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Steelcase Reports Third Quarter Results

Thursday 20 December 2012

Steelcase Inc. today reported third quarter sales of $727.2 million and net income of $23.6 million, or $0.19 per share. Excluding restructuring costs, adjusted earnings were $0.22 per share. Revenue and earnings per share were in-line with company estimates. Steelcase reported $719.4 million of revenue and earnings of $0.17 per share in the third quarter of the prior year, including restructuring costs of approximately $0.02 per share.
Organic revenue growth in the third quarter was 1 percent after adjusting for $8.2 million of unfavourable currency translation effects and a favourable impact of $6.0 million from recent dealer acquisitions. The Americas posted 3 percent organic growth over the prior year while EMEA experienced a 1 percent organic decline. Revenue continued to include a higher mix of project business from some of the company's largest corporate customers as compared to prior year.
"We were pleased that the Americas expanded their adjusted operating margin by 110 basis points in the third quarter compared to the prior year, despite modest revenue growth," said James P. Hackett, president and CEO. "While growth rates have moderated, we expect the fourth quarter will mark the twelfth consecutive quarter of organic revenue growth in the Americas."
Current quarter operating income of $38.4 million compares to $38.2 million in the prior year. Excluding restructuring costs, third quarter adjusted operating income of $44.4 million compares with $42.0 million in the prior year. Strength in the Americas was largely offset by lower profitability in EMEA and the Other category.
"While EMEA was profitable this quarter, we remain focused on improving our results in that segment, as demand patterns remain mixed and our results continue to reflect a higher mix of lower-margin project business," said David C. Sylvester, senior vice president and CFO. "In the Other category, we continue to invest in our Asia strategies, as we believe that the recent softening in demand is transient."
Outlook
Third quarter order growth in the Americas approximated 7 percent compared to the prior year. EMEA orders in the third quarter declined by approximately 4 percent compared to the prior year but grew approximately 8 percent in constant currency. The company expects fourth quarter fiscal 2013 revenue to be in the range of $695 to $720 million. This estimate includes an assumption of approximately $2 million from unfavorable currency translation effects compared to the prior year and approximately $4 million from recent acquisitions. Adjusting for these impacts, the company projects fourth quarter organic revenue growth in the range of 0 to 4 percent over the prior year. The company reported revenue of $690.2 million in the fourth quarter of fiscal 2012.
Steelcase expects to report earnings between $0.14 to $0.18 per share for the fourth quarter of fiscal 2013, including restructuring costs of approximately $0.02 per share. Steelcase reported earnings of $0.11 per share in the fourth quarter of fiscal 2012, including restructuring costs of approximately $0.03 per share.
"We remain optimistic about the prospects for continued growth in the Americas business, as customer visits, which center around the need for companies to modernize their spaces, remained strong again in the third quarter," Mr. Hackett said. "We are continuing to outpace the industry growth in the U.S. and are investing in new ideas intended to sustain our momentum."

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