Steelcase Inc. (NYSE: SCS) stock crashed over 11.4% on 20th June, 2019 (As of 10:23 am GMT-4; Source: Google finance). Gross margin declined 30 basis points to 31.3 percent in the first quarter compared to the prior year, due to higher cost of sales in the Americas. The Americas experienced continued unfavorable business mix which was partially offset by benefits from pricing actions taken over the last several quarters, net of higher commodity and freight costs.
However, the company’s operating income rose 18% to $27.6 million in the first quarter of fiscal 2020. Revenue grew 9% in the first quarter compared to the prior year, or 6 percent on an organic basis, due to the growth across all segments. Orders (adjusted) rose 15% in the first quarter compared to the prior year, primarily due to the strong growth in day-to-day business. Gross margin in EMEA improved by 60 basis points, and gross margin in the Other category improved by 30 basis points. The company generated cash, cash equivalents of $309.4 million, and had total debt was $486.6 million, at the end of the first quarter.
Moreover, Operating expenses rose to $230.8 million in the first quarter from $214.6 million in the prior year but declined as a percentage of revenue to 28.0 percent in the current quarter compared to 28.5 percent in the prior year.
SCS has declared a quarterly cash dividend of $0.145 per share. The dividend will be paid on or before July 16, 2019, to shareholders of record as of July 1, 2019.
For the second quarter, the company expects revenue to be in the range of $970 million to $995 million, which is a growth of 11% to 14% compared to $875.8 million of revenue in the prior year. Adjusted for the impact of acquisitions, divestiture and unfavorable currency translation effects, the projected revenue is expected to post organic growth in the range of 6% to 9%. Earnings are expected to be in the range of $0.41 to $0.45 per share.
For fiscal 2020, the company has reaffirmed its revenue growth targets to be in the range of 5.5% to 9.5% and earnings guidance in the range of $1.20 to $1.35 per share. Steelcase is on track to achieve its fiscal 2020 targets, despite some signs of slowing economic growth, because the customers are continuing to invest in modernized, fluid work environments to support agile work processes and attract, retain and inspire their workforce.