Q4 2025 Steelcase Inc Earnings Call
Good morning, My name is Rob and I'll be your conference operator today at this time I would like to welcome everyone to the Steelcase fourth quarter fiscal 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by.
O'meara: Number one on your telephone keypad, if you would like to withdraw your question again press Star one. Thank you. Mr. O'meara you may begin your conference.
Speaker Change: Thank you Rob and good morning, everyone. Thank you for joining us for the recap of our fourth quarter and fiscal 2025 financial results here with me today are Sarah Armbruster, our President and Chief Executive Officer, and Dave Sylvester, Our senior Vice President and Chief Financial Officer.
Speaker Change: Our fourth quarter earnings release, which crossed the wires yesterday is accessible on our website. This conference call is being webcast and this webcast is a copywriter production of Steelcase, Inc. A replay of this webcast will be posted to IR steelcase com later today.
Speaker Change: Our discussion today may include references to non-GAAP financial measures and forward looking statements reconciliations to the most comparable GAAP measures and details regarding the risks associated with the use of forward looking statements are included in our earnings release, and we are incorporating by reference into this conference call. The text of our Safe Harbor statement included in the release.
Speaker Change: Following our prepared remarks, we will respond to questions from investors and analysts I will now turn the call over to our President and Chief Executive Officer, Sarah Armbruster.
Speaker Change: Mike Hi, everyone and thanks for joining the call. So today I'll cover highlights of our financial results and offer a few remarks, explaining how we continue to make progress against our strategy.
Speaker Change: And I'll start with our results, we're proud of our fiscal 2025 performance and the momentum we've been able to build.
Speaker Change: Despite our industry not growing as expected our full year adjusted earnings per share finished at $1.12 above the top end of the targets we communicated at the beginning of the fiscal year.
Speaker Change: We delivered an adjusted operating margin of 5%, including 7% in the Americas.
Speaker Change: In Q4, we delivered our 11th consecutive quarter of year over year gross margin expansion, improving over 500 basis points since fiscal 2022.
Speaker Change: Our fourth quarter order growth of 9% was led by 12% growth in our Americas segment, which we believe once again outpaced our industry with 6% order growth in the Americas for the full fiscal year. This.
Speaker Change: This is the sixth consecutive quarter of year over year order growth in the Americas.
Speaker Change: That order growth was led by especially strong demand from our large corporate and government customers and we continue to hear leaders across multiple industries, requiring a higher level of in office presence and we see some positive signals in corporate real estate.
Speaker Change: According to CBRE data U S office leasing activity in Q4 increased 24% versus Q3, and 23% year over year, making it the highest quarter of leasing activity in three years.
Speaker Change: So turning now to our strategy, we continue to lead the transformation of the workplace the demand in the Americas coming from our large corporate customers demonstrates that leaders are looking for workspaces that can achieve better outcomes and adapt to the changing needs of their employees.
Speaker Change: As we've said throughout the year many of our large global customers. We're planning key projects in fiscal 'twenty five and those decisions really came to fruition in Q4, we saw customer activity levels pick up first in financial services and now across multiple industries, including technology manufacturing and prefer.
Speaker Change: All services.
Speaker Change: And we're winning our win rates remained strong during fiscal 'twenty, five which led to market share gains in the Americas.
Speaker Change: And we have seen strengthening from our global client collaboration or GCC customers with strong global order growth from those customers in three of the last four months of fiscal 2025.
Speaker Change: And we see opportunities to capture more demand.
Speaker Change: As one example, we're adopting technology in new ways to benefit our dealers and customers with better experiences that lead to stronger loyalty.
Speaker Change: For example over the past three years, we have worked actively with our dealer community to gather and analyze more than 5 million workplace applications using AI driven analytics.
Speaker Change: Our dataset is growing every week and we continuously are uncovering in emerging trends, giving us insights that help us remain relevant and responsive to evolving workplace needs.
Speaker Change: Our second strategic pillar is to expand our reach within markets on a year to date basis, all our customer segments in the Americas have posted year over year order growth with the exception of our consumer business.
Speaker Change: Education, we saw solid growth in fiscal 'twenty, five partially driven from school districts issuing bonds for new construction or a modernization efforts.
Speaker Change: Our value proposition is resonating with those customers and we believe our growth outpace the education furniture market this year.
Speaker Change: In health care, we supported several health care systems to modernize facilities or consolidated organization. Following the pandemic and we were able to leverage our operational scale to execute some large projects on short lead times.
And we believe the health care industry is poised for continued growth largely driven by an aging U S demographic that is requiring more health care services.
Speaker Change: In the small and mid size business segment, our a M. Q brand grew at a strong double digit percentage in fiscal 'twenty five.
Speaker Change: Business growth has been a significant driver of economic activity in the United States and is a strong focus for our future growth and investment.
Speaker Change: Finally, turning to the profitability pillar of our strategy I want to build on my opening remarks.
In fiscal 'twenty, five we delivered 100 basis points of gross margin improvement over the prior year, which included benefits from operational cost reductions.
Speaker Change: These operations initiatives included installing new technologies, and moving production lines to increase efficiencies in sourcing select product lines and closing select distribution centers to optimize our network.
Speaker Change: In our international segment, our results improved through the first half of the year in part driven by the cost reductions we implemented.
Speaker Change: Midway through the year, we were anticipating an improving demand environment that would deliver profitability in the second half.
Although we still see positive demand signals from some of our large national accounts and international are small to midsized business declined and so we're considering additional actions to further lower our cost structure.
Speaker Change: Our balance sheet continued to strengthen as we drove $100 million of free cash flow and we returned $84 million to shareholders I'm proud of the work of our teams to deliver these results.
Speaker Change: As you know we're in the midst of developing and implementing a new ERP system in the Americas with the goal of simplifying our processes and enhancing our capabilities to strengthen our competitive advantage.
Speaker Change: We're now also facing new tariffs and global trade uncertainty, which requires us to respond with pricing actions inventory purchases and supply chain shifts.
Speaker Change: Given the dynamic nature of the environment, we're in and to ensure our ERP system is fully ready we have chosen to agile and target. The go lives or our ERP system in calendar year 2026.
Speaker Change: In closing, we're proud of our fiscal 'twenty five adults in which our adjusted earnings per share finished above our targeted range.
Speaker Change: We remain positive about the progress we continue to make against our strategy.
Speaker Change: We are navigating a dynamic environment of evolving tariff and trade policies and I'll now turn it over to Dave who also is leading our tariff response efforts to review the financial results and our outlook in more detail.
Dave Sylvester: Thank you Sarah and good morning, everyone My.
Dave Sylvester: My comments today will start with the highlights related to our fourth quarter results balance sheet and cash flow.
Dave Sylvester: Then I'll cover the outlook for the first quarter and our targets for fiscal 2026.
Dave Sylvester: Our fourth quarter revenue of $788 million was in the upper end of the estimated range. We provided in December benefiting from stronger than expected order growth in the Americas <unk>.
Dave Sylvester: Our adjusted earnings of 26 cents per share finished above our range and included 11 cents related to favorable tax items net of related variable compensation expense setting.
Dave Sylvester: Setting these items aside adjusted earnings fell below our estimated range driven by shortfalls in both the Americas and international segments.
Dave Sylvester: For the Americas, we had a higher mix of business from large corporate and government customers, which tend to have lower gross margins. Our project spending at the end of the year was higher than anticipated and we recorded some year end inventory related adjustments.
Dave Sylvester: For International we also experienced some unfavorable business mix and we had higher manufacturing costs and higher operating expenses, including a bad debt provision and some severance costs.
Dave Sylvester: Compared to the prior year, we posted an organic revenue decline of 5%, including a 3% decline in the Americas and a 10% decline in international the organic decline, but just for the additional week in the fourth quarter of this year, which provided marginal earnings benefit.
Dave Sylvester: The Americas fourth quarter revenue decline was impacted by a lower beginning backlog of orders scheduled to ship in the quarter the.
Dave Sylvester: The international decline was driven by Germany, France, and India, which posted a current quarter decline compared to 40% growth in the prior year.
Dave Sylvester: Our adjusted EPS increased <unk> <unk> and our adjusted operating income declined $20 million.
Dave Sylvester: Our prior year adjusted EPS benefited by approximately two cents from net favorable adjustments, which were related to our unconsolidated affiliates and were reflected in other income.
Dave Sylvester: Our adjusted operating income in the current year was impacted by $11 million of variable compensation expense related to the tax benefits.
Dave Sylvester: The remainder of the year over year decrease was primarily driven by lower revenue in the international segment and higher operating expenses adjusted for the additional week.
Dave Sylvester: As it relates to cash flow and the balance sheet cash and short term investments decreased $18 million from Q3 as Q4, adjusted EBITDA of $40 million was largely consumed by capital expenditures and capitalization of cloud computing costs related to our new ERP.
Dave Sylvester: Our annual or semi annual interest payment and dividends.
Dave Sylvester: Our trailing four quarter adjusted EBITDA of $262 million was eight 3% of revenue.
Dave Sylvester: Our total liquidity, which includes the cash surrender value of coli aggregated to $558 million at the end of the quarter, which exceeded our total debt of $447 million.
Dave Sylvester: Shifting to orders, our Q4 orders grew 9% compared to the prior year, driven by 12% growth in the Americas and 1% growth in international.
Dave Sylvester: In the Americas, Q4 marks the sixth consecutive quarter of year over year order growth and the 12% growth rate in the current quarter was on top of 8% growth in Q4 of the prior year.
Dave Sylvester: The order growth was driven by large corporate government small and midsized business and health care customers.
Dave Sylvester: We drove strong growth in both our project and continuing business and we continue to believe the growth in our project business is reflective of how we are leading the transformation of the workplace.
Dave Sylvester: As evidenced by our strong win rates and estimated market share gains over the last year in the Americas.
Dave Sylvester: For international the 1% growth in orders was driven by continued strong growth in India, and Spain, and was largely offset by weakness in Germany and the U K.
Dave Sylvester: Turning to our outlook for the first quarter, our overall backlog at the end of the fourth quarter was up 11% compared to the prior year.
Dave Sylvester: Average weekly order levels through the first three weeks in March are 7% higher than the Q4 weekly average.
Dave Sylvester: Seem to be following typical seasonal patterns of order levels building from January through March.
Dave Sylvester: On a year over year beef excuse me on a year over year basis, they declined 1% compared to the same period in fiscal 2025, which reflected 10% growth compared to the same three week period in fiscal 2024.
Dave Sylvester: Accordingly, we expect to report revenue within a range of 762 $785 million, which represents organic growth of between 5% to 9% compared to the prior year.
As it relates to earnings we expect to report adjusted earnings of between $13 17 per share, which compares to 16 in the prior year.
Dave Sylvester: In addition to the projected range of revenue. The adjusted earnings estimates includes gross margin of approximately 33%, which includes an assumption of $9 million of higher tariff costs as compared to the prior year and operating expenses of between 230 to 235.
Dave Sylvester: Which includes $4 $3 million of amortization related to purchased intangible assets.
Dave Sylvester: Lastly, we expect interest expense in the other non operating items to net to approximately $2 million of expense.
Dave Sylvester: And we are projecting an effective tax rate of approximately 27%.
Dave Sylvester: For fiscal 2026.
Dave Sylvester: We are targeting additional progress toward our mid term financial targets, including mid single digit organic revenue growth.
Dave Sylvester: And a modest improvement in our adjusted operating margin.
Dave Sylvester: Our revenue target reflects our strong beginning backlog and assumes the macro environment remains stable return to office sentiment continues to strengthen.
Dave Sylvester: And the overall positive sentiment, we're hearing from our large corporate customers dealers and sales organization in the Americas is not significantly disrupted by the shifts in U S trade policy and related uncertainty about tariffs.
Dave Sylvester: Regarding adjusted operating income in fiscal 2026.
Dave Sylvester: We are targeting to offset higher tariff and related inflationary costs with appropriate pricing actions.
Dave Sylvester: And we expect additional benefits from our gross margin improvement initiatives.
Dave Sylvester: In March we announced the June list price increase in the Americas for the first time in three years in response to inflationary costs over that horizon.
Dave Sylvester: And we also announced the tariff recovery charge in the Americas that takes effect on orders received after today.
Dave Sylvester: Our ability to offset tariff costs with pricing actions could be impacted by a number of factors such as the speed and pace of changes in the tariffs and available exemptions such as U S MCA as well as the macroeconomic environment and competitive factors.
Dave Sylvester: Additionally for your fiscal 2026 modeling in our international segment were targeting breakeven adjusted operating income for the full fiscal year with losses likely in the first half of the year offset by profitability in the second half.
Dave Sylvester: We expect gross margin expansion in fiscal 2026 to be mostly driven by the benefits of projected volume growth.
Dave Sylvester: And our operating expense leverage adjusting for the impacts of the land sale in fiscal 2025 is expected to be relatively flat year over year in part due to approximately $10 million of higher expense associated associated with our new ERP.
Dave Sylvester: Lastly, we are targeting capital expenditures and capitalized cloud computing costs of between $70 million to $80 million for fiscal 2026.
Dave Sylvester: In closing, we're encouraged by the order growth and earnings momentum we achieved in fiscal 2025, our beginning backlog is up 11% heading into fiscal 2026.
Dave Sylvester: Our large corporate customers are beginning to invest more significantly in their workplaces, and we're gaining market share in the Americas.
Dave Sylvester: And we have a strong balance sheet and we're implementing necessary actions to address the tariff and inflationary environment and we are targeting additional progress towards our midterm financial targets in fiscal 2026.
Dave Sylvester: From there we will turn it back to the operator for questions.
Speaker Change: Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Speaker Change: And your first question comes from the line of Greg Burns from Sidoti Your line is open.
Greg Burns: Good morning.
Speaker Change: Hi, Greg.
Dave Sylvester: Could you just run through the commentary around the order pacing maybe.
Speaker Change: Through.
Speaker Change: <unk>.
Speaker Change: The fourth quarter, and what Youre seeing in the early part of <unk>.
Speaker Change: Ne in the May quarter.
Speaker Change: Yeah as I said in my scripted remarks orders seem to follow normal seasonal patterns January through.
Speaker Change: Last week.
Speaker Change: Building as they normally would seasonally I think our growth rate in February was pretty good.
Speaker Change: I don't recall January December was strong you might remember on our call in December through the first three weeks, we had very strong double digit growth.
So December was pretty good January might've been softer year over year.
Speaker Change: But to be honest I don't remember what the prior year comps were a month by month.
Speaker Change: But what I, what we feel good about is that the order patterns are continuing to seem to follow this normal seasonal flow of improving.
Speaker Change: Through at least the end of last week this week, they'll likely be quite strong because ours.
Speaker Change: If recovery charge goes into effect tomorrow on orders that come in after today.
Speaker Change: Okay, Great and then.
Speaker Change: But the outlook for.
Speaker Change: Breakeven internationally.
Speaker Change: And I guess, the expectation for that to be profitable in the second half.
Speaker Change: What actions are you taking there or is that just a volume expectations or are you taking specific actions to.
Speaker Change: <unk>.
Speaker Change: Improve the profitability of that segment.
Speaker Change: Well we are.
Speaker Change: We're expecting some growth out of the international business next year. There are several parts of the business that have been doing well and are expected to continue to do well. The question is whether or not the macro environment will settle down or improve a little bit and allow some of the other areas of our business to Oh.
Speaker Change: Also show some growth or less decline, which should help enable modest growth. So we're definitely counting on some growth for next year, but it's also clear that with the performance we had in the back half of fiscal 2025, we need to continue to look at our cost structure and that's what we're doing.
Speaker Change: Okay, great. Thank you.
Speaker Change: Your next question comes from the line of Joe Gomes from Noble capital. Your line is open.
Joe Gomes: Good morning, Thanks for taking my questions.
Speaker Change: Good morning, good morning.
Speaker Change: Pardon me just real quick on the variable comp and.
Speaker Change: And the tax items that were talking in the fourth quarter.
Speaker Change: Was that just kind of like a true up for the year or why in the fourth quarter I guess.
Speaker Change: Oh, well the tax items. There were two items are two buckets of items that drove the tax items, one was a regulation change that <unk>.
Speaker Change: Happened in December So you might see other 12 31 companies that had to take.
Speaker Change: At the same kind of adjustment that could went the other way ours was positive some companies might have been negative and then we drove a couple of pretty important tax strategies that really are our advisors came to us. They are proven strategies that have worked at other organizations and we worked through them late in <unk>.
Speaker Change: Our fiscal year and agreed to move forward and made the.
Speaker Change: Appropriate elections to do so and so they were recorded in the fourth quarter on the variable comp piece.
We're kind of an all in company, we adjust very few things out of our compensation and so when we have tax adjustments positive or negative they often.
Speaker Change: Go against or for the variable comp that we pay to all of our employees.
Speaker Change: Okay. Thanks for that clarity I appreciate that.
Speaker Change: And on the 26th guide I don't know I know you talked touched about it if you could give a little more.
Speaker Change: Kind of guidance on what your economic assumptions are for the the guidance, especially given all the uncertainty we've seen so far this year.
Speaker Change: Yeah.
Speaker Change: Yeah, I mean, it's.
Speaker Change: We definitely throttled, our expectations a little bit for what's happening currently.
Speaker Change: I mean, it's no secret that there is a negative sentiment in Canada as an example about buying product buying things from the U S. So.
Speaker Change: That we took into consideration what the federal government is doing through does and.
Speaker Change: And how that might impact our government business. We also took that into consideration.
Speaker Change: But when we look at where our backlog stands and where our pre sales activities are playing out and we look at the sentiment across our field sales and dealer organization.
Speaker Change: And even broadly in the industry one of the analysts does a channel check.
On a monthly basis and that has shown expectations for improved demand for the last several months I think more recently, it's tempered because of the uncertainty that's out there, but taking all of that into consideration, we feel pretty good about being able to target.
Speaker Change: Growth, that's consistent with our mid term expectations of 4% to 6%.
Speaker Change: Now could that come apart sure, but it hasnt come apart yet and we so we're planning for growth accordingly.
Speaker Change: Okay. Thank you for that.
Speaker Change: One last one.
Speaker Change: On the buyback did you guys repurchase any shares in the quarter and kind of what's the sentiment for that in the.
Speaker Change: The current environment and doing additional buybacks.
Speaker Change:
Speaker Change: We've targeted buybacks to minimally offset dilution in fiscal 2025, we offset dilution and then some I think we bought between two and 3 million shares throughout.
Speaker Change: Throughout the year, and we will very likely look to be doing the same thing in fiscal 2026.
Speaker Change: Great. Thanks for taking the questions.
Speaker Change: No problem.
Speaker Change: Your next question comes from the line of Steven Ramsey from Thompson Research Group. Your line is open.
Steven Ramsey: Hi, Good morning wanted to kind of stay stay focused on the demand that youre seeing.
First you you guys had talked about in prior quarters.
Steven Ramsey: On the West Coast.
Steven Ramsey: Seeing some recovery in that geography curious kind of where the west coast recovery is in light of the broad based strength.
Steven Ramsey: We're seeing in most verticals, maybe how that helped Q4 orders and how that is embedded in the outlook.
Steven Ramsey: It's a good question for you and we have seen it and then that channel check that I just referenced there is a geographical breakdown of what dealers are expecting in the midterm from a demand perspective, and it has shown improvement in the west coast or expected improvement in the West coast and we're seeing.
Steven Ramsey: Some of that as well.
Speaker Change: I sit actually on the board of one of our largest dealers, who has northern California and Seattle.
Steven Ramsey: And they are seeing increased activity.
Steven Ramsey: Their clients, which is mostly in the tech sector. As you can imagine and are expecting nice growth next fiscal year, then and we expect to participate in that as well.
Steven Ramsey: Okay. That's helpful and then thinking about large customers is there.
Steven Ramsey: Their contribution to the strength in Q4 orders, maybe on a spectrum relative to the 12% Americas growth.
Steven Ramsey: Where did the large customer demand.
Steven Ramsey: And within that 12% number and then thinking about the 2025 quarter outlook.
Steven Ramsey: Our large customers need to come in to reach those targets.
Steven Ramsey: Oh, I don't remember exact numbers, but I tend to remember that there were three vertical market areas that had strong double digit growth in the quarter.
Speaker Change: And large company was one of them, Mike I don't remember the other two.
Speaker Change: But all vertical markets grew in the quarter, except retail.
Speaker Change: Government was also very strong government was strong.
Speaker Change: Okay. That's helpful and then maybe to parse order strength.
Speaker Change: Much was driven by new projects, and then where did continuing activity.
Speaker Change: Linda.
Linda: Yeah, we had growth across all three buckets project continuing in our marketing programs for customers, who don't operate with contracts with us.
Linda: The growth was strongest across projects.
Linda: But it was still double digit right, Mike and a continuing business.
Linda: And then marketing programs was kind of mid to low single digit.
Linda: Okay.
Speaker Change: Okay. That's helpful. And then last thing for me just zooming out.
Speaker Change: <unk> been stating that the industry is honored recovery trajectory in the recent past you saw continuing orders improve and then.
Speaker Change: The typical transition that we're now in two projects.
Speaker Change: <unk> growth.
Speaker Change: Basically do you feel that we are solidly in this new.
Speaker Change: New stage of recovery where projects.
Dave Sylvester: Dave resilient EBIT with the choppy macro do you feel that.
Speaker Change: The macro.
Speaker Change: A little less choppy that that would be an incremental boost to demand.
Speaker Change: I mean is it is the big question that we ask ourselves all the time and unfortunately, we don't have a crystal ball.
Speaker Change: I would tell you before the the tariff.
Speaker Change: Activity started which I think has created some uncertainty across the macro environment I mean, it's in the media all the time and you hear Ceos.
Speaker Change: On different and different interviews, commenting across different industries about that uncertainty.
Speaker Change: So before that played out we felt very good about this upcoming fiscal year. In fact, I mentioned, a few minutes ago that we downgraded our outlook for this fiscal year based on some concerns for like markets like Canada, or the government and in general and yet we're still targeting 4% to two.
Speaker Change: 6%.
Speaker Change: So.
Speaker Change: I don't know whats going to play out we're operating as if it's going to we're.
Speaker Change: We're going to get through this period of uncertainty and remain on track and have a good fiscal year, but I have other meetings, where we of course are preparing contingency plans to navigate the other side. If for example, if this doesn't go away and does stay highly uncertain and somehow impacts are our demand Pat.
Speaker Change: Turns what I feel good about Stephen is that.
Speaker Change: It's been since really calendar 2019 that theres been any kind of new demand level generated in our industry.
Speaker Change: And there are a lot of companies, bringing their employees back into the offices and the offices were designed pre pandemic really around density more than anything in there we were in a privacy crisis at that time and now with everyone coming back.
Speaker Change: And be living on video, even though they are back.
Speaker Change: They need more privacy, even in the open plan at the individual desks in the conference rooms.
Speaker Change: Alan Smith, and our organization references a number now and then that there are 90 million conference rooms in the U S. I don't I don't I don't know where that data point comes from but I have heard it several different times 90.
Speaker Change: Even even if it's half of that they need to modernize so we feel good about the fundamentals behind why demand should be a relatively good but we also recognize too that we're a cyclical industry and we are a relatively discretionary so if if things remain highly uncertain and that causes.
Speaker Change: <unk>.
Speaker Change: The C suite to pullback on capital spending we could feel that what I don't imagine is that we will feel like a catastrophic decline like we felt and the financial crisis or with the pandemic because we were at more of a peak before those declines and we are nowhere near a P.
Speaker Change: Right now the volume levels are still dramatically off what they were pre pandemic. So I think there are reasons to believe that even if the economy stays uncertain our industry could be okay. It may not grow as much as we otherwise would.
Speaker Change: But it could still grow but I also recognize too that we are discretionary so we're managing the business accordingly.
Speaker Change: That's all helpful perspective, thank you.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Reuben Garner from benchmark. Your line is open.
Reuben Garner: Thank you good morning, everybody.
Speaker Change: Dave.
Speaker Change: Just a clarification on your <unk>.
Speaker Change: Tariffs recovery charge I think is what you guys called it.
Speaker Change: How flexible is that in other words is it a stated flat percentage is it tied to specific countries.
Speaker Change: Countries with tariffs you've mentioned U S. MCA exemptions Im no expert in April so I know that Theres a lot of moving pieces when things changing by the day can you just kind of talk to us about the risks from any changes to what's been stated.
Speaker Change: Well. It is it is stated as a percentage of list price.
Speaker Change: And it begins on orders start to come in Tomorrow, and our communications, we said that it's tied to the tariffs and the related inflationary pressures that we're feeling that frankly come from the air cover of tariffs.
Speaker Change: And we also said that it could has just as much chance of going up as it does down depending on how the tariff landscape continues to develop I mean April 2nd is kind of a pretty big date that I think much of corporate America is waiting to see what's going to what's going to happen and how it is going to impact their businesses.
Speaker Change: And we're kind of in that same boat waiting to see and we're really not able to get much insight out of Washington through our relationships to understand what's coming so if we have to take it up we will.
Speaker Change: Consider that in if we need to take it down we will be the first to move quickly to adjust it down.
Speaker Change: But we cannot.
Speaker Change: Absorb costs and I don't think people I don't think companies across the industry are going to absorb the costs I mean, we leveraged a lot of the same suppliers.
Speaker Change: Around <unk> around the world and therefore are exposed to these these tariffs.
Speaker Change: Okay and then.
Speaker Change: The last couple of years, you guys have ramped up your investments in a few kind of growth your parts of your industry you mentioned one of them.
Speaker Change: The small business side showing some.
Speaker Change: Signs of weakness lately and adjusting your cost structure I was wondering if you could just update us on all of those how much of a positive boost that's been to your growth rates and outperformance of the industry over the last year and what specifically are you seeing on the small business side, that's leading you to kind of make our make our cost structure adjustments.
Speaker Change: Yeah, Hey, Reuben this is Sarah so maybe I'll I'll clarify that comment I think that I made about some softness in small and medium business was really specific to our business in Europe. So there we've seen I think some nice strengthening from.
Speaker Change: Large multinationals as well as large kind of national European National companies that we've seen softness in small and medium business, there, but I would say in the Americas.
Speaker Change: Different story, we've seen order growth from that segment for the full year. We continue to make investments that we feel are paying off really nicely in terms of what we're seeing in the small and medium.
Speaker Change: Our small and mid size segment within the America. So we plan to continue to invest to grow.
Speaker Change: As a as we're seeing the results.
Speaker Change: You know benefit the overall anything else yeah within our small to mid <unk> had a terrific year.
Speaker Change: And the the vertical market in total grew compared to.
Speaker Change: Prior year no it didn't hit our plan, but our overall revenue didn't hit our plan either and so I do think there was some macro impact, but what I did note in the fourth quarter is our dealer led small.
Speaker Change: Smaller business was up over prior year, and I think last quarter. It was flat to down so I don't know.
Speaker Change: Might be too early to call that an improving trend, but I certainly appreciate it and then give a nice shot out to our dealers for focusing on it for us.
Speaker Change: Okay really helpful. Congrats on the strong results in a tough environment guys and good luck going forward.
Speaker Change: Alright, thank you thanks.
Speaker Change: Yeah.
Speaker Change: And there are no further questions at this time Ms. Zhang Brewster I turn the call back over to you.
Zhang Brewster: So thanks for joining us this morning, and we appreciate your interest in Steelcase.
Zhang Brewster: This concludes today's conference call you may now disconnect.
Zhang Brewster: Okay.
Zhang Brewster:
Zhang Brewster:
Zhang Brewster: