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Steelcase expects to report loss in current quarter as a result of charges related to tax reform

BY MiBiz Staff Monday, February 05, 2018 04:55pm

GRAND RAPIDS — Office furniture manufacturer Steelcase Inc. expects to report a loss in its current quarter as a result of the effects of tax changes in the U.S. and France.

In providing updated earnings and revenue guidance today, the Grand Rapids-based Steelcase (NYSE: SCS) said the U.S. tax reform law will result in a charge of $30 million related to a reduction in the value of its deferred tax assets in its present fourth quarter of the company’s 2018 fiscal year, according to a statement.

Steelcase said it expects to benefit going forward as a result of the tax changes, which lowered the federal corporate tax rate from 35 percent to 21 percent effective Jan. 1.

A similar tax reform bill in France will result in a charge of $3.5 million in the quarter.

Additionally, the company now expects to record $1.7 million severance costs in its Americas unit.

The charges were partially offset by the partial sale of an investment in an unconsolidated affiliate for $13.9 million, which netted the company $9 million.

Steelcase said taken together, the unexpected events will reduce the company’s diluted earnings per share by about 22 cents in the fourth quarter, resulting in the company recording a loss of 7 cents to 5 cents per diluted share for the period.

Excluding the new items, the company said its earnings would be in the range of 15 cents to 17 cents per share. In December, Steelcase said it expected to report earnings per share of 14 cents to 18 cents.

Steelcase also revised its revenue forecast for the fourth quarter to $745 million to $760 million, compared to the previous estimate of $740 million to $765 million in December.

The company said it completed the $69 million deal to buy California-based AMQ Solutions on Dec. 27, an acquisition that it expects to be “modestly accretive” to earnings starting in the 2019 fiscal year.

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