Steelcase Inc. has reported a notable increase in its fiscal second-quarter results year over year, demonstrating resilience in revenue despite facing a downturn in orders from large corporate clients and a challenging environment in many international markets. The office furniture manufacturer is projecting its revenue for the ongoing quarter to fall within the range of $785 million to $810 million, a figure that stands slightly below the analysts’ collective foresight of $812.1 million, as surveyed by Capital IQ.
In terms of adjusted earnings, Steelcase anticipates figures falling between $0.21 to $0.25 per share, which is close to the analyst consensus predicting $0.23 per share based on insights from a similar number of analysts. In a premarket reaction to these results, Steelcase's stock experienced a decline of 7.9%, reflecting investor sentiment regarding the company’s updated outlook.
"Our confidence remains strong regarding achieving the upper limits of our fiscal 2025 target for adjusted earnings per share, estimated between $0.85 to $1," expressed Chief Financial Officer Dave Sylvester, reinforcing the company’s optimistic long-term view despite current challenges. For the quarter ending August 23, Steelcase recorded adjusted earnings of $0.39 per share, a notable improvement from $0.31 the previous year.
Analysts had projected a normalized EPS of $0.37. Meanwhile, operating expenses saw a decline to $205.1 million compared to $235.9 million the prior year, reflecting the company’s efforts to streamline operations. Revenue for the quarter edged upward to $855.8 million, a slight increase from $854.6 million in the equivalent period last year.
However, analysts were forecasting a higher revenue figure of $864.2 million. A closer examination of sales across different regions revealed that revenues from the Americas experienced a modest year-over-year increase of 1%, reaching $688 million, while international revenues suffered a decline of 4%, totaling $167.8 million.
On an organic growth basis, Steelcase saw a 3% increase in orders in the Americas, primarily driven by demand from government, education, and healthcare sectors. However, it was noted that orders from large corporate customers exhibited a downward trend when compared year-over-year, a significant shift after several quarters of robust growth.
This decline in orders was also mirrored in international markets, where orders plummeted by 11% amidst a broader slowdown across most major regions. Looking ahead, Chief Executive Officer Sara Armbruster expressed optimism, stating, "We expect order patterns from our largest corporate customers to return to growth in the second half of the year." At the conclusion of the quarter, Steelcase maintained a substantial backlog of approximately $680 million, indicating future revenue potential.
As investors continue to monitor Steelcase’s performance amidst evolving market conditions, the company remains focused on leveraging its strengths and addressing challenges to uphold its strategic vision for growth..