By Kimberly Chin
Steelcase Inc.’s shares tumbled 5.6% after hours to $10.87 after the company warned that supply chain disruptions and inflationary pressures had crimped some of its growth.
The company estimated it could have made about three times more in earnings during the quarter had it not been for higher costs associated with inflation and supply-chain disruptions that led to an increase in freight and labor costs, Chief Financial Officer Dave Sylvester said in prepared remarks.
The office furniture maker said third-quarter profit was $9.6 million, up from $2.1 million a year ago. On a per-share basis, profit rose to 8 cents from 2 cents a share a year earlier.
Costs rose 22% over last year while expenses rose 11%.
Revenue increased to $738.2 million from $617.5 million in the year-ago period. Revenue from the Americas region rose 20% while revenue from the Europe, Middle East and Asia (EMEA) region grew 21%.
“We continue to be impacted by a significant number of supply chain disruptions causing us to extend lead times and delay some shipments, which negatively impacted our third-quarter revenue more than we had anticipated,” Chief Executive Sara Armbruster said in prepared remarks.
The Grand Rapids, Mich., company estimated supply chain snarls resulted in a shift of revenue by at least $35 million from the third quarter into the fourth quarter.
Overall orders increased 40% over the previous year. It had a 36% increase in orders in the Americas and an increase of 31% in the EMEA region across all of its markets, it said.
“Our strong order growth reflects the investments companies are making in their office-based workplace strategies,” Ms. Armbruster said.
Steelcase now expects to generate revenue of $740 million to $765 million in the fourth quarter, compared with the $677.1 million it reported in the year-earlier quarter. It expects per-share profit to breakeven in the fourth quarter.
“We expect the benefits from the three price increases we’ve implemented this year, plus the eventual moderation of supply chain challenges to become a tailwind to earnings in fiscal 2023 versus the significant headwinds we’ve faced so far this fiscal year,” Mr. Sylvester, the company’s finance chief, said.
Write to Kimberly Chin at [email protected]
