Thanks Mike. And good morning everyone.
Our fourth quarter EPS was a little better than we expected because of stronger revenues in the Americas and some tax benefits, firstly offset by higher freight costs.
We also had a significant increase in our work from home business this quarter that helped drive some profits. Dave will talk about the fourth quarter in more detail. I'd like to spend a couple of minutes reflecting on the year we just finished and then focused on what we see going forward. It was just a year ago, we were reporting on fiscal 2020, which was one of our best years in two decades. But we didn't have time to celebrate because COVID was causing factory shutdowns, first in Asia, then in Europe, and the Americas.
Our customers also began to shut down their offices. And while some projects went forward, many were paused.
For several weeks, we focused on serving customers in essential industries, and helped out by making PPE for local hospitals in the U.S.
As we reopen factories and offices, we adopted new protocols and processes to keep employees safe. We reduced our fixed costs by temporarily reducing salaries and working hours and then later by reducing headcount. When it became clear, the first wave of the virus wasn't going to be the last wave. We reduced discretionary spending, but continue to invest in selective new product development. We protected our liquidity through a series of actions including reduction in our dividend and aggressive actions to conserve working capital. Because of all those actions, we were able to report a profit for the full year, despite more than a $1 billion drop in revenue.
We are an office furniture company. And we were able to deliver a profit in a year when many of our largest customers were not using their offices.
We will share some of those profits with our employees through our annual bonus, and they deserve it because they really helped us get through the year. The decisions we made during the crisis put us in a strong position as we entered this next year.
We have a lot of new products that are relevant to the post COVID workplace. We invested in our relationships with customers, dealers and designers. And we maintained our strong liquidity position to support future investments.
So we feel prepared to capitalize once demand returns more strongly. On our call last time, I talked about the importance of the vaccine rollout. Because CEOs are eager to put their real estate investments back to work. We were having conversations about the post COVID workplace with our customers throughout the year. But when January came, the rising confidence in the vaccine brought more urgency to those conversations. And now we're seeing an increase in actual projects. In these last several weeks, particularly in the Americas, we have seen more new opportunities as well as restarts the projects that have been put on hold last year. The project opportunities we track and the customer RFPs we received saw double digit increases in February versus January, and our customer visits to Grand Rapids, including both physical and virtual visits, more than doubled. And those trends have continued through the first few weeks in March.
So, our sales people are very busy.
Our pricing and quoting people are busy. And our leadership team is busy as customers want to know how we see the new workplace emerging. We're hearing the same thing from the design firms we work with. They are busy and expect to continue to get busier through the spring. I really believe we're seeing the positive impact of the rapid rollout of the vaccine in the U.S. CEO confidence is very high as measured by the business roundtable. Many CEOs are getting the vaccine themselves and promoting it to their employees because they see it as key to getting fully back to work. Previously, many were targeting September 1 as a return to office day. And now we're hearing more talk about early summer or even spring as the beginning of their first waves of returning. Many states have released restrictions, and many more are expected to in the coming weeks.
So when does this translates to higher orders? The sales process takes several weeks to go from project initiation, through design, bid, selection, specification, and finally an order.
So we expect to see orders build later in our first quarter and into our second quarter.
Some good news is we believe many of these projects seem to be operating towards a faster installation deadline that we normally see, probably because many of these projects were originally scheduled to be completed by now.
So there's some pent up demand.
We also believe many customers will return to their offices without making significant changes, as they will wait to assess the challenges of the hybrid workplace, and then begin projects to update the office.
So we expect those projects are likely to develop in the second half of our fiscal year. The media unfortunately appears to be on a different timetable. Because of the challenges they seen with rising case counts, leading to new shutdowns and a slower rollout of the vaccine. The stimulus efforts have also lagged in boosting the economies so far, we expect to have a clearer picture next quarter of the trajectory of the EMEA recovery. APAC continues to recover nicely.
Our new project opportunity level has been very strong for the past two months, and our fourth quarter orders in China were up 11% versus the prior year. We believe APAC is on track to have a strong year ahead.
As we enter our first quarter, we have a relatively low backlog and we have not yet seen an inflection in our order rates.
We are also facing some higher costs due to commodity inflation and because of a number of temporary global supply chain challenges, including a phone shortage caused by the Texas ice storm a few weeks ago.
So we expect to report an operating loss in the quarter. But it's largely consistent with the scenario we've been managing toward. At the same time, we're also seeing really strong preorder activity levels, which is why we didn't want to take any additional cost reduction actions that could interrupt our participation in the recovery.
We are targeting to be approximately breakeven on a year-to-date basis by mid-year with a second quarter profit that approximately offsets the expected first quarter loss.
As we consider the rest of the year and beyond, we are quite optimistic about the future of the office and the implications for our business. Everyone seems to be talking about the hybrid office, the idea of offering employees the option of working from home one to two days per week. Initially, there were articles about companies hoping to save money by making significant, permanent reductions in their office space needs. But we were skeptical. In KPMGs recent CEO outlook post survey shows only 17% of CEOs think they will downsize their footprint compared to 69% back in August of last year. We agree completely with the principles of a hybrid workplace. But as employees returned to offices, companies will discover that hybrid is hard to get right. Every meeting might have a remote participant, but it's not going to feel the same as when everyone was remote. It's not the same as when everyone was in the same room. Individual work will be different too, as it will often include the need to jump on a video call without distracting others.
During the crisis, we've learned how much we miss all the important connections we make when we are together in an office, before meetings, after meetings, or when we're just moving through our offices. But many offices could do a better job helping make these connections happen.
As employers offer more choice to their employees, the office has to compete with the home. It has to be worth the commute. Offices have to help people work better.
So we don't see the office getting smaller. And we believe companies will have to make investments in the office so that people can work better. Offices have to be safe and feel safe and we can help with that. Offices have to be more productive for collaborative work, but also for individual work and we have new products designed for that. Offices have to be flexible, so flexible that users can reconfigure the space based on what they need right now. And offices have to be inspiring, helping people reconnect with each other, and with the purpose and culture of the company.
I think CEOs get that. And it's why they're less interested in reducing the office footprint now. The recovery is right in front of us, every company is going to have to be more competitive during the recovery. It's not just about attracting and retaining talent, but it's also about helping every person, every team, every part of the business reach its full potential. CEOs understand how important it is to get their people back together safely and productively. We're here to help. And this is why we're targeting double digit revenue growth for the second half of our year.
Now, I'll turn it over to Dave to cover the financials.