It appears that the turnaround at Steelcase (NYSE:SCS) is still on track. Though the company never collapsed in a fiery, attention-grabbing fashion as other well-known names did, the company and stock both took a good smacking a few years back. Of course, what remains to be seen is whether brighter days still lie ahead.

Sales for the company's second quarter climbed 8% and were a bit short of expectations as the company said that it received a higher-than-expected level of business ordered for shipment in the third quarter. The North America segment continued a nice trend of steady sequential growth, while the international business declined for the second straight quarter -- though it's still up 10% over last year's level.

Modest improvements were also seen in margins. Gross margins ticked up about 40 basis points, and operating margins improved by more than 100 basis points (both include restructuring charges). While free cash flow generation in the second quarter was lower than in the year-ago period, it was still positive and nearly surpassed that generated in the prior three quarters combined.

On the surface, it's tough to get excited about this company. The net margin is feeble, as are returns on equity and assets. What's more, the company is sensitive to commodity prices and economic conditions, and there are competitors such as Herman Miller (NASDAQ:MLHR), HNI (NYSE:HNI), Haworth, and Knoll (NYSE:KNL) to deal with in the market.

Yet I see hope. Management appears committed to improving margins, and that will certainly provide positive operating leverage. On the commodity side, I have no idea whether steel prices will stabilize, but Steelcase has rolled over its surcharges into new higher prices, meaning that if steel gets cheaper, it'll do even better. As for the factors such as competition and economic conditions, you can't really do anything about the economy, and competition hasn't kept it from becoming the top manufacturer.

Valuing turnarounds is pretty much a thankless task -- they always look too expensive until earnings have caught up, and by then you've often missed most of the move. While I like that Steelcase stays clear of the likes of Office Depot (NYSE:ODP), Staples (NASDAQ:SPLS), and Wal-Mart (NYSE:WMT) and the resulting margin pressures, it will still be a hard road back. That said, investors at least have the advantages of a market-leading company, a clean balance sheet, and decent cash flow to smooth the journey.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).