diluted earnings (loss) per share includes the effects of certain performance units in which the participants have forfeitable rights to dividend equivalents during the performance period.

Computation of Earnings Per Share Three Months Ended November 26, 2021 Three Months Ended November 27, 2020
Net Income Basic Shares
(in millions) Diluted Shares
(in millions) Net Income Basic Shares
(in millions) Diluted Shares
(in millions)
Amounts used in calculating earnings per share $ 9.6 116.0 116.3 $ 2.1 117.7 118.0
Impact of participating securities (0.3) (3.2) (3.2) — (2.9) (2.9)
Amounts used in calculating earnings per share, excluding participating securities $ 9.3 112.8 113.1 $ 2.1 114.8 115.1
Earnings per share $ 0.08 $ 0.08 $ 0.02 $ 0.02


Computation of Earnings (Loss) Per Share	Three Months Ended August 26, 2022						Three Months Ended August 27, 2021
	Net Income (Loss)		Basic Shares (in millions)		Diluted Shares (in millions)		Net Income (Loss)		Basic Shares (in millions)		Diluted Shares (in millions)
Amounts used in calculating earnings (loss) per share	$	19.6	117.2		117.7		$	24.7	118.0		118.6
Impact of participating securities	(0.7)		(4.4)		(4.4)		(0.6)		(3.1)		(3.1)
Amounts used in calculating earnings (loss) per share, excluding participating securities	$	18.9	112.8		113.3		$	24.1	114.9		115.5

Earnings (loss) per share			$	0.17	$	0.17			$	0.21	$	0.21

There were no anti-dilutive performance units excluded from the computation of diluted earnings (loss) per share for the three months ended ~~November~~August 26, ~~2021~~2022 and ~~November~~August 27, ~~2020.~~2021.

Computation of Earnings Per Share Nine Months Ended November 26, 2021 Nine Months Ended November 27, 2020
Net Income Basic Shares
(in millions) Diluted Shares
(in millions) Net Income Basic Shares
(in millions) Diluted Shares
(in millions)
Amounts used in calculating earnings per share $ 6.2 117.4 117.8 $ 19.5 117.4 117.7
Impact of participating securities (0.2) (3.0) (3.0) (0.4) (2.5) (2.5)
Amounts used in calculating earnings per share, excluding participating securities $ 6.0 114.4 114.8 $ 19.1 114.9 115.2
Earnings per share $ 0.05 $ 0.05 $ 0.17 $ 0.17


Computation of Earnings (Loss) Per Share	Six Months Ended August 26, 2022						Six Months Ended August 27, 2021
	Net Income (Loss)		Basic Shares (in millions)		Diluted Shares (in millions)		Net Income (Loss)		Basic Shares (in millions)		Diluted Shares (in millions)
Amounts used in calculating earnings (loss) per share	$	8.2	117.0		117.5		$	(3.4)	118.1		118.1
Impact of participating securities	(0.3)		(4.2)		(4.2)		0.1		(2.9)		(2.9)
Amounts used in calculating earnings (loss) per share, excluding participating securities	$	7.9	112.8		113.3		$	(3.3)	115.2		115.2

Earnings (loss) per share			$	0.07	$	0.07			$	(0.03)	$	(0.03)

There were no anti-dilutive performance units excluded from the computation of diluted earnings (loss) per share for the ~~nine~~six months ended ~~November~~August 26, ~~2021 and November~~2022. There were 0.5 million anti-dilutive performance units excluded from the computation of diluted earnings (loss) per share for the six months ended August 27, ~~2020.~~2021.

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended ~~November~~August 26, ~~2021:~~2022:


		Unrealized gain (loss) on investments		Pension and other post-retirement liability adjustments		Derivative amortization		Foreign currency translation adjustments		Total			Unrealized gain on investment		Pension and other post-retirement liability adjustments		Derivative amortization		Foreign currency translation adjustments		Total
Balance as of August 27, 2021		$	0.5	$	(6.3)	$	(7.2)	$	(37.9)	$	(50.9)
Balance as of May 27, 2022												Balance as of May 27, 2022	$	—	$	5.4	$	(6.4)	$	(68.0)	$	(69.0)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(0.1)		0.4		—		(13.3)		(13.0)		Other comprehensive income (loss) before reclassifications	0.3		0.3		—		(21.3)		(20.7)
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		—		0.3		—		0.3		Amounts reclassified from accumulated other comprehensive income (loss)	—		(0.3)		0.2		—		(0.1)
Net other comprehensive income (loss) during the period	Net other comprehensive income (loss) during the period	(0.1)		0.4		0.3		(13.3)		(12.7)		Net other comprehensive income (loss) during the period	0.3		—		0.2		(21.3)		(20.8)
Balance as of November 26, 2021		$	0.4	$	(5.9)	$	(6.9)	$	(51.2)	$	(63.6)
Balance as of August 26, 2022												Balance as of August 26, 2022	$	0.3	$	5.4	$	(6.2)	$	(89.3)	$	(89.8)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the ~~nine~~six months ended ~~November~~August 26, ~~2021:~~2022:

Unrealized gain (loss) on investments Pension and other post-retirement liability adjustments Derivative amortization Foreign currency translation adjustments Total
Balance as of February 26, 2021 $ 0.3 $ (6.6) $ (7.6) $ (26.1) $ (40.0)
Other comprehensive income (loss) before reclassifications 0.1 0.8 — (25.1) (24.2)
Amounts reclassified from accumulated other comprehensive income (loss) — (0.1) 0.7 — 0.6
Net other comprehensive income (loss) during the period 0.1 0.7 0.7 (25.1) (23.6)
Balance as of November 26, 2021 $ 0.4 $ (5.9) $ (6.9) $ (51.2) $ (63.6)


	Unrealized gain on investment		Pension and other post-retirement liability adjustments		Derivative amortization		Foreign currency translation adjustments		Total
Balance as of February 25, 2022	$	0.3	$	5.2	$	(6.7)	$	(49.4)	$	(50.6)
Other comprehensive income (loss) before reclassifications	—		0.8		—		(39.9)		(39.1)
Amounts reclassified from accumulated other comprehensive income (loss)	—		(0.6)		0.5		—		(0.1)
Net other comprehensive income (loss) during the period	—		0.2		0.5		(39.9)		(39.2)
Balance as of August 26, 2022	$	0.3	$	5.4	$	(6.2)	$	(89.3)	$	(89.8)

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the three and ~~nine~~six months ended ~~November~~August 26, ~~2021~~2022 and ~~November~~August 27, ~~2020:~~2021:


Detail of Accumulated Other Comprehensive Income (Loss) Components	Detail of Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)								Affected Line in the Condensed Consolidated Statements of Income	Detail of Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)																	Affected Line in the Condensed Consolidated Statements of Operations
		Three Months Ended				Nine Months Ended							Detail of Accumulated Other Comprehensive Income (Loss) Components	Three Months Ended								Six Months Ended										Affected Line in the Condensed Consolidated Statements of Operations
		November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020						Detail of Accumulated Other Comprehensive Income (Loss) Components	August 26, 2022				August 27, 2021					August 26, 2022				Affected Line in the Condensed Consolidated Statements of Operations

Amortization of pension and other post-retirement actuarial losses (gains)	Amortization of pension and other post-retirement actuarial losses (gains)	$	(0.1)	$	(0.3)	$	(0.2)	$	(0.9)						Other income, net		Amortization of pension and other post-retirement actuarial losses (gains)	$	(0.4)				$	—			$				(0.8)						Other income, net
Prior service cost (credit)		—		—		—		(0.1)								Other income, net

Income tax expense	Income tax expense	0.1		0.1		0.1		0.3								Income tax expense (benefit)		Income tax expense		0.1					—						0.2				—			Income tax expense (benefit)
		—		(0.2)		(0.1)		(0.7)												(0.3)					—				(0.6)				(0.1)

Derivative amortization	Derivative amortization	0.4		0.4		1.0		1.0								Interest expense		Derivative amortization		0.3					0.3				0.7				0.6			Interest expense
Income tax benefit	Income tax benefit	(0.1)		(0.1)		(0.3)		(0.3)								Income tax expense (benefit)		Income tax benefit		(0.1)					(0.1)				(0.2)				(0.2)			Income tax expense (benefit)
		0.3		0.3		0.7		0.7												0.2					0.2				0.5				0.4

Total reclassifications	Total reclassifications	$	0.3	$	0.1	$	0.6	$	—									Total reclassifications		$	(0.1)				$	0.2			$	(0.1)			$	0.3

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6.FAIR VALUE

The carrying amounts for many of our financial instruments, including cash and cash equivalents, accounts and notes receivable, accounts ~~and notes~~ payable, short-term borrowings and certain other liabilities, approximate their fair value due to their relatively short maturities. Our foreign exchange forward contracts and long-term investments are measured at fair value inon the Condensed Consolidated Balance Sheets.

Our total debt is carried at cost and was ~~$482.9~~$563.5 and ~~$483.9~~$482.5 as of ~~November~~August 26, ~~2021~~2022 and February ~~26, 2021,~~25, 2022, respectively. The fair value of our total debt is measured using a discounted cash flow analysis based on current market interest rates for similar types of instruments and was ~~$552.4~~$538.3 and ~~$568.1~~$516.7 as of ~~November~~August 26, ~~2021~~2022 and February ~~26, 2021,~~25, 2022, respectively. The estimation of the fair value of our total debt is based on Level 2 fair value measurements.

We periodically use derivative financial instruments to manage exposures to movements in foreign exchange rates and interest rates. The use of these financial instruments modifies the exposure of these risks with the intention to reduce our risk of short-term volatility. We do not use derivatives for speculative or trading purposes.

Assets and liabilities measured at fair value as of ~~November~~August 26, ~~2021~~2022 and February ~~26, 2021~~25, 2022 are summarized below:


		November 26, 2021									August 26, 2022
Fair Value of Financial Instruments	Fair Value of Financial Instruments	Level 1		Level 2		Level 3		Total		Fair Value of Financial Instruments	Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash and cash equivalents	Cash and cash equivalents	$	274.1	$	—	$	—	$	274.1	Cash and cash equivalents	$	52.2	$	—	$	—	$	52.2
Restricted cash	Restricted cash	6.9		—		—		6.9		Restricted cash	6.4		—		—		6.4

Foreign exchange forward contracts	Foreign exchange forward contracts	—		0.2		—		0.2		Foreign exchange forward contracts	—		1.8		—		1.8
Auction rate security	Auction rate security	—		—		2.7		2.7		Auction rate security	—		—		2.6		2.6

		$	281.0	$	0.2	$	2.7	$	283.9		$	58.6	$	1.8	$	2.6	$	63.0
Liabilities:	Liabilities:									Liabilities:
Foreign exchange forward contracts	Foreign exchange forward contracts	$	—	$	(2.1)	$	—	$	(2.1)	Foreign exchange forward contracts	$	—	$	(0.7)	$	—	$	(0.7)
		$	—	$	(2.1)	$	—	$	(2.1)		$	—	$	(0.7)	$	—	$	(0.7)

		February 26, 2021									February 25, 2022
Fair Value of Financial Instruments	Fair Value of Financial Instruments	Level 1		Level 2		Level 3		Total		Fair Value of Financial Instruments	Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash and cash equivalents	Cash and cash equivalents	$	489.8	$	—	$	—	$	489.8	Cash and cash equivalents	$	200.9	$	—	$	—	$	200.9
Restricted cash	Restricted cash	5.8		—		—		5.8		Restricted cash	6.1		—		—		6.1

Foreign exchange forward contracts	Foreign exchange forward contracts	—		1.1		—		1.1		Foreign exchange forward contracts	—		1.0		—		1.0
Auction rate security	Auction rate security	—		—		2.6		2.6		Auction rate security	—		—		2.6		2.6

		$	495.6	$	1.1	$	2.6	$	499.3		$	207.0	$	1.0	$	2.6	$	210.6
Liabilities:	Liabilities:									Liabilities:
Foreign exchange forward contracts	Foreign exchange forward contracts	$	—	$	(0.8)	$	—	$	(0.8)	Foreign exchange forward contracts	$	—	$	(0.3)	$	—	$	(0.3)
		$	—	$	(0.8)	$	—	$	(0.8)		$	—	$	(0.3)	$	—	$	(0.3)

Below is a roll-forward of assets and liabilities measured at fair value using Level 3 inputs for the ~~nine~~six months ended ~~November~~August 26, ~~2021:~~2022:

Roll-Forward of Fair Value Using Level 3 Inputs

Auction Rate Security

Balance as of February ~~26, 2021~~25, 2022

2.6

Unrealized gain on investment

~~0.1~~—

Balance as of ~~November~~August 26, ~~2021~~2022

~~2.7~~2.6

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.INVENTORIES


Inventories	Inventories	November 26, 2021		February 26, 2021		Inventories	August 26, 2022		February 25, 2022
Raw materials and work-in-process	Raw materials and work-in-process	$	162.8	$	126.0	Raw materials and work-in-process	$	276.4	$	208.2
Finished goods	Finished goods	151.3		86.4		Finished goods	153.7		146.9
		314.1		212.4			430.1		355.1
Revaluation to LIFO	Revaluation to LIFO	28.0		18.9		Revaluation to LIFO	33.4		28.9
		$	286.1	$	193.5		$	396.7	$	326.2

The portion of inventories determined by the LIFO method was ~~$125.1~~$162.5 and ~~$89.1~~$141.4 as of ~~November~~August 26, ~~2021~~2022 and February ~~26, 2021,~~25, 2022, respectively.

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8.SHORT-TERM BORROWINGS

We have a $250.0 global committed bank facility, which expires in 2025. At our option, and subject to certain conditions, we may increase the aggregate commitment under the facility by up to $125.0 by obtaining at least one commitment from one or more lenders. As of August 26, 2022, total availability under the facility was limited to $203.2 as a result of covenant constraints. In Q2 2023, we borrowed $68.0 under the facility to fund a portion of our acquisition of Halcon, and we also borrowed under the facility to support our global operating requirements. As of August 26, 2022, our total borrowings outstanding under the facility were $79.8, which had an effective interest rate of 3.75%.

The facility does not include any restrictions on cash dividend payments or share repurchases. As of August 26, 2022, we were in compliance with all covenants under the facility.

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9. SHARE-BASED COMPENSATION

Performance Units

We have issued performance units (“PSUs”) to certain employees which are earned over a three-year performance period based on performance conditions established annually by the Compensation Committee within the first three months of the applicable fiscal year. The PSUs are then modified based on achievement of certain total shareholder return results relative to a comparison group of companies, which is a market condition. When the performance conditions for a fiscal year are established, or if the performance conditions involve a qualitative assessment and such assessment has been made, one-third of the PSUs issued are considered granted. Therefore, each of the three fiscal years within the performance period is considered an individual tranche of the award (referred to as "Tranche 1," "Tranche 2" and "Tranche 3," respectively).

As of ~~November~~August 26, ~~2021,~~2022, the following PSUs have been issued and remained outstanding:

•428,700 PSUs to be earned over the period of 2023 through 2025 (the "2023 PSUs"),

•448,300 PSUs to be earned over ~~a three-year performance~~the period of 2022 through 2024 (the "2022 PSUs"), and

•529,500 PSUs to be earned over ~~a three-year performance~~the period of 2021 through 2023 (the "2021 PSUs") ~~and~~

•~~296,600 PSUs to be earned over a three-year performance period of 2020 through 2022 (the "2020 PSUs")~~.

In Q1 2022, the performance conditions were established for Tranche 1 of the 2022 PSUs, Tranche 2 of the 2021 PSUs and Tranche 3 of the 2020 PSUs. Accordingly, one-third of each of these PSUs were considered granted in Q1 2022.

In Q1 2021, the performance conditions were established for Tranche 1 of the 2021 PSUs and Tranche 2 of the 2020 PSUs. These performance conditions involved a qualitative assessment which was made by the Compensation Committee in Q4 2021. Accordingly, one-third of each of these PSUs were considered granted in Q4 2021.

~~In Q1 2020, the performance conditions were established for Tranche 1 of the 2020 PSUs. Accordingly, one-third of the 2020 PSUs were considered granted in Q1 2020.~~

Once granted, the PSUs are expensed and recorded in Additional paid-in capital on the Condensed Consolidated Balance Sheets over the remaining performance period. For participants who are or become retirement-eligible during the performance period, the PSUs are expensed over the period ending on the date the participant becomes retirement-eligible.

As of August 26, 2022, the 2023 PSUs, 2022 PSUs and 2021 PSUs were considered granted as follows:

•In Q1 2023, the performance conditions were established for Tranche 1 of the 2023 PSUs, Tranche 2 of the 2022 PSUs and Tranche 3 of the 2021 PSUs, and accordingly, such tranches were considered granted in Q1 2023.

•In Q1 2022, the performance conditions were established for Tranche 1 of the 2022 PSUs and Tranche 2 of the 2021 PSUs, and accordingly, such tranches were considered granted in Q1 2022.

•In Q1 2021, the performance conditions were established for Tranche 1 of the 2021 PSUs. These performance conditions involved a qualitative assessment which was made by the Compensation Committee in Q4 2021. Accordingly, such tranche was considered granted in Q4 2021.

1214

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We used the Monte Carlo simulation model to calculate the fair value of the market conditions on the respective grant dates, which resulted in a total fair value of ~~$6.1, $3.7~~$5.2, $4.8 and ~~$1.6~~$2.3 for the PSUs with market conditions granted in 2023, 2022 and 2021, ~~and 2020, respectively.~~respectively, that remain outstanding as of August 26, 2022. The Monte Carlo simulation was computed using the following assumptions:


		FY22 Award		FY21 Award				FY20 Award							FY23 Award		FY22 Award				FY21 Award
		Tranche 1		Tranche 2		Tranche 1		Tranche 3		Tranche 2		Tranche 1			Tranche 1		Tranche 2		Tranche 1		Tranche 3		Tranche 2		Tranche 1
Risk-free interest rate (1)	Risk-free interest rate (1)	0.3	%	0.2	%	0.2	%	0.1	%	0.1	%	2.3	%	Risk-free interest rate (1)	2.6	%	2.3	%	0.3	%	1.6	%	0.2	%	0.2	%
Expected term	Expected term	3 years		2 years		2 years		1 year		1 year		3 years		Expected term	3 years		2 years		3 years		1 year		2 years		2 years
Estimated volatility (2)	Estimated volatility (2)	53.5	%	61.3	%	58.1	%	56.1	%	74.1	%	32.5	%	Estimated volatility (2)	52.2	%	43.8	%	53.5	%	28.7	%	61.3	%	58.1	%

(1)Based on the U.S. Government bond benchmark on the grant date.

(2)Represents the historical price volatility of our Class A Common Stock for the three-year ~~period.~~period preceding the grant date.

The total PSU expense (credit) and associated tax benefit ~~(expense) for all outstanding awards for~~recorded during the three and ~~nine~~six months ended ~~November~~August 26, ~~2021~~2022 and ~~November~~August 27, ~~2020~~2021 are as follows:


		Three Months Ended				Nine Months Ended				Three Months Ended						Six Months Ended
Performance Units	Performance Units	November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020			Performance Units	August 26, 2022		August 27, 2021			August 26, 2022		August 27, 2021
Expense (credit)	Expense (credit)	$	(4.1)	$	0.1	$	1.5	$	0.4				Expense (credit)	$	(0.2)		$	0.4	$	3.9	$	5.6
Tax benefit (expense)		(1.0)		—		0.4		0.1
Tax benefit													Tax benefit	—			0.1		1.0		1.4

The PSU activity for the six months ended August 26, 2022 is as follows:


Maximum Number of Shares of Nonvested Units	Total	Weighted-Average Grant Date Fair Value per Unit
Nonvested as of February 25, 2022	1,205,833	$	14.21
Granted	1,125,192	11.13

Nonvested as of August 26, 2022	2,331,025	$	12.72

As of ~~November~~August 26, ~~2021,~~2022, there was ~~$0.3~~$1.2 of remaining unrecognized compensation expense related to ~~granted~~ nonvested PSUs, which is expected to be recognized over a remaining weighted-average period of ~~1.4~~2.0 years.

~~The PSU activity for the nine months ended November 26, 2021 is as follows:~~

Maximum Number of Shares That May Be Issued Under Nonvested Units Total Weighted-Average
Grant Date
Fair Value
per Unit
Nonvested as of February 26, 2021 898,156 $ 14.06
Granted 1,019,517 14.38
Nonvested as of November 26, 2021 1,917,673 $ 14.23

Restricted Stock Units

During the ~~nine~~six months ended ~~November~~August 26, ~~2021,~~2022, we awarded ~~1,155,818~~1,068,507 restricted stock units ("RSUs") to certain employees. RSUs have restrictions on transfer which lapse one to three years after the date of grant, at which time the RSUs will be issued as unrestricted shares of Class A Common Stock. RSUs are expensed and recorded in Additional paid-in capital on the Condensed Consolidated Balance Sheets over the requisite service period based on the value of the shares on the ~~date~~grant date. Generally, RSUs awarded are not forfeitable upon a qualifying retirement. For participants of ~~grant. For participants~~those awards who are or become retirement-eligible during the service period, the RSUs are expensed over the period ending on the date that the participant becomes retirement-eligible.

The total RSU expense and associated tax benefit for ~~all outstanding awards for~~ the three and ~~nine~~six months ended ~~November~~August 26, ~~2021~~2022 and ~~November~~August 27, ~~2020~~2021 are as follows:


		Three Months Ended				Nine Months Ended				Three Months Ended						Six Months Ended
Restricted Stock Units	Restricted Stock Units	November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020			Restricted Stock Units	August 26, 2022		August 27, 2021			August 26, 2022		August 27, 2021
Expense	Expense	$	2.1	$	1.9	$	11.3	$	10.9				Expense	$	3.3		$	1.5	$	11.2	$	9.2
Tax benefit	Tax benefit	0.5		0.5		2.8		2.8					Tax benefit	0.8			0.4		2.8		2.3

1315

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The RSU activity for the six months ended August 26, 2022 is as follows:


Nonvested Units	Total	Weighted-Average Grant Date Fair Value per Unit
Nonvested as of February 25, 2022	3,445,438	$	11.86
Granted	1,068,507	11.21
Vested	(11,000)	14.44
Forfeited	(26,444)	13.13
Nonvested as of August 26, 2022	4,476,501	$	11.69

As of ~~November~~August 26, ~~2021,~~2022, there was ~~$10.6~~$19.2 of remaining unrecognized compensation expense related to nonvested RSUs, which is expected to be recognized over a remaining weighted-average period of ~~2.1~~1.7 years.

~~The RSU activity for the nine months ended November 26, 2021 is as follows:~~

Nonvested Units Total Weighted-Average
Grant Date
Fair Value
per Unit
Nonvested as of February 26, 2021 2,285,965 $ 12.11
Granted 1,155,818 13.89
Vested (121,384) 12.95
Forfeited (65,085) 12.92
Nonvested as of November 26, 2021 3,255,314 $ 12.58

9.10. LEASES

We have operating leases for corporate offices, sales offices, showrooms, manufacturing and distribution facilities, vehicles and equipment that expire at various dates through ~~2035.~~2036. Certain lease agreements include contingent rental payments based on per unit usage over contractual levels (e.g., miles driven or machine hours ~~used)~~operated) and others include rental payments adjusted periodically for inflationary indexes. Additionally, some leases include options to renew or terminate the leases which can be exercised at our discretion.

The components of lease expense for the three and six months ended August 26, 2022 and August 27, 2021 are as follows:


		Three Months Ended				Nine Months Ended				Three Months Ended			Six Months Ended
		November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020		August 26, 2022	August 27, 2021		August 26, 2022		August 27, 2021
Operating lease cost	Operating lease cost	$	13.2	$	12.8	$	39.5	$	38.8			Operating lease cost	$	13.5	$	13.2	$	25.6	$	26.3
Sublease rental income	Sublease rental income	(0.5)		(0.7)		(1.4)		(1.6)				Sublease rental income	(0.5)		(0.5)		(1.1)		(0.9)
		$	12.7	$	12.1	$	38.1	$	37.2				$	13.0	$	12.7	$	24.5	$	25.4

Supplemental cash flow and other information related to leases for the three and six months ended August 26, 2022 and August 27, 2021 are as follows:


		Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
		November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020		August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021
Cash flow information:	Cash flow information:										Cash flow information:
Operating cash flows used for operating leases	Operating cash flows used for operating leases	$	13.6	$	12.6	$	40.4	$	37.3		Operating cash flows used for operating leases	$	13.6	$	13.4	$	27.1	$	26.8
Leased assets obtained in exchange for new operating lease obligations	Leased assets obtained in exchange for new operating lease obligations	$	17.0	$	0.7	$	34.3	$	2.6		Leased assets obtained in exchange for new operating lease obligations	$	10.3	$	15.7	$	13.5	$	17.3

November 26,
2021 November 27,
2020
Other information:
Weighted-average remaining term 6.2 years 6.7 years
Weighted-average discount rate 3.6 % 4.0 %
As of August 26, 2022 and August 27, 2021, the weighted-average remaining lease terms were 5.6 years and 6.2 years, respectively, and the weighted-average discount rates were 3.7% and 3.7%, respectively.

1416

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the future minimum lease payments as of ~~November~~August 26, ~~2021:~~2022:


Fiscal year ending in February	Fiscal year ending in February	Amount (1)		Fiscal year ending in February	Amount (1)
2022		$	13.1
2023	2023	50.2		2023	$	23.3
2024	2024	45.8		2024	49.0
2025	2025	43.2		2025	44.7
2026	2026	34.2		2026	34.9
2027				2027	28.1
Thereafter	Thereafter	81.3		Thereafter	53.0
Total lease payments	Total lease payments	$	267.8	Total lease payments	$	233.0
Less: Interest	Less: Interest	28.3		Less: Interest	23.6
Present value of lease liabilities	Present value of lease liabilities	$	239.5	Present value of lease liabilities	$	209.4

(1)Lease payments include options to extend lease terms that are reasonably certain of being exercised. The payments exclude legally binding minimum lease payments for leases signed but not yet commenced.

~~10.~~11.ACQUISITIONS

Viccarbe ~~Habitat, S.L.~~

In Q3 2022, we acquired Viccarbe Habitat, S.L. ("Viccarbe"), a Spanish designer of contemporary furniture for high-performance collaborative and social spaces. The transaction included the purchase of all the outstanding capital stock of Viccarbe for $34.9 (or €30.0)~~, less an adjustment for working capital estimated at $1.5 (or €1.3),~~ in an all-cash transaction using cash on-hand. AnUp to an additional ~~amount of~~ $15.1 (or €13.0) is payable to the sellers based upon the achievement of certain ~~sales~~revenue and operating income targets over a ~~three year~~three-year period. This amount was ~~considered~~determined to be contingent consideration and was treated for accounting purposes as part of the total purchase price of the acquisition. We used the Monte Carlo simulation model to calculate the fair value of the contingent consideration as of the acquisition date, which represents a Level 3 measurement. As a result, we recorded a related liability of $4.9 (or €4.2). An additional amount of $7.0 (or €6.0) is also payable to the sellers based upon the achievement of certain milestones and continued employment over a ~~five year~~five-year period, which ~~will be~~is being expensed over the service period on a straight-line basis.

Tangible assets and liabilities of Viccarbe were valued as of the acquisition date using a market analysis, and intangible assets were valued using a discounted cash flow analysis, which represents a Level 3 measurement. On the acquisition date, we recorded $11.7 related to identifiable intangible assets, ~~$25.6~~$25.8 related to goodwill and ~~$5.3~~$5.1 related to tangible assets. The tangible assets mainly consisted of working capital (primarily accounts receivable, inventory and accounts payable), and property, plant and ~~equipment and~~equipment. Additionally, we recorded a deferred tax ~~liabilities.~~liability in the amount of $2.9 associated with the tax basis difference in acquired book assets. The goodwill was recorded in the EMEA segment and is not deductible for income tax purposes in Spain. The goodwill resulting from the acquisition is primarily related to the growth potential of Viccarbe and our ~~intention~~intentions to expand the manufacturing of Viccarbe products in geographic regions outside of EMEA and to offer Viccarbe products through our global distribution network. Intangible assets are principally related to the Viccarbe trade name, dealer relationships and internally developed know-how and designs, which ~~will be~~are being amortized over periods ranging from 9 to 13 years from the date of acquisition. The purchase price allocation for the acquisition was incomplete as of ~~November~~August 26, ~~2021.~~2022, as we are evaluating certain deferred tax balances which will be finalized in Q3 2023.

The following table summarizes the purchased identified intangible assets and the respective fair value and useful life of each asset at the date of acquisition:


Other Intangible Assets	Useful Life (Years)	Fair Value

Trademark	9.0	$	4.6
Dealer relationships	13.0	3.8
Know-how and designs	9.0	3.3
		$	11.7

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair values of the purchased intangible assets are being amortized on a straight-line basis over their useful lives. The following table summarizes the estimated future amortization expense for the next five years as of August 26, 2022:


Fiscal Year Ending in February	Amount
2023	$	0.5
2024	1.0
2025	1.1
2026	1.0
2027	1.0
	$	4.6

Halcon

In Q2 2023, we acquired Halcon, a Minnesota-based designer and manufacturer of precision-tailored wood furniture for the workplace. The transaction included the purchase of all the outstanding membership interests of Halcon for $127.5 less customer deposits of $24.3, plus an adjustment of $1.9 for working capital. The acquisition was funded using a combination of cash on-hand and borrowings under our global committed bank facility. Up to an additional $7.5 is payable to the sellers based upon the achievement of certain revenue and gross margin targets over a six-month period. This amount was determined to be contingent consideration and was treated for accounting purposes as part of the total purchase price of the acquisition. We used the Monte Carlo simulation model to calculate the fair value of the contingent consideration as of the acquisition date, which represents a Level 3 measurement. Based upon the results of the calculation, we did not record a liability for the contingent consideration. An additional amount of $2.0 is also payable to a seller based upon continued employment over a three-year period, which is being expensed over the service period on a straight-line basis.

Tangible assets and liabilities of Halcon were valued as of the acquisition date using a market analysis, and intangible assets were valued using a discounted cash flow analysis, which represents a Level 3 measurement. On the acquisition date, we recorded $51.8 related to identifiable intangible assets, $36.9 related to goodwill and $16.4 related to tangible assets. The tangible assets mainly consisted of property, plant, and equipment of $30.8, working capital (primarily inventory of $12.3) and customer deposits of $24.3. The goodwill was recorded in the Americas segment and is deductible for U.S. income tax purposes. The goodwill resulting from the acquisition is primarily related to the growth potential of Halcon expected to be driven by new product development, geographic expansion and the integration of Halcon products into our dealer network. Intangible assets are principally related to dealer relationships, the Halcon trade name and internally developed know-how and designs, which are being amortized over periods ranging from 9 to 10 years from the date of acquisition. We also acquired a backlog of orders which are expected to ship throughout the remainder of 2023. The purchase price allocation for the acquisition was incomplete as of August 26, 2022, as we are evaluating certain deferred tax balances and working capital adjustments. The amounts recognized related to the purchase price allocation will be finalized no later than one year after the acquisition date.

The following table summarizes the ~~acquired~~purchased identified intangible assets and the respective fair value and useful life of each asset at the date of acquisition:


Other Intangible Assets	Useful Life (Years)	Fair Value

Dealer relationships	10.0	$	21.5
Trademark	9.0	14.0
Know-how and designs	9.0	12.0
Backlog	0.7	4.3
		$	51.8

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Intangible Assets
Useful Life
(Years) Fair Value
Trademark 9.0 $ 4.6
Dealer relationships 13.0 3.8
Know-how/designs 9.0 3.3
$ 11.7

The fair ~~value~~values of the ~~acquired~~purchased intangible assets ~~will be~~is being amortized on a straight-line basis over their useful lives. The following table summarizes the ~~remaining useful life. The~~ estimated future amortization expense for the next five years is as ~~follows:~~of August 26, 2022:


Fiscal Year Ending in February	Fiscal Year Ending in February	Amount		Fiscal Year Ending in February	Amount
2022		$	0.4
2023	2023	1.1		2023	$	5.2
2024	2024	1.1		2024	5.0
2025	2025	1.2		2025	5.1
2026	2026	1.1		2026	5.0
2027				2027	5.0
		$	4.9		$	25.3

~~11.~~12. REPORTABLE SEGMENTS

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

The Americas segment serves customers in the U.S., Canada, the Caribbean Islands and Latin America with a comprehensive portfolio of furniture ~~architectural~~ and ~~technology~~architectural products marketed to corporate, government, healthcare, education and retail customers through the Steelcase, Coalesse, AMQ, Smith System, ~~AMQ,~~ Orangebox, Viccarbe and ~~Viccarbe~~Halcon brands.

The EMEA segment serves customers in Europe, the Middle East and Africa primarily under the Steelcase, Coalesse, Orangebox ~~Coalesse~~ and Viccarbe brands, with a comprehensive portfolio of furniture ~~architectural~~ and ~~technology~~architectural products.

The Other category includes Asia Pacific and Designtex. Asia Pacific serves customers in Australia, China, India, Japan, Korea and other countries in Southeast Asia primarily under the Steelcase brand with a comprehensive portfolio of furniture ~~architectural~~ and ~~technology~~architectural products. Designtex ~~primarily~~ sells textiles, wall coverings and surface imaging solutions specified by architects and designers directly to end-use customers through a direct sales force primarily in North America.

We primarily review and evaluate revenue and operating income by segment in both our internal review processes and for our external financial reporting. We also allocate resources primarily based on revenue and operating income. Total assets by segment include manufacturing and other assets associated with each segment.

Corporate ~~costs~~expenses include unallocated portions of shared service functions such as information technology, corporate facilities, finance, human resources, research, legal and customer aviation, plus deferred compensation expense and income or losses associated with COLI. Corporate assets consist primarily of unallocated cash and cash equivalents, COLI, fixed assets, investments in unconsolidated affiliates and right-of-use assets related to operating leases.

1619

Table of Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue and operating income (loss) for the three and ~~nine~~six months ended ~~November~~August 26, ~~2021~~2022 and ~~November~~August 27, ~~2020~~2021 and total assets as of ~~November~~August 26, ~~2021~~2022 and February ~~26, 2021~~25, 2022 by segment are presented in the following ~~table:~~tables:


		Three Months Ended				Nine Months Ended				Three Months Ended						Six Months Ended
Reportable Segment Statement of Operations Data	Reportable Segment Statement of Operations Data	November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020			Reportable Segment Statement of Operations Data	August 26, 2022		August 27, 2021			August 26, 2022		August 27, 2021
Revenue	Revenue												Revenue
Americas	Americas	$	500.3	$	416.4	$	1,399.9	$	1,381.5				Americas	$	651.6		$	523.3	$	1,172.4	$	899.6
EMEA	EMEA	168.2		143.3		430.7		368.7					EMEA	137.8			138.9		294.2		262.5
Other	Other	69.7		57.8		189.0		168.9					Other	73.9			62.6		137.4		119.3
		$	738.2	$	617.5	$	2,019.6	$	1,919.1					$	863.3		$	724.8	$	1,604.0	$	1,281.4
Operating income (loss)	Operating income (loss)												Operating income (loss)
Americas	Americas	$	11.1	$	13.8	$	40.8	$	84.9				Americas	$	43.5		$	44.7	$	42.3	$	29.7
EMEA	EMEA	8.3		(3.7)		1.0		(31.8)					EMEA	(6.8)			(1.6)		(5.5)		(7.3)
Other	Other	2.0		(2.2)		(7.5)		(2.7)					Other	(1.3)			(4.2)		(4.2)		(9.5)
Corporate	Corporate	(5.5)		(7.9)		(16.3)		(14.1)					Corporate	(6.5)			(5.0)		(16.3)		(10.8)
		$	15.9	$	—	$	18.0	$	36.3					$	28.9		$	33.9	$	16.3	$	2.1


Reportable Segment Balance Sheet Data	Reportable Segment Balance Sheet Data	November 26, 2021		February 26, 2021		Reportable Segment Balance Sheet Data	August 26, 2022		February 25, 2022
Total assets	Total assets					Total assets
Americas	Americas	$	1,103.6	$	1,015.3	Americas	$	1,358.1	$	1,110.4
EMEA	EMEA	479.2		414.4		EMEA	420.0		475.2
Other	Other	227.0		211.3		Other	227.0		227.6
Corporate	Corporate	509.0		713.0		Corporate	297.5		447.8
		$	2,318.8	$	2,354.0		$	2,302.6	$	2,261.0

1720

Table of ~~Content~~Contents

STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

13. RESTRUCTURING ACTIVITIES

In Q4 2022, our Board of Directors approved restructuring actions related to the exit of our technology business in connection with our strategy to shift from offering a portfolio of technology products toward partnering with technology companies to create integrated collaborative solutions. The restructuring actions primarily included involuntary terminations of the majority of salaried employees of the business and the termination of supplier and customer contracts related to the business. We incurred $4.7 in restructuring costs in the Americas segment related to these actions, primarily consisting of cash severance payments and payment of other business exit costs. We recorded $1.8 related to employee termination costs and $2.4 related to business exit and other related costs during Q1 2023. In Q2 2023, we recorded a charge of $0.5 related to the impairment of a right-of-use operating lease asset which was utilized by our technology business. These restructuring actions are complete.

The following table details the changes in the restructuring reserve balance as of August 26, 2022:


	Workforce Reductions		Business Exit and Related Costs		Total
Balance as of February 25, 2022	$	—	$	—	$	—
Restructuring costs	1.8		2.4		4.2
Payments	(1.8)		(2.4)		(4.2)
Balance as of August 26, 2022	$	—	$	—	$	—

14. SUBSEQUENT EVENTS

On September 21, 2022, our Board of Directors authorized a series of actions to reduce operational spending across certain functions. The actions may include the elimination of up to 180 salaried positions in the Americas segment and Corporate functions. As a result of these actions, we currently expect to incur approximately $8 in restructuring costs, consisting of cash severance payments and other separation-related benefits. We expect these actions to be completed in Q3 2023.

Table s of Contents

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations:

This management’s discussion and analysis of financial condition and results of operations ("MD&A") should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February ~~26, 2021.~~25, 2022. 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 specific date. 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.

~~Non-GAAP Financial Measures~~

This item contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the condensed consolidated statements of ~~income,~~operations, balance sheets or statements of cash flows of the company. The non-GAAP financial measures used are (1) organic revenue growth, (2) adjusted operating income (loss) and (3) adjusted earnings per share. Pursuant to the requirements of Regulation G, we have provided a reconciliation ~~below~~of each of the non-GAAP financial measures to the most directly comparable GAAP financial ~~measure.~~

~~The~~measure in the tables below. These measures are supplemental to, and should be used in conjunction with, the most comparable GAAP measures. Management uses these non-GAAP financial measures used are (1) organic revenue growth (decline), which represents the change in revenue excluding the impacts of acquisitions and divestitures and estimated currency translation effects, and (2) adjusted operating income (loss), which represents operating income (loss) excluding goodwill impairment charges and restructuring costs. These measures are presented because management uses this information to monitor and evaluate financial results and trends. ~~Therefore,~~See Non-GAAP Financial Measures for a description of these measures and why management believes ~~this information is~~they are also useful ~~for~~to investors.

Financial Summary

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

Results of Operations


		Three Months Ended								Nine Months Ended								Three Months Ended												Six Months Ended
Statement of Operations Data	Statement of Operations Data	November 26, 2021				November 27, 2020				November 26, 2021				November 27, 2020					Statement of Operations Data	August 26, 2022				August 27, 2021								August 26, 2022							August 27, 2021
Revenue	Revenue	$	738.2	100.0	%	$	617.5	100.0	%	$	2,019.6	100.0	%	$	1,919.1	100.0	%								Revenue		$	863.3		100.0	%			$	724.8		100.0	%			$	1,604.0		100.0	%		$	1,281.4	100.0	%
Cost of sales	Cost of sales	534.6		72.4		437.3		70.9		1,454.5		72.0		1,339.7		69.8									Cost of sales		612.5			70.9				518.0			71.5				1,160.7			72.4			919.9		71.8
Restructuring costs	Restructuring costs	—		—		2.3		0.3		—		—		9.2		0.5									Restructuring costs		—			—				—			—				0.9			—			—		—
Gross profit	Gross profit	203.6		27.6		177.9		28.8		565.1		28.0		570.2		29.7									Gross profit		250.8			29.1				206.8			28.5				442.4			27.6			361.5		28.2
Operating expenses	Operating expenses	187.7		25.4		168.8		27.3		547.1		27.1		498.5		26.0									Operating expenses		221.4			25.7				172.9			23.8				422.3			26.3			359.4		28.0
Goodwill impairment charge		—		—		—		—		—		—		17.6		0.9
Restructuring costs	Restructuring costs	—		—		9.1		1.5		—		—		17.8		0.9									Restructuring costs		0.5			0.1				—			—				3.8			0.3			—		—
Operating income	Operating income	15.9		2.2		—		—		18.0		0.9		36.3		1.9									Operating income		28.9			3.3				33.9			4.7				16.3			1.0			2.1		0.2
Interest expense	Interest expense	(6.5)		(0.9)		(6.6)		(1.1)		(19.3)		(1.0)		(20.7)		(1.2)									Interest expense		(7.2)			(0.8)				(6.4)			(0.9)				(13.6)			(0.8)			(12.8)		(1.0)
Investment income	Investment income	0.1		—		0.2		—		0.4		—		1.2		0.1									Investment income		0.3			—				0.1			—				0.4			—			0.3		—
Other income, net	Other income, net	2.5		0.3		2.2		0.4		3.5		0.2		7.0		0.4									Other income, net		4.4			0.6				1.8			0.2				7.5			0.5			1.0		0.1
Income (loss) before income tax expense (benefit)	Income (loss) before income tax expense (benefit)	12.0		1.6		(4.2)		(0.7)		2.6		0.1		23.8		1.2									Income (loss) before income tax expense (benefit)		26.4			3.1				29.4			4.0				10.6			0.7			(9.4)		(0.7)
Income tax expense (benefit)	Income tax expense (benefit)	2.4		0.3		(6.3)		(1.0)		(3.6)		(0.2)		4.3		0.2									Income tax expense (benefit)		6.8			0.8				4.7			0.6				2.4			0.2			(6.0)		(0.4)
Net income		$	9.6	1.3	%	$	2.1	0.3	%	$	6.2	0.3	%	$	19.5	1.0	%
Earnings per share:
Net income (loss)																					Net income (loss)	$	19.6			2.3		%	$	24.7			3.4		%	$	8.2			0.5		%	$	(3.4)		(0.3)		%
Earnings (loss) per share:																					Earnings (loss) per share:
Basic	Basic	$	0.08			$	0.02			$	0.05			$	0.17										Basic		$	0.17						$	0.21						$	0.07					$	(0.03)
Diluted	Diluted	$	0.08			$	0.02			$	0.05			$	0.17										Diluted		$	0.17						$	0.21						$	0.07					$	(0.03)

1822

Table of ~~Content~~sContents

Q3 2022 Organic Revenue Growth Americas EMEA Other Consolidated
Q3 2021 revenue $ 416.4 $ 143.3 $ 57.8 $ 617.5
Acquisitions 12.2 0.7 — 12.9
Currency translation effects* 0.7 (0.8) 0.4 0.3
Q3 2021 revenue, adjusted 429.3 143.2 58.2 630.7
Q3 2022 revenue 500.3 168.2 69.7 738.2
Organic growth $ $ 71.0 $ 25.0 $ 11.5 $ 107.5
Organic growth % 17 % 17 % 20 % 17 %
* Currency translation effects represent the estimated net effect of translating Q3 2021 foreign currency revenues using the average exchange rates during Q3 2022.


Q2 2023 Organic Revenue Growth	Americas			EMEA			Other			Consolidated
Q2 2022 revenue	$	523.3		$	138.9		$	62.6		$	724.8
Acquisitions	15.1			2.5			—			17.6

Currency translation effects	(0.7)			(18.1)			(1.5)			(20.3)
Q2 2022 revenue, adjusted	537.7			123.3			61.1			722.1
Q2 2023 revenue	651.6			137.8			73.9			863.3


Organic growth $	$	113.9		$	14.5		$	12.8		$	141.2
Organic growth %	21		%	12		%	21		%	20		%

Year-to-date 2022 Organic Revenue Growth (Decline) Americas EMEA Other Consolidated
Year-to-date 2021 revenue $ 1,381.5 $ 368.7 $ 168.9 $ 1,919.1
Acquisitions 38.1 0.7 — 38.8
Currency translation effects* 4.9 15.6 3.6 24.1
Year-to-date 2021 revenue, adjusted 1,424.5 385.0 172.5 1,982.0
Year-to-date 2022 revenue 1,399.9 430.7 189.0 2,019.6
Organic growth (decline) $ $ (24.6) $ 45.7 $ 16.5 $ 37.6
Organic growth (decline) % (2) % 12 % 10 % 2 %
* Currency translation effects represent the estimated net effect of translating year-to-date 2021 foreign currency revenues using the average exchange rates during year-to-date 2022.


Year-to-date 2023 Organic Revenue Growth	Americas			EMEA			Other			Consolidated
Year-to-date 2022 revenue	$	899.6		$	262.5		$	119.3		$	1,281.4
Acquisitions	16.1			5.0			—			21.1
Currency translation effects	(1.2)			(29.6)			(2.1)			(32.9)
Year-to-date 2022 revenue, adjusted	914.5			237.9			117.2			1,269.6
Year-to-date 2023 revenue	1,172.4			294.2			137.4			1,604.0
Organic growth $	$	257.9		$	56.3		$	20.2		$	334.4
Organic growth %	28		%	24		%	17		%	26		%

Reconciliation of Operating Income to Adjusted Operating Income Three Months Ended Nine Months Ended
November 26,
2021 November 27,
2020 November 26,
2021 November 27,
2020
Operating income $ 15.9 2.2 % $ — — % $ 18.0 0.9 % $ 36.3 1.9 %
Add: Goodwill impairment charge — — — — — — 17.6 0.9
Add: Restructuring costs — — 11.4 1.8 — — 27.0 1.4
Adjusted operating income $ 15.9 2.2 % $ 11.4 1.8 % $ 18.0 0.9 % $ 80.9 4.2 %


Adjusted Operating Income	Three Months Ended								Six Months Ended
	August 26, 2022				August 27, 2021				August 26, 2022				August 27, 2021
Operating income	$	28.9	3.3	%	$	33.9	4.7	%	$	16.3	1.0	%	$	2.1	0.2	%
Amortization of purchased intangible assets	6.4		0.7		3.6		0.5		10.2		0.6		7.2		0.5

Restructuring costs	0.5		0.1		—		—		4.7		0.3		—		—
Adjusted operating income	$	35.8	4.1	%	$	37.5	5.2	%	$	31.2	1.9	%	$	9.3	0.7	%


Adjusted Earnings Per Share	Three Months Ended				Six Months Ended
	August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021
Earnings (loss) per share	$	0.17	$	0.21	$	0.07	$	(0.03)
Amortization of purchased intangible assets, per share	0.05		0.03		0.09		0.06
Income tax effect of amortization of purchased intangible assets, per share	(0.01)		(0.01)		(0.02)		(0.02)
Restructuring costs, per share	—		—		0.04		—
Income tax effect of restructuring costs, per share	—		—		(0.01)		—
Adjusted earnings per share	$	0.21	$	0.23	$	0.17	$	0.01

Overview

~~During Q3 2022, we continued to see strengthening demand and a broader recovery of~~In Q2 2023, our ~~industry. Our orders grew by 40%~~revenue increased 19% compared to the prior year, driven by strong beginning order backlog, significant pricing benefits and ~~revenue increased~~our acquisition of Halcon. We continued to experience significant inflation in steel, other commodities, fuel and logistics costs during the quarter, but year-over-year pricing benefits of approximately $80 exceeded year-over-year inflation by ~~20%~~approximately $30.While we expect inflationary pressure to remain, we believe that year-over-year benefits from our pricing actions will continue to exceed year-over-year inflation in the second half of 2023.

Table of Contents

Our orders grew 5% in Q2 2023 compared to the prior ~~year. Supply chain disruptions~~year, driven by pricing benefits in the Americas and EMEA, partially offset by a decline in order volume in the ~~current year resulted in extended lead-times, shipment delays~~Americas. In response to the volume decline and adjustments to delivery schedules which we estimate caused at least $35 of revenue to shift from Q3 2022 into Q4 2022 compared to at least $40 of revenue which we estimate shifted from Q2 2022 to Q3 2022 for similar reasons. Revenue in Q3 2021 was negatively impacted by a delay of approximately $60 of shipments to Q4 2021 due to a temporary global operations shutdown we implemented to protect our systems during a cyberattack. During the quarter, our pipeline of project opportunities, requests for proposals and product mock-ups remained consistent with the levels we saw in Q2 2022.

~~The supply chain disruptions~~lower-than-expected return-to-office trends in the Americas, ~~combined with continued significant inflation in steel and other commodities, net~~we have adjusted our planned levels of ~~pricing benefits, had an impact of approximately $40 on cost of sales in Q3 2022 compared to the prior year. We~~operational spending while we expect ~~the supply chain disruptions and inflationary pressures from steel and other commodities~~ to continue to ~~impact~~prioritize our investments in strategic growth initiatives. As a result, we have announced plans to eliminate up to 180 salaried positions in the Americas segment and Corporate functions in Q3 2023 and expect to maintain other cost reduction efforts during the remainder of ~~sales in Q4 2022 and into~~2023.

Q2 2023 ~~but we expect our recent price increases to offset the current level of inflation in 2023.~~

~~Q3 2022~~ Compared to ~~Q3 2021~~Q2 2022

We recorded net income of ~~$9.6~~$19.6 and ~~diluted~~ earnings per share of ~~$0.08~~$0.17 in ~~Q3 2022~~Q2 2023 compared to net income of ~~$2.1~~$24.7 and ~~diluted~~ earnings per share of ~~$0.02~~$0.21 in the prior year. ~~The prior year results included restructuring costs in the Americas, which decreased net income by $7.0 and diluted earnings per share by $0.06.~~

~~Table of Content~~s

Operating income of ~~$15.9~~$28.9 in ~~Q3 2022~~Q2 2023 represented a decrease of $5.0 compared to ~~break-even~~ operating income of $33.9 in the prior year, which included ~~$11.4~~a $15.4 gain from the sale of ~~restructuring costs.~~land. Excluding the land gain in the prior year, the increase in operating income was primarily driven by higher volume and higher pricing benefits, which improved gross margin, partially offset by higher operating expenses. We reported adjusted operating income of $35.8 and adjusted earnings per share of $0.21 in Q2 2023, and we had adjusted operating income of $37.5 and adjusted earnings per share of $0.23 in the prior year.

Revenue of $863.3 in Q2 2023 represented an increase of $138.5 or 19% compared to the prior year. Approximately $80 of the increase was related to higher pricing benefits, and approximately $75 was related to higher volume (including acquisitions), partially offset by approximately $20 of unfavorable currency translation effects, primarily in EMEA. Revenue growth was driven by the Americas, in part by Smith System and our acquisition of Halcon. Revenue increased by 25% in the Americas and by 18% in the Other category, while EMEA revenue decreased by 1%. Organic revenue growth was $141.2 or 20% compared to the prior year, with 21% growth in the Americas, 12% growth in EMEA and 21% growth in the Other category.

Cost of sales as a percentage of revenue improved by 60 basis points in Q2 2023 compared to the prior year. The improvement was driven by approximately $30 of higher pricing benefits, net of inflation, and the benefits of higher volume, partially offset by approximately $10 of higher fixed overhead costs and labor inefficiencies. Cost of sales as a percentage of revenue improved by 120 basis points in the Americas and 90 basis points in the Other category but increased by 340 basis points in EMEA.

Operating expenses increased by $48.5 in Q2 2023, or 190 basis points as a percentage of revenue, compared to the prior year, which included a $15.4 gain from the sale of land. Compared to the prior year, operating expenses in Q2 2023 included:

•$13.6 of higher marketing, product development and sales expenses,

•$8.4 of higher variable compensation expense,

•$7.9 from acquisitions and

•$4.6 of higher spending in other functional areas, primarily information technology and strategy,

•partially offset by $4.9 of favorable currency translation effects.

Our Q2 2023 effective tax rate was 25.8% compared to a Q2 2022 effective tax rate of 16.0%, which included $3.8 of discrete tax benefits.

Year-to-date 2023 Compared to Year-to-date 2022

We recorded net income of $8.2 and earnings per share of $0.07 in year-to-date 2023 compared to a net loss of $3.4 and loss per share of $0.03 in the prior year. Operating income of $16.3 in year-to-date 2023 represented an increase of $14.2 compared to operating income of $2.1 in the prior year. The increase was driven by higher revenue and lower operating expenses as a percentage of revenue, partially offset by higher cost of sales as a percentage of revenue. Year-to-date 2023 included $4.7 of restructuring costs in the Americas related to the exit of our technology business. We reported adjusted operating income of $31.2 and adjusted earnings per share of $0.17 in year-to-date 2023, and we had adjusted operating income of $9.3 and adjusted earnings per share of $0.01 in the prior year.

Table of Contents

Revenue of ~~$738.2~~$1,604.0 in ~~Q3 2022~~year-to-date 2023 represented an increase of ~~$120.7~~$322.6 or ~~20%~~25% compared to the prior year, driven by growth across all segments. ~~Supply chain disruptions~~Approximately $215 of the increase was related to higher volume (including acquisitions), and approximately $130 was related to higher pricing benefits, partially offset by approximately $30 of unfavorable currency translation effects, primarily in EMEA. Revenue increased by 30% in the Americas, in the current year resulted in extended lead-times, shipment delays and adjustments to delivery schedules which we estimate caused at least $35 of revenue to shift from Q3 2022 into Q4 2022 compared to at least $40 of revenue which we estimate shifted from Q2 2022 to Q3 2022 for similar reasons. Revenue in the prior year was negatively impacted by a delay of approximately $60 of shipments to Q4 2021 as a result of the temporary operations shutdown in Q3 2021. Revenue grew by 20% in the Americas, 17%12% in EMEA and ~~21%~~15% in the Other ~~category~~category. Organic revenue growth was $334.4 or 26% compared to the prior ~~year. After adjusting for a $12.9 impact from acquisitions and $0.3 of currency translation effects, the organic revenue~~year, with 28% growth ~~was $107.5 or 17% compared to the prior year. The organic revenue growth was 17%~~ in the Americas, ~~17%~~24% growth in EMEA and ~~20%~~17% growth in the Other ~~category compared to the prior year.~~category.

Cost of sales as a percentage of revenue increased by ~~150~~60 basis points in ~~Q3 2022~~year-to-date 2023 compared to the prior year. The increase was driven by approximately ~~$29~~$103 of higher inflation ~~costs, net of pricing benefits,~~ and ~~approximately $11~~$18 of higher ~~freight~~fixed overhead costs and labor ~~costs and~~ inefficiencies, ~~due to supply chain disruptions,~~ partially offset by the benefits of higher ~~revenue.~~volume and approximately $130 of higher pricing benefits. Cost of sales as a percentage of revenue increased by ~~430~~40 basis points in the Americas ~~while~~and 190 basis points in EMEA but improved by ~~490~~90 basis points ~~and~~in the Other ~~category improved by 150 basis points.~~category.

Operating expenses ~~of $187.7~~increased by $62.9 in ~~Q3 2022 represented an increase of $18.9,~~year-to-date 2023, but ~~a decline of 190~~decreased by 170 basis points as a percentage of revenue, compared to the prior ~~year. The current~~ year, included approximately $13 of higher marketing and sales expenses, approximately $6 of higher discretionary spending and employee costs in other functional areas and $3.5 from acquisitions, partially offset by $2.9 of lower variable compensation expense.

~~Our Q3 2022 effective tax rate was 20.0%,~~ which included $1.2 of discrete tax benefits. In the prior year, we recorded an income tax benefit of $6.3, which was primarily driven by benefits available under the U.S. Coronavirus Aid, Relief, and Economic Security Act.

~~Year-to-date 2022 Compared to Year-to-date 2021~~

~~We recorded year-to-date 2022 net income of $6.2 and diluted earnings per share~~ ~~of $0.05 com~~pared to year-to-date 2021 net income of $19.5 and diluted earnings per share of $0.17. In year-to-date 2021, the results included: (1) a goodwill impairment charge related to the EMEA segment, which had the effect of decreasing net income by $17.6 and diluted earnings per share by $0.15, and (2) restructuring costs due to workforce reductions in the Americas, which had the effect of decr~~easing net income by $16.5 and diluted earnings per share by $0.14. Year-to-date 2022 operating income of $18.0 represented a decrease of $18.3 comp~~ared to the prior year. The decrease was due to higher cost of sales as a percentage of revenue and higher operating expenses, partially offset by higher revenue and the impact of the goodwill impairment charge and restructuring costs in the prior year. Excluding the impact of the goodwill impairment charge and restructuring costs in the prior year, adjusted operating incom~~e decreased by $62.9 in year-to-date 2022 compared to year-to-date 2021.~~

~~Year-to-dat~~e 2022 revenue of $2,019.6 represented an increase of $100.5 or 5% compared to year-to-date 2021. Revenue increased by 1% in the Americas, 17% in EMEA and 12% in the Other category compared to the prior year. After adjusting for $38.8 of impact from acquisitions and $24.1 of currency translation effects, the organic revenue growth was $37.6 or 2% compared to the prior year. The Americas had an organic revenue decline of 2%, while the organic revenue growth was 12% in EMEA and 10% in the Other category compared to the prior year.

~~Cost of sales as a percentage of revenue increased by 220 basis points in year-to-date 2022 compared to year-to-date 2021. The increase was driven by approximately~~ ~~$57~~ ~~of higher inflation costs, net of pricing benefits, and approximately $16 of higher freight and labor costs and inefficiencies~~ ~~due to supply chain disruptions, partially offset by the benefits of higher revenue~~ and $6.6 of lower variable compensation expense. Cost of sales as a percentage of revenue increased by 370 basis points in the Americas and by 220 basis points in the Other category, while EMEA improved by 320 b~~asis points.~~

~~Operating expenses~~ ~~of $547.1 in year-to-date 2022 represented an increase of $48.6, or 110 basis points as a percentage of revenue, compared to the prior~~ year. The prior year included approximately $41 of lower employee costs as a result of temporary hour and pay reductions and gains of $6.7 from the sale of land. The current year included approximately $26 of higher marketing and sales expenses, approximately $11 of hig~~her discretionary spending in other functional areas and $9.5 from acquisitions, partially offset by approximately $18 of lower~~

~~Table of Content~~s

~~employee costs (due to the benefits from workforce reductions in the prior year~~), a $15.4 gain from the sale of land. Compared to the prior year, operating expenses in year-to-date 2023 included:

•$25.3 of higher marketing, product development and sales expenses,

•$11.6 of higher spending in other functional areas, primarily information technology, aviation and strategy,

•$9.7 from acquisitions and

•$8.6 of higher variable compensation expense,

•partially offset by a $4.0 gain from the sale of land and ~~$9.6~~$8.5 of ~~lower variable compensation expense.~~favorable currency translation effects.

We recorded restructuring costs of $4.7 in the Americas in year-to-date 2023 related to the exit of our technology business. See Note 13 to the condensed consolidated financial statements for additional information.

Our year-to-date 2023 effective tax rate was 22.6% compared to a year-to-date 2022 effective tax rate ~~was (138.5)%~~ ~~compared to a year-to-date 2021 effective tax rate~~ of ~~18.1%~~63.8%. The year-to-date 2022 effective tax rate reflected the impact of lower earnings and included ~~$4.6~~$3.4 of discrete tax benefits. ~~The year-to-date 2021 effective tax rate reflected the non-deductible nature of the goodwill impairment charge recorded in Q1 2021.~~

Interest Expense, Investment Income and Other Income (Expense), Net


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
Interest Expense, Investment Income and Other Income, Net		November 26, 2021		November 27, 2020		November 26, 2021		November 27, 2020
Interest Expense, Investment Income and Other Income (Expense), Net										Interest Expense, Investment Income and Other Income (Expense), Net	August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021
Interest expense	Interest expense	$	(6.5)	$	(6.6)	$	(19.3)	$	(20.7)	Interest expense	$	(7.2)	$	(6.4)	$	(13.6)	$	(12.8)
Investment income	Investment income	0.1		0.2		0.4		1.2		Investment income	0.3		0.1		0.4		0.3
Other income, net:	Other income, net:									Other income, net:
Equity in income of unconsolidated affiliates	Equity in income of unconsolidated affiliates	2.2		2.6		4.5		6.6		Equity in income of unconsolidated affiliates	3.2		1.0		5.5		2.3
Foreign exchange gains (losses)	Foreign exchange gains (losses)	0.9		0.1		0.6		(1.0)		Foreign exchange gains (losses)	0.1		(0.1)		1.6		(0.3)
Net periodic pension and post-retirement credit, excluding service cost	Net periodic pension and post-retirement credit, excluding service cost	(0.2)		—		(0.5)		(0.1)		Net periodic pension and post-retirement credit, excluding service cost	(0.4)		(0.1)		(0.4)		(0.3)
Miscellaneous income (expense), net	Miscellaneous income (expense), net	(0.4)		(0.5)		(1.1)		1.5		Miscellaneous income (expense), net	1.5		1.0		0.8		(0.7)
Total other income, net	Total other income, net	2.5		2.2		3.5		7.0		Total other income, net	4.4		1.8		7.5		1.0
Total interest expense, investment income and other income, net	Total interest expense, investment income and other income, net	$	(3.9)	$	(4.2)	$	(15.4)	$	(12.5)	Total interest expense, investment income and other income, net	$	(2.5)	$	(4.5)	$	(5.7)	$	(11.5)

Interest expense increased in Q2 2023 and year-to-date ~~2021 included~~2023 compared to the ~~impact~~prior year as a result of borrowings under our global ~~credit~~committed bank facility in ~~Q1 2021, which were repaid during~~ Q2 ~~2021. Other~~2023. Total other income, net increased by $2.6 in ~~year-to-date 2021 included a $2.8 gain related~~Q2 2023 compared to ~~additional proceeds received in~~ the prior year, driven by a $2.2 increase in income recorded from our unconsolidated affiliates. Total other income, net increased by $6.5 in year-to-date 2023 compared to the ~~partial sale~~prior year, driven by a $3.2 increase in income recorded from our unconsolidated affiliates and a $1.9 increase of ~~an investment in an unconsolidated affiliate in 2018.~~foreign exchange gains.

Business Segment Review

See Note 1012 to the condensed consolidated financial statements for additional information regarding our business segments.

Table of Contents

Americas


		Three Months Ended								Nine Months Ended								Three Months Ended							Six Months Ended
Statement of Operations Data — Americas	Statement of Operations Data — Americas	November 26, 2021				November 27, 2020				November 26, 2021				November 27, 2020					Statement of Operations Data — Americas	August 26, 2022	August 27, 2021						August 26, 2022					August 27, 2021
Revenue	Revenue	$	500.3	100.0	%	$	416.4	100.0	%	$	1,399.9	100.0	%	$	1,381.5	100.0	%					Revenue	$	651.6	100.0	%		$	523.3	100.0	%		$	1,172.4	100.0	%	$	899.6	100.0	%
Cost of sales	Cost of sales	370.3		74.0		290.4		69.7		1,015.4		72.5		950.8		68.8						Cost of sales	455.9		70.0			372.6		71.2			845.9		72.1		645.1		71.7
Restructuring costs	Restructuring costs	—		—		2.3		0.6		—		—		9.2		0.7						Restructuring costs	—		—			—		—			0.9		0.1		—		—
Gross profit	Gross profit	130.0		26.0		123.7		29.7		384.5		27.5		421.5		30.5						Gross profit	195.7		30.0			150.7		28.8			325.6		27.8		254.5		28.3
Operating expenses	Operating expenses	118.9		23.8		100.8		24.2		343.7		24.6		318.8		23.1						Operating expenses	151.7		23.2			106.0		20.3			279.5		23.9		224.8		25.0

Restructuring costs	Restructuring costs	—		—		9.1		2.2		—		—		17.8		1.3						Restructuring costs	0.5		0.1			—		—			3.8		0.3		—		—
Operating income	Operating income	$	11.1	2.2	%	$	13.8	3.3	%	$	40.8	2.9	%	$	84.9	6.1	%					Operating income	$	43.5	6.7	%		$	44.7	8.5	%		$	42.3	3.6	%	$	29.7	3.3	%

Reconciliation of Operating Income to Adjusted Operating Income — Americas Three Months Ended Nine Months Ended
November 26,
2021 November 27,
2020 November 26,
2021 November 27,
2020
Operating income $ 11.1 2.2 % $ 13.8 3.3 % $ 40.8 2.9 % $ 84.9 6.1 %
Add: Restructuring costs — — 11.4 2.8 — — 27.0 2.0
Adjusted operating income $ 11.1 2.2 % $ 25.2 6.1 % $ 40.8 2.9 % $ 111.9 8.1 %

~~Table of Content~~s


Adjusted Operating Income — Americas	Three Months Ended								Six Months Ended
	August 26, 2022				August 27, 2021				August 26, 2022				August 27, 2021
Operating income	$	43.5	6.7	%	$	44.7	8.5	%	$	42.3	3.6	%	$	29.7	3.3	%
Amortization of purchased intangible assets	5.3		0.8		2.6		0.5		7.9		0.7		5.2		0.6

Restructuring costs	0.5		0.1		—		—		4.7		0.4		—		—
Adjusted operating income	$	49.3	7.6	%	$	47.3	9.0	%	$	54.9	4.7	%	$	34.9	3.9	%

Operating income in the Americas ~~declined~~decreased by ~~$2.7~~$1.2 in ~~Q3 2022~~Q2 2023 compared to the prior year, which included a $15.4 gain from the sale of land. Excluding the land gain in the prior year, the increase in operating income was primarily driven by higher volume and higher pricing benefits, which improved gross margin, partially offset by higher operating expenses. Adjusted operating income of $49.3 in Q2 2023 represented an improvement of $2.0 compared the prior year. Operating income in the Americas increased by $12.6 in year-to-date 2023 compared to the prior year. The year-to-date improvement was driven by higher revenue and lower operating expenses as a percentage of revenue. Year-to-date 2023 also included $4.7 of restructuring costs. Adjusted operating income of $54.9 in year-to-date 2023 represented an improvement of $20.0 compared the prior year.

The Americas revenue represented 75.5% of consolidated revenue in Q2 2023. In Q2 2023, revenue increased by $128.3 or 25% compared to the prior year. The increase included approximately $65 related to higher volume (including acquisitions) and approximately $60 related to higher pricing benefits, and reflected strong growth at Smith System. Organic revenue growth in Q2 2023 was $113.9 or 21% compared to the prior year. The Americas revenue represented 73.1% of consolidated revenue in year-to-date 2023. Year-to-date 2023 revenue of $1,172.4 represented an increase of $272.8 or 30% compared to the prior year. Approximately $175 of the increase related to higher volume, and approximately $100 related to higher pricing benefits. Organic revenue growth in year-to-date 2023 was $257.9 or 28% compared to the prior year.

Cost of sales as a percentage of revenue decreased by 120 basis points in Q2 2023 compared to the prior year. The improvement was driven by the benefits of higher volume, and approximately $23 of higher pricing benefits, net of inflation, partially offset by approximately $11 of higher fixed overhead costs and labor inefficiencies. Cost of sales as a percentage of revenue increased by 40 basis points in year-to-date 2023 compared to the prior year. The increase was driven by approximately $83 of higher inflation and approximately $17 of higher fixed overhead costs and labor inefficiencies, partially offset by the benefits of higher volume and approximately $100 of higher pricing benefits.

Table of Contents

Operating expenses increased by $45.7 in Q2 2023, or 290 basis points as a percentage of revenue, compared to the prior year, which included a $15.4 gain from the sale of land. The current year included $10.6 of higher marketing, product development and sales expenses, $6.4 from acquisitions, $6.4 of higher variable compensation expense and $5.3 of higher spending in other functional areas. Operating expenses in year-to-date 2023 increased by $54.7, but decreased by 110 basis points as a percentage of revenue, compared to the prior year, which included a $15.4 gain from the sale of land. The current year included $19.8 of higher marketing, product development and sales expenses, $9.0 of higher spending in other functional areas, $6.7 from acquisitions and $6.0 of higher variable compensation expense, partially offset by a $4.0 gain from the sale of land.

EMEA

The EMEA segment serves customers in Europe, the Middle East and Africa primarily under the Steelcase, Coalesse, Orangebox and Viccarbe brands, with a comprehensive portfolio of furniture and architectural products.


	Three Months Ended								Six Months Ended
Statement of Operations Data — EMEA	August 26, 2022				August 27, 2021				August 26, 2022				August 27, 2021
Revenue	$	137.8	100.0	%	$	138.9	100.0	%	$	294.2	100.0	%	$	262.5	100.0	%
Cost of sales	105.3		76.4		101.4		73.0		219.4		74.6		190.9		72.7

Gross profit	32.5		23.6		37.5		27.0		74.8		25.4		71.6		27.3
Operating expenses	39.3		28.5		39.1		28.2		80.3		27.3		78.9		30.1


Operating loss	$	(6.8)	(4.9)	%	$	(1.6)	(1.2)	%	$	(5.5)	(1.9)	%	$	(7.3)	(2.8)	%


Adjusted Operating Loss — EMEA	Three Months Ended								Six Months Ended
	August 26, 2022				August 27, 2021				August 26, 2022				August 27, 2021
Operating loss	$	(6.8)	(4.9)	%	$	(1.6)	(1.2)	%	$	(5.5)	(1.9)	%	$	(7.3)	(2.8)	%
Amortization of purchased intangible assets	1.1		0.8		1.0		0.8		2.3		0.8		2.0		0.8


Adjusted operating loss	$	(5.7)	(4.1)	%	$	(0.6)	(0.4)	%	$	(3.2)	(1.1)	%	$	(5.3)	(2.0)	%

Operating results in EMEA decreased by $5.2 in Q2 2023 compared to the prior year. The decline was driven by higher cost of sales as a percentage of revenue ~~partially offset by~~as a result of higher revenue and $11.4 of restructuring costs related to workforce reductions in the prior year. Excluding the impact of the restructuring costs in the prior year, adjusted operating income decreased by $14.1 in Q3 2022inflation compared to the prior year. ~~Operating income~~The operating results in EMEA improved by $1.8 in year-to-date ~~2022 represented a decrease of $44.1~~2023 compared to ~~year-to-date 2021.~~the prior year. The ~~decrease~~improvement was driven by higher revenue and lower operating expenses as a percentage of revenue, partially offset by higher cost of sales as a percentage of revenue.

EMEA revenue ~~and higher operating expenses, partially offset~~represented 16.0% of consolidated revenue in Q2 2023. In Q2 2023, revenue decreased by higher revenue and $27.0 of restructuring costs in the prior year. Excluding the impact of restructuring costs in the prior year, year-to-date 2022 adjusted operating income represented a decrease of $71.1$1.1 or 1% compared to the prior year.

~~The Americas~~ Approximately $13 of higher pricing benefits were more than offset by approximately $18 of unfavorable currency translation effects, while volume remained flat. Organic revenue ~~represented 67.8% of consolidated revenue in Q3 2022. Q3 2022 revenue of $500.3 represented an increase of $83.9~~growth was $14.5 or ~~20%~~12% compared to the prior year. ~~Supply chain disruptions~~EMEA revenue represented 18.3% of consolidated revenue in ~~the Americas in the current year resulted in extended lead-times, shipment delays and adjustments to delivery schedules which we estimate caused at least $35~~year-to-date 2023. In year-to-date 2023, revenue of ~~revenue to shift from Q3 2022 into Q4 2022 compared to at least $40~~$294.2 represented an increase of revenue which we estimate shifted from Q2 2022 to Q3 2022 for similar reasons. Revenue in the prior year was negatively impacted by a delay of approximately $50 of shipments to Q4 2021 as a result of the temporary operations shutdown in Q3 2021. After adjusting for a $12.2 impact from acquisitions and $0.7 of currency translation effects, the organic revenue growth was $71.0$31.7 or ~~17%~~12% compared to the prior ~~year. Year-to-date 2022 revenue~~year, driven by growth across most markets. Approximately $30 of ~~$1,399.9 represented an~~the increase was related to higher volume, and approximately $25 was related to higher pricing benefits, partially offset by approximately $30 of ~~$18.4 or 1% compared to year-to-date 2021. After adjusting for a $38.1 impact from acquisitions and $4.9 of~~unfavorable currency translation ~~effects, the organic~~effects. Organic revenue ~~decline~~growth year-to-date 2023 was ~~$24.6~~$56.3 or 2%24% compared to the prior year.

Cost of sales as a percentage of revenue increased by ~~430~~340 basis points in ~~Q3 2022~~Q2 2023 compared to the prior year. The increase was driven by approximately ~~$27~~$10 of higher inflation ~~costs, net of pricing benefits,~~ and approximately ~~$10 of~~$1 in higher ~~freight and~~ labor ~~costs and~~ inefficiencies, ~~due to supply chain disruptions,~~ partially offset by ~~the benefits of~~ higher ~~revenue.~~pricing benefits. Cost of sales as a percentage of revenue increased by ~~370~~190 basis points in year-to-date ~~2022~~2023 compared to ~~year-to-date 2021.~~the prior year. The increase was driven by approximately ~~$51~~$16 of higher inflation, ~~costs, net~~approximately $2 of ~~pricing benefits,~~unfavorable currency impacts and approximately ~~$15 of~~$2 in higher ~~freight~~overhead costs and labor ~~costs and~~ inefficiencies, ~~due to supply chain disruptions,~~ partially offset by ~~$5.6~~the benefits of ~~lower variable compensation expense.~~higher volume and approximately $25 of higher pricing benefits.

Table of Contents

Operating expenses ~~in Q3 2022~~ increased by ~~$18.1, but decreased by 40~~$0.2 in Q2 2023, or 30 basis points as a percentage of revenue, compared to the prior year. The current year included ~~approximately $13~~$1.9 of higher marketing, product development and sales expenses, ~~approximately $5~~$1.4 from an acquisition and $1.1 of higher ~~discretionary spending and employee costs in other functional areas and $2.8 from acquisitions,~~variable compensation expense, partially offset by ~~$1.6~~$4.9 of ~~lower variable compensation expense.~~favorable currency translation effects. Operating expenses increased by $1.4 in year-to-date 2022 increased by $24.9, or 150 basis points as a percentage of revenue, compared to year-to-date 2021. The prior year included approximately $30 of lower employee costs as a result of temporary hour and pay reductions and gains of $6.7 from the sale of land. The current year included approximately $22 of higher marketing and sales expenses, approximately $7 of higher discretionary spending in other functional areas and $8.8 from acquisitions, partially offset by approximately $18 of lower employee costs (due to the benefits from workforce reductions in the prior year), a $15.4 gain from the sale of land and $6.9 of lower variable compensation expense.

~~EMEA~~

The EMEA segment serves customers in Europe, the Middle East and Africa primarily under the Steelcase, Orangebox, Coalesse and Viccarbe brands, with a comprehensive portfolio of furniture, architectural and technology products.

Three Months Ended Nine Months Ended
Statement of Operations Data — EMEA November 26,
2021 November 27,
2020 November 26,
2021 November 27,
2020
Revenue $ 168.2 100.0 % $ 143.3 100.0 % $ 430.7 100.0 % $ 368.7 100.0 %
Cost of sales 118.1 70.2 107.7 75.2 309.0 71.7 276.4 75.0
Gross profit 50.1 29.8 35.6 24.8 121.7 28.3 92.3 25.0
Operating expenses 41.8 24.9 39.3 27.4 120.7 28.1 106.5 28.8
Goodwill impairment charge — — — — — — 17.6 4.8
Operating income (loss) $ 8.3 4.9 % $ (3.7) (2.6) % $ 1.0 0.2 % $ (31.8) (8.6) %

~~Table of Content~~s

Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss) — EMEA Three Months Ended Nine Months Ended
November 26,
2021 November 27,
2020 November 26,
2021 November 27,
2020
Operating income (loss) $ 8.3 4.9 % $ (3.7) (2.6) % $ 1.0 0.2 % $ (31.8) (8.6) %
Add: Goodwill impairment charge — — — — — — 17.6 4.8
Adjusted operating income (loss) $ 8.3 4.9 % $ (3.7) (2.6) % $ 1.0 0.2 % $ (14.2) (3.8) %

EMEA operating income improved by $12.0 in Q3 2022 compared to the prior year. The increase was driven by higher revenue, lower cost of sales as a percentage of revenue and lower operating expenses as a percentage of revenue. Operating income in EMEA in year-to-date 2022 improved by $32.8 compared to year-to-date 2021, which included a $17.6 goodwill impairment charge related to our Orangebox U.K. reporting unit. Adjusted for the goodwill impairment charge, operating income improved by $15.2, driven by the same factors as the quarter.

EMEA revenue represented 22.8% of consolidated revenue in Q3 2022. Q3 2022 revenue of $168.2 represented an increase of $24.9 or 17% compared to the prior year. Revenue in the prior year was negatively impacted by a delay of approximately $10 of shipments to Q4 2021 as a result of the temporary operations shutdown in Q3 2021. The increase in Q3 2022 was broad-based across most markets, driven by growth in the United Kingdom, including Orangebox, and in Iberia. After adjusting for $0.8 of currency translation effects and a $0.7 impact from an acquisition, the organic revenue growth was $25.0 or 17% compared to the prior year. Year-to-date 2022 revenue increased by $62.0 or 17% compared to year-to-date 2021. The increase was broad-based across most markets, driven by the same factors as the quarter. The increase was also impacted by a delay of approximately $10 of shipments in the prior year to Q4 2021. After adjusting for $15.6 of currency translation effects and a $0.7 impact from an acquisition, the organic revenue growth was $45.7 or 12% compared to the prior year.

Cost of sales as a percentage of revenue decreased by 490 basis points in Q3 2022 compared to the prior year. The improvement was driven by higher revenue, partially offset by approximately $1 of higher inflation costs, net of pricing benefits. Cost of sales as a percentage of revenue decreased by 320 basis points in year-to-date 2022 compared to year-to-date 2021. The improvement was driven by higher revenue and approximately $3 of benefits from shifts in business mix, partially offset by approximately $4 of higher inflation costs, net of pricing benefits.

~~Operating expenses in Q3 2022 increased by $2.5,~~2023, but decreased by ~~260~~280 basis points as a percentage of revenue, compared to the prior year. The current year ~~which~~ included ~~approximately $2 of lower employee costs as a result of temporary hour and pay reductions. The remaining increase was driven by approximately $1~~$4.5 of higher ~~discretionary spending~~marketing, product development and ~~$0.7~~sales expenses, $2.8 from an acquisition and $1.5 of higher variable compensation expense, partially offset by ~~$0.8~~$8.5 of lower variable compensation expense. Year-to-date 2022 operating expenses increased by $14.2, but decreased by 70 basis points as a percentage of revenue, compared to year-to-date 2021, which included approximately $8 of lower employee costs as a result of temporary hour and pay reductions. The remaining increase was driven by approximately $4 of higher marketing and sales expenses, approximately $3 of higher discretionary spending and $0.7 from an acquisition, partially offset by $1.7 of lower variable compensation expense.favorable currency translation effects.

Other

Three Months Ended Nine Months Ended
Statement of Operations Data — Other November 26,
2021 November 27,
2020 November 26,
2021 November 27,
2020
Revenue $ 69.7 100.0 % $ 57.8 100.0 % $ 189.0 100.0 % $ 168.9 100.0 %
Cost of sales 46.2 66.3 39.2 67.8 130.1 68.8 112.5 66.6
Gross profit 23.5 33.7 18.6 32.2 58.9 31.2 56.4 33.4
Operating expenses 21.5 30.8 20.8 36.0 66.4 35.2 59.1 35.0
Operating income (loss) $ 2.0 2.9 % $ (2.2) (3.8) % $ (7.5) (4.0) % $ (2.7) (1.6) %

~~Table of Content~~s


	Three Months Ended								Six Months Ended
Statement of Operations Data — Other	August 26, 2022				August 27, 2021				August 26, 2022				August 27, 2021
Revenue	$	73.9	100.0	%	$	62.6	100.0	%	$	137.4	100.0	%	$	119.3	100.0	%
Cost of sales	51.3		69.4		44.0		70.3		95.4		69.4		83.9		70.3

Gross profit	22.6		30.6		18.6		29.7		42.0		30.6		35.4		29.7
Operating expenses	23.9		32.4		22.8		36.4		46.2		33.7		44.9		37.7


Operating loss	$	(1.3)	(1.8)	%	$	(4.2)	(6.7)	%	$	(4.2)	(3.1)	%	$	(9.5)	(8.0)	%

Operating ~~income~~results in the Other category improved by ~~$4.2~~$2.9 in ~~Q3 2022~~Q2 2023 compared to the prior year. The improvement was driven by higher revenue, lower cost of sales as a percentage of revenue and lower operating expenses as a percentage of revenue. Year-to-date ~~2022~~2023 operating results ~~decreased~~improved by ~~$4.8~~$5.3 compared to ~~year-to-date 2021,~~the prior year, driven by ~~higher cost of sales~~the same factors as ~~a percentage of revenue, partially offset by higher revenue.~~the quarter.

Revenue in the Other category represented ~~9.4%~~8.5% of consolidated revenue in ~~Q3 2022. Q3 2022~~Q2 2023. In Q2 2023, revenue increased by $11.3 or 18% compared to the prior year, driven by India, Southeast Asia, Designtex and Japan, partially offset by China and Australia. Approximately $7 of ~~$69.7 represented an~~the increase ~~of $11.9~~was related to higher volume, and approximately $4 was related to higher pricing benefits. Organic revenue growth was $12.8 or 21% compared to the prior ~~year. The increase was primarily~~year, driven by ~~China, Designtex and Japan, partially offset by India, Southeast Asia and Australia. After adjusting for $0.4~~the same factors as the quarter. Year-to-date 2023 revenue of ~~currency translation effects, the organic revenue growth was $11.5~~$137.4 represented an increase of $18.1 or ~~20%~~15% compared to the prior year. ~~Year-to-date 2022 revenue~~Approximately $12 of ~~$189.0 represented an increase of $20.1 or 12% compared to year-to-date 2021. The~~the increase was ~~primarily driven by China, Designtex, Japan~~related to higher volume, and ~~Australia, partially offset by India and Southeast Asia. After adjusting for $3.6 of currency translation effects, the organic~~approximately $6 was related to higher pricing benefits. Organic revenue growth was ~~$16.5~~$20.2 or ~~10%~~17% compared to the prior year.

Cost of sales as a percentage of revenue decreased by ~~150~~90 basis points in ~~Q3 2022~~Q2 2023 compared to the prior year. The improvement was driven by the benefits of higher ~~revenue~~volume and approximately $1$2 of higher pricing benefits, ~~from shifts in business mix,~~net of inflation, partially offset by ~~$0.7 of higher inflation costs, net of pricing benefits, and $0.5 of higher freight costs and inefficiencies due~~a $1.7 charge related to ~~supply chain disruptions.~~aged inventory. Cost of sales as a percentage of revenue ~~increased~~decreased by ~~220~~90 basis points in year-to-date ~~2022~~2023 compared to the prior ~~year. The increase was~~year, driven by approximately $2 of higher inflation costs, net of pricing benefits, and $1.5 of higher freight costs and inefficiencies due to supply chain disruptions, partially offset by approximately $1 of benefits from shifts in business mix.the same factors as the quarter.

Operating expenses ~~in Q3 2022~~ increased by ~~$0.7,~~$1.1 in Q2 2023, but decreased by ~~520~~400 basis points as a percentage of revenue, compared to the prior ~~year,~~year. The increase was driven by $1.0 of higher ~~discretionary spending.~~marketing, product development and sales expenses. Operating expenses increased by $1.3 in year-to-date ~~2022 increased~~2023, but decreased by ~~$7.3, or 20~~400 basis points as a percentage of revenue, compared to ~~year-to-date 2021, which included approximately $6 of lower employee costs as a result of temporary pay reductions.~~the prior year. The ~~remaining~~ increase was driven by the same ~~factor~~factors as the quarter.

Corporate

Corporate expenses include unallocated portions of shared service functions such as information technology, corporate facilities, finance, human resources, research, legal and customer aviation, plus deferred compensation expense and income or losses associated with COLI.

Three Months Ended Six Months Ended
Statement of Operations Data — Corporate November 26,
2021 November 27,
2020 November 26,
2021 November 27,
2020
Operating expenses $ 5.5 $ 7.9 $ 16.3 $ 14.1

Table of Contents


	Three Months Ended				Six Months Ended
Statement of Operations Data — Corporate	August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021
Operating expenses	$	6.5	$	5.0	$	16.3	$	10.8

Operating expenses increased by $1.5 in Q2 2023 compared to the prior year. The ~~decrease~~increase was driven by $3.0 of lower COLI income, partially offset by $1.9 of lower deferred compensation expense. Operating expenses increased by $5.5 in ~~operating expenses in Q3 2022~~year-to-date 2023 compared to the prior year, ~~was~~ driven by ~~$3.5 of lower deferred compensation expense, partially offset by $1.2 of lower COLI income. The increase in operating expenses in year-to-date 2022 was primarily driven by $3.5~~$7.8 of lower COLI income and $3.4 of higher ~~employee costs as a result of temporary hour and pay reductions in the prior year,~~spending, partially offset by ~~$2.3~~$5.9 of lower deferred compensation expense.

Non-GAAP Financial Measures

The non-GAAP financial measures used in this MD&A are: (1) organic revenue growth, (2) adjusted operating income (loss) and (3) adjusted earnings per share.

Organic Revenue Growth

We define organic revenue growth as revenue growth excluding the impact of acquisitions and divestitures and foreign currency translation effects.Organic revenue growth is calculated by adjusting prior year revenue to include revenues of acquired companies prior to the date of the company's acquisition, to exclude revenues of divested companies and to use current year average exchange rates in the calculation of foreign-denominated revenue. We believe organic revenue growth is a meaningful metric to investors as it provides a more consistent comparison of our revenue to prior periods as well as to industry peers.

Adjusted Operating Income (Loss) and Adjusted Earnings Per Share

We define adjusted operating income (loss) as operating income (loss) excluding amortization of purchased intangible assets and restructuring costs. We define adjusted earnings per share as earnings (loss) per share excluding amortization of purchased intangible assets and restructuring costs, net of related income tax effects.

•Amortization of purchased intangible assets: We may record intangible assets (such as backlog, dealer relationships, trademarks, know-how and designs and proprietary technology) when we acquire companies. We allocate the fair value of purchase consideration to net tangible and intangible assets acquired based on their estimated fair values. The fair value estimates for these intangible assets require management to make significant estimates and assumptions, which include the useful lives of intangible assets. We believe that adjusting for amortization of purchased intangible assets provides a more consistent comparison of our operating performance to prior periods as well as to industry peers. As our business strategy in recent years has included an increased number of acquisitions, intangible asset amortization has become more significant.

•Restructuring costs: Restructuring costs may be recorded as our business strategies change or in response to changing market trends and economic conditions. We believe that adjusting for restructuring costs, which are primarily associated with business exit and workforce reduction costs, provides a more consistent comparison of our operating performance to prior periods as well as to industry peers.

Table of Contents

Liquidity and Capital Resources

Cash and cash equivalents are used to fund day-to-day operations, including seasonal disbursements, particularly the annual payment of accrued variable compensation and retirement plan contributions in Q1 of each fiscal year. During normal business conditions, we target a range of $75 to $175 in cash and cash equivalents to fund operating requirements. In addition, we may carry additional liquidity for potential investments in strategic initiatives and as a cushion against economic volatility, and from time to time, we may allow our cash and cash equivalents to temporarily fall below our targeted range to fund acquisitions and other growth initiatives.

Liquidity Sources November 26,
2021 February 26,
2021
Cash and cash equivalents $ 275.2 $ 489.8
Company-owned life insurance 170.0 169.5
Availability under credit facilities 270.6 265.9
Total liquidity sources available $ 715.8 $ 925.2

~~Table of Content~~s


Liquidity Sources	August 26, 2022		February 25, 2022
Cash and cash equivalents	$	52.2	$	200.9

Company-owned life insurance	161.7		168.0
Availability under credit facilities	136.4		262.0
Total liquidity sources available	$	350.3	$	630.9

As of ~~November~~August 26, ~~2021,~~2022, we held a total of ~~$275.2~~$52.2 in cash and cash equivalents. Of that total, ~~79%~~32% was located in the U.S., and ~~the remaining 21%~~68% was located outside of the U.S., primarily in China (including Hong Kong), Mexico, ~~Singapore,~~ Malaysia, ~~India~~Canada and ~~Spain.~~the United Kingdom.

COLI investments are recorded at their net cash surrender value. Our investments in COLI policies are intended to be utilized as a long-term funding source for long-term benefit obligations. However, COLI can also be used as a source of liquidity. We believe the financial strength of the issuing insurance companies associated with our COLI policies is sufficient to meet their obligations.

Availability under credit facilities may be reduced related to compliance with applicable covenants. See Liquidity Facilities for more information.

The following table summarizes our Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~November~~August 26, ~~2021~~2022 and ~~November~~August 27, ~~2020:~~2021:


		Nine Months Ended					Six Months Ended
Cash Flow Data	Cash Flow Data	November 26, 2021		November 27, 2020		Cash Flow Data	August 26, 2022		August 27, 2021
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	(59.1)	$	37.2	Operating activities	$	(74.4)	$	(61.6)
Investing activities	Investing activities	(51.3)		(17.8)		Investing activities	(115.3)		(6.5)
Financing activities	Financing activities	(101.5)		(76.6)		Financing activities	43.3		(59.9)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(1.6)		1.8		Effect of exchange rate changes on cash and cash equivalents	(2.0)		(0.6)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(213.5)		(55.4)		Net decrease in cash, cash equivalents and restricted cash	(148.4)		(128.6)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	495.6		547.1		Cash, cash equivalents and restricted cash, beginning of period	207.0		495.6
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	282.1	$	491.7	Cash, cash equivalents and restricted cash, end of period	$	58.6	$	367.0

Table of Contents

Cash ~~provided by (used in)~~used in operating activities


		Nine Months Ended					Six Months Ended
Cash Flow Data — Operating Activities	Cash Flow Data — Operating Activities	November 26, 2021		November 27, 2020		Cash Flow Data — Operating Activities	August 26, 2022		August 27, 2021
Net income		$	6.2	$	19.5
Net income (loss)						Net income (loss)	$	8.2	$	(3.4)
Depreciation and amortization	Depreciation and amortization	62.2		64.1		Depreciation and amortization	43.7		41.2
Goodwill impairment charge		—		17.6
Share-based compensation						Share-based compensation	15.6		15.2
Restructuring costs	Restructuring costs	—		27.0		Restructuring costs	4.7		—
Changes in accounts receivable, inventories and accounts payable	Changes in accounts receivable, inventories and accounts payable	(84.5)		41.8		Changes in accounts receivable, inventories and accounts payable	(117.5)		(45.3)
Income taxes receivable						Income taxes receivable	22.2		(2.2)
Employee compensation liabilities	Employee compensation liabilities	(15.3)		(130.5)		Employee compensation liabilities	1.3		(30.7)
Employee benefit obligations	Employee benefit obligations	(13.5)		(25.2)		Employee benefit obligations	(18.6)		(14.9)
Changes in other operating assets and liabilities	Changes in other operating assets and liabilities	(14.2)		22.9		Changes in other operating assets and liabilities	(34.0)		(21.5)
Net cash provided by (used in) operating activities		$	(59.1)	$	37.2
Net cash used in operating activities						Net cash used in operating activities	$	(74.4)	$	(61.6)

Annual payments related to accrued variable compensation and retirement plan contributions totaled $32.4 in year-to-date 2023 compared to $50.4 in the prior year. The remaining change in employee compensation liabilities was driven by higher variable compensation expense in year-to-date ~~2022~~2023 compared to ~~$148.0 in year-to-date 2021.~~the prior year. In year-to-date ~~2022,~~2023, we used cash in working capital, ~~primarily~~ driven by increased inventory levels ~~in connection with~~to mitigate the impact of supply chain disruptions and increased accounts receivable due to revenue growth. In year-to-date 2023, we received $29.7 related to the carryback of our fiscal year 2021 tax loss in the U.S.

Cash used in investing activities

Nine Months Ended
Cash Flow Data — Investing Activities November 26,
2021 November 27,
2020
Capital expenditures $ (45.3) $ (32.1)
Proceeds from disposal of fixed assets 17.4 7.3
Acquisition, net of cash acquired (32.6) —
Other 9.2 7.0
Net cash used in investing activities $ (51.3) $ (17.8)

~~Table of Content~~s


	Six Months Ended
Cash Flow Data — Investing Activities	August 26, 2022		August 27, 2021
Capital expenditures	$	(28.9)	$	(31.8)
Proceeds from disposal of fixed assets	5.6		16.8
Acquisitions, net of cash acquired	(105.4)		—
Other	13.4		8.5
Net cash used in investing activities	$	(115.3)	$	(6.5)

Capital expenditures in year-to-date ~~2022~~2023 were primarily related to investments in manufacturing operations, ~~information technology,~~ product development, customer-facing facilities and ~~customer-facing facilities. Capital expenditures were higher compared to~~information technology. In year-to-date ~~2021 due to reduced spending in the prior year as a result of the COVID-19 pandemic. We sold land for proceeds of $17.2 in~~2023 and year-to-date 2022, proceeds from the disposal of fixed assets included $5.6 and ~~$7.1 in year-to-date 2021.~~$16.6, respectively, related to the sale of land. Other investing activities in year-to-date ~~2022~~2023 included ~~$7.0~~$7.5 of proceeds from the sale of an investment in an unconsolidated affiliate and $5.1 of proceeds from COLI policy maturities. Other investing activities in ~~year-to-date 2021~~the prior year included ~~$3.3~~$6.4 of ~~additional~~ proceeds from ~~the partial sale of an investment in an unconsolidated affiliate in 2018.~~COLI policy maturities.

Cash ~~used in~~provided by (used in) financing activities


		Nine Months Ended					Six Months Ended
Cash Flow Data — Financing Activities	Cash Flow Data — Financing Activities	November 26, 2021		November 27, 2020		Cash Flow Data — Financing Activities	August 26, 2022		August 27, 2021
Dividends paid	Dividends paid	$	(45.9)	$	(31.8)	Dividends paid	$	(34.0)	$	(29.2)
Common stock repurchases	Common stock repurchases	(54.0)		(42.7)		Common stock repurchases	(3.4)		(30.9)
Borrowings on lines of credit		—		250.0
Repayments on lines of credit		—		(250.0)
Borrowings on global committed bank facility						Borrowings on global committed bank facility	266.8		—
Repayments on global committed bank facility						Repayments on global committed bank facility	(187.0)		—
Other	Other	(1.6)		(2.1)		Other	0.9		0.2
Net cash used in financing activities		$	(101.5)	$	(76.6)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	$	43.3	$	(59.9)

We paid dividends of $0.145 per common share in Q1 2023 and Q2 2023, and $0.10 ~~$0.145~~ and $0.145 per common share in Q1 2022 and Q2 2022, ~~and Q3 2022, respectively, and $0.07, $0.10 and $0.10 per common share in~~ respectively.

~~Q1 2021, Q2 2021 and Q3 2021, respectively.~~Table of Contents

In year-to-date ~~2022,~~2023, we repurchased ~~3,991,083~~279,301 shares of Class A common stock, ~~392,812~~all of which were ~~made~~repurchased to satisfy participants' tax withholding obligations upon the issuance of shares under equity awards, pursuant to the terms of our Incentive Compensation Plan. In year-to-date ~~2021,~~2022, we repurchased ~~3,288,795~~2,227,000 shares of Class A common stock, ~~288,795~~359,527 of which were ~~made~~repurchased to satisfy participants' tax withholding obligations upon the issuance of shares under equity awards, pursuant to the terms of our Incentive Compensation Plan.

As of ~~November~~August 26, ~~2021,~~2022, we had ~~$7.6~~$6.4 of remaining availability under the $150 share repurchase program approved by our Board of Directors in 2016.

~~Off-Balance Sheet Arrangements~~

~~During Q3 2022, no material change in our off-balance sheet arrangements occurred.~~

~~Contractual Obligations~~

~~During~~ ~~Q3 2022, no material change in our contractual obligations occurred.~~

Liquidity Facilities

~~Our~~The following table summarizes available capacity under our total liquidity facilities as of ~~November~~August 26, ~~2021 were:~~2022:


Liquidity Facilities	~~November~~August 26, ~~2021~~2022
Global committed bank facility	$	~~250.0~~203.2
Other committed bank facility	~~4.7~~5.9
Various uncommitted ~~lines~~facilities	~~19.2~~11.0
Total credit lines available	~~273.9~~220.1
Less: Borrowings outstanding	~~(1.7)~~(83.7)
~~Less: Other guarantees~~	~~(1.6)~~
Available capacity	$	~~270.6~~136.4

We have a $250.0 global committed bank facility in effect through 2025. As of ~~November~~August 26, ~~2021,~~2022, total availability under the facility was limited to $203.2 as a result of covenant constraints, there were no$79.8 borrowings outstanding under the facility, and we were in compliance with all covenants under the facility.

We have ~~a $12.5~~an $8.0 committed bank facility related to a ~~subsidiary, which has current~~subsidiary. As of August 26, 2022, total availability ~~of $4.7~~under the facility was limited to $5.9 based on eligible accounts receivable of the ~~subsidiary. As of November 26, 2021, $1.7~~subsidiary, and $3.3 was outstanding under the facility.

~~Table~~We have unsecured uncommitted short-term credit facilities available for working capital purposes with various financial institutions with a total U.S. dollar borrowing capacity of ~~Content~~s

~~The various uncommitted lines~~up to $3.7 and a total foreign currency borrowing capacity of up to $7.3 as of August 26, 2022. These credit facilities have no stated expiration date but may be changed or canceled by the ~~applicable lenders~~banks at any time. ~~There were no borrowings outstanding, and there were $1.6 of guarantees which reduced our availability, under the various uncommitted lines as of November 26, 2021.~~

In addition to the available capacity reflected in the table above, we have credit agreements totaling $33.9 which can be utilized to support bank guarantees, letters of credit or foreign exchange contracts. As of ~~November~~August 26, ~~2021, we had $12.7 in~~2022, $0.6 was outstanding ~~letters of credit and bank guarantees against~~under these ~~agreements. There were no draws against our letters of credit during year-to-date 2022 or year-to-date 2021.~~facilities.

Total consolidated debt as of ~~November~~August 26, ~~2021~~2022 was ~~$482.9. Our debt primarily consists of $444.6~~$563.5. In addition to borrowings under our credit facilities, we have $445.1 in term notes due in 2029 with an effective interest rate of 5.6%~~. In addition, we have~~, and a term loan with a balance of ~~$35.5~~$33.5 as of ~~November~~August 26, ~~2021. The term loan~~2022, which has a floating interest rate based on 30-day LIBOR plus 1.20% and is due in Q1 2024. The term notes are unsecured, and the term loan is secured by our two corporate aircraft. The term notes and the term loan ~~do not~~ contain no financial covenants and are not cross-defaulted to our other debt facilities.

Liquidity Outlook

As of ~~November~~August 26, ~~2021,~~2022, our total liquidity, which is comprised of cash and cash equivalents and the cash surrender value of COLI, aggregated to ~~$445.2.~~$213.9. Our liquidity position, funds available under our credit facilities and cash generated from future operations are expected to be sufficient to finance our known or foreseeable liquidity ~~needs.~~needs, including our material cash requirements.

~~Our~~During Q2 2023, there have been no significant ~~funding~~changes in the items that we have identified as our material committed cash requirements ~~include operating expenses, non-cancelable operating lease obligations,~~in our Annual Report on Form 10-K for the fiscal year ended February 25, 2022.

We also have other planned material usages of cash which we consider discretionary. This includes plans for capital expenditures variable compensation and retirement plan contributions, dividend payments and debt service obligations. We have flexibility over some of these uses of cash, including capital expenditures and discretionary operating expenses, to preserve our liquidity position. We expect capital expenditureswhich are expected to total approximately $50 to $60 ~~to $70~~ in ~~2022~~2023 compared to ~~$41.3~~$60.5 in ~~2021.~~

2022. In addition, we fund dividend payments declared by our Board of Directors. On ~~December 16, 2021,~~September 21, 2022, we announced a quarterly dividend on our common stock of ~~$0.145~~$0.10 per share, or approximately ~~$16,~~$11, to be paid in ~~Q4 2022. Future dividends~~Q3 2023.

On September 21, 2022, we announced plans to eliminate up to 180 salaried positions in the Americas segment and Corporate functions, which we estimate will result in approximately $8 of cash severance and other separation-related benefit payments in Q3 2023.

Our material cash requirements are subject to fluctuation based on business requirements, economic volatility or investments in strategic initiatives. We anticipate the cash expected to be generated from future operations and current cash and cash equivalents, funds available under our credit facilities and funds available from COLI will be ~~subject~~sufficient to ~~approval by~~fulfill our ~~Board~~ existing material cash requirements.

Table of ~~Directors.~~Contents

Critical Accounting Estimates

During ~~Q3 2022,~~Q2 2023, there have been no changes in the items that we have identified as critical accounting ~~estimates.~~estimates in our Annual Report on Form 10-K for the fiscal year ended February 25, 2022.

Recently Issued Accounting Standards

See Note 2 to the condensed consolidated financial statements.

Forward-looking Statements

From time to time, in written and oral statements, we discuss our expectations regarding future events and our plans and objectives for future operations. These forward-looking statements discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to us, based on current beliefs of management as well as assumptions made by, and information currently available to, us. Forward-looking statements generally are accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “possible,” “potential,” “predict,” “project," "target” or other similar words, phrases or expressions. Although we believe these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements and vary from our expectations because of factors such as, but not limited to, competitive and general economic conditions domestically and internationally; acts of terrorism, war, governmental action, natural disasters, pandemics and other Force Majeure events; cyberattacks; the COVID-19 pandemic and the actions taken by various governments and third parties to combat the pandemic; changes in the legal and regulatory environment; changes in raw material, commodity and other input costs; currency fluctuations; changes in customer demand; and the other risks and contingencies detailed in this Report, our most recent Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. We undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Item 3.Quantitative and Qualitative Disclosures About Market Risk:

The nature of market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) faced by us as of ~~November~~August 26, ~~2021~~2022 is the same as disclosed in our Annual Report on Form 10-K for the fiscal

~~Table of Contents~~

year ended February ~~26, 2021.~~25, 2022. We are exposed to market risks from foreign currency exchange, interest rates, commodity prices and fixed income and equity prices, which could affect our operating results, financial position and cash flows.

Foreign Exchange Risk

During ~~Q3 2022,~~Q2 2023, no material change in foreign exchange risk occurred.

Interest Rate Risk

During ~~Q3 2022,~~Q2 2023, no material change in interest rate risk occurred.

Commodity Price Risk

During ~~Q3 2022,~~Q2 2023, no material change in commodity price risk occurred.

Fixed Income and Equity Price Risk

During ~~Q3 2022,~~Q2 2023, no material change in fixed income and equity price risk occurred.

Table of Contents

Item 4.Controls and Procedures:

(a) Disclosure Controls and Procedures. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of ~~November~~August 26, ~~2021.~~2022. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of ~~November~~August 26, ~~2021,~~2022, our disclosure controls and procedures were effective in (1) recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and (2) ensuring that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our ~~third~~second fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1A. Risk Factors:

For a more detailed explanation of the risks affecting our business, please refer to the Risk Factors section in our Annual Report on Form 10-K for the fiscal year ended February ~~26, 2021.~~25, 2022. There have not been any material changes to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended February ~~26, 2021.~~

~~Table of Contents~~

25, 2022.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds:

Issuer Purchases of Equity Securities

The following is a summary of share repurchase activity during ~~Q3 2022:~~Q2 2023:

Period (a)
Total Number of
Shares Purchased (b)
Average Price
Paid per Share (c)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (1) (d)
Approximate Dollar
Value of Shares
that May Yet be
Purchased
Under the Plans
or Programs (1)
(in millions)
8/28/2021 - 10/1/2021 1,193,884 $ 13.13 1,193,884 $ 14.2
10/2/2021 - 10/29/2021 511,769 $ 12.41 478,484 $ 8.3
10/30/201 - 11/26/2021 58,430 $ 11.93 58,430 $ 7.6
Total 1,764,083 (2) 1,730,798


Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1) (in millions)
5/28/2022 - 7/1/2022	198	$	11.92	—	$	6.4
7/2/2022 - 7/29/2022	—	$	—	—	$	6.4
7/30/22 - 8/26/2022	—	$	—	—	$	6.4
Total	198	(2)		—

(1)In January 2016, the Board of Directors approved a share repurchase program, announced on January 19, 2016, permitting the repurchase of up to $150 of shares of our common stock. On June 28, 2021, we entered into a stock repurchase agreement with an independent third party broker under which the broker is authorized to repurchase up to $50 of shares of our common stock on our behalf during the period June 28, 2021 through December 20, 2021, subject to certain price, market and volume constraints specified in the agreement. The agreement was established in accordance with Rule 10b5-1 under the Exchange Act. Shares purchased under the agreement are part of our share repurchase program approved in January 2016.

(2)~~33,285~~All shares were repurchased to satisfy participants’ tax withholding obligations upon the issuance of shares under equity awards, pursuant to the terms of our Incentive Compensation Plan.

2935

Table of Contents

Item 6.Exhibits:


Exhibit No.			Description

10.1*			~~Letter agreement between Steelcase Inc. and Allan W. Smith, Jr.,~~ ~~dated September 22, 2021~~ ~~(1)~~
10.2*			~~Steelcase Inc. Incentive Compensation Plan Form of Restricted Stock Units Agreement (FY 2022) revised~~ ~~December~~ ~~2021~~
31.1			Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1			Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL ~~document.~~document
101.SCH			Inline XBRL Schema Document
101.CAL			Inline XBRL Calculation Linkbase Document
101.LAB			Inline XBRL Labels Linkbase Document
101.PRE			Inline XBRL Presentation Linkbase Document
101.DEF			Inline XBRL Definition Linkbase Document
104			Cover Page Interactive Data File (embedded within the Inline XBRL document)

________________

* Management contract or compensatory plan or arrangement.

(1) Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on September 24, 2021 (commission file number 001-13873), and incorporated herein by reference.

3036

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


STEELCASE INC.


By:			/s/ ~~Robin L. Zondervan~~David C. Sylvester
			~~Robin L. Zondervan~~David C. Sylvester Senior Vice President, ~~Corporate Controller &~~ Chief ~~Accounting~~Financial Officer (Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer)

Date: ~~December 20, 2021~~September 23, 2022

3137


Computation of Earnings Per Share	Three Months Ended November 26, 2021						Three Months Ended November 27, 2020
	Net Income		Basic Shares (in millions)		Diluted Shares (in millions)		Net Income		Basic Shares (in millions)		Diluted Shares (in millions)
Amounts used in calculating earnings per share	$	9.6	116.0		116.3		$	2.1	117.7		118.0
Impact of participating securities	(0.3)		(3.2)		(3.2)		—		(2.9)		(2.9)
Amounts used in calculating earnings per share, excluding participating securities	$	9.3	112.8		113.1		$	2.1	114.8		115.1

Earnings per share			$	0.08	$	0.08			$	0.02	$	0.02


Computation of Earnings Per Share	Nine Months Ended November 26, 2021						Nine Months Ended November 27, 2020
	Net Income		Basic Shares (in millions)		Diluted Shares (in millions)		Net Income		Basic Shares (in millions)		Diluted Shares (in millions)
Amounts used in calculating earnings per share	$	6.2	117.4		117.8		$	19.5	117.4		117.7
Impact of participating securities	(0.2)		(3.0)		(3.0)		(0.4)		(2.5)		(2.5)
Amounts used in calculating earnings per share, excluding participating securities	$	6.0	114.4		114.8		$	19.1	114.9		115.2

Earnings per share			$	0.05	$	0.05			$	0.17	$	0.17


Q3 2022 Organic Revenue Growth	Americas			EMEA			Other			Consolidated
Q3 2021 revenue	$	416.4		$	143.3		$	57.8		$	617.5
Acquisitions	12.2			0.7			—			12.9

Currency translation effects*	0.7			(0.8)			0.4			0.3
Q3 2021 revenue, adjusted	429.3			143.2			58.2			630.7
Q3 2022 revenue	500.3			168.2			69.7			738.2


Organic growth $	$	71.0		$	25.0		$	11.5		$	107.5
Organic growth %	17		%	17		%	20		%	17		%

* Currency translation effects represent the estimated net effect of translating Q3 2021 foreign currency revenues using the average exchange rates during Q3 2022.