Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Steelcase Fourth Quarter and Fiscal 2022 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. [Operator Instructions] Thank you. Mr. O'Meara, you may begin your conference. Michael O'Meara: Thank you, Rob. Good morning, everyone. Thank you for joining us for the recap of our fourth quarter fiscal 2022 financial results. Here with me today are Sara Armbruster, our President and Chief Executive Officer, and Dave Sylvester, our Senior Vice President and Chief Financial Officer. 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 copyrighted production of Steelcase Inc. A replay of this webcast will be posted to ir.steelcase.com later today. 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. 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, Sara Armbruster.

Thanks, Mike. And good morning, everyone. I'm happy to share that our orders grew strongly again this quarter, which was a continuation of the strength in our second and third quarters. But like so many other companies, we continue to be impacted by a significant number of supply chain challenges and inflationary costs. As we saw in our earnings release, we expect much of this pressure to continue into our first quarter, which Dave will cover in more depth, but I want to affirm we are starting to see the positive effects of actions we've taken in fiscal 2022 and believe they will drive improved results in fiscal 2023. Our fourth quarter orders growth of 27% was broad based across all segments, including in all of our main geographic markets and across most vertical markets. Orders for the quarter for our entire company were within 10% of pre-pandemic levels. Orders for Smith System, AMQ and Orangebox, along with our Asia-Pacific region, exceeded the same period in fiscal 2020. As I mentioned last quarter, these businesses have been key parts of our growth strategy, and I'm proud that we've been able to drive that growth. I also want to highlight our financial performance in EMEA, which finished the year with over $3 million of operating income, which is an improvement of $18 million versus the adjusted loss we posted last year. Our strategy in EMEA is to drive strong top line growth, while improving our gross margins and operating expense leverage, and our team has done a great job executing against that strategy over the past year. So while we see momentum that is fueling our progress, we're experiencing some friction too. Supply chain challenges have persisted and continue to lengthen the time to convert orders to shipments and drive additional costs. During the fourth quarter, we made additional adjustments in our supply chain, which included increasing our inventory levels, switching certain suppliers and in-sourcing production. And recently, we've seen improvements in our performance as a result of these adjustments. Over the past five weeks, we've achieved a higher level of on-time deliveries and a lower need for overtime and freight expediting. In addition, our order and project pipelines have not experienced any significant cancellation levels. We're also seeing positive signs in the market. This past week, I was in Washington DC meeting with customers and business leaders and across many different conversations and continue to hear strong sentiments from those leaders about their plans to implement hybrid models that include substantial presence in the office with a growing number already of having taken the step. Similarly, as I talk with business leaders who come to visit our Grand Rapids workspaces, or other CEOs and leaders more broadly, they resoundingly continue to express a broad desire to reshape their culture, and that includes changing their spaces and bringing employees together in person. Our most recent research stat says, with 87% of respondents in our latest global report indicating they will go back or are already back in the office, which is not only great for Steelcase, but it's great for innovation and growth across industries and markets. So while we're still seeing companies make a variety of choices about the role of the office and their future workplace plans, these plans almost always involve some aspect of hybrid work. So that remains an incredible opportunity for Steelcase to lead the industry with insights about new ways of working and with products and services designed to help people thrive. And we're seeing similar sentiments about the office from others research as well. In January, for example, the Harvard Business Review published a new survey detailing the projected impact of hybrid work on real estate demand. Their results reveal workers are seeking less density when they work in the office. And because companies are most likely to see peak attendance in the middle of the week, they do not believe there is much of an opportunity to shrink their footprints. Across respondents, the estimated decrease in office space needs is only 1%. Another positive development from this past quarter was that, according to CBRE data, the US office real estate market recorded the first positive net absorption since the start of the pandemic. This means more space was occupied than vacated during the fourth quarter of calendar year 2021. We were also emboldened by the overall higher level of leasing activity that CBRE reported. The data showed that new leases accounted for 72% of the Q4 total leasing activity. And this is the highest ratio since the pandemic started. And it's meaningful as new leases are more likely than renewals to lead to new furniture projects. So, Steelcase is navigating the current challenges and we see positive market signals, which reinforces our decision to anchor our strategy on work and on being the leader in helping companies navigate the new era of hybrid work. We're also placing strong emphasis on additional growth opportunities, such as expanding our reach to customers of different sizes, building on the success of our education business globally, and helping more people work better in homes through our consumer retail efforts. Developing innovative products to support hybrid work continues to be a core part of our growth plans. Earlier this week, for example, we began taking orders for our new Flex Personal Spaces desking solution. We've received consistently positive feedback since the introduction at NeoCon last fall. Customers love the added privacy and how the design drives the floor plan layout that is different from the traditional grid style, and they control that flex provides users within that footprint to address the changing dynamics of the post-pandemic world. The breadth of our Americas ancillary portfolio also continues to expand and orders for this collection of products grew faster than our overall average during the past year. We're seeing customer solve for the new needs of hybrid work by adding areas for socializing and collaborating adjacent to spaces that support focus and opportunities to rejuvenate. And based on additions like On the QT that Orangebox has made to our architectural pod portfolio, we're expecting strong growth from that business again next year. As we look to further grow our retail business, in the coming months, we expect to expand on our existing e-commerce program with Best Buy. Best Buy will now stock some of our top selling SKUs with the goal of creating a great consumer experience by offering competitive lead times and providing in-store pickup. Our Smith System business had an outstanding year, with revenue growth of 50%. The Smith System business benefited this year from US government stimulus available to K-12 schools, but also drove growth from both the success of new products and a strong focus on customer experience, which included a decision to carry higher inventory level to ensure product availability. I'd like to close by mentioning a few highlights on our ESG progress. In the environmental arena, we were proud to join with companies like Ford, Xerox, GE and more than 90 others in the pledge to reduce carbon emissions by at least 50% by 2030 as part of the US Department of Energy's Better Climate Challenge. We were also named among the top 8% of companies recognized as a supplier engagement leader by CBP for working with our suppliers to cascade carbon measurement and environmental action down our supply chain. On the social side, we took action and joined the Valuable 500, a decision that builds on our work with G3ict in support of inclusive workplaces. The Valuable 500 pledge indicates our commitment to innovate for disability inclusion. And we received two notable recognitions this quarter. First, Steelcase was named the world's most admired company by Fortune Magazine for the 16th time. And second, Steelcase again earned a 100% score on the Human Rights Campaign's Corporate Equality Index and the designation of being a best place to work for LGBTQ equality. We believe these recognitions are evidence of a strong culture and values that have been in place at Steelcase for many decades. I'd like to offer my special thanks to the employees of Steelcase who live these values every day and who have persevered through a challenging year. Despite some of the headwinds we're experiencing, market signals about returning to the office and implementing a hybrid approach are very strong. We believe we have many reasons to be optimistic and we look forward to continuing to implement our strategy and drive higher revenue and earnings in fiscal 2023. With that, I'd now like to turn it over to Dave to review the financial results and our fiscal 2023 targets.

Thank you, Sara. And good morning, everyone. Today I will cover our fourth quarter results, share a few summary remarks about the fiscal year and provide some color about our outlook for the first quarter and targets for fiscal 2023. Before I begin, I would like to reiterate what Sara said. We have been and are continuing to navigate through a variety of challenges, including continued pandemic-related disruptions, extraordinary inflation, and a broad number of supply chain issues, which remain significant headwinds through the fourth quarter. We are proud of the way we are navigating these challenges and increasing our resilience as a business. And due to these actions, we believe our financial performance is nearing an inflection point. As a result, we are optimistic about the future of the business and specifically our prospects for significant earnings improvement in fiscal 2023. Moving to the fourth quarter results compared to the outlook we provided in December, revenue of $753 million was in the middle of the range we shared and the loss per share of $0.02 was close to our estimate of approximately breakeven. Order growth of 27% was better than expected. But as I mentioned, inflationary pressure and supply chain disruptions remain significant, which drove higher-than-expected inflation, inbound and outbound freight and labor costs. For revenue, we grew 12% organically compared to the prior year with growth across all segments. Supply chain disruptions continued to cause extended lead times, delayed shipments and other adjustments to delivery schedules during the quarter, which coupled with the strong order growth have further increased our backlog compared to the prior year. As you'll recall, revenue in the fourth quarter of the prior year benefited from shipment delays of approximately $60 million due to a temporary operation shutdown in the third quarter. Excluding this impact, our year-over-year organic revenue growth would have been approximately 22%. Earnings for the fourth quarter were slightly lower than our breakeven outlook due to lower gross margins, which were impacted by higher-than-expected inflation, net of pricing benefits, an increase in our provisions for future warranty claims in the Americas and supply chain disruption costs. Compared to the prior year, we incurred approximately $22 million of higher net inflation and approximately $9 million of higher freight and labor costs and inefficiencies associated with the supply chain disruptions in the Americas. In total, these have the effect of reducing our current quarter earnings by approximately $0.15 per share. Moving to the sequential comparison of the fourth quarter results versus the third quarter, operating income of $2 million in the fourth quarter represented a sequential decrease of $14 million, driven by lower gross margin and higher operating expenses, offset in part by the benefits of higher revenue. Gross margin was negatively impacted by higher freight and labor costs associated with the supply chain disruptions, the warranty charges in the Americas and other operating costs, partially offset by the benefit of higher revenue and lower net inflation due to our pricing actions. Operating expenses increased $7 million in the fourth quarter compared to the third quarter, which included a $4 million credit related to variable compensation expense. The remaining increase was driven by higher investments in marketing, product development and sales in the fourth quarter. Regarding orders in the quarter, we posted year-over-year organic quarter growth of 27% which was above expectations and included 29% growth in the Americas, 28% growth in EMEA, and 9% growth in the other category. The growth in the Americas and EMEA was broad based with growth in every regional market, and particular strengths at both Smith System and AMQ. Fourth quarter orders in the Americas and EMEA were within approximately 10% of pre-pandemic fiscal 2020 levels. And for the second quarter in a row, orders in the Asia Pacific region within the other category exceeded fiscal 2020 levels. On a sequential basis, total orders declined 12%, which is slightly less than our typical seasonal patterns. As it relates to cash flow and the balance sheet, we ended the quarter with $201 million in cash and $369 million in total liquidity. Operating cash flow included a $61 million increase in working capital, driven by revenue growth and increased inventory to adjust to extended supplier lead times, especially for our long distance supply chains, as well as prepare for the strong summer seasonality of Smith System. Operating cash flow also included the payment of our semi-annual interest payment of $12 million. Investing activities included $15 million of capital expenditures, which totaled $61 million for the full year. And we returned $17 million to shareholders during the quarter through our quarterly dividend of $0.145 per share. Before I get into fiscal 2023, I would like to first make a few comments about fiscal 2022. The levels of inflation net of pricing benefits and supply chain disruption costs experienced this year were extraordinary and had a significant impact on our financial performance. We estimate the impact of these items on the full year approximated $110 million and have the effect of decreasing our earnings by approximately $0.50 per share. We've taken decisive pricing actions, which include implementing three price increases in fiscal 2022, and recently announcing a fourth increase, which will be effective in April. In addition, we continue to make adjustments in our supply chains and operations, aimed at improving our resilience, reliability and profitability. Despite the significant challenges, we are pleased with our performance in fiscal 2022 in many other areas. We achieved year-over-year organic order growth of 25%, which included 23% growth in the Americas, 32% growth in EMEA and 30% growth in the other category. Our EMEA segment achieved $3 million of operating income which represented an improvement of $18 million compared to the adjusted operating loss in the prior year, and is evidence that our strategies to increase profitability in that segment are working. Our recent acquisitions are diversifying our product portfolio and broadening our market coverage. And on a combined basis, Smith System, AMQ and Orangebox achieved approximately 50% revenue growth in fiscal 2022 compared to the prior year, and drove solid operating income performance. We have maintained tight spending controls by minimizing discretionary spending and delaying non-critical investments. And as Sara mentioned, we stayed focused on executing our strategy during a challenging year, and we're excited about recent and upcoming product launches. For these reasons, we remain confident in our business strategies and our outlook for the future. Therefore, looking forward to fiscal 2023, we are targeting strong revenue growth and earnings expansion which we detailed in our earnings release. As it relates to revenue, we are targeting organic revenue growth between 15% and 20% for fiscal 2023, driven by our strong beginning backlog, the implementation of our pricing actions and increased demand as more companies return to their offices and invest in their workspaces. While supply chain conditions remain difficult to predict, we have begun to see stabilization and modest improvements in our operational performance based on the adjustments we've made. And our targets reflect some improvements in our order fulfillment patterns, which we believe should improve the time it takes to convert orders to shipments. For earnings, we are targeting $0.50 to $0.70 per share, driven by the higher revenue, including net yield from our pricing actions, and improved freight and labor efficiency as our upper operational performance stabilizes. Our targets also reflect increased operating expenses, driven by investments in our workforce, including variable compensation, investments in growth strategies, product development projects, higher variable selling costs, and some normalization of previously deferred run-the-business costs. Regarding the balance sheet, we are also targeting higher liquidity levels driven by free cash flows in a range of $115 million to $135 million, including US income tax recoveries of approximately $33 million and capital expenditures of $70 million to $80 million for the year. While our targets for next fiscal year reflect significant year-over-year improvements in revenue and earnings, we expect supply chain disruptions and inflationary pressure pressures to continue into fiscal 2023. These factors, coupled with typically low seasonal demand patterns in the first quarter, are impacting our outlook for the first quarter and we are projecting to record a loss of $0.15 to $0.20 per share, which compares to a loss of $0.24 per share in the prior year. For the second quarter, we are targeting earnings that would more than offset the first quarter loss, driven by seasonally higher revenue and higher pricing benefits. Also, because some of you have asked about the potential impacts of the conflict in Ukraine and the related sanctions against Russia and our decision to suspend business with Russian government owned and controlled entities, I will share that Russia is not a material part of our business and we are not aware of any significant tier 1 or tier 2 supply chain exposure from either country. However, we're closely watching the developments in that region and monitoring for any broader impacts. Additional details on our outlook for the first quarter and targets for the full year are provided in the earnings release. In closing, supply chain disruptions and commodity cost inflation continued to be significant and negatively impacted our financial results in the fourth quarter and will also impact the first quarter. We remain pleased with our order rates and the strong performance of our EMEA segment and our recently acquired businesses, which provides evidence that our strategies are working. And while many global uncertainties exist, we expect to see benefits from our pricing actions, improved operational performance from the actions we've taken to address the supply chain disruptions and a broader return to office in the coming months. As a result, we believe we are well poised to deliver our targeted levels of revenue and earnings growth in fiscal 2023. From there, I will turn it over for questions.

[Operator Instructions]. And your first question comes from the line of Greg Burns from Sidoti & Company.

Just when we look at the guidance for OpEx for next year, there's a pretty big step up in your quarterly run rates. So, maybe can you just outline some of the growth areas that you're investing in? And how flexible are those plans if kind of the gross margin realization doesn't occur as you'd expect? Because it looks like, based on the guidance, you're expecting a pretty healthy recovery in the gross margin to support those spending plans.

First, I'll say this. As you can imagine, we've pushed as much of the incremental discretionary investments toward the back half of the year as possible to take into consideration the contingency that you're referencing around gross margin improvement, and let's say the overall economic environment playing out in a positive way. But broadly, the increase in operating expenses is a little bit, more than half, driven by employee-related costs, global merits, health care, variable compensation, which was very low this year, as you can imagine, given our overall financial performance driven by the inflation and supply chain disruptions, and driven by the significant improvement in profitability, we'll see higher variable compensation. And then, the other half – or a little less than half is driven by investments in our growth strategies and product development projects, higher variable selling costs. And there is some normalization, as I said in my remarks, of some of the deferred run-the-business costs, like travel and entertainment, contracted services, etc. But we're also very carefully watching those costs and really bringing them back at low levels in the first half of the year and then I would say moderate levels in the second half of the year.

Looking at the gross margin for the EMEA segment this quarter, up until this point, it hadn't really been as impacted as the Americas segment, but it was down year-over-year, down pretty significantly sequentially on basically flat revenue. So, can you just talk about what's driving that and kind of what your outlook is for the gross margins in EMEA?

Yeah, we really saw, I would say, more significant impacts than we'd seen all year on the supply chain disruption front. They incurred more significant airfreight than they had been incurring and had labor inefficiencies as well. And also, we're not net in the whole from an inflationary perspective. We're now at least covering the inflation cost with our pricing actions, but we're not getting margin on it yet. So, that's a year-over-year drag on our gross margin. And then lastly, some of the mix of the business or the projects that were quoted earlier in the year and then subsequently ordered those don't have the new pricing on it, so that had an effect on the overall gross margins as well. Anything to add to that, Mike? Michael O'Meara: Looking forward, I think Greg asked…

As far as gross margins in EMEA? Michael O'Meara: Yeah.

I think you'll see them improving as you would expect to see the entire business margins improving. Because they will have incremental pricing benefits, we anticipate their supply chain disruptions will settle down as well. And we're expecting growth in EMEA for next year.

Your next question comes from the line of Reuben Garner from Benchmark.

Sara, in the prepared remarks and in the release, you talked about stronger demand from kind of office transformation. That's something we've been talking about over the last couple of years. Are you guys starting to see any changes or signs in what's actually being ordered that kind of reassures you that at least the demand we've seen in the last six to nine months is less about what was pent up and more about the changing of the office or the future? Or is it more your conversations indicate and some of these surveys indicate that, going forward, you'll start to see that kind of demand kick in?

I would say two things. First, you're right that, as we have been talking about for the past couple of quarters, there is a backlog in the system in orders that customers have placed that are what I would describe as being for more typical or traditional office solutions. So we're still seeing some of that and fulfilling those orders as they come in. But I would absolutely say that more and more of the conversations we're having with customers and the things that they're looking to order as they develop plans for their spaces going forward are focused on new typologies and new ways of thinking about how they use that office floor space to support their employees. So, the big things that we're seeing are strong demand for collaboration solutions, both in person collaboration solutions, as well as solutions that can support hybrid or virtual collaboration. We're also seeing quite a bit of increased interest in new ways to deploy privacy on the floorplate, whether that's privacy in terms of fully enclosed spaces, like an Orangebox pod or whether that's what I would describe as more lightweight privacy, like screenings or movable boundaries, and lots of different solutions that we're bringing to market in between like Flex Personal Spaces. And then, lastly, there's definitely an increased interest among customers in social spaces. So, thinking about more relaxed postures, more informal spaces, the kinds of things that we really try to add to our portfolio through our ancillary partners through acquisitions like Viccarbe. And I would say that two, three years ago, there were some customers who saw those kinds of spaces as perhaps a bit of a thrill, not really kind of core to getting work done in the office. But I would say the tenor of those conversations has really changed. And people, I think our organizations are much more likely to see important business and cultural and sort of organizational value in those kinds of solutions.

A couple of questions on the guidance. So, the 15% to 20% revenue growth for the full year, how much of that is volume versus price flowing through from increases that you announced over the course of last year? And then, as a part of that question, you guys got a lot of backlog built up. Do you have the capacity to grow faster than your guidance if the demand is there as the year moves along, or you kind of tapped out and you're pretty – you have a lot of visibility into this volume growth because of where the backlog sits?

Reuben, I'll take the first part and then you can come back to the second part. On the 15% to 20% growth, one way to think about it – this is a little oversimplified, but you can think about it in four buckets that's driving the growth. One is what you remarked, the strong beginning backlog is a contributor to our 15% to 20% growth. Another bucket is the pricing benefits that we – the actions that we've taken and the incremental benefits that we anticipate next year that we disclosed in the release. The third is simply the run rate of our business has been improving, demand patterns have been strengthening throughout the year. So, we're naturally going to lap easier comps in the first half of fiscal 2023. So that will contribute to growth. And then, the last bucket is increased demand, driven by return to office and companies getting back to investing more normally in their work environments. So, they're not exactly equal to those four buckets, but they're not dramatically different, either. On the capacity-related question, it really boils down to supply chain disruptions. And if those continue to, let's say, stabilize and our actions continue to improve our ability to navigate them or if they get better, then we definitely would have capacity to deal with additional growth. And I would say, in some parts of the world, it's a little different than in other parts of the world. The supply chain disruptions have been and are most significant right now in the Americas. They're getting a little bit more challenging in EMEA. And Asia, it's kind of on and off and a little spotty. But generally, I would say we have capacity to – our capacity constraints would be predominantly in the Americas. And hopefully, we will continue to see improvements, which will allow us to take advantage of incremental demand if it's there.

That's a good segue into the last question I've got. So, the EMEA supply chain issues that maybe started to creep up and your outlook for that segment, how much – I know you guys have a facility in Germany. I've seen in the news, inflation starting to take off there. I guess, how confident are you guys that you'll be able to kind of offset those increases with pricing actions? How similar do you think it could look to the Americas over the course of last year? Or could it be better because of various reasons that you guys maybe can control?

Well, so far, so good in EMEA, I would say. When I look at migration rates of our – moving our customers to these new price adjustments, they've been pretty good. Our sales teams have done a terrific job not dealing with one or two or three, but now four price adjustments. And in the quarter, I commented earlier that, for EMEA, our pricing is now offsetting inflation. So, I would say, so far, so good. And I don't see any reason why we won't be able to continue to implement pricing to cover our increased inflationary costs. We're not alone. And all of our competitors are experiencing the same thing. And when we look at who's done what levels of price increases, we're not kind of on an island all by ourselves. The whole industry is experiencing significant commodity costs increases and therefore layering in incremental pricing.

I'm going to sneak one more in, if you don't mind. It's just a clarification. So, Dave, the $110 million that you referenced for FY 2022, does that number match up with the target or the outlook for pricing net of inflation of $120 million to $140 million FY 2023? In other words, you're guiding to kind of getting all of that back this year, at least in dollar terms?

Yes, it's really two things on the $110 million. One component is the inflation net of pricing, and that's roughly 80 plus million. And the other component is the supply chain disruption costs. That's the other $25 million to $30 million. And then, this $120 million to $140 million that we guided on net pricing benefits is just related to what we expect on the net inflationary environment.

Your next question comes from the line of Steven Ramsey from Thomson Research Group.

I wanted to make sure I understood. Can you clarify the free cash flow guidance again and how much working capital benefit is included in that free cash flow guide? And then, maybe to follow along the CapEx guidance, can you share the nature of that CapEx?

As I said in my remarks, the free cash flow guide is $115 million to $135 million. And firstly, that includes a $33 million recovery from the IRS for US income tax receivable. To your question about working capital improvement, we have modeled in some improvement in working capital into that free cash flow, but not entirely back to normal. If you did any kind of analysis on our days of inventory for pre-pandemic versus today, you'd kind of quickly identify that we have somewhere north of $100 million of incremental inventories both between raw materials and finished goods that are higher than normal because of the spike in disruptions, us carrying buffer levels of inventory and carrying, frankly, higher finished goods. Because of the supply chain disruptions, either we're bringing in finished goods or component parts earlier for the summer seasonality of Smith System than we otherwise would. Or we're sitting on a number of incomplete projects or projects that are complete, but our customer sites aren't ready for delivery. So we've imagined some of that coming back and being improved over the course of fiscal 2023, but not all of it. It could be better than that. But we don't know how to really think about the supply chain disruptions with accuracy. So, we've tried to be conservative and imagine some level of improvement, but not all. It's really normal breakdown. There isn't any significant capacity additions for any, let's say, significant new facilities. So, it really breaks down between product development, manufacturing, advanced technology in manufacturing, some replacement equipment. Of course, our facilities, we invest significantly in our showrooms, facilities around the world, but nothing significant on its own is included in the estimated guidance of $70 million to $80 million for next year.

On the other profitability better than the other segments in Q4, not a common sight, but a good thing. Do you think in the next one to three years that this segment remains lower profitability, higher growth segments? And then, in the near term, are higher restrictions in the Asia-Pacific region for COVID growth, is that changing the growth profile in the near term? Or does the lower order amount already reflect some of this?

Well, on the first part of your question, I hope so. I hope that there continues to be significant growth prospects in that region. We certainly see it in markets like India and China, of course. But also, in other parts of Southeast Asia, we've done quite well recently and see pretty significant growth prospects. So, I think to the extent that growth in the market there plays into our strategy, we will continue to invest and pursue that growth. So, you could expect to see mid to low-single digit operating margins, let's say, over the mid to longer term as long as the growth prospects are in front of us, like we imagined. On the near term, over a very short period of time, we went from having our China manufacturing facility fully open to partially closed to fully closed to reopened. And that's I'm talking about over a course of about a week. So, it's a bit volatile over there, but we have no current cases of COVID in the manufacturing facility. So, the government has allowed us to reopen and operate fully. And so, I'm optimistic that we'll be able to navigate the current environment and not experience dramatic disruption. It's possible that the first quarter could be impacted more significantly if we're closed again or if supply chain that we rely on in China is disrupted more significantly than we are. But we're optimistic at this point that it's relatively short term and hopefully predominantly will be contained in the quarter.

Last quick question for me, and maybe this was discussed, on the net pricing guide for FY 2023, does this reflect any benefit from the upcoming price increase you recently announced in the quarter? And then, how much of the net guide reflects inflation moderating through the year? Michael O'Meara: Steven, this is Mike. So, the most recently announced price increase will start to take effect in April with some customers, and so we will see some benefit next fiscal year from that. We're imagining it'll phase in like our historical patterns largely. So, we'll get some benefit next year and, of course, even more in FY 2024. As far as net deflation or any moderation, that's very hard, of course, for us to predict. So as we kind of put our guides together, we're mostly assuming some level of stabilization in inflation. We're not predicting necessarily huge increases from here. Of course, we are lapping still in the first quarter lower inflation level. So we'll have inflation pressure earlier in the year. But we don't necessarily have a view that we're going to see a lot of deflation in those estimates.

When you double click on the total inflation, we have seen steel pricing come down a little bit over the last few months. And external indices are projecting it to continue to come down. Those projections have been wrong in the past more than they've been right. But we don't have any better information on projected steel pricing. So, we do leverage those external projections. But the non-steel commodities and energy, fuel, healthcare, wages, we're really continuing to experience inflation. So, in total, I think we'll continue to see or feel aggregate inflation next year.

Your next question comes from the line of Rudy Yang from Berenberg.

I think you discussed a portion of your increased costs this quarter was due to more aircraft usage than expected, just given that ocean freight capacity continues to be constrained. So, just given that element, I guess, would fulfilling orders as quickly as possible be your top priority? Or would you consider selectively delaying orders in order to kind of preserve profitability?

Well, we definitely take the second approach and look very carefully at whether or not our customers can absorb a delay or whether or not we need to meet the commitments. And when we need to meet commitments, we do everything we can to, in fact, meet them. The air freight that we had in the quarter, I'll give you just a little color – more color on that. We had a tremendous amount of inventory that was on the water, in the port at anchor, and even offloaded them from ships that was sitting in Long Beach, as an example that, in December, we imagined we would get access to. We were told several times we were scheduled to be able to get it. And that, of course, just kept getting delayed and delayed and delayed, which unfortunately caused us to do some more airfreight than we were anticipating. But we're going to have a very, I would say, tight tollgate that the teams have to go through in order to evaluate whether or not we will air freight component parts in order to meet customer demand.

With four price increases now, I think you mentioned your prices are collectively up in the double digits, I guess how does that compare with the rest of the industry? And obviously, you mentioned that this is something that the industry as a whole has also been doing. But would you feel comfortable if you have to keep your prices at a premium over the rest of your peers?

Well, when we look at what our competitors have done, over the last 12 months, 16 months from a pricing perspective, everybody takes pricing at different levels at different times. But when you look at it on a trailing 12 or 15-month basis, the industry is pretty much consistent, and that's the same commodity cost inflation. A lot of us leverage, I'm sure, the same suppliers. So, I think the industry is largely in a similar place based on the information that we see. Now, we can't see every competitor, but the public companies are the larger ones. And certainly the larger ones, we have information about their levels of price increases, and so we track that, of course.

Your next question comes from the line of Budd Bugatch from Water Tower Research.

I really have one major question which is trying to wrap my head around the improving order [indiscernible], how long that will persist. And I think during COVID – I'm just reflecting that what happened is people were home and saw how their home [indiscernible] what they thought they should [Technical Difficulty] residential for a period of time. I wonder whether that's a similar thing [Technical Difficulty] as executives have to sell being back in the office to associates to get them to actually come back to the hybrid work? Is there a significant amount of refresh that needs to be done in the office. I know that you're talking about the future of work and the way that the offices will be configured, but I think maybe we also are seeing places where the opposite may just look tired, and associates don't want come back and that could keep this cycle going for longer than we might imagine. Is that something that's rational [indiscernible]?

Great question, Budd. This is Sara. And I think a couple of things that I would say in response to that. I would say, absolutely. I think organizations are realizing that their offices need to earn the commute, right? So the office needs to provide things in a better way that can be provided at home to attract people to the workplace. So, yes, some organizations are taking the approach of mandating people back to the office. But I think where we've seen more success among our customers is when customers really think hard about what is it in the workspace and the overall employee experience that will really encourage and attract people back to the office. So, that's one thing. I think, secondly, I think you're absolutely right that, as people are in the office, some organizations are seeing that the spaces that worked for them before are not necessarily going to be the kinds of spaces that work for them going forward. And many organizations that I talked to, business leaders are thinking about this as a moment to use all of the change and all of the things that have been in upheaval to really shift the culture of the organization and to sort of make those course corrections to take their organization forward in a way that they think will best support the business outcomes they're striving for. And as part of that, they are absolutely looking at their spaces, and looking at what kinds of solutions will best allow them to achieve that. And I think we see that. This goes back a bit to the question we've been asked before. We absolutely see that in some of what we would call our forward-looking indicators. So, as we think about the kind of mock up activity we're seeing, as we think about the kinds of pilots and tests that customers are doing, they are primarily mock ups and pilots that are looking at new kinds of solutions and testing new ideas to help them not only refresh their space, but in some cases really transform their space to attract their organizations back to the workplace.

Sara, you've not faced that, I think you say, for the last five months in terms of order growth and [indiscernible]. Certainly, you're better positioned among the Fortune 1000 larger companies. Is this a phenomenon that's really to the larger companies or you're going to [indiscernible] corporation as a whole. I know that's a hard push the ball to [indiscernible] what your thoughts might be on that from your conversations with executives and CEOs.

I'll answer that question with admittedly anecdotal evidence, but I would say that the kinds of people I talk to, whether it's as I travel or whether it's your customer visits to Grand Rapids, certainly that includes leaders of large Fortune 1000 types of organizations, but it includes a lot of other organizations – certainly, we know that those big multinational corporations are an important part of our business. So, we serve a wide range of businesses and industries of all sizes. And I would say that that all of those conversations, whether you're talking about the Fortune 50 or the smaller enterprise that's down the street, leaders are asking these questions and they really are thinking about attraction and retention of talent. They're thinking about how they position their organizations for success kind of in this post pandemic world. So, I would definitely say that the kinds of interest, the kinds of new needs, the kinds of solutions that I've been describing, I think customers of all types and all sizes that we interact with are asking about those things and looking to evolve their workspaces.

That's looks like an interesting environment for a period of time. Just some quick follow-up questions. Any commentary on the Best Buy or anything as to when that might have meaningful revenues or what you might see meaningful in the retail arena?

I'm not going to get into detail on the specifics of Best Buy. But I would definitely say that we know that even while people come back to their offices and adapt these hybrid work models, there will be parts of the week and parts of their work experience that are going to happen from other places like their home. So, I think we feel very strong about the opportunity we think we have with partnerships like Best Buy and other things that we are doing or are working on in the retail space to allow a much broader reach of the consumer segment to have access to great Steelcase products to support them just as well in their home environment as, we hope, they're supported in their office environments. So, I think we continue to believe that there is market demand for those kinds of solutions. And with the right partnerships and approaches, we could tap into that.

Are you seeing much funding of those purchases by the corporations [Technical Difficulty] work for?

Yeah, we're seeing a mix. So, we've worked certainly with many organizations that have created a funded program or provided a stipend to allow their employees to purchase things like an ergonomic half chair for their home. Certainly, we've also seen some organizations take a different approach and not provide that stipend. And as we might expect, the programs that [indiscernible] for the employees tend to be far more successful in terms of the uptake than the ones that don't. But we're ready to support our customers in those programs, regardless of the route they choose.

Last from me. Dave, when will the K be filed? Last year, I think it was mid-April. Is it filed sooner than that this year? What's the plan?

I think we are targeting the 15th or the 18th. I can't remember if it's a Friday or Monday, but it's middle of April.

Congratulations on navigating this incredible time.

There are no further questions at this time. Ms. Armbruster, I turn the call back over to you.

Great. Well, thank you all for joining today. We appreciate your interest in Steelcase and I hope you have a great day.

This concludes today's conference call. You may now disconnect.