Steelcase Inc. Reports Operating Results (10-Q)
Steelcase Inc. has a market cap of $1.03 billion; its shares were traded at around $7.75 with and P/S ratio of 0.5. The dividend yield of Steelcase Inc. stocks is 2%.SCS is in the portfolios of Arnold Van Den Berg of Century Management, Columbia Wanger of Columbia Wanger Asset Management, Columbia Wanger of Columbia Wanger Asset Management, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, Arnold Schneider of Schneider Capital Management, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates.
Highlight of Business Operations: We recorded a net loss of $11.1 in Q1 2011 compared to net income of $0 in Q1 2010. Q1 2011 included an income tax charge of $11.4 resulting from the recently enacted U.S. healthcare reform legislation, which changes the tax treatment of the federal subsidies received by employers who provide certain prescription drug benefits for retirees (the Medicare Part D subsidy). In addition, the year-over-year comparison is negatively impacted by results from company-owned life insurance (COLI), which generated significantly less income in Q1 2011 compared to Q1 2010, and the reinstatement of employee salaries to 2009 levels after a reduction in 2010. Q1 2011 results were favorably impacted by benefits from restructuring activities and other cost reduction efforts, lower commodity costs and modest organic revenue growth.
Our operating loss of $1.4 represented an improvement of $3.8 compared to the same period last year, which included $17.2 of variable life COLI income. Variable life COLI income is now reported in Other income (expense), net beginning in Q1 2011. See Note 7 to the condensed consolidated financial statements for additional information. Adjusted operating income increased $20.7 primarily due to benefits from restructuring activities and other cost reduction efforts and lower commodity costs of approximately $5, partially offset by approximately $3 of higher compensation costs related to the reinstatement of employee salaries to 2009 levels.
Our revenue decreased $3.8 or 0.7% in Q1 2011 compared to the same period last year. Organic revenue growth from Q1 2010 to Q1 2011 was $4 or 1%. North America, IDEO, PolyVision, Asia Pacific, Latin America, the Middle East and the Coalesse Group delivered organic revenue growth in the quarter. Western Europe reported upper-single digit organic revenue declines, although their order patterns strengthened considerably during Q1 2011.
Operating expenses increased by $0.9 in Q1 2011 compared to the same period last year. The favorable impacts of dealer deconsolidations within the last twelve months and benefits of restructuring activities and other cost reduction efforts were offset by variable life COLI income in the prior year of $7.2 and approximately $2 of higher compensation costs related to the reinstatement of employee salaries to 2009 levels.
We recorded restructuring costs of $2.5 in Q1 2011 compared to $2.8 in Q1 2010. Q1 2011 restructuring costs primarily related to several smaller actions initiated in the last six to nine months to consolidate manufacturing facilities. In Q1 2011, we initiated a formal procedure of discussions with local work councils regarding a project to reorganize our European manufacturing operations. No restructuring costs were recorded for this project in Q1 2011. Initial reactions by affected employees included work stoppages and slow-downs, and therefore we initiated back-up manufacturing plans, all of which increased our costs in Q1 2011. On June 25, 2010, we made significant progress in negotiations with the local work councils, and we estimate that the costs associated with this project will be approximately $17 and that approximately $11 will be recognized in Q2 2011. We anticipate annualized savings from these actions to be $7 to $8 when fully implemented by the end of 2011.
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