Steelcase (SCS)

Q1 2012 Earnings Call

June 23, 2011 11:00 am ET

Executives

James Hackett - Chief Executive Officer, President, Director and Member of Executive Committee

Raj Mehan - IR

David Sylvester - Chief Financial Officer and Senior Vice President

Analysts

Mark Rupe - Longbow Research LLC

Chad Bolen - Raymond James

Todd Schwartzman - Sidoti & Company, LLC

Unknown Analyst -

Presentation

Operator

Good day, everyone, and welcome to Steelcase's First Quarter 2012 Conference Call. [Operator Instructions] For opening remarks and introduction, I would like to turn the conference call over to Mr. Raj Mehan, Director of Investor Relations.

Raj Mehan

Thank you, Gerard. Good morning, everyone. Thanks for joining us for the recap of our first quarter fiscal year 2012 financial results. Here with me today are Jim Hackett, our President and Chief Executive Officer; Dave Sylvester, our Chief Financial Officer; and Mark Mossing, Corporate Controller and Chief Accounting Officer.

Our first quarter earnings release which crossed the wires yesterday is accessible on our website. As a reminder, as of the end of the first quarter of fiscal year 2012, we realigned our reportable segments for financial reporting purposes, primarily as a result of the previously announced organizational changes to strengthen our position as a globally integrated enterprise. The prior period segment data contained in the news release has been reclassified to reflect this realignment. In addition, for the benefit of the investment community, supplementary tables which contain reclassified quarterly information for the prior year and annual information for the last 4 years can be found in our May 27, 2011 Form 8-K filing and in the Investor Relations section of our website under Events and Presentations.

As a reminder, this conference is being webcast. The presentation slides that accompany this webcast are also available on ir.steelcase.com, and we'll have a replay of this call posted to the site later today.

In addition to our prepared remarks, we'll 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 slides.

At this time, we're 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 25, 2011 and our other filings with the Securities and Exchange Commission. This webcast is copyrighted production of Steelcase Inc.

And now with those formalities out of the way, I'll turn the call over to President and CEO, Jim Hackett.

James Hackett

Thank you, Raj, and good morning to all. I just have some brief comments and most of them are on the themes that I've stayed with the last few quarters; all-around good news. We're pleased to report a very strong quarter for the company. And there's been some stress in the global economy obviously, but we are seeing a rhythm to the recovery as it relates to our business, likely the industry, and it's great to feel the momentum continuing in the right direction.

Now Dave Sylvester, our CFO, will provide the details in a moment, but you're probably already aware that we exceeded the expectations for both revenue and profits. It was true that performance was strong across all of our business units and that includes global regions as well. In fact, our Asia business is profitable for the second straight quarter. We've worked hard on that and I'm proud to report that. I think this news shows that with a decent rate of growth, we have our business model tuned to produce the kind of results you're seeing. Now this was our fifth quarter in a row of organic year-over-year revenue growth, and that growth is ramping up nicely. This is the second consecutive quarterly increase above 20%.

As I mentioned in earlier quarterly calls, we are executing the previously discussed strategy that was designed to give Steelcase this running start out of the recovery. And there was evidence of this even throughout NeoCon last week in Chicago. To remind you, NeoCon is the trade show for our industry. It's held annually and it's a big deal. And I know some of you had the opportunity to visit us at the show, where our company received 4 best of NeoCon awards. And my biggest takeaway from the show was the upbeat mood of the customers, designers and dealers who came to visit. It wasn't just the quantity of visitors to the showroom which was very healthy because the spaces seemed full throughout the show, it was the quality of those visitors. They were very serious about projects, serious about our topics, more than just buying new furniture. We're seeing project business as a result come back to life in large companies. And the people there were ready to talk about rethinking their workspaces, which really enthuses me, and this is around the world. And of course, that allows us to leverage our insights about how people are working today and where that will be in the future. The theme of the Steelcase branded showroom this year centered around the interconnected workplace and the technology-based solutions that we have offered are gaining traction, because more and more of our customers are focusing on connecting people to each other and connecting them to important information. And it's provided a natural starting point for discussions about our product called media:scape. media:scape is the new -- actually, has a new mobile version that makes it more effective for collaboration. I urge you to go to our website to learn more about media:scape. And as our NeoCon awards for Coalesse brand, Turnstone brand and Details brand demonstrated, we're translating important insights from our research as well into innovation in all of our brands. This is also a big deal, because the company is able to translate these kind of behaviors into the nature of the way products will respond to work in the future.

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