Steelcase (NYSE: SCS) reported Q1 EPS of ($0.33), $0.19 worse than the analyst estimate of ($0.14). Revenue for the quarter came in at $482.8 million versus the consensus estimate of $530.3 million.

• Revenue and orders declined significantly as a result of government restrictions and economic uncertainty associated with the global pandemic
• Cost reduction actions and discretionary spending controls reduced operating loss by approximately $70 million
• Quarter-end backlog totaled $751 million; most expected to ship in second quarter
• Liquidity position very strong at $799 million

"The global pandemic dramatically interrupted our momentum from a very strong fiscal 2020," said Jim Keane, president and CEO. "Suddenly, we were closing plants and taking actions to protect employees and preserve capital. Instead of permanent layoffs, we helped temporarily-idled employees access government programs, while paying the full cost of their health care premiums. Salaried workers took significant pay cuts, with higher-paid people taking the deepest cuts. As we began to ramp up manufacturing of essential business orders, we were able to ease the pay reductions and call back our hourly production employees. Because we were able to increase production sooner and faster than we expected, our revenue for the quarter was slightly better than some scenarios we modeled.”

“The significant restrictions on our factories necessitated the speed and depth of our actions to implement temporary layoffs of our manufacturing and distribution employees, significantly reduce salaries and semi-variable costs, and curtail project and other discretionary spending,” said Dave Sylvester, senior vice president and CFO. “As our factories were forced to idle, the layoffs allowed our variable margins to largely remain intact, and we estimate the other reductions lowered our average weekly costs compared to the fourth quarter and saved us approximately $70 million in total for the quarter, spread across cost of goods sold and operating expenses.”

“We started the second quarter with $751 million in our customer order backlog and nearly $800 million of liquidity,” said Dave Sylvester. “We expect our second quarter revenue and operating results will benefit from the high level of backlog and maintaining our salary reductions and other cost containment efforts, and by the end of the second quarter, we anticipate having positive adjusted operating income for the year to date. We believe the strength of our liquidity position will provide ballast over the course of the year as we navigate the economic uncertainty.”

“Customers are facing an uncertain environment as they contemplate how to support their people as they work from home and how to safely return to office-based work," said Jim Keane. “We are providing programs through which clients can provide their employees safe, efficient and productive solutions for the home. We are also engaging with clients as they prepare for the early stages of a return to the office but also as they look to reinvent the office to flexibly support higher levels of creativity, innovation and productivity.”

For earnings history and earnings-related data on Steelcase (SCS) click here.