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Published in Manufacturing

Despite sluggish earnings, Steelcase still expects profitable first half of FY2022

BY Thursday, June 24, 2021 04:42pm

GRAND RAPIDS — While office furniture giant Steelcase Inc. continues to reel from the initial shock of the COVID-19 pandemic, its first quarter fiscal year 2022 results announced Thursday showed sequential growth and a road to profitability.

The Grand Rapids-based furniture maker reported $556.6 million in revenue for the quarter compared to $482.8 million in the same quarter last year, marking a 15.3-percent increase. While its $31.8 million operating loss was significant, it was a far cry from the $52.3 million loss in the prior year.

Jim Keane COURTESY PHOTO

The company also reported a net loss of 24 cents in earnings per share for the quarter compared to a net loss of 33 cents per share in the same quarter last year.

Steelcase cited government mandates throughout the world for continuing to limit its ability to manufacture and fulfill orders, but it still reported steady revenue increases in most segments. This included 13-percent growth in the Americas, 24-percent growth in Europe, the Middle East and Africa (EMEA), and 15-percent growth in the “other” category compared to last year’s first quarter. Revenue for the Americas climbed 25 percent on a quarter-over-quarter basis and EMEA increased 30 percent.

Steelcase saw its orders increase by 11 percent year-over-year and by 25 percent compared to the fourth quarter of fiscal 2021. 

The company also restored its quarterly cash dividend to the pre-pandemic level of $0.145 per share.

“Our first quarter results were better than we expected, as our teams did a great job winning business and navigating multiple supply chain challenges while also continuing to maintain strong cost controls,” Steelcase president and CEO Jim Keane said in a statement. 

“We are confident we are entering the recovery phase of this cycle as our backlog and project opportunity pipelines are building and many of our customers around the world are announcing plans to bring their employees back to the office over the summer.”

With operating expenses of $186.5 million in the first quarter, Steelcase reported gross margins increased by 27.8 percent, which was 240 basis points more than last year. The company achieved this increase against the backdrop of supply chain pressures and the rising cost for raw materials.

“The extraordinary inflationary pressures in the steel market, as well as increasing costs of logistics and many other commodities, impacted our first quarter gross margins across the world and are expected to continue impacting us for the next few quarters,” said Dave Sylvester, senior vice president and CFO for Steelcase. “We expect to offset more of those inflationary costs later in our fiscal year, once our April price increase is more fully implemented and our recently announced August price increase begins to take effect.”

With $624 million in backlogged orders, Steelcase expects second quarter revenue to be around $750 million to $780 million. 

Encouraged by the “broad economic recovery expected in most markets and the ongoing return of workers to offices around the world,” Steelcase is targeting double-digit, year-over-year revenue growth for the second quarter of fiscal 2022. By achieving the goal, Keane said that Steelcase would be profitable for the first half of the year.

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