GRAND RAPIDS, Mich., Dec. 08, 2016 - Steelcase Inc. today reported preliminary financial results for the third quarter which included revenue of $787 million and diluted earnings per share of $0.34. During the quarter, the company recognized a benefit related to the outcome of a tax audit in EMEA, which had a favorable impact on diluted earnings per share of $0.03 and was not included in the company’s previously issued guidance. In the prior year, Steelcase reported $787.6 million of revenue, diluted earnings of $0.28 per share and adjusted earnings of $0.30 per share. Steelcase had previously guided current quarter revenue between $795 to $820 million and diluted earnings per share between $0.32 to $0.36. The results announced today are preliminary and subject to change based on the completion of the company’s quarter-end review process.
Revenue in the third quarter was relatively flat compared to the prior year, with the Americas and EMEA each posting modest organic revenue growth and the Other category posting a modest organic revenue decline. Revenue in the Americas was negatively impacted by lower than expected growth in day-to-day business and a significant amount of customer deliveries that were expected to ship within the third quarter moving to the fourth quarter.
“In the Americas, our revenue growth exceeded industry trends during the first two months of the quarter, as reported by our industry association,” said Jim Keane, president and CEO. “Our project pipeline continued to show year-over-year strength. We expect the success of our new product introductions and other strategic actions implemented over the past twelve months to sustain our momentum in the market.”
“EMEA operating results were better than expected. A significant improvement in gross margin led to the achievement of operating income for the quarter compared to a significant operating loss in the prior year,” said Dave Sylvester, senior vice-president and CFO. “EMEA also benefited from modest organic revenue growth (driven by timing of customer deliveries), lower than expected operating expenses (as some spending was deferred to the fourth quarter), and a favorable adjustment to accrued liabilities (which was non-recurring in nature).”
During the third quarter, the company repurchased 1.1 million shares of Class A Common Stock under its share repurchase authorization for a total cost of $15.2 million. A total of $126.5 million remained under the company’s share repurchase authorization at the end of the third quarter.
Orders in the Americas grew approximately 3.5 percent compared to the prior year, and backlog at the end of the quarter in the Americas was approximately 4 percent higher than the prior year. EMEA orders declined approximately 2 percent compared to the prior year, and backlog at the end of the quarter was approximately 11 percent lower than the prior year. Orders in the Other category grew by more than 10 percent in the third quarter, driven by continued strength in Asia Pacific.
“In the Americas, orders across the energy vertical market continued to decline significantly compared to the prior year, negatively impacting overall order growth in the segment by approximately 300 basis points,” said Dave Sylvester. “In addition, the growth in customer order backlog at the end of the third quarter compared to the prior year was almost entirely driven by orders with requested delivery dates which fall beyond the fourth quarter.”
Full Quarterly Results to be Announced on December 20, 2016
Steelcase Inc. will webcast a discussion of its third quarter 2017 financial results, on Wednesday, December 21 at 8:30 a.m. ET. Links to the webcast will be available at ir.steelcase.com and a replay of the webcast will be available after the call concludes. The news release detailing the full financial results for the third quarter, as well as guidance for fourth quarter revenue and earnings per share, will be issued the previous day, December 20, 2016, after the market closes.