Steelcase Reports Fourth Quarter EPS of $0.22; Full Year EPS Grows 29%
Steelcase Reports Fourth Quarter EPS of $0.22; Full Year EPS Grows 29 Percent Thursday March 27, 4:01 pm ET - Announces acceleration of strategic cost reduction actions -
GRAND RAPIDS, Mich., March 27 /PRNewswire-FirstCall/ -- Steelcase Inc. (NYSE: SCS - News) today announced fourth quarter and fiscal year 2008 financial results. Steelcase reported fourth quarter revenue growth of 15.8 percent to $901.3 million. Net income of $30.6 million, or $0.22 per share, compared to $29.3 million or $0.20 per share in the prior year. The company also announced the acceleration of various strategic cost reduction actions over the next nine to twelve months, which are expected to generate annualized savings of approximately $25 million after-tax.
For fiscal 2008, revenue grew 10.4 percent over the prior year to $3.4 billion, and earnings per share increased 29.2 percent over the same period to $0.93.
"Fiscal 2008 marked another year of improved profitability and fitness of the business," said James P. Hackett, president and CEO. "We are pleased with the improvements each business segment is making in its operating efficiency while pursuing targeted growth strategies."
Fourth Quarter Results
Reported revenue of $901.3 million for the fourth quarter increased 15.8 percent, compared to $778.4 million in the prior year quarter. The increase in revenue was largely driven by the International segment which grew 32.6 percent over the prior year and represented 30.9 percent of reported revenue in the current quarter. In addition, revenue benefited from an extra shipping week in the current quarter and approximately $26 million of favorable currency translation effects compared to the prior year.
Net income increased to $30.6 million, or $0.22 per share in the fourth quarter of fiscal 2008, lower than company estimates of $0.23 to $0.28 per share. Current quarter net income was negatively impacted by specific operational challenges in the International segment and lower cash surrender value appreciation on company-owned life insurance policies in the North America segment. The company reported earnings per share of $0.20 in the prior year, which included $(6.1) million of after-tax restructuring costs. In addition, the prior year included favorable tax adjustments and goodwill and intangible asset impairment charges, which, when combined with related adjustments to variable compensation expense, had the net effect of increasing last year's fourth quarter net income by $10.8 million.
Cost of sales was reduced to 68.2 percent of sales in the fourth quarter, a 50 basis point improvement compared to the prior year. The net improvement was a result of increased volume leverage, pricing and the benefits from prior restructuring actions in North America, offset in part by the operational challenges in the International segment and lower cash surrender value appreciation on company-owned life insurance policies. The improvement, in addition to lower restructuring costs, increased gross margin to 31.9 percent in the current quarter from 30.3 percent in the prior year.
Operating expenses were $240.4 million or 26.7 percent of sales compared to $231.3 million or 29.7 percent of sales in the prior year. Prior year expenses included $11.7 million of non-cash intangible asset and goodwill impairment charges. Current quarter operating expenses reflect the costs associated with an extra week of operations, increased spending on longer-term growth initiatives, the unfavorable impact of currency translation effects and lower cash surrender value appreciation on company-owned life insurance policies. These increases were offset in part by lower variable compensation costs.