Steelcase Inc. (ticker: SCS), a global leader in office furniture and architectural products, recently released its financial results for Q1 2024. Notably, the company’s Americas segment recorded an increase in operating income by $30.5 million compared to the previous year. This uptick was driven by higher pricing benefits, improved operational efficiencies, and lower restructuring costs, despite lower volume and higher operating expenses.
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Revenue Growth in Americas Segment
In Q1 2024, Americas revenue increased by $29.0 million or 5% compared to the prior year, representing 76.2% of the company’s consolidated revenue. This increase was attributed to approximately $65 million in higher pricing benefits, partially offset by around $35 million related to lower volume and about $2 million due to unfavorable currency translation effects. Organic revenue growth for the quarter stood at $13.5 million or 2% year-over-year.
Improvement in Cost of Sales
Cost of sales in the Americas segment improved by a considerable 640 basis points for the quarter, a result of approximately $65 million in higher pricing benefits and $5 million from operational efficiencies. The supply chain improvements played a significant role in driving this improvement. However, the gains were partially offset by the effects of lower volume and $4.5 million in higher variable compensation expenses.
Higher Operating Expenses
Operating expenses in the segment increased by $16.6 million in Q1 2024, or 150 basis points as a percentage of revenue, impacted by a $4.0 million gain from the sale of land in the prior year. Q1 2024 operating expenses included $8.5 million of higher variable compensation expense and $6.2 million from an acquisition.
Restructuring Costs
Despite the overall improvement in operations, Steelcase Inc. recorded restructuring costs of $8.1 million in Q1 2024, compared to $4.2 million in Q1 2023. The majority of these costs were primarily associated with business exit and workforce reduction costs.
International Segment Performance
In contrast, the International segment reported a decrease in revenue by $17.8 million or 9% compared to the prior year. Approximately $15 million in higher pricing benefits were more than offset by around $30 million related to lower volume and nearly $3 million of unfavorable currency translation effects.
Liquidity and Capital Resources
Regarding liquidity and capital resources, Steelcase Inc. had $40.2 million in cash and cash equivalents as of May 26, 2023, with 10% located in the U.S. and 90% outside the U.S. The company also held $159.7 million in company-owned life insurance and $270.4 million in availability under credit facilities. The total liquidity sources available amounted to $470.3 million.
Considering the financial results for Q1 2024 and the company’s current liquidity position, Steelcase Inc. seems to be on track for steady growth in the Americas segment, even with the challenges brought forth by restructuring costs and operating expenses. It remains essential for the company to maintain a strategic focus on operational efficiencies, pricing benefits, and supply chain improvements to continue delivering long-term value to its shareholders.
Income Statement
Financials in millions USD. Fiscal year is March – February. source
| Year | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 – 1994 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 0 | Revenue | 3232.6 | 2772.7 | 2596.2 | 3723.7 | 3443.2 | 3055.5 | 3032.4 | 3060 | 3059.7 | 2988.9 | Upgrade |
| 1 | Revenue Growth (YoY) | 16.59% | 6.80% | -30.28% | 8.15% | 12.69% | 0.76% | -0.90% | 0.01% | 2.37% | 4.19% | Upgrade |
| 2 | Cost of Revenue | 2313.2 | 2011.2 | 1833.4 | 2508.5 | 2355.3 | 2050.3 | 2024.8 | 2088.8 | 2143.7 | 2043.7 | Upgrade |
| 3 | Gross Profit | 919.4 | 761.5 | 762.8 | 1215.2 | 1087.9 | 1005.2 | 1007.6 | 971.2 | 916 | 945.2 | Upgrade |
| 4 | Selling, General & Admin | 837.2 | 741.4 | 684.2 | 958.2 | 904.3 | 850 | 810.5 | 790 | 768 | 757 | Upgrade |
| 5 | Other Operating Expenses | 16.7 | 0 | 35.6 | 0 | 0 | 0 | 0.9 | 6.6 | 3.1 | 22.3 | Upgrade |
| 6 | Operating Expenses | 853.9 | 741.4 | 719.8 | 958.2 | 904.3 | 850 | 811.4 | 796.6 | 771.1 | 779.3 | Upgrade |
| 7 | Operating Income | 65.5 | 20.1 | 43 | 257 | 183.6 | 155.2 | 196.2 | 174.6 | 144.9 | 165.9 | Upgrade |
| 8 | Interest Expense / Income | 28.4 | 25.7 | 27.1 | 27.3 | 37.5 | 17.5 | 17.2 | 17.6 | 17.7 | 17.8 | Upgrade |
| 9 | Other Expense / Income | -14.5 | -7.2 | -10 | -15.5 | -17.8 | -23.8 | -17.3 | -17.8 | -9.8 | 0.9 | Upgrade |
| 10 | Pretax Income | 51.6 | 1.6 | 25.9 | 245.2 | 163.9 | 161.5 | 196.3 | 174.8 | 137 | 147.2 | Upgrade |
| 11 | Income Tax | 16.3 | -2.4 | -0.2 | 45.5 | 37.9 | 80.8 | 71.7 | 4.5 | 50.9 | 59.5 | Upgrade |
| 12 | Net Income | 35.3 | 4 | 26.1 | 199.7 | 126 | 80.7 | 124.6 | 170.3 | 86.1 | 87.7 | Upgrade |
| 13 | Net Income Growth | 782.50% | -84.67% | -86.93% | 58.49% | 56.13% | -35.23% | -26.83% | 97.79% | -1.82% | 126.03% | Upgrade |
| 14 | Shares Outstanding (Basic) | 113 | 112 | 115 | 117 | 117 | 116 | 117 | 122 | 121 | 124 | Upgrade |
| 15 | Shares Change | 0.79% | -2.45% | -1.96% | 0.36% | 0.55% | -1.01% | -4.12% | 0.74% | -2.07% | -0.90% | Upgrade |
| 16 | EPS (Basic) | 0.30 | 0.03 | 0.22 | 1.67 | 1.06 | 0.68 | 1.03 | 1.37 | 0.69 | 0.70 | Upgrade |
| 17 | EPS (Diluted) | 0.30 | 0.03 | 0.22 | 1.66 | 1.05 | 0.68 | 1.03 | 1.36 | 0.68 | 0.69 | Upgrade |
| 18 | EPS Growth | 900.00% | -86.36% | -86.75% | 58.10% | 54.41% | -33.98% | -24.26% | 100.00% | -1.45% | 130.00% | Upgrade |
| 19 | Free Cash Flow Per Share | 0.36 | -1.30 | 0.27 | 2.47 | 0.60 | 1.27 | 0.95 | 0.76 | 0.05 | 0.82 | Upgrade |
| 20 | Dividend Per Share | 0.490 | 0.535 | 0.370 | 0.580 | 0.540 | 0.508 | 0.480 | 0.449 | 0.430 | 0.400 | Upgrade |
| 21 | Dividend Growth | -8.41% | 44.59% | -36.21% | 7.41% | 6.30% | 5.83% | 6.90% | 4.42% | 7.50% | 11.11% | Upgrade |
| 22 | Gross Margin | 28.44% | 27.46% | 29.38% | 32.63% | 31.60% | 32.90% | 33.23% | 31.74% | 29.94% | 31.62% | Upgrade |
| 23 | Operating Margin | 2.03% | 0.72% | 1.66% | 6.90% | 5.33% | 5.08% | 6.47% | 5.71% | 4.74% | 5.55% | Upgrade |
| 24 | Profit Margin | 1.09% | 0.14% | 1.01% | 5.36% | 3.66% | 2.64% | 4.11% | 5.57% | 2.81% | 2.93% | Upgrade |
| 25 | Free Cash Flow Margin | 1.24% | -5.25% | 1.19% | 7.77% | 2.04% | 4.81% | 3.68% | 3.04% | 0.21% | 3.40% | Upgrade |
| 26 | Effective Tax Rate | 31.59% | -150.00% | -0.77% | 18.56% | 23.12% | 50.03% | 36.53% | 2.57% | 37.15% | 40.42% | Upgrade |
| 27 | EBITDA | 170 | 110.5 | 138.2 | 358.1 | 283 | 244.9 | 273.8 | 258.1 | 214.6 | 225 | Upgrade |
| 28 | EBITDA Margin | 5.26% | 3.99% | 5.32% | 9.62% | 8.22% | 8.02% | 9.03% | 8.43% | 7.01% | 7.53% | Upgrade |
| 29 | Depreciation & Amortization | 90 | 83.2 | 85.2 | 85.6 | 81.6 | 65.9 | 60.3 | 65.7 | 59.9 | 60 | Upgrade |
| 30 | EBIT | 80 | 27.3 | 53 | 272.5 | 201.4 | 179 | 213.5 | 192.4 | 154.7 | 165 | Upgrade |
| 31 | EBIT Margin | 2.47% | 0.98% | 2.04% | 7.32% | 5.85% | 5.86% | 7.04% | 6.29% | 5.06% | 5.52% | Upgrade |
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