Steelcase (NYSE:SCS), the world's largest office furniture maker, reported first quarter earnings on Wednesday. The company met analysts' (Yahoo Finance) expected earnings per share of $0.13. Revenue increased over last year despite declining sales in the company's European market. Strength in the Americas region led the company's quarterly earnings and offset other regional weakness.
The company, which is headquartered in my hometown of Grand Rapids, reported first quarter revenue of $675.2 million. Net income for the quarter was $13.2 million. Earnings per share were $0.10 per share, but $0.13 when adjusted to exclude certain items. Last year the company reported revenue of $639.4 million in the first quarter. Earnings per share last year were $0.06 in the first quarter. Both key metrics saw increases.
Revenue by segment:
· Americas (United States, Canada, Latin America): $474.6 million, +16.2%
· EMEA (Europe, Middle East, Africa): $127.5 million, -17.2%
· Other (Asia Pacific, Poly Vision, Designtex): $73.1 million, -5.1%
The Americas segment made up 70.3% of first quarter sales. The EMEA (18.9%) and Other (10.8%) rounded out the rest of the quarterly $675.2 million. In last year's fiscal 2012, the Americas region made up 67% of revenue, while EMEA made up 22% and Other the remaining 11%. The first quarter showed that the Americas segment picked up the revenue slack coming from areas of Europe. In fact, the Americas segment has now posted seven straight quarters of double digit growth for the company. Steelcase actually saw growth in Germany and Spain in the first quarter.
Steelcase is best known for its office furniture brands. Steelcase continues to receive orders from its base of large corporate clients. I recently wrote about a deal between Steelcase and Huntington Bank (NASDAQ:HBAN) to help with the design of the company's small banks inside Meijer grocery stores. The company is expanding into healthcare and education segments. Steelcase just got back from its NeoCon conference in Chicago and had the opportunity to display some of its new education segment products. The "Verb" won a Best of NeoCon Award for the company. Aimed at higher education, the "Verb" is a table-based system used for closer teaching between teachers and students. The devices can also be used for high school. We will learn more about these two new business segments in the coming reported quarters.
Steelcase repurchased 1.1 million shares in the first quarter. Through September, Steelcase can purchase more shares on a $144 million share buyback agreement. The company also will be paying out a quarterly dividend of $0.09. Steelcase has been raising its payout rate recently after lowering it during the American recession years. The shares yield over 4% at today's prices.
The company's second quarter outlook calls for revenue of $715 to $740 million. Earnings per share are estimated to come in at $0.16 to $0.20, according to the company. Analysts on Yahoo Finance see the company reporting revenue of $731.5 million, which is close to the higher end of Steelcase's forecast. Analysts see the company earning $0.19 per share in the second quarter, which is also at the high end of company guidance. For fiscal 2013, analysts are calling for $0.74 per share. Shares of Steelcase, at today's $8.66, trade for less than ten times next year's expected $0.99 in earnings per share.
With companies cutting back on spending, Steelcase has recognized the need to diversify its business by attacking the healthcare and education fields. The company also has plenty of global expansion options with limited sales outside of the Americas and Europe. Steelcase yields over 4% and pays investors to wait for its turnaround to take place and new growth initiatives to be set.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SCS over the next 72 hours.