Leggett & Platt Reports 3Q EPS of $.67
- 3Q EPS from Continuing Operations was
$.67 , unchanged versus same quarter last year - 3Q sales declined 6% to
$949 million , largely due to divestitures - EBIT margin was 13.7%
- Increasing 2016 EPS guidance; expect record continuing ops EPS of
$2.55-2.62 , approx.$3.75 billion of sales
Diversified manufacturer
Third quarter sales from continuing operations decreased 6% versus third quarter 2015, to
CEO Comments
President and CEO
"Cash flow from operations, at
"At our recent Investor Day in September, we recommitted to our long-standing goal of achieving Total Shareholder Return (TSR[1]) that ranks in the top third of the
"Regarding our long-term growth expectations, we believe the macro environment will support modest revenue growth in our end markets over the next few years. Within those markets, we will concentrate on extending our record of content gains and new program awards across our businesses, thereby growing organically faster than our markets. In addition, strategic acquisitions are expected to supplement the organic growth we achieve.
"We are committed to maintaining our strong financial base. At quarter end, the company's debt was 1.7 times our trailing 12-month adjusted[2] EBITDA, and net debt to net capital2 was 36%, comfortably within our 30% - 40% target range. We ended the quarter with over
Dividends, and Stock Repurchases
In August,
At yesterday's closing share price of
During the third quarter the company purchased 0.5 million shares of its stock at an average price of
Increasing 2016 Continuing Operations EPS Guidance: $2.55 -
With strong third quarter earnings and lower commodity costs, the company is increasing its EPS guidance from its prior range of
Full-year sales are now estimated at approximately
Cash from operations is expected to exceed
The company's top priorities for use of cash are organic growth, dividends, and strategic acquisitions. After funding those priorities, if cash is 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.
LIFO
All of Leggett's operating segments use the first-in, first out (FIFO) method for valuing inventory. An adjustment is made at the corporate level (i.e., outside the segments) to convert about 50% of the inventories to the last-in, first-out (LIFO) method. These are primarily the company's domestic, steel-related inventories. Commodity costs have been volatile in 2016, and despite recent decreases, are still higher than at the start of the year. Accordingly, the company now expects full year LIFO expense of
SEGMENT RESULTS – Third Quarter 2016 (versus the same period in 2015)
Residential Furnishings – Total sales decreased
Commercial Products – Total sales decreased
Industrial Materials – Total sales decreased
Specialized Products – Total sales increased
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
Fourth quarter results will be issued after market close on
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 improve operations and realize cost savings, price and product competition from foreign and domestic competitors, 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 TSR = (Change in Stock Price + Dividends) / Beginning Stock Price; assumes dividends are reinvested.
2 Refer to attached tables for non-GAAP reconciliations.
LEGGETT & PLATT |
||||||||||||
RESULTS OF OPERATIONS |
THIRD QUARTER |
YEAR TO DATE |
||||||||||
(In millions, except per share data) |
2016 |
2015 |
Change |
2016 |
2015 |
Change |
||||||
Net sales (from continuing operations) |
$948.9 |
$1,009.1 |
(6%) |
$2,846.2 |
$2,972.6 |
(4%) |
||||||
Cost of goods sold |
721.5 |
768.0 |
2,151.2 |
2,283.0 |
||||||||
Gross profit |
227.4 |
241.1 |
695.0 |
689.6 |
||||||||
Selling & administrative expenses |
93.9 |
96.9 |
(3%) |
298.7 |
301.0 |
(1%) |
||||||
Amortization |
5.2 |
5.2 |
15.1 |
15.6 |
||||||||
Other expense (income), net |
(1.9) |
(2.5) |
(22.6) |
0.6 |
||||||||
Earnings before interest and taxes |
130.2 |
141.5 |
(8%) |
403.8 |
372.4 |
8% |
||||||
Net interest expense |
9.0 |
9.2 |
26.7 |
29.1 |
||||||||
Earnings before income taxes |
121.2 |
132.3 |
377.1 |
343.3 |
||||||||
Income taxes |
27.6 |
36.1 |
93.0 |
97.1 |
||||||||
Net earnings from continuing operations |
93.6 |
96.2 |
284.1 |
246.2 |
||||||||
Discontinued operations, net of tax |
0.0 |
(0.1) |
20.4 |
1.2 |
||||||||
Net earnings |
93.6 |
96.1 |
304.5 |
247.4 |
||||||||
Less net income from non-controlling interest |
(0.1) |
(0.9) |
(0.3) |
(2.8) |
||||||||
Net earnings attributable to L&P |
$ 93.5 |
$ 95.2 |
$ 304.2 |
$ 244.6 |
||||||||
Earnings per diluted share |
||||||||||||
From continuing operations |
$0.67 |
$0.67 |
0% |
$2.02 |
$1.70 |
19% |
||||||
From discontinued operations |
$0.00 |
$0.00 |
$0.15 |
$0.01 |
||||||||
Net earnings per diluted share |
$0.67 |
$0.67 |
$2.17 |
$1.71 |
||||||||
Shares outstanding |
||||||||||||
Common stock (at end of period) |
133.7 |
136.1 |
133.7 |
136.1 |
||||||||
Basic (average for period) |
137.4 |
140.4 |
138.1 |
141.3 |
||||||||
Diluted (average for period) |
139.4 |
142.5 |
140.2 |
143.2 |
||||||||
CASH FLOW |
THIRD QUARTER |
YEAR TO DATE |
||||||||||
(In millions) |
2016 |
2015 |
Change |
2016 |
2015 |
Change |
||||||
Net earnings |
$ 93.6 |
$ 96.1 |
$ 304.5 |
$ 247.4 |
||||||||
Depreciation and amortization |
29.2 |
28.5 |
86.4 |
85.0 |
||||||||
Working capital decrease (increase) |
(10.3) |
5.8 |
(35.8) |
(110.7) |
||||||||
Impairments |
0.3 |
0.0 |
4.0 |
6.5 |
||||||||
Other operating activity |
10.8 |
(0.5) |
26.6 |
28.6 |
||||||||
Net Cash from Operating Activity |
$ 123.6 |
$ 129.9 |
(5%) |
$ 385.7 |
$ 256.8 |
50% |
||||||
Additions to PP&E |
(25.2) |
(27.2) |
(83.1) |
(78.5) |
6% |
|||||||
Purchase of companies, net of cash |
(11.1) |
0.0 |
(28.0) |
(11.1) |
||||||||
Proceeds from business and asset sales |
0.2 |
2.3 |
54.2 |
17.8 |
||||||||
Dividends paid |
(45.5) |
(42.5) |
(132.0) |
(128.0) |
||||||||
Repurchase of common stock, net |
(16.6) |
(40.8) |
(177.4) |
(155.4) |
||||||||
Additions (payments) to debt, net |
8.2 |
(37.8) |
96.8 |
25.2 |
||||||||
Other |
(1.1) |
(7.8) |
(52.1) |
(8.4) |
||||||||
Increase (Decr.) in Cash & Equiv. |
$ 32.5 |
$ (23.9) |
$ 64.1 |
$ (81.6) |
||||||||
FINANCIAL POSITION |
30-Sep |
|||||||||||
(In millions) |
2016 |
2015 |
Change |
|||||||||
Cash and equivalents |
$317.3 |
$251.2 |
||||||||||
Receivables |
543.8 |
529.6 |
||||||||||
Inventories |
518.6 |
504.6 |
||||||||||
Held for sale |
0.0 |
27.8 |
||||||||||
Other current assets |
33.6 |
66.5 |
||||||||||
Total current assets |
1,413.3 |
1,379.7 |
2% |
|||||||||
Net fixed assets |
554.1 |
543.7 |
||||||||||
Held for sale |
14.8 |
22.3 |
||||||||||
Goodwill and other assets |
1,088.1 |
1,116.5 |
||||||||||
TOTAL ASSETS |
$ 3,070.3 |
$ 3,062.2 |
0% |
|||||||||
Trade accounts payable |
$334.9 |
$343.5 |
||||||||||
Current debt maturities |
1.0 |
3.4 |
||||||||||
Held for sale |
0.0 |
8.1 |
||||||||||
Other current liabilities |
351.0 |
396.0 |
||||||||||
Total current liabilities |
686.9 |
751.0 |
(9%) |
|||||||||
Long term debt |
1,055.4 |
985.1 |
7% |
|||||||||
Deferred taxes and other liabilities |
224.4 |
225.7 |
||||||||||
Equity |
1,103.6 |
1,100.4 |
0% |
|||||||||
Total Capitalization |
2,383.4 |
2,311.2 |
||||||||||
TOTAL LIABILITIES & EQUITY |
$ 3,070.3 |
$ 3,062.2 |
||||||||||
LEGGETT & PLATT |
||||||||||||
SEGMENT RESULTS 1 |
THIRD QUARTER |
YEAR TO DATE |
||||||||||
(In millions) |
2016 |
2015 |
Change |
2016 |
2015 |
Change |
||||||
External Sales |
||||||||||||
Residential Furnishings |
$ 484.5 |
$ 523.1 |
(7.4%) |
$ 1,453.3 |
$ 1,545.9 |
(6.0%) |
||||||
Commercial Products |
154.2 |
150.2 |
2.7% |
432.3 |
409.1 |
5.7% |
||||||
Industrial Materials |
71.4 |
106.8 |
(33.1%) |
228.4 |
336.2 |
(32.1%) |
||||||
Specialized Products |
238.8 |
229.0 |
4.3% |
732.2 |
681.4 |
7.5% |
||||||
Total |
$ 948.9 |
$ 1,009.1 |
(6.0%) |
$ 2,846.2 |
$ 2,972.6 |
(4.3%) |
||||||
Inter-Segment Sales |
||||||||||||
Residential Furnishings |
$ 5.7 |
$ 6.9 |
$ 19.4 |
$ 22.0 |
||||||||
Commercial Products |
10.1 |
20.9 |
46.6 |
62.5 |
||||||||
Industrial Materials |
73.3 |
84.5 |
223.6 |
274.4 |
||||||||
Specialized Products |
8.7 |
10.8 |
29.8 |
30.1 |
||||||||
Total |
$ 97.8 |
$ 123.1 |
$ 319.4 |
$ 389.0 |
||||||||
Total Sales (External + Inter-segment) |
||||||||||||
Residential Furnishings |
$ 490.2 |
$ 530.0 |
(7.5%) |
$ 1,472.7 |
$ 1,567.9 |
(6.1%) |
||||||
Commercial Products |
164.3 |
171.1 |
(4.0%) |
478.9 |
471.6 |
1.5% |
||||||
Industrial Materials |
144.7 |
191.3 |
(24.4%) |
452.0 |
610.6 |
(26.0%) |
||||||
Specialized Products |
247.5 |
239.8 |
3.2% |
762.0 |
711.5 |
7.1% |
||||||
Total |
$ 1,046.7 |
$ 1,132.2 |
(7.6%) |
$ 3,165.6 |
$ 3,361.6 |
(5.8%) |
||||||
EBIT |
||||||||||||
Residential Furnishings |
$ 54.9 |
$ 58.2 |
(6%) |
$ 168.1 |
$ 161.0 |
4% |
||||||
Commercial Products |
13.7 |
14.5 |
(6%) |
38.4 |
33.3 |
15% |
||||||
Industrial Materials |
13.0 |
15.2 |
(14%) |
49.7 |
38.5 |
29% |
||||||
Specialized Products |
42.7 |
38.0 |
12% |
147.3 |
115.0 |
28% |
||||||
Intersegment eliminations and other |
1.2 |
2.3 |
2.9 |
1.3 |
||||||||
Change in LIFO reserve |
4.7 |
13.3 |
(2.6) |
23.3 |
||||||||
Total |
$ 130.2 |
$ 141.5 |
(8%) |
$ 403.8 |
$ 372.4 |
8% |
||||||
EBIT Margin 2 |
Basis Pts |
Basis Pts |
||||||||||
Residential Furnishings |
11.2% |
11.0% |
20 |
11.4% |
10.3% |
110 |
||||||
Commercial Products |
8.3% |
8.5% |
(20) |
8.0% |
7.1% |
90 |
||||||
Industrial Materials |
9.0% |
7.9% |
110 |
11.0% |
6.3% |
470 |
||||||
Specialized Products |
17.3% |
15.8% |
150 |
19.3% |
16.2% |
310 |
||||||
Overall from Continuing Operations |
13.7% |
14.0% |
(30) |
14.2% |
12.5% |
170 |
||||||
LAST SIX QUARTERS |
2015 |
2016 |
||||||||||
Selected Figures |
2Q |
3Q |
4Q |
1Q |
2Q |
3Q |
||||||
Net Sales ($ million) |
997 |
1,009 |
945 |
938 |
959 |
949 |
||||||
Sales Growth (vs. prior year) |
4% |
1% |
(1%) |
(3%) |
(4%) |
(6%) |
||||||
Unit Volume Growth (same locations, vs. prior year) |
4% |
5% |
3% |
4% |
2% |
(1%) |
||||||
Adjusted EBIT 3 |
121 |
142 |
130 |
127 |
132 |
130 |
||||||
Cash from Operations ($ million) |
95 |
130 |
102 |
111 |
151 |
124 |
||||||
Adjusted EBITDA (trailing twelve months) 4 |
--- |
--- |
--- |
631 |
645 |
634 |
||||||
(Long term debt + current maturities) / Adj. EBITDA4 |
--- |
--- |
--- |
1.6 |
1.6 |
1.7 |
||||||
Same Location Sales (vs. prior year) |
2Q |
3Q |
4Q |
1Q |
2Q |
3Q |
||||||
Residential Furnishings |
2% |
(2%) |
(3%) |
(5%) |
(6%) |
(8%) |
||||||
Commercial Products |
18% |
15% |
(1%) |
7% |
(4%) |
(4%) |
||||||
Industrial Materials |
(4%) |
(10%) |
(16%) |
(19%) |
(13%) |
(8%) |
||||||
Specialized Products |
0% |
5% |
7% |
10% |
9% |
6% |
||||||
Overall from Continuing Operations |
(1%) |
(1%) |
(2%) |
(1%) |
(1%) |
(2%) |
||||||
1Segment information reflects the 4Q 2015 move of the logistics operations from Residential Furnishings to Industrial Materials. |
||||||||||||
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 |
||||||||||||
RECONCILIATION OF REPORTED (GAAP) TO ADJUSTED (Non-GAAP) FINANCIAL MEASURES |
||||||||||||
2015 |
2016 |
|||||||||||
Non-GAAP adjustments, Continuing Ops 5 |
2Q |
3Q |
4Q |
1Q |
2Q |
3Q |
||||||
Litigation accruals |
1.5 |
- |
4.0 |
- |
- |
- |
||||||
Pension buy-out charge |
- |
- |
12.1 |
- |
- |
- |
||||||
Gain on sale of a small CVP operation |
- |
- |
- |
- |
(11.2) |
- |
||||||
Goodwill and related asset impairment |
- |
- |
- |
- |
3.7 |
- |
||||||
Benefit from litigation settlement proceeds |
- |
- |
- |
- |
(6.9) |
- |
||||||
Non-GAAP adjustments (pre-tax) |
1.5 |
- |
16.1 |
- |
(14.4) |
- |
||||||
Income tax impact |
(0.5) |
- |
(6.1) |
- |
5.4 |
- |
||||||
Non-GAAP adjustments (after tax) |
1.0 |
- |
10.0 |
- |
(9.0) |
- |
||||||
Diluted shares outstanding |
143.4 |
142.5 |
141.9 |
141.2 |
140.1 |
139.4 |
||||||
EPS impact of non-GAAP adjustments |
- |
- |
0.07 |
- |
(0.06) |
- |
||||||
Adjusted EBIT, Margin, and EPS 5 |
2Q |
3Q |
4Q |
1Q |
2Q |
3Q |
||||||
EBIT (earnings before interest and taxes) |
119.2 |
141.5 |
114.1 |
127.1 |
146.5 |
130.2 |
||||||
Non-GAAP adjustments (pre-tax) |
1.5 |
- |
16.1 |
- |
(14.4) |
- |
||||||
Adjusted EBIT ($ millions) |
120.7 |
141.5 |
130.2 |
127.1 |
132.1 |
130.2 |
||||||
Net sales from continuing operations |
997 |
1,009 |
945 |
938 |
959 |
949 |
||||||
EBIT margin |
12.0% |
14.0% |
12.1% |
13.5% |
15.3% |
13.7% |
||||||
Adjusted EBIT margin |
12.1% |
14.0% |
13.8% |
13.5% |
13.8% |
13.7% |
||||||
Diluted EPS from Continuing Operations |
0.53 |
0.67 |
0.57 |
0.63 |
0.72 |
0.67 |
||||||
EPS impact of non-GAAP adjustments |
- |
- |
0.07 |
- |
(0.06) |
- |
||||||
Adjusted EPS ($) |
0.53 |
0.67 |
0.64 |
0.63 |
0.66 |
0.67 |
||||||
Net Debt to Net Capitalization 6 |
2Q |
3Q |
4Q |
1Q |
2Q |
3Q |
||||||
Long term debt |
827 |
985 |
942 |
1032 |
1044 |
1055 |
||||||
Current debt maturities |
202 |
3 |
3 |
4 |
4 |
1 |
||||||
Total Debt |
1029 |
988 |
945 |
1036 |
1048 |
1056 |
||||||
Less cash and equivalents |
(275) |
(251) |
(253) |
(250) |
(285) |
(317) |
||||||
Net Debt |
754 |
737 |
692 |
786 |
763 |
739 |
||||||
Total capitalization |
2175 |
2311 |
2263 |
2344 |
2333 |
2383 |
||||||
Current debt maturities |
202 |
3 |
3 |
4 |
4 |
1 |
||||||
Less cash and equivalents |
(275) |
(251) |
(253) |
(250) |
(285) |
(317) |
||||||
Net Capitalization |
2102 |
2063 |
2013 |
2098 |
2052 |
2067 |
||||||
Long Term Debt to Total Capitalization |
38% |
43% |
42% |
44% |
45% |
44% |
||||||
Net Debt to Net Capital |
36% |
36% |
34% |
37% |
37% |
36% |
||||||
Total Debt to EBITDA 7 |
2Q |
3Q |
4Q |
1Q |
2Q |
3Q |
||||||
Total Debt |
1029 |
988 |
945 |
1036 |
1048 |
1056 |
||||||
EBIT |
119.2 |
141.5 |
114.1 |
127.1 |
146.5 |
130.2 |
||||||
Depreciation and Amortization |
26.9 |
28.5 |
28.2 |
28.3 |
28.9 |
29.2 |
||||||
EBITDA |
146.1 |
170.0 |
142.3 |
155.4 |
175.4 |
159.4 |
||||||
Non-GAAP adjustments (pre-tax) |
1.5 |
- |
16.1 |
- |
(14.4) |
- |
||||||
Adjusted EBITDA ($ millions) |
147.6 |
170.0 |
158.4 |
155.4 |
161.0 |
159.4 |
||||||
Adjusted EBITDA, trailing 12 months |
----- |
----- |
----- |
631 |
645 |
634 |
||||||
Total Debt / Adjusted 12-month EBITDA |
----- |
----- |
----- |
1.6 |
1.6 |
1.7 |
||||||
5These adjustments are made to aid readers' understanding of the company's underlying operational profitability. |
||||||||||||
6 These calculations portray debt position if the company was to use its cash to pay down debt. Management uses this ratio to track leverage trends across time periods with variable levels of cash. |
||||||||||||
7 Management uses this ratio as supplemental information to assess ability to pay off debt. |
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