Steelcase (SCS 14.71, +0.51, +3.59%) jumped higher 4% in pre-market trade after the company beat third quarter expectations and issuing upbeat guidance.
The early spike lifted the stock from the four-month low that it reached earlier this week. Factoring in today's pre-market jump, the stock is down 2.0% for the year after a volatile fourth quarter. Back in September, Steelcase responded to a strong quarterly report with a spike to its best level in nearly three years (19.35), but the next three months saw the stock slide back into negative territory for the year.
Steelcase supplies furniture for offices, hospitals, and classrooms. The company's comments regarding order trends from its business clients could be interpreted as commentary on the broader state of the business cycle at a time when investors are questioning the strength of economic growth in the U.S. and abroad.
Steelcase reported above-consensus third quarter earnings of $0.36 per share on a 16.7% year/year jump in revenue to $901 mln, also ahead of estimates.
Going forward, Steelcase expects fourth quarter earnings between $0.24 per share and $0.28 per share, which encompasses current market expectations. The company expects to generate revenue between $860 mln and $885 mln, which is ahead of market estimates. Management expects that the company's revenue growth rate will remain ahead of industry trends.
The company saw solid revenue growth in all its segments. President and CEO Jim Keane touted implementation of growth strategies to broaden its product offerings as a key factor in the quarter’s successes, noting that the company's organic revenue growth outpaced industry trends in the U.S. and other markets.
Steelcase's revenue growth was fueled by a 13% increase in organic revenue. Revenue in the Americas grew 15.5% year/year to $638.6 mln while organic revenue in the Americas grew 12% due to strong project business from large and small customers.
Revenue in Europe, the Middle East, and Africa increased 21.1% to $170.9 mln while organic revenue increased 12% due to a strong customer backlog at the start of the quarter.
Other revenue grew 17.0% to $91.5 mln while organic revenue grew 20% due to strength in most markets across Asia-Pacific.
Gross margin weakened to 30.9% from 32.5% one year ago. The decline was driven by the recording of an $11.2 mln pension charge. In addition, pricing benefits offset higher commodity, freight, and labor costs.
Steelcase's total orders grew 10% during the third quarter, mostly due to project business. Orders in the Americas increased 14% while other orders grew 12%. Orders in Europe, the Middle East, and Africa fell 6%.
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