Why Steelcase Inc. (NYSE: SCS) stock is going gangbusters today

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Steelcase Inc. (NYSE: SCS) stock rose over 7.5% on 20th September, 2019 (as of 10:56 am GMT-4; Source: Google finance) after the company posted better than expected earnings for the second quarter of FY 20. SCS’ total liquidity, comprising of cash, cash equivalents and the cash surrender value of company-owned life insurance, has totaled to $385.3 million and total debt was $485 million at the end of the second quarter.

SCS in the second quarter of FY 20 has reported the adjusted earnings per share of 50 cents, beating the analysts’ estimates for the adjusted earnings per share of 43 cents. The company had reported the adjusted revenue growth of 14 percent to $998 million in the second quarter of FY 20, beating the analysts’ estimates for revenue by $17.13 million. The revenue grew due to double-digit growth across all segments and this growth included benefits from acquisitions and organic revenue growth of 9%. Organic revenue grew due to high order backlog at the beginning of the second quarter.  Orders  grew 3 percent compared to orders in the second quarter of FY19, which grew 12% compared to the previous year.

Moreover, second quarter 2020 operating income of $85.3 million rose by $17.4 million or 26 percent compared to operating income of $67.9 million in the prior year.  The Americas posted the operating income of $90.3 million compared to $77.2 million in the prior year.  The Americas’ operating income margin expanded 40 basis points compared to the prior year due to higher gross margins and lower operating expenses as a percentage of revenue.  EMEA has also posted an operating loss of $5.5 million compared to an operating loss of $6.0 million in the prior year, while the Other Category delivered the operating income of $8.9 million compared to $4.8 million in the prior year.

SCS has  declared a quarterly cash dividend of $0.145 per share, to be paid on or before October 14, 2019, to shareholders of record as of September 30, 2019.

For the third quarter of FY 20, the company expects the revenue to be in the range of $920 to $945 million, which would represent 2 to 5 percent growth.  The company reported revenue of $900.9 million in the third quarter of fiscal 2019, which was a 17% increase and 13% organic growth compared to the previous year. Steelcase expects to report diluted earnings per share to range between $0.33 to $0.37 for the third quarter of fiscal 2020.  Steelcase had reported diluted earnings per share of $0.31, and adjusted earnings per share of $0.36, in the third quarter of FY19.

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