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 ~~August~~May 26, ~~2022~~2023


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 ~~September~~June 20, ~~2022,~~2023, Steelcase Inc. had ~~92,308,638~~93,588,645 shares of Class A Common Stock and ~~20,475,134~~20,414,413 shares of Class B Common Stock outstanding.

Table of Contents


STEELCASE INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~August~~May 26, ~~2022~~2023 INDEX


		Page No.

PART I	Financial Information	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~August~~May 26, ~~2022~~2023 and ~~August~~May 27, ~~2021~~2022	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and Six~~ Months Ended ~~August 2~~6 ,May 26, 2023 and May 27, 2022 ~~and August 27, 2021~~	2
	Condensed Consolidated Balance Sheets as of ~~August 2~~6 ~~, 2022~~May 26, 2023 and February ~~25, 2022~~24, 2023	3
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three ~~and Six~~ Months Ended ~~August 2~~6 ,May 26, 2023 and May 27, 2022 ~~and August 27, 2021~~	4
	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~August 2~~6 ,May 26, 2023 and May 27, 2022 ~~and 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	2218
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3326
Item 4.	Controls and Procedures	3427

PART II	Other Information	3528
Item 1A.	Risk Factors	3528
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3528
Item 6.	Exhibits	3629
Signatures		3730

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements:

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in millions, except per share data)


		Three Months Ended				Six Months Ended					Three Months Ended
		August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021			May 26, 2023		May 27, 2022
Revenue	Revenue	$	863.3	$	724.8	$	1,604.0	$	1,281.4	Revenue	$	751.9	$	740.7
Cost of sales	Cost of sales	612.5		518.0		1,160.7		919.9		Cost of sales	515.9		548.2
Restructuring costs	Restructuring costs	—		—		0.9		—		Restructuring costs	1.4		0.9
Gross profit	Gross profit	250.8		206.8		442.4		361.5		Gross profit	234.6		191.6
Operating expenses	Operating expenses	221.4		172.9		422.3		359.4		Operating expenses	220.6		200.9
Restructuring costs	Restructuring costs	0.5		—		3.8		—		Restructuring costs	6.7		3.3
Operating income		28.9		33.9		16.3		2.1
Operating income (loss)										Operating income (loss)	7.3		(12.6)
Interest expense	Interest expense	(7.2)		(6.4)		(13.6)		(12.8)		Interest expense	(6.6)		(6.4)
Investment income	Investment income	0.3		0.1		0.4		0.3		Investment income	0.5		0.1
Other income, net	Other income, net	4.4		1.8		7.5		1.0		Other income, net	1.7		3.1
Income (loss) before income tax expense (benefit)	Income (loss) before income tax expense (benefit)	26.4		29.4		10.6		(9.4)		Income (loss) before income tax expense (benefit)	2.9		(15.8)
Income tax expense (benefit)	Income tax expense (benefit)	6.8		4.7		2.4		(6.0)		Income tax expense (benefit)	1.4		(4.4)
Net income (loss)	Net income (loss)	$	19.6	$	24.7	$	8.2	$	(3.4)	Net income (loss)	$	1.5	$	(11.4)
Earnings (loss) per share:	Earnings (loss) per share:									Earnings (loss) per share:
Basic	Basic	$	0.17	$	0.21	$	0.07	$	(0.03)	Basic	$	0.01	$	(0.10)
Diluted	Diluted	$	0.17	$	0.21	$	0.07	$	(0.03)	Diluted	$	0.01	$	(0.10)
Dividends declared and paid per common share	Dividends declared and paid per common share	$	0.145	$	0.145	$	0.290	$	0.245	Dividends declared and paid per common share	$	0.100	$	0.145

See accompanying notes to the condensed consolidated financial statements.

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STEELCASE INC.

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

(in millions)


		Three Months Ended				Six Months Ended					Three Months Ended
		August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021			May 26, 2023		May 27, 2022
Net income (loss)	Net income (loss)	$	19.6	$	24.7	$	8.2	$	(3.4)	Net income (loss)	$	1.5	$	(11.4)
Other comprehensive income (loss), net:	Other comprehensive income (loss), net:									Other comprehensive income (loss), net:
Unrealized gain on investment		0.3		—		—		0.2
Unrealized loss on investment										Unrealized loss on investment	—		(0.3)
Pension and other post-retirement liability adjustments	Pension and other post-retirement liability adjustments	—		0.4		0.2		0.3		Pension and other post-retirement liability adjustments	(0.6)		0.2
Derivative amortization	Derivative amortization	0.2		0.2		0.5		0.4		Derivative amortization	0.2		0.3
Foreign currency translation adjustments	Foreign currency translation adjustments	(21.3)		(12.7)		(39.9)		(11.8)		Foreign currency translation adjustments	3.2		(18.6)
Total other comprehensive income (loss), net	Total other comprehensive income (loss), net	(20.8)		(12.1)		(39.2)		(10.9)		Total other comprehensive income (loss), net	2.8		(18.4)
Comprehensive income (loss)	Comprehensive income (loss)	$	(1.2)	$	12.6	$	(31.0)	$	(14.3)	Comprehensive income (loss)	$	4.3	$	(29.8)

See accompanying notes to the condensed consolidated financial statements.

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STEELCASE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)


		(Unaudited)					(Unaudited)
		August 26, 2022		February 25, 2022			May 26, 2023		February 24, 2023
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	52.2	$	200.9	Cash and cash equivalents	$	40.2	$	90.4

Accounts receivable, net of allowance of $8.6 and $8.0		413.3		340.4
Accounts receivable, net of allowance of $6.8 and $6.5						Accounts receivable, net of allowance of $6.8 and $6.5	363.3		373.3
Inventories	Inventories	396.7		326.2		Inventories	307.3		319.7

Prepaid expenses	Prepaid expenses	31.2		24.0		Prepaid expenses	34.5		28.9
Income taxes receivable		19.5		41.7
Assets held for sale						Assets held for sale	29.0		29.0

Other current assets	Other current assets	40.0		26.0		Other current assets	41.6		42.7
Total current assets	Total current assets	952.9		959.2		Total current assets	815.9		884.0
Property, plant and equipment, net of accumulated depreciation of $1,085.8 and $1,089.0		404.5		392.8
Property, plant and equipment, net of accumulated depreciation of $1,100.7 and $1,088.6						Property, plant and equipment, net of accumulated depreciation of $1,100.7 and $1,088.6	373.1		376.5
Company-owned life insurance ("COLI")	Company-owned life insurance ("COLI")	161.7		168.0		Company-owned life insurance ("COLI")	159.7		157.3
Deferred income taxes	Deferred income taxes	114.6		121.2		Deferred income taxes	117.6		117.3
Goodwill	Goodwill	277.0		242.8		Goodwill	277.0		276.8
Other intangible assets, net of accumulated amortization of $93.4 and $86.4		123.0		85.5
Other intangible assets, net of accumulated amortization of $102.0 and $97.6						Other intangible assets, net of accumulated amortization of $102.0 and $97.6	107.5		111.2
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	45.8		53.1		Investments in unconsolidated affiliates	51.4		51.1
Right-of-use operating lease assets	Right-of-use operating lease assets	193.6		209.8		Right-of-use operating lease assets	193.5		198.3
Other assets	Other assets	29.5		28.6		Other assets	29.8		30.3
Total assets	Total assets	$	2,302.6	$	2,261.0	Total assets	$	2,125.5	$	2,202.8
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	274.2	$	243.6	Accounts payable	$	215.3	$	203.5
Short-term borrowings and current portion of long-term debt	Short-term borrowings and current portion of long-term debt	118.1		5.1		Short-term borrowings and current portion of long-term debt	0.8		35.7
Current operating lease obligations	Current operating lease obligations	40.7		44.2		Current operating lease obligations	46.0		44.7
Accrued expenses:	Accrued expenses:					Accrued expenses:
Employee compensation	Employee compensation	78.9		75.6		Employee compensation	79.3		120.0
Employee benefit plan obligations	Employee benefit plan obligations	22.0		25.4		Employee benefit plan obligations	20.5		31.2
Accrued promotions	Accrued promotions	27.4		32.9		Accrued promotions	25.8		26.7
Customer deposits	Customer deposits	65.3		53.4		Customer deposits	51.1		50.8

Other	Other	98.5		87.0		Other	94.8		90.7
Total current liabilities	Total current liabilities	725.1		567.2		Total current liabilities	533.6		603.3
Long-term liabilities:	Long-term liabilities:					Long-term liabilities:
Long-term debt less current maturities	Long-term debt less current maturities	445.4		477.4		Long-term debt less current maturities	445.7		445.5
Employee benefit plan obligations	Employee benefit plan obligations	111.4		126.7		Employee benefit plan obligations	95.4		103.0
Long-term operating lease obligations	Long-term operating lease obligations	168.7		182.2		Long-term operating lease obligations	163.5		169.9
Other long-term liabilities	Other long-term liabilities	52.6		55.3		Other long-term liabilities	58.2		54.9
Total long-term liabilities	Total long-term liabilities	778.1		841.6		Total long-term liabilities	762.8		773.3
Total liabilities	Total liabilities	1,503.2		1,408.8		Total liabilities	1,296.4		1,376.6
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:

Additional paid-in capital	Additional paid-in capital	13.7		1.5		Additional paid-in capital	30.1		19.4
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(89.8)		(50.6)		Accumulated other comprehensive income (loss)	(69.7)		(72.5)
Retained earnings	Retained earnings	875.5		901.3		Retained earnings	868.7		879.3
Total shareholders’ equity	Total shareholders’ equity	799.4		852.2		Total shareholders’ equity	829.1		826.2
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	2,302.6	$	2,261.0	Total liabilities and shareholders’ equity	$	2,125.5	$	2,202.8

See accompanying notes to the condensed consolidated financial statements.

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STEELCASE INC.

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

(in millions, except share and per share data)


		Three Months Ended				Six Months Ended					Three Months Ended
		August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021			May 26, 2023		May 27, 2022
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	112,740,491		115,664,399		112,109,294		114,908,676		Common shares outstanding, beginning of period	112,988,721		112,109,294
Common stock issuances	Common stock issuances	21,209		14,204		42,381		27,297		Common stock issuances	37,250		21,172
Common stock repurchases	Common stock repurchases	(198)		(1,873,804)		(279,301)		(2,227,000)		Common stock repurchases	(429,624)		(279,103)
Performance and restricted stock units issued as common stock	Performance and restricted stock units issued as common stock	500		16,559		889,628		1,112,385		Performance and restricted stock units issued as common stock	1,357,239		889,128
Common shares outstanding, end of period	Common shares outstanding, end of period	112,762,002		113,821,358		112,762,002		113,821,358		Common shares outstanding, end of period	113,953,586		112,740,491

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	$	10.3	$	21.3	$	1.5	$	12.5	Additional paid-in capital, beginning of period	$	19.4	$	1.5
Common stock issuances	Common stock issuances	0.3		0.2		0.5		0.4		Common stock issuances	0.3		0.2
Common stock repurchases	Common stock repurchases	��		(23.4)		(3.4)		(27.7)		Common stock repurchases	(3.3)		(3.4)
Performance and restricted stock units expense	Performance and restricted stock units expense	3.1		1.9		15.1		14.8		Performance and restricted stock units expense	13.7		12.0
Additional paid-in capital, end of period	Additional paid-in capital, end of period	13.7		—		13.7		—		Additional paid-in capital, end of period	30.1		10.3

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	(69.0)		(38.8)		(50.6)		(40.0)		Accumulated other comprehensive income (loss), beginning of period	(72.5)		(50.6)
Other comprehensive income (loss)	Other comprehensive income (loss)	(20.8)		(12.1)		(39.2)		(10.9)		Other comprehensive income (loss)	2.8		(18.4)

Accumulated other comprehensive income (loss), end of period	Accumulated other comprehensive income (loss), end of period	(89.8)		(50.9)		(89.8)		(50.9)		Accumulated other comprehensive income (loss), end of period	(69.7)		(69.0)

Changes in retained earnings:	Changes in retained earnings:									Changes in retained earnings:
Retained earnings, beginning of period	Retained earnings, beginning of period	872.8		947.8		901.3		988.0		Retained earnings, beginning of period	879.3		901.3
Net income (loss)	Net income (loss)	19.6		24.7		8.2		(3.4)		Net income (loss)	1.5		(11.4)
Dividends paid	Dividends paid	(16.9)		(17.1)		(34.0)		(29.2)		Dividends paid	(12.1)		(17.1)
Common stock repurchases		—		(3.2)		—		(3.2)

Retained earnings, end of period	Retained earnings, end of period	875.5		952.2		875.5		952.2		Retained earnings, end of period	868.7		872.8
Total shareholders' equity	Total shareholders' equity	$	799.4	$	901.3	$	799.4	$	901.3	Total shareholders' equity	$	829.1	$	814.1

(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.

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STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)


		Six Months Ended					Three Months Ended
		August 26, 2022		August 27, 2021			May 26, 2023		May 27, 2022
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income (loss)	Net income (loss)	$	8.2	$	(3.4)	Net income (loss)	$	1.5	$	(11.4)
Depreciation and amortization	Depreciation and amortization	43.7		41.2		Depreciation and amortization	20.4		20.2
Share-based compensation	Share-based compensation	15.6		15.2		Share-based compensation	14.0		12.2
Restructuring costs	Restructuring costs	4.7		—		Restructuring costs	8.1		4.2

Other	Other	(2.4)		(20.6)		Other	(1.3)		(4.2)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(83.6)		(58.0)		Accounts receivable	11.3		(14.5)
Inventories	Inventories	(67.4)		(42.0)		Inventories	12.1		(50.6)
Income taxes receivable	Income taxes receivable	22.2		(2.2)		Income taxes receivable	(2.4)		25.3
Other assets	Other assets	(21.2)		(18.1)		Other assets	(0.8)		(13.2)
Accounts payable	Accounts payable	33.5		54.7		Accounts payable	11.3		16.7
Employee compensation liabilities	Employee compensation liabilities	1.3		(30.7)		Employee compensation liabilities	(49.1)		(18.5)
Employee benefit obligations	Employee benefit obligations	(18.6)		(14.9)		Employee benefit obligations	(19.3)		(17.2)
Customer deposits		(10.8)		14.0

Accrued expenses and other liabilities	Accrued expenses and other liabilities	0.4		3.2		Accrued expenses and other liabilities	5.5		(4.1)
Net cash used in operating activities		(74.4)		(61.6)
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	11.3		(55.1)
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(28.9)		(31.8)		Capital expenditures	(11.7)		(13.6)
Proceeds from disposal of fixed assets		5.6		16.8
Acquisitions, net of cash acquired		(105.4)		—

Other	Other	13.4		8.5		Other	0.5		6.3
Net cash used in investing activities	Net cash used in investing activities	(115.3)		(6.5)		Net cash used in investing activities	(11.2)		(7.3)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Dividends paid	Dividends paid	(34.0)		(29.2)		Dividends paid	(12.1)		(17.1)
Common stock repurchases		(3.4)		(30.9)

Borrowings on global committed bank facility	Borrowings on global committed bank facility	266.8		—		Borrowings on global committed bank facility	67.2		—
Repayments on global committed bank facility	Repayments on global committed bank facility	(187.0)		—		Repayments on global committed bank facility	(67.2)		—
Repayments on note payable						Repayments on note payable	(32.2)		—
Other	Other	0.9		0.2		Other	(6.0)		(3.6)
Net cash provided by (used in) financing activities		43.3		(59.9)
Net cash used in financing activities						Net cash used in financing activities	(50.3)		(20.7)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(2.0)		(0.6)		Effect of exchange rate changes on cash and cash equivalents	(0.4)		(1.3)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(148.4)		(128.6)		Net decrease in cash, cash equivalents and restricted cash	(50.6)		(84.4)
Cash and cash equivalents and restricted cash, beginning of period (1)	Cash and cash equivalents and restricted cash, beginning of period (1)	207.0		495.6		Cash and cash equivalents and restricted cash, beginning of period (1)	97.2		207.0
Cash and cash equivalents and restricted cash, end of period (2)	Cash and cash equivalents and restricted cash, end of period (2)	$	58.6	$	367.0	Cash and cash equivalents and restricted cash, end of period (2)	$	46.6	$	122.6

(1)These amounts include restricted cash of ~~$6.1~~$6.8 and ~~$5.8~~$6.1 as of February ~~25, 2022~~24, 2023 and February ~~26, 2021,~~25, 2022, respectively.

(2)These amounts include restricted cash of $6.4 and ~~$6.3~~$5.9 as of ~~August~~May 26, ~~2022~~2023 and ~~August~~May 27, ~~2021,~~2022, respectively.

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

See accompanying notes to the condensed consolidated financial statements.

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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 ~~25, 2022~~24, 2023 (“Form 10-K”). The Condensed Consolidated Balance Sheet as of February ~~25, 2022~~24, 2023 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.

Adoption of New Accounting Standards

Effective Q1 2024, we adopted ASU No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50), which is intended to enhance transparency of supplier finance programs by requiring disclosure of key terms, amounts outstanding (including a rollforward of outstanding amounts) and a description of where such amounts are presented in the consolidated financial statements.

We participate in a supplier finance program in Spain offered by a third-party financial institution. The program allows participating suppliers the ability to finance our payment obligations prior to their scheduled due dates at a discounted price set by the financial institution. We have extended payment terms with suppliers that have voluntarily chosen to participate in the program. As of May 26, 2023, the outstanding amount of program obligations, reported in Accounts payable on the Condensed Consolidated Balance Sheets, was $0.8. The amount settled through the program during Q1 2024 was $2.2.

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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				Six Months Ended				Product Category Data	Three Months Ended
		August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021			May 26, 2023		May 27, 2022
Americas	Americas									Americas
Desking, benching, systems and storage	Desking, benching, systems and storage	$	303.4	$	244.3	$	563.7	$	429.4	Desking, benching, systems and storage	$	250.2	$	260.3
Seating	Seating	203.3		165.5		359.5		283.7		Seating	152.8		156.2
Other (1)	Other (1)	144.9		113.5		249.2		186.5		Other (1)	169.8		127.3
EMEA
Desking, benching, systems and storage		49.4		41.7		105.1		96.5
Seating		45.7		55.7		99.0		89.6
Other (1)		42.7		41.5		90.1		76.4
Other
International										International
Desking, benching, systems and storage	Desking, benching, systems and storage	14.1		14.5		25.8		25.3		Desking, benching, systems and storage	61.6		67.4
Seating	Seating	22.3		16.2		39.7		30.7		Seating	62.0		70.7
Other (1)	Other (1)	37.5		31.9		71.9		63.3		Other (1)	55.5		58.8
		$	863.3	$	724.8	$	1,604.0	$	1,281.4		$	751.9	$	740.7

_______________________________________

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

Reportable geographic information is as follows:

Reportable Geographic Revenue Three Months Ended Six Months Ended
August 26,
2022 August 27,
2021 August 26,
2022 August 27,
2021
United States $ 634.6 $ 493.5 $ 1,136.3 $ 852.8
Foreign locations 228.7 231.3 467.7 428.6
$ 863.3 $ 724.8 $ 1,604.0 $ 1,281.4


Reportable Geographic Revenue	Three Months Ended
	May 26, 2023		May 27, 2022
United States	$	532.7	$	501.8
Foreign locations	219.2		238.9
	$	751.9	$	740.7

Contract Balances

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

Changes in the Customer deposits balance ~~during~~for the ~~six~~three months ended ~~August~~May 26, ~~2022~~2023 are as follows:


	Customer Deposits
Balance as of February ~~25, 2022~~24, 2023	$	~~53.4~~50.8
Recognition of revenue related to beginning of year customer deposits	~~(45.8)~~(31.4)
Customer deposits received, net of revenue recognized during the period	~~33.4~~
~~Customer deposits acquired (1)~~	~~24.3~~31.7
Balance as of ~~August~~May 26, ~~2022~~2023	$	~~65.3~~51.1

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

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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 (Loss) Per Share	Computation of Earnings (Loss) Per Share	Three Months Ended August 26, 2022						Three Months Ended August 27, 2021						Computation of Earnings (Loss) Per Share	Three Months Ended May 26, 2023						Three Months Ended May 27, 2022
		Net Income (Loss)		Basic Shares (in millions)		Diluted Shares (in millions)		Net Income (Loss)		Basic Shares (in millions)		Diluted Shares (in millions)			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	Amounts used in calculating earnings (loss) per share	$	19.6	117.2		117.7		$	24.7	118.0		118.6		Amounts used in calculating earnings (loss) per share	$	1.5	117.9		118.4		$	(11.4)	116.7		116.7
Impact of participating securities	Impact of participating securities	(0.7)		(4.4)		(4.4)		(0.6)		(3.1)		(3.1)		Impact of participating securities	(0.1)		(4.1)		(4.1)		0.4		(4.0)		(4.0)
Amounts used in calculating earnings (loss) per share, excluding participating securities	Amounts used in calculating earnings (loss) per share, excluding participating securities	$	18.9	112.8		113.3		$	24.1	114.9		115.5		Amounts used in calculating earnings (loss) per share, excluding participating securities	$	1.4	113.8		114.3		$	(11.0)	112.7		112.7

Earnings (loss) per share	Earnings (loss) per share			$	0.17	$	0.17			$	0.21	$	0.21	Earnings (loss) per share			$	0.01	$	0.01			$	(0.10)	$	(0.10)

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

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)

2023. There were ~~no anti-dilutive performance units excluded from the computation of diluted earnings (loss) per share for the six months ended August 26, 2022. There were 0.5~~0.4 million anti-dilutive performance units excluded from the computation of diluted earnings (loss) per share for the ~~six~~three months ended ~~August~~May 27, ~~2021.~~2022.

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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 ~~August~~May 26, ~~2022:~~2023:

Unrealized gain on investment Pension and other post-retirement liability adjustments Derivative amortization Foreign currency translation adjustments Total
Balance as of May 27, 2022 $ — $ 5.4 $ (6.4) $ (68.0) $ (69.0)
Other comprehensive income (loss) before reclassifications 0.3 0.3 — (21.3) (20.7)
Amounts reclassified from accumulated other comprehensive income (loss) — (0.3) 0.2 — (0.1)
Net other comprehensive income (loss) during the period 0.3 — 0.2 (21.3) (20.8)
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 six months ended August 26, 2022:~~


		Unrealized gain on investment		Pension and other post-retirement liability adjustments		Derivative amortization		Foreign currency translation adjustments		Total			Unrealized gain (loss) 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)
Balance as of February 24, 2023												Balance as of February 24, 2023	$	(0.1)	$	9.3	$	(5.7)	$	(76.0)	$	(72.5)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	—		0.8		—		(39.9)		(39.1)		Other comprehensive income (loss) before reclassifications	—		(0.1)		—		3.2		3.1
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		(0.6)		0.5		—		(0.1)		Amounts reclassified from accumulated other comprehensive income (loss)	—		(0.5)		0.2		—		(0.3)
Net other comprehensive income (loss) during the period	Net other comprehensive income (loss) during the period	—		0.2		0.5		(39.9)		(39.2)		Net other comprehensive income (loss) during the period	—		(0.6)		0.2		3.2		2.8
Balance as of August 26, 2022		$	0.3	$	5.4	$	(6.2)	$	(89.3)	$	(89.8)
Balance as of May 26, 2023												Balance as of May 26, 2023	$	(0.1)	$	8.7	$	(5.5)	$	(72.8)	$	(69.7)

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~~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 six~~ months ended ~~August~~May 26, ~~2022~~2023 and ~~August~~May 27, ~~2021:~~2022:


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 Operations	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				Six Months Ended							Detail of Accumulated Other Comprehensive Income (Loss) Components	Three Months Ended								Affected Line in the Condensed Consolidated Statements of Operations
		August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021						Detail of Accumulated Other Comprehensive Income (Loss) Components	May 26, 2023			Affected Line in the Condensed Consolidated Statements of Operations

Amortization of pension and other post-retirement actuarial losses (gains)		$	(0.4)	$	—	$	(0.8)	$	(0.1)						Other income, net
Amortization of pension and other post-retirement actuarial gains																	Amortization of pension and other post-retirement actuarial gains				$		(0.6)			$	(0.4)			Other income, net

Income tax expense	Income tax expense	0.1		—		0.2		—								Income tax expense (benefit)	Income tax expense				0.1				0.1				Income tax expense (benefit)
		(0.3)		—		(0.6)		(0.1)											(0.5)				(0.3)

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

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

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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 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 and contingent consideration are measured at fair value on the Condensed Consolidated Balance Sheets.

Our total debt is carried at cost and was ~~$563.5~~$446.5 and ~~$482.5~~$481.2 as of ~~August~~May 26, ~~2022~~2023 and February ~~25, 2022,~~24, 2023, 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 ~~$538.3~~$379.9 and ~~$516.7~~$405.9 as of ~~August~~May 26, ~~2022~~2023 and February ~~25, 2022,~~24, 2023, respectively. The estimation of the fair value of our total debt is based on Level 2 fair value measurements.

We ~~periodically~~may 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.

In connection with the acquisition of Viccarbe Habitat, S.L in Q3 2022, up to an additional $13.9 (or €13.0) is payable to the sellers based upon the achievement of certain revenue and operating income targets over a three-year period ending in 2025. This amount was considered 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. At each subsequent reporting date, changes in the fair value of the liability are recorded to Operating expenses until the liability is settled.

Assets and liabilities measured at fair value within our Condensed Consolidated Balance Sheets as of ~~August~~May 26, ~~2022~~2023 and February ~~25, 2022~~24, 2023 are summarized below:

August 26, 2022
Fair Value of Financial Instruments Level 1 Level 2 Level 3 Total
Assets:
Cash and cash equivalents $ 52.2 $ — $ — $ 52.2
Restricted cash 6.4 — — 6.4
Foreign exchange forward contracts — 1.8 — 1.8
Auction rate security — — 2.6 2.6
$ 58.6 $ 1.8 $ 2.6 $ 63.0
Liabilities:
Foreign exchange forward contracts $ — $ (0.7) $ — $ (0.7)
$ — $ (0.7) $ — $ (0.7)
February 25, 2022
Fair Value of Financial Instruments Level 1 Level 2 Level 3 Total
Assets:
Cash and cash equivalents $ 200.9 $ — $ — $ 200.9
Restricted cash 6.1 — — 6.1
Foreign exchange forward contracts — 1.0 — 1.0
Auction rate security — — 2.6 2.6
$ 207.0 $ 1.0 $ 2.6 $ 210.6
Liabilities:
Foreign exchange forward contracts $ — $ (0.3) $ — $ (0.3)
$ — $ (0.3) $ — $ (0.3)

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

~~Roll-Forward of Fair Value Using Level 3 Inputs~~

~~Auction Rate Security~~

~~Balance as of February 25, 2022~~

~~2.6~~

~~Unrealized gain on investment~~

—

~~Balance as of August 26, 2022~~

~~2.6~~


	May 26, 2023
Fair Value of Financial Instruments	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	40.2	$	—	$	—	$	40.2
Restricted cash	6.4		—		—		6.4







Foreign exchange forward contracts	—		1.8		—		1.8
Auction rate security	—		—		2.1		2.1

	$	46.6	$	1.8	$	2.1	$	50.5
Liabilities:
Foreign exchange forward contracts	$	—	$	(0.3)	$	—	$	(0.3)
Contingent consideration	—		—		(9.7)		(9.7)
	$	—	$	(0.3)	$	(9.7)	$	(10.0)

	February 24, 2023
Fair Value of Financial Instruments	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	90.4	$	—	$	—	$	90.4
Restricted cash	6.8		—		—		6.8







Foreign exchange forward contracts	—		2.3		—		2.3
Auction rate security	—		—		2.1		2.1

	$	97.2	$	2.3	$	2.1	$	101.6
Liabilities:
Foreign exchange forward contracts	$	—	$	(0.3)	$	—	$	(0.3)
Contingent consideration	—		—		(9.5)		(9.5)
	$	—	$	(0.3)	$	(9.5)	$	(9.8)

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Below is a roll-forward of assets and liabilities measured at estimated fair value using Level 3 inputs during the three months ended May 26, 2023:


Roll-forward of Fair Value Using Level 3 Inputs	Auction Rate Security - Other Assets		Contingent Consideration - Other Long-Term Liabilities
Balance as of February 24, 2023	$	2.1	$	9.5
Unrealized gain (loss) on investment	—		—
Foreign currency (gain) loss	—		0.2
Change in estimated fair value	—		—
Balance as of May 26, 2023	$	2.1	$	9.7

7.INVENTORIES


Inventories	Inventories	August 26, 2022		February 25, 2022		Inventories	May 26, 2023		February 24, 2023
Raw materials and work-in-process	Raw materials and work-in-process	$	276.4	$	208.2	Raw materials and work-in-process	$	221.0	$	232.8
Finished goods	Finished goods	153.7		146.9		Finished goods	116.8		118.1
		430.1		355.1			337.8		350.9
Revaluation to LIFO	Revaluation to LIFO	33.4		28.9		Revaluation to LIFO	30.5		31.2
		$	396.7	$	326.2		$	307.3	$	319.7

The portion of inventories determined by the LIFO method ~~was $162.5~~aggregated to $140.8 and ~~$141.4~~$134.1 as of ~~August~~May 26, ~~2022~~2023 and February ~~25, 2022,~~24, 2023, respectively.

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~~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. On April 27, 2023, the credit facility was amended. As ~~of August 26, 2022, total availability~~amended, interest on borrowings under the facility ~~was limited to $203.2~~is based on the rate selected by us from the following options (with all capitalized terms having the meanings provided in the credit agreement, as amended):

•the Applicable Floating Rate Margin in effect plus the greatest of (i) the Prime Rate, (ii) the Federal Funds Effective Rate plus 0.5%, (iii) the Term SOFR Reference Rate for a ~~result of covenant constraints.~~ one-month interest period plus 1.10% or (iv) 0.75%;

•the Applicable Term Benchmark/RFR Margin in effect plus (i) for borrowings in U.S. dollars, the Term SOFR Reference Rate plus 0.10%, or (ii) for borrowings in euros, the Adjusted EURIBOR Rate; or

•the Applicable Term Benchmark/RFR Margin in effect plus the Daily Simple SOFR Rate plus 0.10%.

In ~~Q2 2023,~~Q1 2024, we borrowed ~~$68.0~~and repaid $67.2 under the facility to fund our operations and the balloon payment of $31.8 for a ~~portion of our acquisition of Halcon, and we also borrowed under~~note payable that matured during the ~~facility to support our global operating requirements.~~quarter. As of ~~August~~May 26, ~~2022, our total~~2023, there were no 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.

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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 ~~August~~May 26, ~~2022,~~2023, the following PSUs have been issued and remained outstanding:

•767,600 PSUs to be earned over the period of 2024 through 2026 (the "2024 PSUs"),

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

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

•~~529,500 PSUs to be earned over the period of 2021 through 2023 (the "2021~~ PSUs").

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. The awards will be forfeited if a participant leaves the company for reasons other than retirement, disability or death or if the participant engages in any competition with us, as defined in the Inventive Compensation Plan.

As of ~~August~~May 26, ~~2022,~~2023, the 2024 PSUs, 2023 PSUs ~~2022 PSUs~~ and ~~2021~~2022 PSUs were considered granted as follows:

•In Q1 2024, the performance conditions were established for Tranche 1 of the 2024 PSUs, Tranche 2 of the 2023 PSUs and Tranche 3 of the 2022 PSUs, and accordingly, such tranches were considered granted in Q1 2024.

•In Q1 2023, the performance conditions were established for Tranche 1 of the 2023 PSUs and 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.~~Q1 2022.

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~~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 ~~$5.2, $4.8~~$4.5, $3.5 and $2.3 for the PSUs with market conditions granted in 2024, 2023 ~~2022~~ and ~~2021,~~2022, respectively, that ~~remain~~remained outstanding as of ~~August~~May 26, ~~2022.~~2023. The Monte Carlo simulation was computed using the following assumptions:


		FY23 Award		FY22 Award				FY21 Award							2024 PSUs		2023 PSUs				2022 PSUs
		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)	2.6	%	2.3	%	0.3	%	1.6	%	0.2	%	0.2	%	Risk-free interest rate (1)	3.7	%	4.0	%	2.6	%	4.7	%	2.3	%	0.3	%
Expected term	Expected term	3 years		2 years		3 years		1 year		2 years		2 years		Expected term	3 years		2 years		3 years		1 year		2 years		3 years
Estimated volatility (2)	Estimated volatility (2)	52.2	%	43.8	%	53.5	%	28.7	%	61.3	%	58.1	%	Estimated volatility (2)	44.1	%	37.8	%	52.2	%	45.5	%	43.8	%	53.5	%

(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 ~~preceding~~prior to the grant ~~date.~~date which is equivalent to the expected term of the tranche.

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total PSU expense ~~(credit)~~ and associated tax benefit recorded during the three ~~and six~~ months ended ~~August~~May 26, ~~2022~~2023 and ~~August~~May 27, ~~2021~~2022 are as follows:


		Three Months Ended				Six Months Ended				Three Months Ended
Performance Units	Performance Units	August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021			Performance Units	May 26, 2023		May 27, 2022
Expense (credit)		$	(0.2)	$	0.4	$	3.9	$	5.6
Expense													Expense	$	5.4	$	4.1
Tax benefit	Tax benefit	—		0.1		1.0		1.4					Tax benefit	1.4		1.0

The PSU activity for the ~~six~~three months ended ~~August~~May 26, ~~2022~~2023 is as follows:


Maximum Number of Shares of Nonvested Units	Maximum Number of Shares of Nonvested Units	Total	Weighted-Average Grant Date Fair Value per Unit		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
Nonvested as of February 24, 2023					Nonvested as of February 24, 2023	1,060,231	$	13.11
Granted	Granted	1,125,192	11.13		Granted	1,315,664	8.30

Nonvested as of August 26, 2022		2,331,025	$	12.72
Nonvested as of May 26, 2023					Nonvested as of May 26, 2023	2,375,895	$	10.44

As of ~~August~~May 26, ~~2022,~~2023, there was ~~$1.2~~$3.6 of remaining unrecognized compensation expense related to nonvested PSUs, which is expected to be recognized over a remaining weighted-average period of ~~2.0~~2.1 years.

Restricted Stock Units

During the ~~six~~three months ended ~~August~~May 26, ~~2022,~~2023, we awarded ~~1,068,507~~1,545,505 restricted stock units ("RSUs") to certain employees. RSUs have restrictions on transfer which lapse ~~one~~up to three years after the date of grant, at which time the RSUs ~~will be~~are 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 grant date. ~~Generally, RSUs awarded are not forfeitable upon a qualifying retirement.~~ For participants ~~of 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. Typically, these awards will be forfeited if a participant leaves the company for reasons other than retirement, disability or death or if the participant engages in any competition with us, as defined in the Incentive Compensation Plan.

The total RSU expense and associated tax benefit for the three ~~and six~~ months ended ~~August~~May 26, ~~2022~~2023 and ~~August~~May 27, ~~2021~~2022 are as follows:

Three Months Ended Six Months Ended
Restricted Stock Units August 26,
2022 August 27,
2021 August 26,
2022 August 27,
2021
Expense $ 3.3 $ 1.5 $ 11.2 $ 9.2
Tax benefit 0.8 0.4 2.8 2.3

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~~STEELCASE INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~


	Three Months Ended
Restricted Stock Units	May 26, 2023		May 27, 2022
Expense	$	8.3	$	7.9
Tax benefit	2.1		2.0

The RSU activity for the ~~six~~three months ended ~~August~~May 26, ~~2022~~2023 is as follows:


Nonvested Units	Nonvested Units	Total	Weighted-Average Grant Date Fair Value per Unit		Nonvested Units	Total	Weighted-Average Grant Date Fair Value per Unit
Nonvested as of February 25, 2022		3,445,438	$	11.86
Nonvested as of February 24, 2023					Nonvested as of February 24, 2023	3,293,268	$	12.11
Granted	Granted	1,068,507	11.21		Granted	1,545,505	7.89
Vested	Vested	(11,000)	14.44		Vested	(12,477)	11.78
Forfeited	Forfeited	(26,444)	13.13		Forfeited	(24,802)	10.98
Nonvested as of August 26, 2022		4,476,501	$	11.69
Nonvested as of May 26, 2023					Nonvested as of May 26, 2023	4,801,494	$	10.76

As of ~~August~~May 26, ~~2022,~~2023, there was ~~$19.2~~$16.9 of remaining unrecognized compensation expense related to nonvested RSUs, which is expected to be recognized over a remaining weighted-average period of ~~1.7~~1.8 years.

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 ~~2036.~~2035. Certain lease agreements include contingent rental payments based on per unit usage over contractual levels (e.g., miles driven or machine hours 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~~during the three ~~and six~~ months ended ~~August~~May 26, ~~2022~~2023 and ~~August~~May 27, ~~2021~~2022 are as follows:


		Three Months Ended				Six Months Ended				Three Months Ended
		August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021		May 26, 2023				May 27, 2022
Operating lease cost	Operating lease cost	$	13.5	$	13.2	$	25.6	$	26.3		Operating lease cost	$	13.6		$	12.1
Sublease rental income	Sublease rental income	(0.5)		(0.5)		(1.1)		(0.9)			Sublease rental income	(0.5)			(0.6)
		$	13.0	$	12.7	$	24.5	$	25.4			$	13.1		$	11.5

Supplemental cash flow and other information related to leases ~~for~~during the three ~~and six~~ months ended ~~August~~May 26, 2023 and May 27, 2022 ~~and August 27, 2021 are~~is as follows:


		Three Months Ended				Six Months Ended				Three Months Ended
		August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021		May 26, 2023		May 27, 2022
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	$	13.4	$	27.1	$	26.8		Operating cash flows used for operating leases	$	14.1	$	13.5
Leased assets obtained in exchange for new operating lease obligations	Leased assets obtained in exchange for new operating lease obligations	$	10.3	$	15.7	$	13.5	$	17.3		Leased assets obtained in exchange for new operating lease obligations	$	5.0	$	3.2

As of ~~August~~May 26, ~~2022~~2023 and ~~August~~May 27, ~~2021,~~2022, the weighted-average remaining lease terms were ~~5.6~~5.1 years and ~~6.2~~5.8 years, respectively, and the weighted-average discount rates were ~~3.7%~~4.3% and ~~3.7%~~3.6%, respectively.

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~~STEELCASE INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

The following table summarizes the future minimum lease payments as of ~~August~~May 26, ~~2022:~~2023:


Fiscal year ending in February	Fiscal year ending in February	Amount (1)		Fiscal year ending in February	Amount (1)
2023		$	23.3
2024	2024	49.0		2024	$	40.0
2025	2025	44.7		2025	53.3
2026	2026	34.9		2026	42.6
2027	2027	28.1		2027	34.0
2028				2028	25.2
Thereafter	Thereafter	53.0		Thereafter	39.2
Total lease payments	Total lease payments	$	233.0	Total lease payments	$	234.3
Less: Interest	Less: Interest	23.6		Less: Interest	24.8
Present value of lease liabilities	Present value of lease liabilities	$	209.4	Present value of lease liabilities	$	209.5

(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.

~~11.ACQUISITIONS~~

~~Viccarbe~~

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) in an all-cash transaction using cash on-hand. Up to an additional $15.1 (or €13.0) is payable to the sellers based upon the achievement of certain revenue and operating income targets over a three-year 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. 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 period, which 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, $25.8 related to goodwill and $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. Additionally, we recorded a deferred tax 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 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 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 August 26, 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

1714

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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, 2022:11.ACQUISITIONS

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

~~Halcon~~HALCON

In Q2 2023, we acquired ~~Halcon,~~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~~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 iswas 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.~~consideration, and we were not required to make a payment at the settlement date in 2023. 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~~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~~$36.6 related to goodwill and ~~$16.4~~$16.7 related to tangible assets. The tangible assets mainly consisted of property, plant and equipment of ~~$30.8,~~$30.6, working capital (primarily inventory of ~~$12.3)~~$12.8) 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~~HALCON expected to be driven by new product development, geographic expansion and the integration of ~~Halcon~~HALCON products into our dealer network. Intangible assets are principally related to dealer relationships, the ~~Halcon~~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~~shipped throughout 2023. As of May 26, 2023, the ~~remainder of 2023. The~~ purchase ~~price allocation~~accounting for the HALCON 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.complete.

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

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

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~~STEELCASE INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

The fair values of the purchased intangible assets isare 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~~May 26, ~~2022:~~2023:


Fiscal Year Ending in February	Fiscal Year Ending in February	Amount		Fiscal Year Ending in February	Amount
2023		$	5.2
2024	2024	5.0		2024	$	3.8
2025	2025	5.1		2025	5.1
2026	2026	5.0		2026	5.0
2027	2027	5.0		2027	5.0
2028				2028	5.0
		$	25.3		$	23.9

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12. REPORTABLE SEGMENTS

~~Our~~As of the end of Q1 2024, we realigned our reportable segments ~~consist~~for financial reporting purposes as a result of changes in how we monitor business performance and allocate resources to support our top strategic priorities. During the quarter, we simplified our internal reporting to summarize the results of all brands by geography including utilization of previously unallocated Corporate expenses. This change is parallel to the organizational structure that is used by our Chief Executive Officer in the capacity as chief operating decision maker ("CODM") for making operating and investment decisions and assessing business performance.

The operating segments regularly reviewed by the CODM are (1) the Americas, (2) Europe, the Middle East and Africa ("EMEA") and (3) Asia Pacific. Asia Pacific serves customers in Australia, China, India, Japan, Korea and other countries in Southeast Asia. We primarily review and evaluate revenue, gross profit and operating income (loss) by these segments in our internal review processes and reporting. We also allocate resources among these segments primarily based on revenue, gross profit and operating income (loss). Total assets by segment include manufacturing and other assets associated with each segment.

For purposes of segment reporting externally, we have aggregated the EMEA and Asia Pacific operating segments as an International segment based upon their similarity in certain quantitative and qualitative characteristics as defined in the ~~Other category. Unallocated corporate expenses are reported as Corporate.~~Accounting Standards Codification ("ASC") 280, Segment Reporting. We evaluated the economic similarity of these operating segments including patterns and trends for revenue, gross profit and operating income (loss) in addition to the similarity in the nature of products and services, types of customers, and production and distribution processes in these regions. We concluded that these operating segments met the criteria for aggregation consistent with the basic principles and objectives of segment reporting described in ASC 280. The change in our reportable segments did not result in a change to our reporting units for purposes of goodwill impairment testing.

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

~~The Other category includes Asia Pacific~~products that are marketed to corporate, government, education and ~~Designtex. Asia Pacific serves~~retail customers ~~in Australia, China, India, Japan, Korea and other countries in Southeast Asia~~ primarily ~~under~~through the Steelcase, ~~brand with a comprehensive portfolio~~Coalesse, Orangebox, Smith System and Viccarbe brands.

As required by ASC 280, all presented segment data reflects the reclassification of furniture and architectural products. Designtex 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~~previously reported segment data. Revenue, gross profit and operating income (loss) for the three months ended May 26, 2023 and May 27, 2022 and total assets and goodwill as of May 26, 2023 and February 24, 2023 by segment are presented 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.the following tables which reflect the realigned segments:

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. 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.


	Three Months Ended
Reportable Segment Statement of Operations Data	May 26, 2023		May 27, 2022
Revenue
Americas	$	572.8	$	543.8
International	179.1		196.9
	$	751.9	$	740.7
Gross Profit
Americas	$	183.6	$	139.1
International	51.0		52.5
	$	234.6	$	191.6
Operating Income (Loss)
Americas	$	19.8	$	(10.7)
International	(12.5)		(1.9)
	$	7.3	$	(12.6)

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Three Months Ended Six Months Ended
Reportable Segment Statement of Operations Data August 26,
2022 August 27,
2021 August 26,
2022 August 27,
2021
Revenue
Americas $ 651.6 $ 523.3 $ 1,172.4 $ 899.6
EMEA 137.8 138.9 294.2 262.5
Other 73.9 62.6 137.4 119.3
$ 863.3 $ 724.8 $ 1,604.0 $ 1,281.4
Operating income (loss)
Americas $ 43.5 $ 44.7 $ 42.3 $ 29.7
EMEA (6.8) (1.6) (5.5) (7.3)
Other (1.3) (4.2) (4.2) (9.5)
Corporate (6.5) (5.0) (16.3) (10.8)
$ 28.9 $ 33.9 $ 16.3 $ 2.1

Reportable Segment Balance Sheet Data August 26,
2022 February 25,
2022
Total assets
Americas $ 1,358.1 $ 1,110.4
EMEA 420.0 475.2
Other 227.0 227.6
Corporate 297.5 447.8
$ 2,302.6 $ 2,261.0

~~Table of Contents~~

~~STEELCASE INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~


Reportable Segment Balance Sheet Data	May 26, 2023		February 24, 2023
Total assets
Americas	$	1,579.9	$	1,631.2
International	545.6		571.6
	$	2,125.5	$	2,202.8

Goodwill
Americas	$	268.4	$	268.3
International	8.6		8.5
	$	277.0	$	276.8

13. RESTRUCTURING ACTIVITIES

In Q4 ~~2022, our Board~~2023, we implemented a series of ~~Directors approved~~ restructuring actions, primarily related to the ~~exit~~wind down of our ~~technology business~~customer aviation function in connection with our strategy to ~~shift from offering a portfolio of technology products toward partnering with technology companies to~~reinvent our go-to-market model and create ~~integrated collaborative solutions.~~new customer experiences. The restructuring actions ~~primarily~~ included ~~involuntary~~ terminations of ~~the majority of~~approximately 23 salaried employees ofin the ~~business and the termination~~Americas segment. We expect to incur approximately $4.4 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~~other separation-related benefits. In Q1 2024, we recorded $0.7 of restructuring costs in the Americas segment for these actions. We also incurred $3.6 of workforce reductions and other ~~business exit costs.~~separation-related benefits in the Americas segment for these actions in Q4 2023. We ~~recorded $1.8~~expect these actions to be completed in Q2 2024.

In Q1 2024, we announced a series of restructuring actions in response to continued decline in order volume, persisting inflationary pressures, and decreasing plant utilization. These actions involve the involuntary terminations of approximately 40 to 50 salaried roles in EMEA, the elimination of approximately 240 positions in Asia Pacific, and the involuntary terminations of approximately 30 employees in the Americas in connection with the closing of our regional distribution center in Atlanta, Georgia. We expect to incur restructuring costs of approximately $14 to $17 in the International segment and approximately $2 in the Americas segment related to ~~employee termination costs and $2.4 related to business exit~~these actions, consisting of cash severance payments and other ~~related~~separation-related benefits. We incurred restructuring costs of $6.8 in the International segment and $0.6 in the Americas segment for these actions during Q1 ~~2023. In Q2 2023, we recorded a charge~~2024. We expect these actions to be substantially completed by the end 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.~~

2024.

The following table details the changes in the restructuring reserve balance ~~as of August~~for the three months ended May 26, ~~2022:~~2023:

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.


	Workforce Reductions
Balance as of February 24, 2023	$	4.0
Restructuring costs	8.1
Payments	(4.1)
Balance as of May 26, 2023	$	8.0

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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 ~~25, 2022.~~24, 2023. 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.

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 operations, balance sheets or statements of cash flows of the company. The non-GAAP financial measures used are (1) organic revenue growth (decline), (2) adjusted operating income (loss) and (3) adjusted earnings (loss) per share. Pursuant to the requirements of Regulation G, we have provided a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial 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 to monitor and evaluate financial results and trends. See Non-GAAP Financial Measures for a description of these measures and why management believes they are also useful 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.~~International segment. See Note 12 to the condensed consolidated financial statements for additional information.

Results of Operations


		Three Months Ended								Six Months Ended								Three Months Ended
Statement of Operations Data	Statement of Operations Data	August 26, 2022				August 27, 2021				August 26, 2022				August 27, 2021					Statement of Operations Data	May 26, 2023			May 27, 2022
Revenue	Revenue	$	863.3	100.0	%	$	724.8	100.0	%	$	1,604.0	100.0	%	$	1,281.4	100.0	%							Revenue		$	751.9		100.0	%		$	740.7	100.0	%
Cost of sales	Cost of sales	612.5		70.9		518.0		71.5		1,160.7		72.4		919.9		71.8								Cost of sales		515.9			68.6			548.2		74.0
Restructuring costs	Restructuring costs	—		—		—		—		0.9		—		—		—								Restructuring costs		1.4			0.2			0.9		0.1
Gross profit	Gross profit	250.8		29.1		206.8		28.5		442.4		27.6		361.5		28.2								Gross profit		234.6			31.2			191.6		25.9
Operating expenses	Operating expenses	221.4		25.7		172.9		23.8		422.3		26.3		359.4		28.0								Operating expenses		220.6			29.3			200.9		27.1
Restructuring costs	Restructuring costs	0.5		0.1		—		—		3.8		0.3		—		—								Restructuring costs		6.7			0.9			3.3		0.5
Operating income		28.9		3.3		33.9		4.7		16.3		1.0		2.1		0.2
Operating income (loss)																					Operating income (loss)	7.3			1.0			(12.6)			(1.7)
Interest expense	Interest expense	(7.2)		(0.8)		(6.4)		(0.9)		(13.6)		(0.8)		(12.8)		(1.0)								Interest expense		(6.6)			(0.9)			(6.4)		(0.9)
Investment income	Investment income	0.3		—		0.1		—		0.4		—		0.3		—								Investment income		0.5			0.1			0.1		—
Other income, net	Other income, net	4.4		0.6		1.8		0.2		7.5		0.5		1.0		0.1								Other income, net		1.7			0.2			3.1		0.5
Income (loss) before income tax expense (benefit)	Income (loss) before income tax expense (benefit)	26.4		3.1		29.4		4.0		10.6		0.7		(9.4)		(0.7)								Income (loss) before income tax expense (benefit)		2.9			0.4			(15.8)		(2.1)
Income tax expense (benefit)	Income tax expense (benefit)	6.8		0.8		4.7		0.6		2.4		0.2		(6.0)		(0.4)								Income tax expense (benefit)		1.4			0.2			(4.4)		(0.6)
Net income (loss)	Net income (loss)	$	19.6	2.3	%	$	24.7	3.4	%	$	8.2	0.5	%	$	(3.4)	(0.3)	%							Net income (loss)		$	1.5		0.2	%		$	(11.4)	(1.5)	%
Earnings (loss) per share:	Earnings (loss) per share:																							Earnings (loss) per share:
Basic	Basic	$	0.17			$	0.21			$	0.07			$	(0.03)									Basic		$	0.01					$	(0.10)
Diluted	Diluted	$	0.17			$	0.21			$	0.07			$	(0.03)									Diluted		$	0.01					$	(0.10)

2218

Table of Contents

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 %


Q1 2024 Organic Revenue Growth (Decline)	Americas			International			Consolidated
Q1 2023 revenue	$	543.8		$	196.9		$	740.7
Acquisition	19.7			—			19.7
Divestitures	(2.4)			(2.3)			(4.7)
Currency translation effects	(1.8)			(2.8)			(4.6)
Q1 2023 revenue, adjusted	559.3			191.8			751.1
Q1 2024 revenue	572.8			179.1			751.9


Organic growth (decline) $	$	13.5		$	(12.7)		$	0.8
Organic growth (decline) %	2		%	(7)		%	—		%


Adjusted Operating Income (Loss)	Three Months Ended
	May 26, 2023				May 27, 2022
Operating income (loss)	$	7.3	1.0	%	$	(12.6)	(1.7)	%
Amortization of purchased intangible assets	4.3		0.5		3.8		0.5

Restructuring costs	8.1		1.1		4.2		0.6
Adjusted operating income (loss)	$	19.7	2.6	%	$	(4.6)	(0.6)	%

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 %

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
Adjusted Earnings (Loss) Per Share										Adjusted Earnings (Loss) Per Share	Three Months Ended
											May 26, 2023		May 27, 2022
Earnings (loss) per share	Earnings (loss) per share	$	0.17	$	0.21	$	0.07	$	(0.03)	Earnings (loss) per share	$	0.01	$	(0.10)
Amortization of purchased intangible assets, per share	Amortization of purchased intangible assets, per share	0.05		0.03		0.09		0.06		Amortization of purchased intangible assets, per share	0.04		0.03
Income tax effect of amortization of purchased intangible assets, per share	Income tax effect of amortization of purchased intangible assets, per share	(0.01)		(0.01)		(0.02)		(0.02)		Income tax effect of amortization of purchased intangible assets, per share	(0.01)		(0.01)
Restructuring costs, per share	Restructuring costs, per share	—		—		0.04		—		Restructuring costs, per share	0.07		0.04
Income tax effect of restructuring costs, per share	Income tax effect of restructuring costs, per share	—		—		(0.01)		—		Income tax effect of restructuring costs, per share	(0.02)		(0.01)
Adjusted earnings per share		$	0.21	$	0.23	$	0.17	$	0.01
Adjusted earnings (loss) per share										Adjusted earnings (loss) per share	$	0.09	$	(0.05)

Overview

In ~~Q2 2023,~~Q1 2024, we realigned our reportable segments for financial reporting purposes. Effective as of the end of Q1 2024, Designtex and previously unallocated Corporate expenses are now included in the Americas segment, and the Europe, the Middle East and Africa ("EMEA") and Asia Pacific operating segments are aggregated and reported as the International segment. All prior year results are reclassified so as to be directly comparable to these realigned segments.

Our revenue ~~increased 19%~~in Q1 2024 continued to benefit from the pricing actions we implemented over the past two years in response to significant inflationary pressures, but volume declines compared to the prior year driven by strong beginning order backlog, significant pricing benefits and our acquisition of Halcon. We continued to experience significant inflation in steel, other commodities, fuel and logistics costs duringsubstantially offset the ~~quarter, but year-over-year pricing benefits of approximately $80 exceeded year-over-year inflation by 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.~~

~~Tableof Contents~~

~~Our orders grew 5% in Q2 2023 compared to the prior year, driven by~~ pricing benefits in the Americas and ~~EMEA, partially~~more than offset the pricing benefits in International. Orders (adjusted for the impact of an acquisition, divestitures and currency translation effects) declined by ~~a decline~~7% in ~~order volume~~Q1 2024 compared to the prior year but grew 21% sequentially compared to Q4 2023, which is consistent with the seasonal increase in the ~~Americas.~~prior year. Inflationary pressures continued to moderate during the quarter, and improvements in our supply chain reliability contributed to better operational performance and faster order fulfillment patterns in the Americas which, along with higher pricing benefits, resulted in a significant improvement in our gross margin. In response to ~~the volume decline and lower-than-expected return-to-office~~softening demand trends, we announced a series of restructuring actions in International. We also initiated restructuring actions in the Americas ~~we have adjusted~~in connection with the closing of our ~~planned levels of operational spending while we expect to continue to prioritize our investments~~regional distribution center 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 2023.Atlanta, Georgia.

~~Q2 2023 Compared to Q2 2022~~

We recorded net income of ~~$19.6~~$1.5 and earnings per share of ~~$0.17~~$0.01 in ~~Q2 2023~~Q1 2024 compared to a net ~~income~~loss of ~~$24.7~~$11.4 and ~~earnings~~loss per share of ~~$0.21~~$0.10 in the prior year. Operating income of ~~$28.9~~$7.3 in ~~Q2 2023~~Q1 2024 represented ~~a decrease~~an improvement of ~~$5.0~~$19.9 compared to an operating ~~income~~loss of ~~$33.9~~$12.6 in 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~~year.The improvement was ~~primarily~~ driven by higher ~~volume and higher~~ pricing benefits, ~~which improved gross margin,~~ partially offset by the impacts of lower volume and higher operating expenses. We reported adjusted operating income of ~~$35.8~~$19.7 and adjusted earnings per share of ~~$0.21~~$0.09 in ~~Q2 2023,~~Q1 2024, and we ~~had~~reported an adjusted operating ~~income~~loss of ~~$37.5~~$4.6 and an adjusted ~~earnings~~loss per share of ~~$0.23~~$0.05 in the prior year.

Table of Contents

Revenue of ~~$863.3~~$751.9 in ~~Q2 2023~~Q1 2024 represented an increase of ~~$138.5~~$11.2 or ~~19%~~2% compared to the prior ~~year.~~ year, driven by growth in the Americas partially offset by a decline in International.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~~$65 related to lower volume (net of a $19.7 benefit from an acquisition) and $4.6 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.~~effects. Revenue increased by ~~25%~~5% in the Americas, ~~and by 18% in the Other category,~~ while ~~EMEA~~International revenue decreased by 1%9%. Organic revenue growth was ~~$141.2 or 20%~~flat compared to the prior year, with ~~21%~~2% growth in the Americas ~~12% growth~~but a 7% decline in ~~EMEA~~International.

Cost of sales as a percentage of revenue decreased by 540 basis points in Q1 2024 compared to the prior year.The improvement was driven by approximately $80 of higher pricing benefits, net of inflation, partially offset by the impacts of lower volume and ~~21% growth in the Other category.~~

$4.6 of higher variable compensation expense. 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 120640 basis points in the Americas and 90by 220 basis points in ~~the Other category but increased by 340 basis points in EMEA.~~International.

Operating expenses increased by ~~$48.5~~$19.7 in ~~Q2 2023,~~Q1 2024, or ~~190~~220 basis points as a percentage of revenue, compared to the prior year, which included a ~~$15.4~~$4.0 gain from the sale of land. ~~Compared to the prior year, operating~~Operating expenses in ~~Q2 2023 included:~~

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

•~~$8.4~~Q1 2024 included $9.0 of higher variable compensation expense

•~~$7.9~~ and $6.2 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.

~~Tableof Contents~~

Revenue of $1,604.0 in year-to-date 2023 represented an increase of $322.6 or 25% compared to the prior year, driven by growth across all segments. 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, 12% in EMEA and 15% in the Other category. Organic revenue growth was $334.4 or 26% compared to the prior year, with 28% growth in the Americas, 24% growth in EMEA and 17% growth in the Other category.

Cost of sales as a percentage of revenue increased by 60 basis points in year-to-date 2023 compared to the prior year. The increase was driven by approximately $103 of higher inflation and $18 of higher fixed overhead costs and labor inefficiencies, partially offset by the benefits of higher volume and approximately $130 of higher pricing benefits. Cost of sales as a percentage of revenue increased by 40 basis points in the Americas and 190 basis points in EMEA but improved by 90 basis points in the Other category.

Operating expenses increased by $62.9 in year-to-date 2023, but decreased by 170 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 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 $8.5 of favorable currency translation effects.~~acquisition.

We recorded restructuring costs of ~~$4.7~~$8.1 in ~~the Americas~~Q1 2024 and $4.2 in ~~year-to-date 2023 related to the exit of our technology business.~~Q1 2023. See Note 13 to the condensed consolidated financial statements for additional information.

Our ~~year-to-date~~Q1 2024 effective tax rate was approximately 48%, which included $0.6 of discrete tax expense, compared to a Q1 2023 effective tax rate ~~was 22.6% compared to a year-to-date 2022 effective tax rate~~ of ~~63.8%~~27.8%. ~~The year-to-date 2022 effective tax rate reflected the impact of lower earnings and included $3.4 of discrete tax benefits.~~

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


		Three Months Ended				Six Months Ended					Three Months Ended
Interest Expense, Investment Income and Other Income (Expense), Net		August 26, 2022		August 27, 2021		August 26, 2022		August 27, 2021
Interest Expense, Investment Income and Other Income, Net										Interest Expense, Investment Income and Other Income, Net	May 26, 2023		May 27, 2022
Interest expense	Interest expense	$	(7.2)	$	(6.4)	$	(13.6)	$	(12.8)	Interest expense	$	(6.6)	$	(6.4)
Investment income	Investment income	0.3		0.1		0.4		0.3		Investment income	0.5		0.1
Other income, net:	Other income, net:									Other income, net:
Equity in income of unconsolidated affiliates	Equity in income of unconsolidated affiliates	3.2		1.0		5.5		2.3		Equity in income of unconsolidated affiliates	1.9		2.3
Foreign exchange gains (losses)	Foreign exchange gains (losses)	0.1		(0.1)		1.6		(0.3)		Foreign exchange gains (losses)	0.5		1.5
Net periodic pension and post-retirement credit, excluding service cost	Net periodic pension and post-retirement credit, excluding service cost	(0.4)		(0.1)		(0.4)		(0.3)		Net periodic pension and post-retirement credit, excluding service cost	(0.1)		—
Miscellaneous income (expense), net	Miscellaneous income (expense), net	1.5		1.0		0.8		(0.7)		Miscellaneous income (expense), net	(0.6)		(0.7)
Total other income, net	Total other income, net	4.4		1.8		7.5		1.0		Total other income, net	1.7		3.1
Total interest expense, investment income and other income, net	Total interest expense, investment income and other income, net	$	(2.5)	$	(4.5)	$	(5.7)	$	(11.5)	Total interest expense, investment income and other income, net	$	(4.4)	$	(3.2)

Interest expense increased in Q2 2023 and year-to-date 2023 compared to the prior year as a result of borrowings under our global committed bank facility in Q2 2023. Total other income, net increased by $2.6 in Q2 2023 compared to 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 prior year, driven by a $3.2 increase in income recorded from our unconsolidated affiliates and a $1.9 increase of foreign exchange gains.

Table of Contents

Business Segment Review

See Note 12 to the condensed consolidated financial statements for additional information regarding our business segments.

~~Tableof Contents~~

Americas


		Three Months Ended								Six Months Ended								Three Months Ended
Statement of Operations Data — Americas	Statement of Operations Data — Americas	August 26, 2022				August 27, 2021				August 26, 2022				August 27, 2021					Statement of Operations Data — Americas	May 26, 2023				May 27, 2022
Revenue	Revenue	$	651.6	100.0	%	$	523.3	100.0	%	$	1,172.4	100.0	%	$	899.6	100.0	%								Revenue		$	572.8		100.0	%		$	543.8	100.0	%
Cost of sales	Cost of sales	455.9		70.0		372.6		71.2		845.9		72.1		645.1		71.7									Cost of sales		388.6			67.8			403.8		74.2
Restructuring costs	Restructuring costs	—		—		—		—		0.9		0.1		—		—									Restructuring costs		0.6			0.1			0.9		0.2
Gross profit	Gross profit	195.7		30.0		150.7		28.8		325.6		27.8		254.5		28.3									Gross profit		183.6			32.1			139.1		25.6
Operating expenses	Operating expenses	151.7		23.2		106.0		20.3		279.5		23.9		224.8		25.0									Operating expenses		163.1			28.5			146.5		27.0

Restructuring costs	Restructuring costs	0.5		0.1		—		—		3.8		0.3		—		—									Restructuring costs		0.7			0.1			3.3		0.6
Operating income		$	43.5	6.7	%	$	44.7	8.5	%	$	42.3	3.6	%	$	29.7	3.3	%
Operating income (loss)																					Operating income (loss)	$	19.8			3.5		%	$	(10.7)		(2.0)		%

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 %


Adjusted Operating Income (Loss) — Americas	Three Months Ended
	May 26, 2023				May 27, 2022
Operating income (loss)	$	19.8	3.5	%	$	(10.7)	(2.0)	%
Amortization of purchased intangible assets	3.1		0.5		2.6		0.5

Restructuring costs	1.3		0.2		4.2		0.8
Adjusted operating income (loss)	$	24.2	4.2	%	$	(3.9)	(0.7)	%

Operating income in the Americas ~~decreased~~increased by ~~$1.2~~$30.5 in ~~Q2 2023~~Q1 2024 compared to the prior year, which included a ~~$15.4~~$4.0 gain from the sale of land. ~~Excluding the land gain in the prior year, the~~The increase ~~in operating income~~ was ~~primarily~~ driven by higher ~~volume and higher~~ pricing benefits, ~~which~~ improved ~~gross margin,~~operational efficiencies and lower restructuring costs, partially offset by the impacts of lower volume and higher operating expenses. Adjusted operating income of ~~$49.3~~$24.2 in ~~Q2 2023~~Q1 2024 represented an improvement of ~~$2.0~~$28.1 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%~~76.2% of consolidated revenue in ~~Q2 2023.~~Q1 2024. In ~~Q2 2023,~~Q1 2024, revenue increased by ~~$128.3~~$29.0 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%5% compared to the prior year. Approximately ~~$175~~$65 of the increase ~~related to higher volume, and approximately $100~~was related to higher pricing ~~benefits.~~benefits, partially offset by approximately $35 related to lower volume (net of a $19.7 benefit from an acquisition) and approximately $2 of unfavorable currency translation effects. Organic revenue growth in ~~year-to-date 2023~~Q1 2024 was ~~$257.9~~$13.5 or ~~28%~~2% compared to the prior year.

Cost of sales as a percentage of revenue ~~decreased~~improved by ~~120~~640 basis points in ~~Q2 2023~~Q1 2024 compared to the prior year. The improvement was driven by ~~the benefits of higher volume, and~~ approximately ~~$23~~$65 of higher pricing benefits, ~~net of inflation, partially offset by~~and approximately ~~$11 of higher fixed overhead costs and labor inefficiencies. Cost of sales~~$5 from operational efficiencies as a ~~percentage~~result of ~~revenue increased by 40 basis points~~improvements 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,~~our supply chain reliability, partially offset by the ~~benefits~~impacts of lower volume and $4.5 of higher ~~volume and approximately $100 of higher pricing benefits.~~

~~Tableof Contents~~

variable compensation expense.

Operating expenses increased by ~~$45.7~~$16.6 in ~~Q2 2023,~~Q1 2024, or ~~290~~150 basis points as a percentage of revenue, compared to the prior year, which included a ~~$15.4~~$4.0 gain from the sale of land. ~~The current year~~Operating expenses in Q1 2024 included ~~$10.6 of higher marketing, product development and sales expenses, $6.4 from acquisitions, $6.4~~$8.5 of higher variable compensation expense and ~~$5.3~~$6.2 from an acquisition.

We recorded restructuring costs of ~~higher spending~~$1.3 in ~~other functional areas. Operating expenses~~Q1 2024 and $4.2 in ~~year-to-date 2023 increased by $54.7, but decreased by 110 basis points as a percentage of revenue, compared~~Q1 2023. See Note 13 to the ~~prior year, which included a $15.4 gain from the sale~~condensed consolidated financial statements for additional information.

Table 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.Contents

~~EMEA~~International

The ~~EMEA~~International segment serves customers in ~~Europe, the Middle East~~EMEA and ~~Africa primarily under the Steelcase, Coalesse, Orangebox and Viccarbe brands,~~Asia Pacific with a comprehensive portfolio of furniture and architectural ~~products.~~products that are marketed to corporate, government, education and retail customers primarily through the Steelcase, Coalesse, Orangebox, Smith System and Viccarbe brands.


		Three Months Ended								Six Months Ended								Three Months Ended
Statement of Operations Data — EMEA		August 26, 2022				August 27, 2021				August 26, 2022				August 27, 2021
Statement of Operations Data — International																			Statement of Operations Data — International	May 26, 2023					May 27, 2022
Revenue	Revenue	$	137.8	100.0	%	$	138.9	100.0	%	$	294.2	100.0	%	$	262.5	100.0	%				Revenue		$	179.1		100.0	%		$	196.9	100.0	%
Cost of sales	Cost of sales	105.3		76.4		101.4		73.0		219.4		74.6		190.9		72.7					Cost of sales		127.3			71.1			144.4		73.3

Restructuring costs																			Restructuring costs	0.8		0.4			—			—
Gross profit	Gross profit	32.5		23.6		37.5		27.0		74.8		25.4		71.6		27.3					Gross profit		51.0			28.5			52.5		26.7
Operating expenses	Operating expenses	39.3		28.5		39.1		28.2		80.3		27.3		78.9		30.1					Operating expenses		57.5			32.1			54.4		27.7

Restructuring costs																			Restructuring costs	6.0		3.4			—			—
Operating loss	Operating loss	$	(6.8)	(4.9)	%	$	(1.6)	(1.2)	%	$	(5.5)	(1.9)	%	$	(7.3)	(2.8)	%				Operating loss		$	(12.5)		(7.0)	%		$	(1.9)	(1.0)	%


Adjusted Operating Loss — EMEA		Three Months Ended								Six Months Ended
		August 26, 2022				August 27, 2021				August 26, 2022				August 27, 2021
Adjusted Operating Loss — International																		Adjusted Operating Loss — International	Three Months Ended
																			May 26, 2023				May 27, 2022
Operating loss	Operating loss	$	(6.8)	(4.9)	%	$	(1.6)	(1.2)	%	$	(5.5)	(1.9)	%	$	(7.3)	(2.8)	%	Operating loss	$	(12.5)	(7.0)	%	$	(1.9)	(1.0)	%
Amortization of purchased intangible assets	Amortization of purchased intangible assets	1.1		0.8		1.0		0.8		2.3		0.8		2.0		0.8		Amortization of purchased intangible assets	1.2		0.7		1.2		0.6

Restructuring costs																		Restructuring costs	6.8		3.8		—		—
Adjusted operating loss	Adjusted operating loss	$	(5.7)	(4.1)	%	$	(0.6)	(0.4)	%	$	(3.2)	(1.1)	%	$	(5.3)	(2.0)	%	Adjusted operating loss	$	(4.5)	(2.5)	%	$	(0.7)	(0.4)	%

~~Operating results~~The operating loss in ~~EMEA decreased~~International increased by ~~$5.2~~$10.6 in ~~Q2 2023~~Q1 2024 compared to the prior year. The ~~decline~~increase was driven by lower volume, higher ~~cost~~operating expenses and $6.8 of restructuring costs, partially offset by higher pricing benefits. The adjusted operating loss of $4.5 in Q1 2024 represented a decline of $3.8 compared to the prior year.

International revenue represented 23.8% of consolidated revenue in Q1 2024. In Q1 2024, revenue decreased by $17.8 or 9% compared to the prior year.Approximately $15 of higher pricing benefits were more than offset by approximately $30 related to lower volume and approximately $3 of unfavorable currency translation effects. Organic revenue decline was $12.7 or 7% compared to the prior year.

Cost of sales as a percentage of revenue ~~as a result of higher inflation compared to the prior year. The operating results in EMEA~~ improved by ~~$1.8~~220 basis points in ~~year-to-date 2023~~Q1 2024 compared to the prior year. The 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 represented 16.0% of consolidated revenue in Q2 2023. In Q2 2023, revenue decreased by $1.1 or 1% compared to the prior year. Approximately $13~~approximately $10 of higher pricing benefits, ~~were more than offset by approximately $18~~net of unfavorable currency translation effects, while volume remained flat. Organic revenue growth was $14.5 or 12% compared to the prior year. EMEA revenue represented 18.3% of consolidated revenue in year-to-date 2023. In year-to-date 2023, revenue of $294.2 represented an increase of $31.7 or 12% compared to the prior year, driven by growth across most markets. Approximately $30 of the increase was related to higher volume, and approximately $25 was related to higher pricing benefits, partially offset by approximately $30 of unfavorable currency translation effects. Organic revenue growth year-to-date 2023 was $56.3 or 24% compared to the prior year.

~~Cost of sales as a percentage of revenue increased by 340 basis points in Q2 2023 compared to the prior year. The increase was driven by approximately $10 of higher~~ inflation, and approximately $1 in higher labor inefficiencies, partially offset by higher pricing benefits. Cost of sales as a percentage of revenue increased by 190 basis points in year-to-date 2023 compared to the prior year. The increase was driven by approximately $16 of higher inflation, approximately $2 of unfavorable currency impacts and approximately $2 in higher overhead costs and labor inefficiencies, partially offset by the ~~benefits~~impacts of ~~higher~~lower volume and ~~approximately $25 of~~ higher ~~pricing benefits.~~

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logistics and labor costs.

Operating expenses increased by ~~$0.2~~$3.1 in ~~Q2 2023,~~Q1 2024, or 30440 basis points as a percentage of revenue, compared to the prior year. The current year included ~~$1.9~~approximately $3 of higher marketing, product development and sales expenses, $1.4 from an acquisition and $1.1 of higher variable compensation expense, partially offset by $4.9 of favorable currency translation effects. Operating expenses increased by $1.4 in year-to-date 2023, but decreased by 280 basis points as a percentage of revenue, compared to the prior year. The current year included $4.5 of higher marketing, product development and sales expenses, $2.8 from an acquisition and $1.5 of higher variable compensation expense, partially offset by $8.5 of favorable currency translation effects.

~~Other~~

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 and architectural products. Designtex 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.

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 results in the Other category improved by $2.9 in 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 2023 operating results improved by $5.3 compared to the prior year, driven by the same factors as the quarter.

Revenue in the Other category represented 8.5% of consolidated revenue in 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 the increase 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, driven by the same factors as the quarter. Year-to-date 2023 revenue of $137.4 represented an increase of $18.1 or 15% compared to the prior year. Approximately $12 of the increase was related to higher volume, and approximately $6 was related to higher pricing benefits. Organic revenue growth was $20.2 or 17% compared to the prior year.

Cost of sales as a percentage of revenue decreased by 90 basis points in Q2 2023 compared to the prior year. The improvement was driven by the benefits of higher volume and approximately $2 of higher pricing benefits, net of inflation, partially offset by a $1.7 charge related to aged inventory. Cost of sales as a percentage of revenue decreased by 90 basis points in year-to-date 2023 compared to the prior year, driven by the same factors as the quarter.

Operating expenses increased by $1.1 in Q2 2023, but decreased by 400 basis points as a percentage of revenue, compared to the prior year. The increase was driven by $1.0 of higher marketing, product development and sales expenses. Operating expenses increased by $1.3 in year-to-date 2023, but decreased by 400 basis points as a percentage of revenue, compared to the prior year. The increase was driven by the same factors as the quarter.

~~Corporate~~

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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 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 year-to-date 2023 compared to the prior year, driven by $7.8 of lower COLI income and $3.4 of higher spending, partially offset by $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 (decline), (2) adjusted operating income (loss) and (3) adjusted earnings (loss) per share.

Organic Revenue Growth (Decline)

We define organic revenue growth (decline) as revenue growth (decline) excluding the impact of acquisitions and divestitures and foreign currency translation effects.Organic revenue growth (decline) 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 (decline) 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 (Loss) 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 (loss) per share as earnings (loss) per share,

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on a diluted basis, 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.

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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.~~initiatives and material committed cash requirements.


Liquidity Sources	Liquidity Sources	August 26, 2022		February 25, 2022		Liquidity Sources	May 26, 2023		February 24, 2023
Cash and cash equivalents	Cash and cash equivalents	$	52.2	$	200.9	Cash and cash equivalents	$	40.2	$	90.4

Company-owned life insurance	Company-owned life insurance	161.7		168.0		Company-owned life insurance	159.7		157.3
Availability under credit facilities	Availability under credit facilities	136.4		262.0		Availability under credit facilities	270.4		269.7
Total liquidity sources available	Total liquidity sources available	$	350.3	$	630.9	Total liquidity sources available	$	470.3	$	517.4

As of ~~August~~May 26, ~~2022,~~2023, we held a total of ~~$52.2~~$40.2 in cash and cash equivalents. Of that total, ~~32%~~10% was located in the U.S., and ~~68%~~90% was located outside of the U.S., primarily in China (including Hong Kong), Mexico, ~~Malaysia, Canada and~~ the United ~~Kingdom.~~Kingdom, India and Malaysia.

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.

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The following table summarizes our Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~August~~May 26, ~~2022~~2023 and ~~August~~May 27, ~~2021:~~2022:

Six Months Ended
Cash Flow Data August 26,
2022 August 27,
2021
Net cash provided by (used in):
Operating activities $ (74.4) $ (61.6)
Investing activities (115.3) (6.5)
Financing activities 43.3 (59.9)
Effect of exchange rate changes on cash and cash equivalents (2.0) (0.6)
Net decrease in cash, cash equivalents and restricted cash (148.4) (128.6)
Cash, cash equivalents and restricted cash, beginning of period 207.0 495.6
Cash, cash equivalents and restricted cash, end of period $ 58.6 $ 367.0

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	Three Months Ended
Cash Flow Data	May 26, 2023		May 27, 2022
Net cash provided by (used in):
Operating activities	$	11.3	$	(55.1)
Investing activities	(11.2)		(7.3)
Financing activities	(50.3)		(20.7)
Effect of exchange rate changes on cash and cash equivalents	(0.4)		(1.3)
Net decrease in cash, cash equivalents and restricted cash	(50.6)		(84.4)
Cash, cash equivalents and restricted cash, beginning of period	97.2		207.0
Cash, cash equivalents and restricted cash, end of period	$	46.6	$	122.6

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


		Six Months Ended					Three Months Ended
Cash Flow Data — Operating Activities	Cash Flow Data — Operating Activities	August 26, 2022		August 27, 2021		Cash Flow Data — Operating Activities	May 26, 2023		May 27, 2022
Net income (loss)	Net income (loss)	$	8.2	$	(3.4)	Net income (loss)	$	1.5	$	(11.4)
Depreciation and amortization	Depreciation and amortization	43.7		41.2		Depreciation and amortization	20.4		20.2
Share-based compensation	Share-based compensation	15.6		15.2		Share-based compensation	14.0		12.2
Restructuring costs	Restructuring costs	4.7		—		Restructuring costs	8.1		4.2
Changes in accounts receivable, inventories and accounts payable	Changes in accounts receivable, inventories and accounts payable	(117.5)		(45.3)		Changes in accounts receivable, inventories and accounts payable	34.7		(48.4)
Income taxes receivable	Income taxes receivable	22.2		(2.2)		Income taxes receivable	(2.4)		25.3
Employee compensation liabilities	Employee compensation liabilities	1.3		(30.7)		Employee compensation liabilities	(49.1)		(18.5)
Employee benefit obligations	Employee benefit obligations	(18.6)		(14.9)		Employee benefit obligations	(19.3)		(17.2)
Changes in other operating assets and liabilities	Changes in other operating assets and liabilities	(34.0)		(21.5)		Changes in other operating assets and liabilities	3.4		(21.5)
Net cash used in operating activities		$	(74.4)	$	(61.6)
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	$	11.3	$	(55.1)

Annual payments related to accrued variable compensation and retirement plan contributions totaled ~~$32.4~~$77.3 in ~~year-to-date 2023~~Q1 2024 compared to ~~$50.4~~$32.4 in the prior year. ~~The remaining change in employee compensation liabilities was driven by higher variable compensation expense in year-to-date 2023 compared to the prior year.~~ In ~~year-to-date 2023,~~Q1 2024, we ~~used~~generated cash infrom working capital ~~driven by~~primarily due to decreased levels of inventory related to supply chain improvements and improvements in the number of days sales outstanding related to accounts receivable. In Q1 2023, cash was used to meet working capital requirements primarily due to increased levels of inventory ~~levels~~on-hand which were purchased to mitigate the ~~impact~~impacts of supply chain ~~disruptions and increased accounts receivable due to revenue growth.~~disruptions. In ~~year-to-date~~Q1 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


		Six Months Ended					Three Months Ended
Cash Flow Data — Investing Activities	Cash Flow Data — Investing Activities	August 26, 2022		August 27, 2021		Cash Flow Data — Investing Activities	May 26, 2023		May 27, 2022
Capital expenditures	Capital expenditures	$	(28.9)	$	(31.8)	Capital expenditures	$	(11.7)	$	(13.6)
Proceeds from disposal of fixed assets		5.6		16.8
Acquisitions, net of cash acquired		(105.4)		—

Other	Other	13.4		8.5		Other	0.5		6.3
Net cash used in investing activities	Net cash used in investing activities	$	(115.3)	$	(6.5)	Net cash used in investing activities	$	(11.2)	$	(7.3)

Capital expenditures in ~~year-to-date 2023~~Q1 2024 were primarily related to investments in manufacturing operations, product development, customer-facing showrooms, facilities and information technology. In year-to-date 2023 and year-to-date 2022, proceeds from the disposal of fixed assets included $5.6 and $16.6, respectively, related to the sale of land. Other investing activities in year-to-date 2023 included $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 the prior year included ~~$6.4~~$5.6 of proceeds from ~~COLI policy maturities.~~the sale of land.

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


		Six Months Ended					Three Months Ended
Cash Flow Data — Financing Activities	Cash Flow Data — Financing Activities	August 26, 2022		August 27, 2021		Cash Flow Data — Financing Activities	May 26, 2023		May 27, 2022
Dividends paid	Dividends paid	$	(34.0)	$	(29.2)	Dividends paid	$	(12.1)	$	(17.1)
Common stock repurchases		(3.4)		(30.9)

Borrowings on global committed bank facility	Borrowings on global committed bank facility	266.8		—		Borrowings on global committed bank facility	67.2		—
Repayments on global committed bank facility	Repayments on global committed bank facility	(187.0)		—		Repayments on global committed bank facility	(67.2)		—
Repayments on note payable						Repayments on note payable	(32.2)		—
Other	Other	0.9		0.2		Other	(6.0)		(3.6)
Net cash provided by (used in) financing activities		$	43.3	$	(59.9)
Net cash used in financing activities						Net cash used in financing activities	$	(50.3)	$	(20.7)

We paid dividends of ~~$0.145~~$0.10 per common share in Q1 ~~2023 and Q2 2023, and $0.10~~2024 and $0.145 per common share in Q1 ~~2022~~2023.

In Q1 2024, we borrowed and ~~Q2 2022, respectively.~~

repaid $67.2 under our global committed bank facility to fund our operations and a balloon payment of $31.8 for a note payable that matured during the quarter. See Note 8 to the condensed consolidated financial statements for additional information
.

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Other financing activities include share repurchases. In ~~year-to-date 2023,~~Q1 2024, we repurchased ~~279,301~~429,624 shares of Class A common stock all of which 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. In year-to-date 2022,for $3.3, and in Q1 2023, we repurchased ~~2,227,000~~279,103 shares of Class A common stock ~~359,527 of which~~for $3.4. 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.

As of ~~August~~May 26, ~~2022,~~2023, we had $6.4 of remaining availability under the $150 share repurchase program approved by our Board of Directors in 2016.

Liquidity Facilities

The following table summarizes available capacity under our ~~total~~ liquidity facilities as of ~~August~~May 26, ~~2022:~~2023:


Liquidity Facilities	~~August~~May 26, ~~2022~~2023
Global committed bank facility	$	~~203.2~~250.0
Other committed bank facility	~~5.9~~8.0
Various uncommitted facilities	~~11.0~~13.2
Total credit lines available	~~220.1~~271.2
Less: Borrowings outstanding	~~(83.7)~~(0.8)

Available capacity	$	~~136.4~~270.4

We have a $250.0 global committed bank facility in effect through 2025. As of ~~August~~May 26, ~~2022, total availability under the facility was limited to $203.2 as a result of covenant constraints,~~2023, there were ~~$79.8~~no borrowings outstanding, ~~under the facility,~~our ability to borrow was not limited and we were in compliance with all covenants under the facility.

We have an $8.0 committed bank facility related to a subsidiary. As of ~~August~~May 26, ~~2022, total~~2023, there were $0.8 in borrowings outstanding under the facility and our availability to borrow under the facility was ~~limited to $5.9 based on eligible accounts receivable of the subsidiary, and $3.3 was outstanding under the facility.~~not limited.

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 up to ~~$3.7~~$3.8 and a total foreign currency borrowing capacity of up to ~~$7.3~~$9.4 as of ~~August~~May 26, ~~2022.~~2023. These credit facilities have no stated expiration date but may be changed or canceled by the banks at any time. As of ~~August~~May 26, ~~2022, $0.6 was~~2023, there were no borrowings outstanding under these facilities.

Total consolidated debt as of ~~August~~May 26, ~~2022~~2023 was ~~$563.5.~~$446.5. In addition to borrowings under one of our ~~credit~~committed bank facilities, we have ~~$445.1~~$445.7 in term notes due in 2029 with an effective interest rate of 5.6%~~, and a term loan with a balance of $33.5 as of August 26, 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~~ contain no financial covenants and are not cross-defaulted to our other debt facilities.

Liquidity Outlook

As of ~~August~~May 26, ~~2022~~2023, our total liquidity, which is comprised of cash and cash equivalents and the cash surrender value of COLI, aggregated to ~~$213.9.~~ $199.9. 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, including our material cash requirements.

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During ~~Q2 2023,~~Q1 2024, there have been no significant changes in the items that we have identified as our material committed cash requirements in our Annual Report on Form 10-K for the fiscal year ended February ~~25, 2022.~~24, 2023.

We also have other planned material usages of cash which we consider discretionary. This includes plans for capital expenditures which are expected to total approximately ~~$50~~$70 to ~~$60~~$80 in ~~2023~~2024 compared to ~~$60.5~~$59.1 in ~~2022.~~2023. In addition, we fund dividend payments declared by our Board of Directors. On ~~September~~June 21, ~~2022,~~2023, we announced a quarterly dividend on our common stock of $0.10 per share, or approximately $11, to be paid in ~~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.Q2 2024.

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 sufficient to fulfill our existing material cash requirements.

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Critical Accounting Estimates

During ~~Q2 2023,~~Q1 2024, there have been no changes in the items that we have identified as critical accounting estimates in our Annual Report on Form 10-K for the fiscal year ended February ~~25, 2022.~~24, 2023.

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 the market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) we faced ~~by us~~ as of ~~August~~May 26, ~~2022 is the same as~~2023 had not materially changed from what we disclosed in our Annual Report on Form 10-K for the fiscal year ended February ~~25, 2022.~~24, 2023. 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 ~~Q2 2023,~~Q1 2024, no material change in foreign exchange risk occurred.

Interest Rate Risk

During ~~Q2 2023,~~Q1 2024, no material change in interest rate risk occurred.

Commodity Price Risk

During ~~Q2 2023,~~Q1 2024, no material change in commodity price risk occurred.

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Fixed Income and Equity Price Risk

During ~~Q2 2023,~~Q1 2024, no material change in fixed income and equity price risk occurred.

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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 ~~August~~May 26, ~~2022.~~2023. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of ~~August~~May 26, ~~2022,~~2023, 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 ~~second~~first fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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 ~~25, 2022.~~24, 2023. 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 ~~25, 2022.~~24, 2023.

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 ~~Q2 2023:~~Q1 2024:

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) —


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)
02/25/2023 - 03/31/2023	429,624	$	7.71	—	$	6.4
04/01/2023 - 04/28/2023	—	$	—	—	$	6.4
04/29/2023 - 05/26/2023	—	$	—	—	$	6.4
Total	429,624	(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.

(2)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.

3528

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Item 6.Exhibits:


Exhibit No.			Description

10.1			Third Amended and Restated Credit Agreement, dated as of February 27, 2020 and amended December 21, 2021 and April 27, 2023, among Steelcase Inc.; JPMorgan Chase Bank, N.A., as Administrative Agent; Bank of America, N.A., and Wells Fargo Bank, National Association, as Co-Syndication Agents; HSBC Bank USA, National Association, as Documentation Agent; and certain other lenders
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
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)

________________

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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/ ~~David~~NICOLE C. ~~Sylvester~~MCGRATH
			~~David~~Nicole C. ~~Sylvester~~McGrath ~~Senior~~ Vice President, Corporate Controller & Chief ~~Financial~~Accounting Officer (Duly Authorized ~~Officer, Principal Financial~~ Officer and Principal Accounting Officer)

Date: ~~September~~June 23, ~~2022~~2023

3730


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)


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







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

	$	58.6	$	1.8	$	2.6	$	63.0
Liabilities:
Foreign exchange forward contracts	$	—	$	(0.7)	$	—	$	(0.7)
	$	—	$	(0.7)	$	—	$	(0.7)

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







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

	$	207.0	$	1.0	$	2.6	$	210.6
Liabilities:
Foreign exchange forward contracts	$	—	$	(0.3)	$	—	$	(0.3)
	$	—	$	(0.3)	$	—	$	(0.3)


	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	$	—	$	—	$	—


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		%


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 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	%


	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)	%


	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