For the quarter, SCS delivered EPS of $0.26, beating analysts' estimate by $0.03. Revenue also came in well above expectations at $775.6 million vs. the $759.8 million expectation. However, revenue growth was pretty stagnant at just +2.3%. That said, SCS isn't a topline growth story. Its highest revenue growth rate over the past five years stands at just 8.4%. What SCS does have going for it is steady earnings and cash flow generation, enabling it to pay a solid dividend -- currently yielding 3.6%.
Rewinding back to Q1, SCS missed on both the top and bottom lines due to large customers delaying and reducing spending. This quarter, however, management said there were some improvement in the Americas pipeline. Order rates and revenue were essentially flat year/year, an improvement over the 3% decline in saw last quarter. Additionally, its Asia-Pacific segment had a strong quarter with 19% organic growth in the company's "other" category.
From a product standpoint, demand was particularly strong for its high to adjustable products and SCS is now increasing its development pipeline to respond to this trend. This focus is helping to improve its win rate and revenues from newer adjustable products now account for nearly one third of its total revenue. Furthermore, the company believes it is approaching the point where the revenue growth from these products will offset the decline in revenue from legacy products.
Competition and pricing are always important factors for SCS too. During the conference call last night, management said that the industry has always been competitive, but, it is seeing more instances were certain traditional competitors are discounting new projects to new levels. That said, despite this higher pressure on pricing, the company held its market share and its win rates improved.
Lastly, as noted above, SCS took some costs out of the business, helping it to outperform on the bottom line. However, gross margin still declined to 33.3% from 34.7% in the year ago quarter. This is likely attributable to the challenging competitive environment.
Another blemish is the downside Q3 EPS guidance of $0.21-$0.25 vs. the $0.28 Capital IQ Consensus. Revenue guidance was inline at $785-$810 million. But, at this point, investors seem content with the idea that conditions have improved a bit from last quarter and that there could be an acceleration in growth on the topline down the road as it continues to launch new products and expands in the stronger Asia Pacific region,