10-Q: Steelcase Inc. Reports Q3 2025 Results: Revenue Growth in Americas Offsets International Decline

Steelcase Inc. saw a 2% increase in revenue in Q3 2025, driven by growth in the Americas, despite a decline in international markets and a non-cash pension settlement charge impacting earnings.

Summary

• Steelcase Inc. reported a 2% increase in revenue for the third quarter of 2025, reaching $794.9 million, compared to $777.9 million in the same period last year.
• The Americas segment experienced a 5% revenue increase, while the International segment saw a 6% decline.
• The company's net income for the quarter was $19.1 million, or $0.16 per diluted share, down from $30.8 million, or $0.26 per diluted share, in the prior year.
• The results were impacted by a $15.2 million non-cash settlement charge related to the annuitization of a defined benefit pension plan in the U.K.
• Year-to-date revenue was $2,378.0 million, slightly down from $2,384.4 million in the prior year, with a net income of $93.1 million, or $0.78 per diluted share, compared to $59.8 million, or $0.50 per diluted share, in the prior year.
• The company's organic revenue grew by 3% in Q3 2025, with a 7% increase in the Americas and an 8% decline in International.
• Adjusted operating income for Q3 2025 was $47.3 million, compared to $49.3 million in the prior year.
• The company's effective tax rate for Q3 2025 was 26.8%, compared to 24.1% in the prior year.

Sentiment

Score: 5

Explanation: The document presents a mixed picture with positive revenue growth in the Americas but declines in international markets and a significant non-cash charge impacting earnings. The company is making strategic investments but faces some challenges.

Positives

• The Americas segment showed strong revenue growth of 5% in Q3 2025.
• The company's cost of sales as a percentage of revenue improved by approximately 120 basis points in Q3 2025.
• Year-to-date net income increased to $93.1 million, or $0.78 per diluted share, compared to $59.8 million, or $0.50 per diluted share, in the prior year.
• The company generated cash from improved operating results and the timing of payment of certain accrued liabilities.
• The company has a $300 million global committed bank facility in effect through 2029 with no borrowings outstanding as of November 22, 2024.

Negatives

• International revenue declined by 6% in Q3 2025.
• The company's net income decreased to $19.1 million in Q3 2025, compared to $30.8 million in the prior year.
• A $15.2 million non-cash settlement charge related to a U.K. pension plan annuitization negatively impacted earnings.
• Orders declined by 1% in Q3 2025 compared to the prior year.
• Operating expenses increased by $17.3 million in Q3 2025 compared to the prior year.

Risks

• The company faces risks related to competitive and general economic conditions, both domestically and internationally.
• Acts of terrorism, war, governmental action, natural disasters, pandemics, and other Force Majeure events could impact the business.
• Cyberattacks pose a risk to the company's operations and data.
• Changes in the legal and regulatory environment could affect the company's performance.
• Fluctuations in raw material, commodity, and other input costs could impact profitability.
• Currency fluctuations could affect the company's financial results.
• Changes in customer demand could impact revenue.
• The company is investing in a new ERP system, which carries implementation risks and costs.

Future Outlook

The company expects to begin amortizing the capitalized development costs of its new ERP system in 2026. Capital expenditures are expected to total approximately $50 million in 2025, and the company expects to incur approximately $50 million in capitalized costs for cloud computing arrangements related to the implementation of its new ERP system in 2025.

Management Comments

• Management uses non-GAAP financial measures to monitor and evaluate financial results and trends.
• Management believes the financial strength of the issuing insurance companies associated with COLI policies is sufficient to meet their obligations.
• Management believes organic revenue growth is a meaningful metric to investors as it provides a more consistent comparison of our revenue to prior periods as well as to industry peers.

Industry Context

The results reflect a mixed performance with strong growth in the Americas offset by weakness in international markets, which may be indicative of broader trends in the furniture and office solutions industry. The company's focus on cost reduction and business transformation initiatives aligns with industry trends towards efficiency and technological upgrades.

Comparison to Industry Standards

• Steelcase's performance in the Americas, with a 5% revenue increase, is a positive sign compared to some competitors who may be facing stagnant or declining sales in the region.
• The 6% decline in international revenue is a concern, as some competitors may be experiencing more stable or even growing international sales.
• The company's adjusted operating income of $47.3 million in Q3 2025, while slightly down year-over-year, is still a reasonable performance compared to industry averages.
• The company's investment in a new ERP system is a significant undertaking, similar to what other large companies in the industry are doing to improve efficiency and data management.
• The non-cash pension settlement charge is a unique event that may not be comparable to other companies in the industry, but it highlights the importance of managing long-term liabilities.

Stakeholder Impact

• Shareholders may be concerned about the decrease in net income and diluted earnings per share in Q3 2025.
• Employees may be affected by the ongoing restructuring actions.
• Customers in the Americas may benefit from the company's strong performance in that region.
• Customers in international markets may experience some disruption due to the company's restructuring efforts.
• Creditors should be reassured by the company's strong liquidity position and compliance with debt covenants.

Next Steps

• The company expects to complete its restructuring actions by the end of 2025.
• The company plans to begin amortizing the capitalized development costs of its new ERP system in 2026.
• The company will continue to monitor and manage its liquidity position and cash requirements.

Key Dates

Keywords

Steelcase, revenue, earnings, restructuring, pension, Americas, International, operating income, organic growth, ERP system