Steelcase Shares Lower

Shares of furniture company Steelcase (SCS) were sharply lower in pre-market trade, after posting first-quarter results late Wednesday that fell short of analysts’ estimates as order growth was weighted toward the second half of the quarter.

The Grand Rapids, Mich.-headquartered company, which also provides architecture and technology related to interior design, generated $824.3 million in revenue in the three months ended May 24. This was up 9.3% from $754 million in the corresponding quarter of the prior year but fell short of the consensus estimate of analysts polled by Capital IQ for $839.1 million.

Diluted earnings per share came in at $0.15, up from $0.14 a year earlier but nevertheless below the $0.18 analyst estimate.

“We are pleased to have delivered another quarter of strong growth in sales and operating income,” Jim Keane, chief executive of Steelcase, said. “Our 15% percent order growth was particularly strong and in line with our expectations. We fell just short of our revenue estimates because order growth was weighted toward the second half of the quarter and customers requested delivery dates later than we typically see, in part because of construction labor shortages that caused their projects to be delayed. We ended the quarter with a high backlog and a strong pipeline of customer opportunities which support our outlook for the second quarter.”

The company is targeting second quarter 2020 revenue in the range of $970 million to $995 million, which would represent 11% to 14% growth compared to $875.8 million of revenue in the prior year. Diluted earnings per share are projected to come in the range of $0.41 to $0.45 which compares to $0.41 in the second quarter of fiscal 2019. The prior year included a $7.5 million gain from the sale of property.

For the fiscal 2020 year, the company is reaffirming its targets of 5.5% to 9.5% revenue growth – which translates to 2% to 6% organic revenue growth- and $1.20 to $1.35 of diluted earnings per share.