Press Release

CARTHAGE, Mo., May 1, 2023 /PRNewswire/ -- 

• 1Q sales of $1.21 billion, an 8% decrease vs 1Q22
• 1Q EBIT of $89 million, down $48 million vs 1Q22
• 1Q EPS of $.39, a decrease of $.27 vs 1Q22
• 2023 guidance unchanged: sales of $4.8–$5.2 billion; EPS of $1.50–$1.90

President and CEO Mitch Dolloff commented, "We delivered first quarter results that were above our expectations but lower than our record first quarter results last year. Operating results were largely in line with our expectations, but several expenses were lower than expected in the first quarter. Given continued demand volatility, our full year guidance range remains unchanged.

"Our diverse portfolio of businesses, our solid financial position, and the ingenuity and agility of our employees continue to help us navigate challenging markets. We are focused on improving the things that we can control and continuing to mitigate the macroeconomic impacts on our business. We are working with our customers on new product opportunities, continuing our focus on improving operating efficiency, and driving strong cash management. Our financial discipline allows us to withstand periods of economic uncertainty and enables us to manage our company for long-term success."

FIRST QUARTER RESULTS

First quarter sales were $1.21 billion, an 8% decrease versus first quarter last year

• Organic sales¹ were down 11%
• Volume was down 7%, primarily from demand softness in residential end markets, partially offset by growth in our Automotive, Aerospace, and Hydraulic Cylinders businesses
• Raw material-related selling price decreases reduced sales 3%
• Currency impact decreased sales 1%
• Acquisitions, net of divestitures, increased sales 3%

First quarter EBIT was $89 million, down $48 million or 35% from first quarter 2022 EBIT.

• EBIT decreased primarily from lower volume and lower metal margin in our Steel Rod business
• EBIT margin was 7.4%, down from 10.4% in the first quarter of 2022
• EBIT was better than anticipated due to several factors totaling approximately $20 million: including lower incentive compensation, favorable medical claims and other insurance trends, lower bad debt expense, a reduction to a contingent purchase price liability associated with a prior year acquisition, and pandemic-related cost reimbursements

First quarter EPS was $.39, a $.27 decrease versus first quarter 2022 EPS of $.66, reflecting lower EBIT. 

DEBT, CASH FLOW, AND LIQUIDITY

• Net Debt² was 2.88x trailing 12-month adjusted EBITDA²
• Debt at March 31
• Total debt of $2.1 billion, including $317 million of commercial paper outstanding
• No significant maturities until November 2024
• Operating cash flow was $97 million in the first quarter, an increase of $58 million versus first quarter 2022, reflecting a smaller use of cash for working capital partially offset by lower earnings
• Capital expenditures were $38 million
• Total liquidity was $870 million at March 31
• $345 million cash on hand
• $525 million in capacity remaining under revolving credit facility

DIVIDEND

• In February, Leggett & Platt's Board of Directors declared a $.44 per share first quarter dividend, two cents higher than last year's first quarter dividend
• At an annual indicated dividend of $1.76 per share, the yield is 5.4% based upon Friday's closing stock price of $32.31 per share

STOCK REPURCHASES

• Net issuances of .5 million shares through employee benefit plans
• Shares outstanding at the end of the first quarter were 133.1 million

2023 GUIDANCE

• Full year 2023 sales and EPS guidance unchanged
• Sales are expected to be $4.8–$5.2 billion, -7% to +1% versus 2022
• Volume at the midpoint expected to be down low single digits:
• Down low single digits in Bedding Products Segment
• Up high single digits in Specialized Products Segment
• Down low single digits in Furniture, Flooring & Textile Products Segment
• Raw material-related price decreases and currency impact combined expected to reduce sales mid-single digits
• Acquisitions completed in 2022 expected to add ~3% to sales
• EPS is expected to be $1.50–$1.90
• Earnings at the midpoint primarily reflects:
• Metal margins down mid-teens
• Lower volume in some businesses
• Moderate pricing pressure from deflation
• Based on this framework, EBIT margin should be 7.5% to 8.0%
• Additional expectations:
• Depreciation and amortization $200 million
• Net interest expense $85 million
• Effective tax rate 24%
• Fully diluted shares 137 million
• Operating cash flow $450–$500 million
• Capital expenditures $100–$130 million
• Dividends $240 million
• Minimal acquisitions and share repurchases

SEGMENT RESULTS – First Quarter 2023 (versus 1Q 2022)

Bedding Products –

• Trade sales decreased 17%
• Volume decreased 9%, primarily due to demand softness in U.S. bedding markets and lower trade demand in our Steel Rod and Drawn Wire businesses
• Raw material-related selling price decreases reduced sales 7%
• Currency impact decreased sales 1%
• EBIT decreased $43 million, primarily from lower metal margin, lower volume, and lower overhead recovery

Specialized Products –

• Trade sales increased 21%
• Volume increased 11% from growth across the segment
• Raw material-related price increases added 2%
• Currency impact decreased sales 5%
• Hydraulic Cylinders acquisition completed in August 2022 added 13%
• EBIT increased $8 million, primarily from higher volume

Furniture, Flooring & Textile Products –

• Trade sales decreased 13%
• Volume decreased 15%, with declines across the segment
• Raw material-related selling price increases of 1% were offset by currency impact of 1%
• Textiles acquisitions added 2%
• EBIT decreased $14 million, primarily from lower volume

SLIDES AND CONFERENCE CALL

A set of slides containing summary financial information is available from the Investor Relations section of Leggett's website at www.leggett.com. Management will host a conference call at 7:30 a.m. Central (8:30 a.m. Eastern) on Tuesday, May 2. The webcast can be accessed from Leggett's website. The dial-in number is (201) 689-8341; there is no passcode. 

FOR MORE INFORMATION: Visit Leggett's website at www.leggett.com.

COMPANY DESCRIPTION:  Leggett & Platt (NYSE: LEG) is a diversified manufacturer that designs and produces a broad variety of engineered components and products that can be found in many homes and automobiles. The 140-year-old Company is comprised of 15 business units, approximately 20,000 employees, and 135 manufacturing facilities located in 18 countries. 

Leggett & Platt is the leading U.S.-based manufacturer of: a) bedding components; b) automotive seat support and lumbar systems; c) specialty bedding foams and private label finished mattresses; d) components for home furniture and work furniture; e) flooring underlayment; f) adjustable beds; and g) bedding industry machinery.

FORWARD-LOOKING STATEMENTS: This press release contains "forward-looking statements," including, but not limited to the amount of the Company's forecasted 2023 full-year volume growth; acquisition sales growth; sales, EPS, capital expenditures; depreciation and amortization; net interest expense; fully diluted shares; operating cash flow; EBIT margin; effective tax rate; amount of dividends; raw material related price decreases; currency impact; volume in each of the Company's segments; lower metal margins in our Steel Rod business; moderate pricing pressure from deflation; and minimal acquisitions and share repurchases. Such forward-looking statements are expressly qualified by the cautionary statements described in this provision and reflect only the beliefs of Leggett at the time the statement is made. Because all forward-looking statements deal with the future, they are subject to risks, uncertainties and developments which might cause actual events or results to differ materially from those envisioned or reflected in any forward-looking statement. Moreover, we do not have, and do not undertake, any duty to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement was made. Some of these risks and uncertainties include: the adverse impact on our sales, earnings, our liquidity impacting our ability to pay our obligations as they come due, margins, cash flow, costs, and financial condition caused by: the Russian invasion of Ukraine; global inflationary impacts; macro-economic impacts; pandemics; the demand for our products and our customers' products; growth rates in the industries in which we participate and opportunities in those industries; our manufacturing facilities' ability to remain fully operational and obtain necessary raw materials and parts, maintain appropriate labor levels and ship finished products to customers; the impairment of goodwill and long-lived assets; restructuring-related costs; our ability to access the commercial paper market or borrow under our revolving credit facility, including compliance with restrictive covenants that may limit our operational flexibility and our ability to timely pay our debt; adverse impact from supply chain shortages and disruptions; our ability to manage working capital; increases or decreases in our capital needs, which may vary depending on acquisition or divestiture activity; our capital expenditures; our ability to collect trade receivables; market conditions; price and product competition from foreign and domestic competitors; cost and availability of raw materials (including semiconductors and chemicals) due to supply chain disruptions or otherwise; labor and energy costs; cash generation sufficient to pay the dividend; cash repatriation from foreign accounts; our ability to pass along raw material cost increases through increased selling prices; conflict between China and Taiwan; our ability to maintain profit margins if customers change the quantity or mix of our components in their finished products; our ability to maintain and grow the profitability of acquired companies; political risks; changing tax rates; increased trade costs; risks related to operating in foreign countries; cybersecurity breaches; customer bankruptcies, losses and insolvencies; disruption to our steel rod mill and other operations and supply chain because of severe weather-related events, natural disaster, fire, explosion, terrorism, pandemic, governmental action or labor strikes; foreign currency fluctuation; the amount of share repurchases; the imposition or continuation of anti-dumping duties on innersprings, steel wire rod and mattresses; data privacy; climate change compliance costs and market, technological and reputational impacts; our ESG obligations; litigation risks; and risk factors in the "Forward-Looking Statements" and "Risk Factors" sections in Leggett's most recent Form 10-K filed with the SEC.

CONTACT:   Investor Relations, (417) 358-8131 or invest@leggett.com
Susan R. McCoy, Senior Vice President, Investor Relations
Cassie J. Branscum, Senior Director, Investor Relations
Kolina A. Talbert, Manager, Investor Relations

¹ Trade sales excluding acquisitions/divestitures in the last 12 months
² Please refer to attached tables for Non-GAAP Reconciliations

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SOURCE Leggett & Platt