Leggett & Platt Reports 2Q EPS Of $.64 On 3% Sales Growth
- 2Q sales were
$989 million , a 3% increase versus 2Q 2016; same location sales grew 4% - 2Q EPS was
$.64 - 2017 sales guidance reduced 1% to
$3.9-4.0 billion ; EPS guidance narrowed to$2.55 to $2.65
Diversified manufacturer
Second quarter earnings were
CEO Comments
President and CEO
"Unit volume grew 2% in the second quarter, and 4% in the first quarter. The sequential decrease is attributable to demand softness in some end markets and stronger comps in 2Q last year. For the full year we are lowering our sales guidance range by
"For a decade now our primary financial goal has been to achieve Total Shareholder Return (TSR) that ranks within the top third of the
"We are achieving these results while maintaining our strong financial base. Net debt to net capital1 was 39% at quarter end, near the top of our 30% ‑ 40% target range, reflecting working capital investment, stock repurchases, and increased acquisition activity. At quarter end, the company's debt was 2.0 times its trailing 12-month adjusted1 EBITDA."
Dividends and Stock Repurchases
In May,
At yesterday's closing share price of
During the second quarter the company repurchased 0.2 million shares of its stock and also issued 0.2 million shares. For the first half of 2017, the company repurchased 2.4 million shares, and issued 1.2 million through employee benefit plans and option exercises. At quarter's end, 132.3 million shares were outstanding, a 0.8% decline over the last 12 months. For the full year, the company anticipates repurchasing approximately 3 million shares, and issuing approximately 1.5 million shares for employee benefit plans.
2017 Sales and EPS Guidance Modified
For 2017, EPS guidance is narrowed to a range of
Cash from operations is expected to approximate
The company's top priorities for use of cash are organic growth, dividends, and strategic acquisitions. After funding those priorities, if there is cash available, the company generally intends to repurchase its stock (rather than repay debt early or stockpile cash). Management has standing authorization from the Board of Directors to buy up to 10 million shares each year; however, no specific repurchase commitment or timetable has been established.
SEGMENT RESULTS – Second Quarter 2017 (versus the same period in 2016)
Change to Segment Reporting – Effective
The Home Furniture group moved from Residential Products to the Furniture Products segment (formerly called Commercial Products segment).- The Machinery group moved from Specialized Products to the Residential Products segment.
In addition, changes in LIFO reserve are now included within the segments to which they relate (primarily Industrial Products).
Residential Products – Total sales were flat. Acquisitions contributed 3% to sales growth. Same location sales declined 3%, as follows: i) sales volume declined 5%, primarily (4%) from fewer pass-through sales of adjustable beds; ii) inflation contributed 2% to sales growth. EBIT decreased
Industrial Products – Total sales decreased 7% due to divestitures completed in 2016. EBIT decreased
Furniture Products – Total sales increased 7%, primarily due to gains in Adjustable Bed. EBIT decreased
Specialized Products – Total sales increased 1%. Same location sales increased 5%, with volume gains in Automotive partially offset by a currency impact and a decline in CVP. Divestitures, net of acquisitions, reduced sales by 3%. EBIT declined
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
Third quarter results will be released after the market closes on Thursday, October 26, with a conference call the next morning.
FOR MORE INFORMATION: Visit Leggett's website at www.leggett.com.
COMPANY DESCRIPTION: At
FORWARD-LOOKING STATEMENTS: Statements in this release that are not historical in nature are "forward-looking." These statements involve uncertainties and risks, including the company's ability to achieve its longer-term operating targets and generate average annual TSR of 11%-14%, price and product competition from foreign and domestic competitors, the amount of share repurchases, changes in demand for the company's products, cost and availability of raw materials and labor, fuel and energy costs, future growth of acquired companies, general economic conditions, possible goodwill or other asset impairment, foreign currency fluctuation, litigation risks, and other factors described in the company's Form 10-K. Any forward-looking statement reflects only the company's beliefs when the statement is made. Actual results could differ materially from expectations, and the company undertakes no duty to update these statements.
CONTACT: Investor Relations, (417) 358-8131 or invest@leggett.com
1 Refer to attached tables for non-GAAP reconciliations.
LEGGETT & PLATT |
July 27, 2017 |
|||||||||||
RESULTS OF OPERATIONS |
SECOND QUARTER |
YEAR TO DATE |
||||||||||
(In millions, except per share data) |
2017 |
2016 |
Change |
2017 |
2016 |
Change |
||||||
Net sales (from continuing operations) |
$ 989.3 |
$ 958.9 |
3% |
$1,949.6 |
$1,897.3 |
3% |
||||||
Cost of goods sold |
759.2 |
724.9 |
1,493.5 |
1,429.7 |
||||||||
Gross profit |
230.1 |
234.0 |
(2%) |
456.1 |
467.6 |
|||||||
Selling & administrative expenses |
105.0 |
99.7 |
5% |
211.4 |
204.8 |
3% |
||||||
Amortization |
4.7 |
4.8 |
9.8 |
9.9 |
||||||||
Other expense (income), net |
(1.9) |
(17.0) |
(3.3) |
(20.7) |
||||||||
Earnings before interest and taxes |
122.3 |
146.5 |
(17%) |
238.2 |
273.6 |
(13%) |
||||||
Net interest expense |
8.9 |
9.3 |
17.5 |
17.7 |
||||||||
Earnings before income taxes |
113.4 |
137.2 |
220.7 |
255.9 |
||||||||
Income taxes |
25.8 |
37.7 |
47.0 |
65.4 |
||||||||
Net earnings from continuing operations |
87.6 |
99.5 |
173.7 |
190.5 |
||||||||
Discontinued operations, net of tax |
- |
20.3 |
- |
20.4 |
||||||||
Net earnings |
87.6 |
119.8 |
173.7 |
210.9 |
||||||||
Less net income from non-controlling interest |
- |
1.4 |
- |
(0.2) |
||||||||
Net earnings attributable to L&P |
$ 87.6 |
$ 121.2 |
(28%) |
$ 173.7 |
$ 210.7 |
|||||||
Earnings per diluted share |
||||||||||||
From continuing operations |
$0.64 |
$0.72 |
(11%) |
$1.26 |
$1.35 |
(7%) |
||||||
From discontinued operations |
$0.00 |
$0.15 |
$0.00 |
$0.15 |
||||||||
Net earnings per diluted share |
$0.64 |
$0.87 |
(26%) |
$1.26 |
$1.50 |
|||||||
Shares outstanding |
||||||||||||
Common stock (at end of period) |
132.3 |
133.4 |
(0.8%) |
132.3 |
133.4 |
|||||||
Basic (average for period) |
136.0 |
137.8 |
136.4 |
138.4 |
||||||||
Diluted (average for period) |
137.4 |
140.1 |
(1.9%) |
137.8 |
140.6 |
|||||||
CASH FLOW |
SECOND QUARTER |
YEAR TO DATE |
||||||||||
(In millions) |
2017 |
2016 |
Change |
2017 |
2016 |
Change |
||||||
Net earnings |
$ 87.6 |
$ 119.8 |
$ 173.7 |
$ 210.9 |
||||||||
Depreciation and amortization |
31.9 |
28.9 |
62.2 |
57.2 |
||||||||
Working capital decrease (increase) |
(30.1) |
1.2 |
(109.6) |
(25.5) |
||||||||
Impairments |
0.1 |
3.7 |
0.1 |
3.7 |
||||||||
Other operating activity |
8.9 |
(2.8) |
29.7 |
15.8 |
||||||||
Net Cash from Operating Activity |
$ 98.4 |
$ 150.8 |
(35%) |
$ 156.1 |
$ 262.1 |
(40%) |
||||||
Additions to PP&E |
(44.8) |
(30.2) |
(79.1) |
(57.9) |
37% |
|||||||
Purchase of companies, net of cash |
(0.9) |
(0.5) |
(38.8) |
(16.9) |
||||||||
Proceeds from business and asset sales |
0.3 |
51.7 |
1.6 |
54.0 |
||||||||
Dividends paid |
(45.0) |
(43.0) |
(90.4) |
(86.5) |
||||||||
Repurchase of common stock, net |
(10.4) |
(55.4) |
(113.3) |
(160.8) |
||||||||
Additions (payments) to debt, net |
60.8 |
7.8 |
215.0 |
88.6 |
||||||||
Other |
8.1 |
(46.6) |
2.1 |
(51.0) |
||||||||
Increase (Decr.) in Cash & Equiv. |
$ 66.5 |
$ 34.6 |
$ 53.2 |
$ 31.6 |
||||||||
FINANCIAL POSITION |
30-Jun |
|||||||||||
(In millions) |
2017 |
2016 |
Change |
|||||||||
Cash and equivalents |
$ 335.1 |
$ 284.8 |
||||||||||
Receivables |
577.7 |
534.7 |
||||||||||
Inventories |
580.0 |
523.4 |
||||||||||
Other current assets |
47.4 |
37.2 |
||||||||||
Total current assets |
1,540.2 |
1,380.1 |
12% |
|||||||||
Net fixed assets |
616.2 |
553.1 |
||||||||||
Held for sale |
11.0 |
12.8 |
||||||||||
Goodwill and other assets |
1,114.1 |
1,085.8 |
||||||||||
TOTAL ASSETS |
$ 3,281.5 |
$ 3,031.8 |
8% |
|||||||||
Trade accounts payable |
$ 388.3 |
$ 339.8 |
||||||||||
Current debt maturities |
3.4 |
3.6 |
||||||||||
Other current liabilities |
350.0 |
355.6 |
||||||||||
Total current liabilities |
741.7 |
699.0 |
6% |
|||||||||
Long term debt |
1,183.5 |
1,044.3 |
13% |
|||||||||
Deferred taxes and other liabilities |
222.7 |
222.9 |
||||||||||
Equity |
1,133.6 |
1,065.6 |
6% |
|||||||||
Total Capitalization |
2,539.8 |
2,332.8 |
9% |
|||||||||
TOTAL LIABILITIES & EQUITY |
$ 3,281.5 |
$ 3,031.8 |
8% |
LEGGETT & PLATT |
July 27, 2017 |
|||||||||||
SEGMENT RESULTS1 |
SECOND QUARTER |
YEAR TO DATE |
||||||||||
(In millions) |
2017 |
2016 |
Change |
2017 |
2016 |
Change |
||||||
External Sales |
||||||||||||
Residential Products |
$ 407.8 |
$ 408.0 |
(0.0%) |
$ 799.1 |
$ 798.2 |
0.1% |
||||||
Industrial Products |
75.9 |
79.9 |
(5.0%) |
145.7 |
157.0 |
(7.2%) |
||||||
Furniture Products |
267.2 |
235.6 |
13.4% |
532.0 |
486.9 |
9.3% |
||||||
Specialized Products |
238.4 |
235.4 |
1.3% |
472.8 |
455.2 |
3.9% |
||||||
Total |
$ 989.3 |
$ 958.9 |
3.2% |
$ 1,949.6 |
$ 1,897.3 |
2.8% |
||||||
Inter-Segment Sales |
||||||||||||
Residential Products |
$ 4.2 |
$ 4.2 |
$ 9.0 |
$ 9.1 |
||||||||
Industrial Products |
63.3 |
70.2 |
128.9 |
150.3 |
||||||||
Furniture Products |
4.4 |
17.3 |
10.7 |
38.3 |
||||||||
Specialized Products |
1.7 |
1.8 |
3.6 |
3.5 |
||||||||
Total |
$ 73.6 |
$ 93.5 |
$ 152.2 |
$ 201.2 |
||||||||
Total Sales (External + Inter-segment) |
||||||||||||
Residential Products |
$ 412.0 |
$ 412.2 |
(0.0%) |
$ 808.1 |
$ 807.3 |
0.1% |
||||||
Industrial Products |
139.2 |
150.1 |
(7.3%) |
274.6 |
307.3 |
(10.6%) |
||||||
Furniture Products |
271.6 |
252.9 |
7.4% |
542.7 |
525.2 |
3.3% |
||||||
Specialized Products |
240.1 |
237.2 |
1.2% |
476.4 |
458.7 |
3.9% |
||||||
Total |
$ 1,062.9 |
$ 1,052.4 |
1.0% |
$ 2,101.8 |
$ 2,098.5 |
0.2% |
||||||
EBIT |
||||||||||||
Residential Products |
$ 50.2 |
$ 52.2 |
(4%) |
$ 92.7 |
$ 85.3 |
9% |
||||||
Industrial Products |
7.1 |
13.0 |
(45%) |
15.9 |
33.1 |
(52%) |
||||||
Furniture Products |
20.3 |
24.6 |
(17%) |
40.6 |
56.1 |
(28%) |
||||||
Specialized Products |
44.1 |
54.7 |
(19%) |
87.1 |
98.2 |
(11%) |
||||||
Intersegment eliminations and other |
0.6 |
2.0 |
1.9 |
0.9 |
||||||||
Total |
$ 122.3 |
$ 146.5 |
(17%) |
$ 238.2 |
$ 273.6 |
(13%) |
||||||
EBIT Margin 2 |
Basis Pts |
Basis Pts |
||||||||||
Residential Products |
12.2% |
12.7% |
(50) |
11.5% |
10.6% |
90 |
||||||
Industrial Products |
5.1% |
8.7% |
(360) |
5.8% |
10.8% |
(500) |
||||||
Furniture Products |
7.5% |
9.7% |
(220) |
7.5% |
10.7% |
(320) |
||||||
Specialized Products |
18.4% |
23.1% |
(470) |
18.3% |
21.4% |
(310) |
||||||
Overall from Continuing Operations |
12.4% |
15.3% |
(290) |
12.2% |
14.4% |
(220) |
||||||
LAST SIX QUARTERS |
2016 |
2017 |
||||||||||
Selected Figures |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Net Sales ($ million) |
938 |
959 |
949 |
904 |
960 |
989 |
||||||
Sales Growth (vs. prior year) |
(3%) |
(4%) |
(6%) |
(4%) |
2% |
3% |
||||||
Unit Volume Growth (same locations, vs. prior year) |
4% |
2% |
(1%) |
1% |
4% |
2% |
||||||
Adjusted EBIT 3 |
127 |
132 |
130 |
103 |
116 |
122 |
||||||
Cash from Operations ($ million) |
111 |
151 |
124 |
167 |
58 |
98 |
||||||
Adjusted EBITDA (trailing twelve months) 3 |
631 |
645 |
634 |
607 |
598 |
591 |
||||||
(Long term debt + current maturities) / Adj. EBITDA 3,4 |
1.6 |
1.6 |
1.7 |
1.6 |
1.9 |
2.0 |
||||||
Same Location Sales (vs. prior year) |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Residential Products |
(5%) |
(4%) |
(8%) |
(9%) |
(2%) |
(3%) |
||||||
Industrial Products |
(19%) |
(13%) |
(8%) |
(4%) |
(4%) |
1% |
||||||
Furniture Products |
3% |
(8%) |
(5%) |
(2%) |
(0%) |
6% |
||||||
Specialized Products |
9% |
10% |
7% |
8% |
9% |
5% |
||||||
Overall from Continuing Operations |
(1%) |
(1%) |
(2%) |
(1%) |
4% |
4% |
||||||
1Segment information reflects the Q1 2017 segment changes. |
2Segment margins calculated on Total Sales. Overall company margin calculated on External Sales. |
3Refer to next page for non-GAAP reconciliations. |
4EBITDA based on trailing twelve months. |
LEGGETT & PLATT |
July 27, 2017 |
|||||||||||
RECONCILIATION OF REPORTED (GAAP) TO ADJUSTED (Non-GAAP) FINANCIAL MEASURES 8 |
||||||||||||
2016 |
2017 |
|||||||||||
Non-GAAP adjustments, Continuing Ops 5 |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Gain on sale of operations |
- |
(11.2) |
- |
(15.7) |
- |
- |
||||||
Goodwill and related asset impairment |
- |
3.7 |
- |
- |
- |
- |
||||||
Benefit from litigation settlement proceeds |
- |
(6.9) |
- |
- |
- |
- |
||||||
Non-GAAP adjustments (pre-tax) |
- |
(14.4) |
- |
(15.7) |
- |
- |
||||||
Income tax impact |
- |
5.4 |
- |
6.5 |
- |
|||||||
Non-GAAP adjustments (after tax) |
- |
(9.0) |
- |
(9.2) |
- |
- |
||||||
Diluted shares outstanding |
141.2 |
140.1 |
139.4 |
139.2 |
138.1 |
137.4 |
||||||
EPS impact of non-GAAP adjustments |
- |
(0.06) |
- |
(0.07) |
- |
- |
||||||
2016 |
2017 |
|||||||||||
Adjusted EBIT, Margin, and EPS 5 |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
EBIT (earnings before interest and taxes) |
127.1 |
146.5 |
130.2 |
118.2 |
115.9 |
122.3 |
||||||
Non-GAAP adjustments (pre-tax) |
- |
(14.4) |
- |
(15.7) |
- |
- |
||||||
Adjusted EBIT ($ millions) |
127.1 |
132.1 |
130.2 |
102.5 |
115.9 |
122.3 |
||||||
Net sales from continuing operations |
938 |
959 |
949 |
904 |
960 |
989 |
||||||
EBIT margin |
13.5% |
15.3% |
13.7% |
13.1% |
12.1% |
12.4% |
||||||
Adjusted EBIT margin |
13.5% |
13.8% |
13.7% |
11.3% |
12.1% |
12.4% |
||||||
Diluted EPS from Continuing Operations |
0.63 |
0.72 |
0.67 |
0.60 |
0.62 |
$0.64 |
||||||
EPS impact of non-GAAP adjustments |
- |
(0.06) |
- |
(0.07) |
- |
- |
||||||
Adjusted EPS ($) |
0.63 |
0.66 |
0.67 |
0.53 |
0.62 |
0.64 |
||||||
2016 |
2017 |
|||||||||||
Net Debt to Net Capitalization 6 |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Long term debt |
1032 |
1044 |
1055 |
956 |
1120 |
1184 |
||||||
Current debt maturities |
4 |
4 |
1 |
4 |
3 |
3 |
||||||
Total Debt |
1036 |
1048 |
1056 |
960 |
1123 |
1187 |
||||||
Less cash and equivalents |
(250) |
(285) |
(317) |
(282) |
(269) |
(335) |
||||||
Net Debt |
786 |
763 |
739 |
678 |
854 |
852 |
||||||
Total capitalization |
2344 |
2333 |
2383 |
2278 |
2403 |
2540 |
||||||
Current debt maturities |
4 |
4 |
1 |
4 |
3 |
3 |
||||||
Less cash and equivalents |
(250) |
(285) |
(317) |
(282) |
(269) |
(335) |
||||||
Net Capitalization |
2098 |
2052 |
2067 |
2000 |
2137 |
2208 |
||||||
Long Term Debt to Total Capitalization |
44% |
45% |
44% |
42% |
47% |
47% |
||||||
Net Debt to Net Capital |
37% |
37% |
36% |
34% |
40% |
39% |
||||||
2016 |
2017 |
|||||||||||
Total Debt to EBITDA 7 |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Total Debt |
1036 |
1048 |
1056 |
960 |
1123 |
1187 |
||||||
EBIT |
127.1 |
146.5 |
130.2 |
118.2 |
115.9 |
122.3 |
||||||
Depreciation and Amortization |
28.3 |
28.9 |
29.2 |
29.0 |
30.3 |
31.9 |
||||||
EBITDA |
155.4 |
175.4 |
159.4 |
147.2 |
146.2 |
154.2 |
||||||
Non-GAAP adjustments (pre-tax) |
- |
(14.4) |
- |
(15.7) |
- |
- |
||||||
Adjusted EBITDA ($ millions) |
155.4 |
161.0 |
159.4 |
131.5 |
146.2 |
154.2 |
||||||
Adjusted EBITDA, trailing 12 months |
631 |
645 |
634 |
607 |
598 |
591 |
||||||
Total Debt / Adjusted 12-month EBITDA |
1.6 |
1.6 |
1.7 |
1.6 |
1.9 |
2.0 |
||||||
5Management and investors use these measures as supplemental information to assess operational performance. |
6 These calculations portray debt position if the company was to use its cash to pay down debt. Management and investors use this ratio to track leverage trends across time periods with variable levels of cash. |
7 Management and investors use this ratio as supplemental information to assess ability to pay off debt. |
8Calculations impacted by rounding. |
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