Steelcase Inc. (NYSE:SCS) Q2 2020 Earnings Conference Call - Final Transcript

Sep 23, 2020 • 08:30 am ET


Steelcase Inc. (NYSE:SCS) Q2 2020 Earnings Conference Call - Final Transcript


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Good day, everyone, and welcome to Steelcase's Second Quarter Fiscal 2021 Conference Call. As a reminder, today's call is being recorded.

For opening remarks and introductions, I'd like to turn the call -- conference call over to Mr. Michael O'Meara, Director of Investor Relations and Financial Planning and Analysis.

Michael O'Meara

Thank you, Michelle. Good morning, everyone. Thank you for joining us for the recap of our second quarter fiscal 2021 financial results.

Here with me today are Jim Keane, our President and Chief Executive Officer; and Dave Sylvester, our Senior Vice President and Chief Financial Officer.

Our second quarter earnings release, which crossed the wires yesterday, is accessible on our website. This conference call is being webcast, and this webcast is a copyrighted production of Steelcase, Inc. A replay of this webcast will be posted to later today.

Our discussion today may include references to non-GAAP financial measures and forward-looking statements. Reconciliations to the most comparable GAAP measures and details regarding the risks associated with the use of forward-looking statements are included in our earnings release and we are incorporating by reference into this conference call the text of our Safe Harbor statement included in the release.

Following our prepared remarks, we will respond to questions from investors and analysts.

I will now turn the call over to our President and Chief Executive Officer, Jim Keane.

James P. Keane

Thanks, Mike, and good morning, everyone.

For the second quarter, we reported EPS of $0.47, or $0.55 after adjusting for the restructuring charges. This is a 10% improvement against last year and beat our own expectations. And we delivered that earnings growth despite a 17% organic revenue decline. Our strong profitability was due first of all to continued operating expense control from actions we took at the onset of the pandemic. I also have to give credit to our operations people in all our factories around the world. In the first quarter, they faced shutdowns or significant restrictions in what they could make. In the second quarter, they had to ramp up the entire supply chain quickly to work through the large backlog of orders at the start of the quarter, while continuing to control costs. Our strong gross margins in the second quarter show how efficiently they were able to do that. So it was a very good quarter because of operational execution and good cost controls.

During the first and second quarters, we had used salary reductions as a way to quickly reduce costs without job eliminations. Remember, at the beginning of the crisis, many people thought we would effectively control the pandemic, and with the help of the stimulus package, some sort of economic recovery would begin in the summer. Now, it's clear that in the Americas and possibly Europe, the economic effects will continue for a while longer. We could not expect our employees to accept reduced salaries for that long. So we restored salaries to 100% and we announced our plans for workforce reductions in the Americas a few weeks