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Steelcase Reports Second Quarter Results

Stocks in this article: SCS

"The EMEA results reflected significant organic revenue growth in the quarter and an improvement in adjusted operating results compared to the prior year, due in part to a strong backlog at the start of the quarter," said David C. Sylvester, senior vice president and CFO.  "Nevertheless, economic uncertainty remains very high in Europe and so we remain committed to improving our business model across the region."

Cost of sales improved to 68.9 percent of revenue in the current quarter compared to 69.7 percent in the prior year. Higher absorption of fixed costs associated with the revenue growth in the quarter, as well as year-over-year benefits from recent pricing adjustments (net of commodity cost changes) and restructuring actions (net of related disruption costs), were partially offset by the impact of a shift in business mix.

Operating expenses in the second quarter were $181.0 million compared with $174.9 million in the prior year. The increase was largely due to increased spending on sales, product development and other initiatives in the Americas and Asia Pacific. 

Interest expense was $4.6 million in the current quarter compared to $7.6 million in the prior year, which included $3.6 million of interest expense associated with senior notes repaid during August 2011. These notes were repaid with proceeds from the issuance of replacement notes in February 2011.

Investment income of $1.3 million in the current quarter compared to an investment loss of $2.6 million in the prior year. The improvement was primarily due to higher gains in the cash surrender value of variable life company-owned life insurance (COLI). 

The company repurchased 0.9 million shares at a cost of $7.6 million in the second quarter. The company has $136 million of remaining availability under its existing share repurchase authorization.

Cash, short-term investments and the cash surrender value of variable life COLI totaled $270.8 million and total debt was $291.9 million at the end of the second quarter. 

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