Revenue falls for Steelcase in Q1, but orders continue to rise

GRAND RAPIDS, Mich. – As has been the trend for several quarters, revenue is down for Steelcase from the previous year while orders are continuing to increase.

Steelcase reported $727.3 million in first quarter revenue, a decline of 3% from last year and around $50 million less than last quarter. The company had also reported a 3% decline the previous quarter.

Revenue declined 1% in the Americas and 3% internationally. Americas revenue was impacted once again by a lower beginning backlog from the prior year (which was in-turn affected by supply chain disruptions and extended delivery timeframes).

Orders for the quarter grew 8% from last year, climbing 10% in the Americas and 2% internationally. Growth in the Americas was driven by project business with large corporate customers and the company’s education business.

“We are pleased with our first quarter results, which reflected higher than expected adjusted earnings improvement and 10% order growth in the Americas,” said Sara Armbruster, president and CEO. “Similar to the prior two quarters, our order growth was driven by our large corporate customers, as companies make investments in their office space to support the transformation of work and other workplace strategies. Additionally, we’re excited about our education business, which delivered strong first quarter order growth at the start of the peak education season.”

Steelcase recorded operating income of $17.6 million for the quarter, an increase of $10.3 million compared with the prior year. The increase was primarily due to gross margin improvement, partially offset by the impact of lower volume.

The company recorded $6.3 million of restructuring costs in the first quarter, which included $4.3 million of costs in the Americas related to cost improvement initiatives and $2 million of costs in International related to the closure of a distribution center and other efforts to improve operational effectiveness.

“Our International segment delivered nearly $7 million of year-over-year improvement in adjusted operating results despite lower revenue, driven in part by the benefits from our prior year restructuring actions,” said Dave Sylvester, senior vice president and CFO. “Our teams have continued to make adjustments to lower our cost structure in certain International markets as we manage through the current demand environment.”

Gross margin of 32.2% in the first quarter included $7.0 million of restructuring costs compared with $1.4 million of restructuring costs in the first quarter of the prior year. Excluding restructuring costs, gross margin improved 180 basis points compared to the prior year driven by pricing benefits, partially offset by the impacts of lower volume.

Total liquidity, comprised of cash and cash equivalents, short-term investments and the cash surrender value of company-owned life insurance, aggregated to $377.8 million at the end of the first quarter and represented an increase of $177.9 million compared to the prior year. Total debt was $446.5 million.

For the second quarter, the company expects revenue to be in-line with the previous year.

See also:

  • Steelcase reports weaker Q4, but with growth coming from large corporations
  • Steelcase reports revenue decline in Q3, though orders remain strong

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