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Steelcase Inc. F1Q11 (Qtr End 05/28/10) Earnings Call Transcript

Steelcase Inc. F1Q11 (Qtr End 05/28/10) Earnings Call Transcript

Steelcase Inc. (SCS)

F1Q11 (Qtr End 05/28/10) Earnings Call Transcript

June 22, 2010 10:00 am ET


Raj Mehan – Director, IR

Jim Hackett – President and CEO

Dave Sylvester – VP and CFO

Terry Lenhardt – VP, North America Finance


Budd Bugatch – Raymond James

Todd Schwartzman – Sidoti

Mark Rupe – Longbow

Jeff Matthews – Ram Partners



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Good day, everyone, and welcome to Steelcase's first quarter fiscal 2011 conference call. As a reminder, today's call is being recorded. For opening remarks and introduction, I would like to turn the conference over to Mr. Raj Mehan, Director of Investor Relations.

Raj Mehan

Thank you, Karen. Good morning, everyone. Thank you for joining us for the recap of our first quarter fiscal year 2011 financial results. Here with me today are Jim Hackett, our President and Chief Executive Officer; Dave Sylvester, our Chief Financial Officer; Mark Mossing, Corporate Controller and Chief Accounting Officer; and, Terry Lenhardt, Vice President, North America Finance.

As many of you may have noticed, this quarter we made a change to our quarterly reporting and analyst call process. The practice we adopted for this quarter and our intent going forward will be to release our earnings report after market closes and then have our analyst call the following day at 10 AM. By releasing our financial results the night before our call, we believe we’d provide the investment community additional time to review and fully understand our results.

In addition, we have significantly enhanced the content of the webcast slides, which accompany the earnings release. Much of the sequential and year-over-year comparisons are now incorporated into the webcast slides. This will decrease the amount of prepared remarks made during this call. Again, we made this change to enable a deeper understanding of our results faster and allow greater time for dialog and Q&A during this call. We hope this is an enhancement for our processes as well and welcome any feedback.

Our first quarter earnings release, which crossed the wires yesterday, is accessible on our website. This conference call is being webcast. Presentation slides that accompany this webcast are available on And a replay of this call will also be posted to the site later today. In addition to our prepared remarks, we will then respond to questions from investors and analysts.

Our discussion today will include references to non-GAAP financial measures. These measures are presented because management uses this information to monitor and evaluate financial results and trends. Therefore, management believes this information is also useful for investors. Reconciliations to the most comparable GAAP measures are included in the earnings release and webcast live.

At this time, we are incorporating by reference into this conference call and subsequent transcript the text of our Safe Harbor statement included in yesterday’s release. Certain statements made within the release and during this conference call constitute forward-looking statements. There are risks associated with the use of this information for investment decision-making purposes.

For more details on these risks, please refer to yesterday’s release and Form 8-K, the company's 10-K for the year-ended February 26, 2010, and our other filings with the Securities and Exchange Commission. This webcast is a copyrighted production of Steelcase, Inc.

Now, with those formalities out of the way, I’m excited to turn the call over to our President and CEO, Jim Hackett.

Jim Hackett

Thank you, Raj. And good morning, everyone. And I still want to make comments and help answer questions with our new format. So let me get started. Our industry as a whole is usually upbeat at this time of year because we are all still feeling the glow from our trade show NeoCon. This year, the combination of the great response in Chicago to our new products and specialized applications plus the performance we are reporting today makes us even more optimistic.

We have suggested on several of these calls that we would be able to look back at Q1 of last year as low watermarks in the downturn. And it now appears that intuition was correct. I don’t say that obviously to bolster about our forecasting ability because forecasting in today’s world is perilous.

Yet I want to acknowledge that it’s a pleasure to talk about a modest level of organic growth after six consecutive quarters of year-over-year revenue declines. We are encouraged that our adjusted operating income has improved by $20 million compared to this same time last year. And again, that’s with 1% of growth. Dave is going to provide more color in a few moments.

Now, as I inferred a moment ago, there is some ongoing uncertainty in the global economy, and we believe the recovery is gaining traction albeit slowly. We’ve started on a path toward a year of continued and likely modest growth. During the downturn, it’s important to remind everyone that we protected our investment in growth initiatives. We didn’t opt for just short-term profit. And we believe we are starting to see the benefits of that decision.

One exciting example is the launch of a product called the node chair. It was our first product developed specifically for the classrooms in the education market. This little product won the Best of NeoCon Innovation Award last week and then also got some positive media attentions, in Fast Company, BusinessWeek and other channels. The crowd really loved this chair. It was one of five steel-casing products that illustrated elements of that strategy that continue to invest even in the downturn, as we won Best of NeoCon Awards.

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