Stock Trading in Red: Steelcase Inc. (NYSE: SCS)

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Steelcase Inc. (NYSE: SCS) stock fell over 15% on 23rd September, 2020 (as of 10:38 am GMT-4; Source: Google finance) after the company in the second quarter of FY 21 has reported 18% fall in the revenue of $818.8 million. The company’s net income has fallen to $55.5 million compared to net income of $60.5 million in the prior year. Orders after adjusting for the impact of the PolyVision divestiture and currency translation effects fell 32% in the second quarter compared to the prior year, declining by 37 percent in June, 34 percent in July and 22 percent in August.  For the second quarter, orders fell 35% in the Americas, 22% in EMEA and 25% in the Other category compared to the prior year.  In the Americas, the monthly year-over-year order decrease has improved through the quarter, as orders stabilized compared to more typical seasonality in the prior year, and project business and orders from smaller customers reflected lower declines than the overall average.  In EMEA, performance varied significantly by geographic market based on the stage of the pandemic locally, and orders comprised of a $19 million project in the education sector that is anticipated to ship in the third quarter.

Moreover, the revenue in the quarter benefited due to a strong beginning backlog of customer orders, which exceeded the prior year by 11% due to pandemic-related restrictions on manufacturing and delivery activities during the first quarter.  Revenue fell 15% in the Americas and 18% in EMEA compared to the prior year.  However, the company delivered the adjusted operating income of $104.2 million represented an increase of $18.9 million compared to operating income of $85.3 million in the prior year.  The increase was due to significant cost reduction actions implemented across all segments, which more than offset the impact of lower revenue.

The company’s total liquidity, comprised of cash, cash equivalents and the cash surrender value of company-owned life insurance, were of aggregate to $683.7 million. Total debt stood at $483.3 million at the end of the second quarter.  During the second quarter, the company repaid all outstanding borrowings under its global credit facility. The company has declared a quarterly cash dividend of $0.10 per share, to be paid on or before October 15, 2020, to shareholders of record as of October 2, 2020.

The company expects third quarter fiscal 2021 revenue to be in the range of $690 to $725 million, whereas the company had reported revenue of $955.2 million in the third quarter of fiscal 2020.  The company expects the diluted earnings per share to be in the range of $0.07 to $0.13 for the third quarter of fiscal 2021.

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