Earnings After Close Today; Watching Margins, Order Trends
Steelcase reports 3QFY24 results after market close today. We are expecting adjusted EPS of $0.25 on revenue of $804 million. Consensus is EPS of $0.23 on revenue of $796 million. Our estimate is at the high end of the revenue guidance and the midpoint of adjusted EPS guidance. EPS estimates range from a low of $0.17 to a high of $0.25 (WTR), compared with guidance of $0.23-0.27. We will be watching two key metrics: Orders Rates: Management noted that orders trended positively during the first three weeks of 3QFY24. We will be attentive to see if that is sustained. Since the Steelcase second-quarter earnings report, the Architectural Billing Index weakened. We will be interested in how, or if, that has fed through to Steelcase. Margins: Steelcase has reported better-than-expected results in 1Q and 2Q, both driven primarily by margin performance. Price increases offset input costs, which have stabilized and recently moderated. We are modeling gross margin of 32% versus 28.8% a year ago, and operating margin of 4.7% versus 2.5% a year ago. As shown on the stock chart on page 3, Steelcase’s equity has significantly outperformed YTD. Since its 2QFY24 report in late September, Steelcase gained ~50%. Steelcase will host its 3QFY24 management-led earnings conference call on Wednesday, December 20 at 8:30 am ET. We will also be hosting Steelcase at WTR’s first Virtual Furniture/Furnishings Conference on January 17, 2024. Registration link is accessible in our full report.Steelcase provides furniture settings, user-centered technologies and interior architectural products. The company's furniture portfolio includes panel, fence and beam-based furniture systems, storage, fixed and height-adjustable desks, benches and tables and complementary products. The company's seating products include task chairs and seating for specific vertical markets. The company's technology solutions support group collaboration by integrating furniture and technology. The company's interior architectural products include full and partial height walls and architectural pods. The company also provides services, including workplace strategy consulting, data-driven space measurement, and lease origination services.
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