Shareholders don't just own stocks. We invest in businesses. Every share we buy purchases a stake in a company -- a sliver of a living, breathing enterprise run by a management team that ultimately determines the fate of the money we invest.

That's why The Motley Fool regularly contacts public companies and executives on our community's behalf, asking them the questions shareholders would find relevant. Because while quantitative measures are important, it's also crucial for investors to assess the less tangible aspects of the businesses they own (or are thinking of owning).

We recently surveyed select companies to gain insights into their business. Today we highlight Steelcase (NYSE:SCS):


Grand Rapids, Mich.

Market Cap

$826 million


Office services and supplies

Related Companies

HNI (NYSE:HNI), Herman Miller (NASDAQ:MLHR), Kimball International (NASDAQ:KBALB), Knoll (NYSE:KNL)

Following are Steelcase's answers to our email query about the business.

What steps have you taken to navigate your business through the economic turmoil of the past 12 months?
At Steelcase, the context for our actions embodied three main principles: Protect the eventual recovery; stay marginally profitable in the worst case if revenue declines were significant; and protect the strength of our balance sheet.

In order to protect the eventual recovery, we:

  • Made sure investments in growth initiatives were not jeopardized -- protected these to allow participation more fully in the recovery.
  • Enhanced relationships with key influencers -- shared our research and new product portfolio to influence project business when recovery starts.

By staying marginally profitable (before restructuring costs) at the operating income level, even in a scenario where year-over-year revenues declines up to 27%, we felt we could navigate the downturn and not burn material amounts of cash.

In order to stay marginally profitable, we moved quickly and aggressively, taking out a total of $140 million in annualized costs.

Cost reductions aggregated $100 million in permanent savings -- through workforce reductions and facility closures.

  • Cost reductions aggregated $40 million in temporary savings -- through employee salary reductions and elimination of certain employee benefits (i.e., profit sharing and 401(k) match contributions).
  • In addition, every Steelcase employee sharpened their pencils and helped control costs with extreme focus and discipline around overall manufacturing and operating expenses.

Throughout the downturn, we also ensured we maintained a regular and open dialogue with various audiences including our banks, rating agencies, and investors. The dialogue helped instill confidence in the rationale for our actions and our resolve in our strategic direction.

What are the top two or three metrics to which your business pays the closest attention?
Externally, we believe that stable or growing corporate profits are necessary for corporations to release funds for discretionary spend items such as office furniture. So trends associated with business capital spending are important. Obviously, in our line of work, employment growth (decline) trends are also important drivers.

Internally, our relative demand indicators are measured through the level of customer visits to our HQ, the level of project activity being pursued by our sales force, and the health of our distribution network. From a financial perspective, we are and have been for some time a company that is EVA-focused -- both for expectations for investments we make and for variable compensation purposes.

Now that the first decade of the new century is drawing to a close, we'd like to take a moment to reflect on what lies ahead. What excites you most about your business?
The eventual recovery in our industry. The company dedicated a lot of effort and money toward staying invested in growth initiatives -- so being poised for the recovery is what excites us the most. Our newest product portfolio embraces secular forces of technology and how they are impacting the workplace -- especially in the areas of increased collaboration. We love working with our customers and showing them new ways of working and how our solutions can help them improve their work experience. We are also excited about two key initiatives that are taking us into some adjacent and emerging markets. Our research illustrates that health-care professionals have been underserved in the area of helping them be more efficient, and significant opportunity exists to improve the experience of patients and families affected by care giving. With our focus on improving their experience, we took a "patient-centric" view and are designing holistic solutions in the clinical spaces of health care. In a similar vein, the classroom, which has seen little innovation in decades, is another area of focus for us. Our research in this area is revealing new product ideas which are under development and should be launched in the near future.

Of course, because we are a global company, and have local and regional coverage in Europe and many emerging markets, as the world markets begin to recover, we intend to share in that overall recovery through the investments we have made in these markets as well.

Steelcase is rated four stars (out of a possible five) by our Motley Fool CAPS community. Do you agree with our community's bullish assessment? Click here to rate the stock and cast your opinion.

The Motley Fool has a disclosure policy.