Leggett & Platt Announces Record Full-Year EPS
- Record 2016 continuing operations EPS of
$2.62 , a 15% increase versus 2015 - Record 2016 continuing operations adjusted1 EPS of
$2.49 , a 6% increase versus 2015 - Three-year TSR2 ending
12-31-2016 ranks in the top 11% of theS&P 500 - 2016 sales declined 4% to
$3.75 billion due to divestitures and deflation - 2016 EBIT margin was 13.9%; continuing operations adjusted1 EBIT margin was 13.1%
- 2017 continuing operations EPS guidance is
$2 .55–2.75 on sales of$3 .95–4.05 billion
Diversified manufacturer
Fourth Quarter |
Full Year |
|||||
EPS, $/share: |
2016 |
2015 |
Change |
2016 |
2015 |
Change |
Continuing Operations, adjusted |
.53 |
.64 |
(17)% |
2.49 |
2.36 |
6% |
Gain on Sale of Businesses |
.07 |
-- |
.12 |
-- |
||
Lump Sum Pension Buyout |
-- |
(.05) |
-- |
(.05) |
||
Goodwill Impairment |
-- |
-- |
(.02) |
(.02) |
||
Foam Litigation Settlements |
-- |
(.02) |
.03 |
(.02) |
||
Continuing Operations |
.60 |
.57 |
5% |
2.62 |
2.27 |
15% |
Net Sales, $m |
904 |
945 |
(4)% |
3,750 |
3,917 |
(4)% |
Full-year sales were
Fourth Quarter Results
Fourth quarter 2016 continuing operations EPS improved 5% to
CEO Comments
President and CEO
"We achieved record continuing operations EPS of
"During 2016, divestitures and raw material-related deflation contributed to a decline in annual sales. Continuing operations posted 2% unit volume growth, with strong performance in Automotive offset by soft demand in several other markets, including bedding and home furniture. Adjusted1 EBIT margin was 13.1%, the highest margin L&P has achieved since 1999.
"Looking forward, we expect an approximate
"Portfolio management remains a strategic priority. Over the past few years we have enhanced our business portfolio and improved margins by growing our stronger businesses and exiting businesses that consistently struggled to deliver acceptable returns. During 2016 we acquired three small businesses: a US manufacturer of aerospace tube assemblies, a distributor of geosynthetic products, and a South African innerspring manufacturer. In addition, we purchased the remaining minority interest in a key automotive joint venture in
"Our primary financial goal, adopted in 2007, is to achieve TSR that ranks in the top third of the
Cash Flow, Dividends and Stock Repurchases
The company generated
2016 marked the company's 45th consecutive annual dividend increase; dividends grew at a compound annual rate of 13% over that period. Only one other
The company repurchased 4.5 million shares of its stock during 2016, at an average price of
Anticipating 2017 EPS of
For 2017, the company expects that sales growth will lead to another year of strong earnings. Continuing operations EPS is expected to be
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 there is still 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. The company expects to repurchase 3 to 4 million shares in 2017, and issue about 2 million shares, primarily for employee benefit plans.
TSR Target
For the foreseeable future, the company aims to generate average annual TSR of 11%-14%. Such TSR performance should rank within the top third of the S&P 500 over 3-year periods, assuming future annual TSR of 6%-7% for the
Revenue growth |
6-9% |
Margin increases |
1% |
Dividend yield |
3% |
Stock buyback |
1% |
Total TSR |
11-14% |
Over the last three years, the company has enjoyed combined unit volume and acquisition growth of 7% per year on average, but this has been partially offset by divestitures, commodity deflation, and currency. The company anticipates that long-term revenue growth should: i) average 6-9% per year, ii) come primarily from organic growth, predominantly Leggett-specific opportunities within the company's "grow" business units (such as Automotive, Bedding, Adjustable Bed,
2019 Operating Targets
In September, the company shared 2019 operating targets that should result in achievement of its top-third TSR goal over the next three years. Those operating targets are: 1) revenue of
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. In 2016, increasing commodity costs, particularly in the fourth quarter, resulted in a full-year LIFO expense of
SEGMENT RESULTS – Full Year 2016 (versus 2015)
Residential Furnishings – Total sales decreased
Commercial Products – Total sales increased
Industrial Materials – Total sales decreased
Specialized Products – Total sales increased
SEGMENT RESULTS – Fourth Quarter 2016 (versus 4Q 2015)
Residential Furnishings – Total sales decreased
Commercial Products – Total sales were flat. Growth in Adjustable Bed and
Industrial Materials – Total sales decreased
Specialized Products – Total sales increased
Conference Call at
Management will host a conference call at
First quarter results will be released after the market closes 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 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 Please refer to attached tables for non-GAAP reconciliations.
2 Total Shareholder Return = (Change in Stock Price + Dividends) / Beginning Stock Price; assumes dividends are reinvested.
LEGGETT & PLATT |
||||||||||||
RESULTS OF OPERATIONS |
FOURTH QUARTER |
YEAR TO DATE |
||||||||||
(In millions, except per share data) |
2016 |
2015 |
Change |
2016 |
2015 |
Change |
||||||
Net sales (from continuing operations) |
$ 903.7 |
$ 944.6 |
(4%) |
$3,749.9 |
$3,917.2 |
(4%) |
||||||
Cost of goods sold |
699.5 |
711.0 |
2,850.7 |
2,994.0 |
||||||||
Gross profit |
204.2 |
233.6 |
899.2 |
923.2 |
||||||||
Selling & administrative expenses |
98.1 |
115.9 |
(15%) |
396.8 |
416.9 |
(5%) |
||||||
Amortization |
4.8 |
5.2 |
19.9 |
20.8 |
||||||||
Other expense (income), net |
(16.9) |
(1.6) |
(39.5) |
(1.0) |
||||||||
Earnings before interest and taxes (EBIT) |
118.2 |
114.1 |
4% |
522.0 |
486.5 |
7% |
||||||
Net interest expense |
8.2 |
7.6 |
34.9 |
36.7 |
||||||||
Earnings before income taxes |
110.0 |
106.5 |
487.1 |
449.8 |
||||||||
Income taxes |
27.0 |
24.7 |
120.0 |
121.8 |
||||||||
Net earnings from continuing operations |
83.0 |
81.8 |
367.1 |
328.0 |
||||||||
Discontinued operations, net of tax |
(1.3) |
0.0 |
19.1 |
1.2 |
||||||||
Net earnings |
81.7 |
81.8 |
386.2 |
329.2 |
||||||||
Less net income from non-controlling interest |
(0.1) |
(1.3) |
(0.4) |
(4.1) |
||||||||
Net earnings attributable to L&P |
$ 81.6 |
$ 80.5 |
$ 385.8 |
$ 325.1 |
||||||||
Earnings per diluted share |
||||||||||||
From continuing operations |
$0.60 |
$0.57 |
5% |
$2.62 |
$2.27 |
15% |
||||||
From discontinued operations |
($0.01) |
$0.00 |
$0.14 |
$0.01 |
||||||||
Net earnings per diluted share |
$0.59 |
$0.57 |
4% |
$2.76 |
$2.28 |
21% |
||||||
Shares outstanding |
||||||||||||
Common stock (at end of period) |
133.5 |
135.6 |
(2%) |
133.5 |
135.6 |
(2%) |
||||||
Basic (average for period) |
137.3 |
139.9 |
137.9 |
140.9 |
||||||||
Diluted (average for period) |
139.2 |
141.9 |
(2%) |
140.0 |
142.9 |
(2%) |
||||||
CASH FLOW |
FOURTH QUARTER |
YEAR TO DATE |
||||||||||
(In millions) |
2016 |
2015 |
Change |
2016 |
2015 |
Change |
||||||
Net earnings |
$ 81.7 |
$ 81.8 |
$ 386.2 |
$ 329.2 |
||||||||
Depreciation and amortization |
29.0 |
28.2 |
115.4 |
113.2 |
||||||||
Working capital decrease (increase) |
50.9 |
(60.1) |
15.1 |
(170.8) |
||||||||
Impairments |
0.1 |
0.0 |
4.1 |
6.5 |
||||||||
Other operating activity |
5.2 |
52.4 |
31.8 |
81.0 |
||||||||
Net Cash from Operating Activity |
$ 166.9 |
$ 102.3 |
63% |
$ 552.6 |
$ 359.1 |
54% |
||||||
Additions to PP&E |
(40.9) |
(24.7) |
(124.0) |
(103.2) |
20% |
|||||||
Purchase of companies, net of cash |
(1.5) |
0.0 |
(29.5) |
(11.1) |
||||||||
Proceeds from business and asset sales |
31.9 |
33.6 |
86.1 |
51.4 |
||||||||
Dividends paid |
(45.4) |
(43.6) |
(177.4) |
(171.6) |
||||||||
Repurchase of common stock, net |
(15.7) |
(27.8) |
(193.1) |
(183.2) |
||||||||
Additions (payments) to debt, net |
(90.3) |
(28.5) |
6.5 |
(3.3) |
||||||||
Other |
(40.4) |
(9.3) |
(92.5) |
(17.7) |
||||||||
Increase (Decr.) in Cash & Equiv. |
$ (35.4) |
$ 2.0 |
$ 28.7 |
$ (79.6) |
||||||||
FINANCIAL POSITION |
31-Dec |
|||||||||||
(In millions) |
2016 |
2015 |
Change |
|||||||||
Cash and equivalents |
$ 281.9 |
$ 253.2 |
||||||||||
Receivables |
486.6 |
520.2 |
||||||||||
Inventories |
519.6 |
504.6 |
||||||||||
Other current assets |
36.8 |
33.2 |
||||||||||
Total current assets |
1,324.9 |
1,311.2 |
1% |
|||||||||
Net fixed assets |
565.5 |
540.8 |
||||||||||
Held for sale |
11.0 |
8.4 |
||||||||||
Goodwill and other assets |
1,082.7 |
1,103.3 |
||||||||||
TOTAL ASSETS |
$2,984.1 |
$2,963.7 |
1% |
|||||||||
Trade accounts payable |
$ 351.1 |
$ 307.2 |
||||||||||
Current debt maturities |
3.6 |
3.4 |
||||||||||
Other current liabilities |
351.9 |
390.6 |
||||||||||
Total current liabilities |
706.6 |
701.2 |
1% |
|||||||||
Long term debt |
956.2 |
941.5 |
2% |
|||||||||
Deferred taxes and other liabilities |
227.3 |
223.3 |
||||||||||
Equity |
1,094.0 |
1,097.7 |
(0%) |
|||||||||
Total Capitalization |
2,277.5 |
2,262.5 |
||||||||||
TOTAL LIABILITIES & EQUITY |
$2,984.1 |
$2,963.7 |
LEGGETT & PLATT |
||||||||||||
SEGMENT RESULTS 1 |
FOURTH QUARTER |
YEAR TO DATE |
||||||||||
(In millions) |
2016 |
2015 |
Change |
2016 |
2015 |
Change |
||||||
External Sales |
||||||||||||
Residential Furnishings |
$ 458.5 |
$ 490.3 |
(6.5%) |
$1,911.8 |
$2,036.2 |
(6.1%) |
||||||
Commercial Products |
143.7 |
130.7 |
9.9% |
576.0 |
539.8 |
6.7% |
||||||
Industrial Materials |
61.0 |
91.4 |
(33.3%) |
289.4 |
427.6 |
(32.3%) |
||||||
Specialized Products |
240.5 |
232.2 |
3.6% |
972.7 |
913.6 |
6.5% |
||||||
Total |
$ 903.7 |
$ 944.6 |
(4.3%) |
$3,749.9 |
$3,917.2 |
(4.3%) |
||||||
Inter-Segment Sales |
||||||||||||
Residential Furnishings |
$ 5.9 |
$ 5.8 |
$ 25.3 |
$ 27.8 |
||||||||
Commercial Products |
7.8 |
21.0 |
54.4 |
83.5 |
||||||||
Industrial Materials |
69.5 |
74.6 |
293.1 |
349.0 |
||||||||
Specialized Products |
9.2 |
11.0 |
39.0 |
41.1 |
||||||||
Total |
$ 92.4 |
$ 112.4 |
$ 411.8 |
$ 501.4 |
||||||||
Total Sales (External + Inter-segment) |
||||||||||||
Residential Furnishings |
$ 464.4 |
$ 496.1 |
(6.4%) |
$1,937.1 |
$2,064.0 |
(6.1%) |
||||||
Commercial Products |
151.5 |
151.7 |
(0.1%) |
630.4 |
623.3 |
1.1% |
||||||
Industrial Materials |
130.5 |
166.0 |
(21.4%) |
582.5 |
776.6 |
(25.0%) |
||||||
Specialized Products |
249.7 |
243.2 |
2.7% |
1,011.7 |
954.7 |
6.0% |
||||||
Total |
$ 996.1 |
$1,057.0 |
(5.8%) |
$4,161.7 |
$4,418.6 |
(5.8%) |
||||||
EBIT |
||||||||||||
Residential Furnishings |
$ 45.4 |
$ 44.0 |
3% |
$ 213.5 |
$ 205.0 |
4% |
||||||
Commercial Products |
14.2 |
9.0 |
58% |
52.6 |
42.3 |
24% |
||||||
Industrial Materials |
24.9 |
11.9 |
109% |
74.6 |
50.4 |
48% |
||||||
Specialized Products |
44.5 |
40.6 |
10% |
191.8 |
155.6 |
23% |
||||||
Intersegment eliminations and other |
(2.9) |
(14.5) |
- |
(13.2) |
||||||||
Change in LIFO reserve |
(7.9) |
23.1 |
(10.5) |
46.4 |
||||||||
Total |
$ 118.2 |
$ 114.1 |
4% |
$ 522.0 |
$ 486.5 |
7% |
||||||
EBIT Margin 2 |
Basis Pts |
Basis Pts |
||||||||||
Residential Furnishings |
9.8% |
8.9% |
90 |
11.0% |
9.9% |
110 |
||||||
Commercial Products |
9.4% |
5.9% |
350 |
8.3% |
6.8% |
150 |
||||||
Industrial Materials |
19.1% |
7.2% |
1190 |
12.8% |
6.5% |
630 |
||||||
Specialized Products |
17.8% |
16.7% |
110 |
19.0% |
16.3% |
270 |
||||||
Overall from Continuing Operations |
13.1% |
12.1% |
100 |
13.9% |
12.4% |
150 |
||||||
LAST SIX QUARTERS |
2015 |
2016 |
||||||||||
Selected Figures |
3Q |
4Q |
1Q |
2Q |
3Q |
4Q |
||||||
Net Sales ($ million) |
1,009 |
945 |
938 |
959 |
949 |
904 |
||||||
Sales Growth (vs. prior year) |
1% |
(1%) |
(3%) |
(4%) |
(6%) |
(4%) |
||||||
Unit Volume Growth (same locations, vs. prior year) |
5% |
3% |
4% |
2% |
(1%) |
1% |
||||||
Adjusted EBIT 3 |
142 |
130 |
127 |
132 |
130 |
103 |
||||||
Cash from Operations ($ million) |
130 |
102 |
111 |
151 |
124 |
167 |
||||||
Adjusted EBITDA (trailing twelve months) 3 |
--- |
--- |
631 |
645 |
634 |
607 |
||||||
(Long term debt + current maturities) / Adj. EBITDA3,4 |
--- |
--- |
1.6 |
1.6 |
1.7 |
1.6 |
||||||
Same Location Sales (vs. prior year) |
3Q |
4Q |
1Q |
2Q |
3Q |
4Q |
||||||
Residential Furnishings |
(2%) |
(3%) |
(5%) |
(6%) |
(8%) |
(7%) |
||||||
Commercial Products |
15% |
(1%) |
7% |
(4%) |
(4%) |
0% |
||||||
Industrial Materials |
(10%) |
(16%) |
(19%) |
(13%) |
(8%) |
(4%) |
||||||
Specialized Products |
5% |
7% |
10% |
9% |
6% |
4% |
||||||
Overall from Continuing Operations |
(1%) |
(2%) |
(1%) |
(1%) |
(2%) |
(1%) |
||||||
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 8 |
||||||||||||||||
Full Year |
2015 |
2016 |
||||||||||||||
Non-GAAP adjustments, Continuing Ops 5 |
2015 |
2016 |
3Q |
4Q |
1Q |
2Q |
3Q |
4Q |
||||||||
Litigation accruals |
5.5 |
- |
- |
4.0 |
- |
- |
- |
- |
||||||||
Pension buy-out charge |
12.1 |
- |
- |
12.1 |
- |
- |
- |
- |
||||||||
Gain on sale of operations |
- |
(26.9) |
- |
- |
- |
(11.2) |
- |
(15.7) |
||||||||
Goodwill and related asset impairment |
5.5 |
3.7 |
- |
- |
- |
3.7 |
- |
- |
||||||||
Benefit from litigation settlement proceeds |
- |
(6.9) |
- |
- |
- |
(6.9) |
- |
- |
||||||||
Non-GAAP adjustments (pre-tax) |
23.1 |
(30.1) |
- |
16.1 |
- |
(14.4) |
- |
(15.7) |
||||||||
Income tax impact |
(8.5) |
11.9 |
- |
(6.1) |
- |
5.4 |
- |
6.5 |
||||||||
Non-GAAP adjustments (after tax) |
14.6 |
(18.2) |
- |
10.0 |
- |
(9.0) |
- |
(9.2) |
||||||||
Diluted shares outstanding |
142.9 |
140.0 |
142.5 |
141.9 |
141.2 |
140.1 |
139.4 |
139.2 |
||||||||
EPS impact of non-GAAP adjustments |
0.09 |
(0.13) |
- |
0.07 |
- |
(0.06) |
- |
(0.07) |
||||||||
Full Year |
2015 |
2016 |
||||||||||||||
Adjusted EBIT, Margin, and EPS 5 |
2015 |
2016 |
3Q |
4Q |
1Q |
2Q |
3Q |
4Q |
||||||||
EBIT (earnings before interest and taxes) |
486.5 |
522.0 |
141.5 |
114.1 |
127.1 |
146.5 |
130.2 |
118.2 |
||||||||
Non-GAAP adjustments (pre-tax) |
23.1 |
(30.1) |
- |
16.1 |
- |
(14.4) |
- |
(15.7) |
||||||||
Adjusted EBIT ($ millions) |
509.6 |
491.9 |
141.5 |
130.2 |
127.1 |
132.1 |
130.2 |
102.5 |
||||||||
Net sales from continuing operations |
3,917 |
3,750 |
1,009 |
945 |
938 |
959 |
949 |
904 |
||||||||
EBIT margin |
12.4% |
13.9% |
14.0% |
12.1% |
13.5% |
15.3% |
13.7% |
13.1% |
||||||||
Adjusted EBIT margin |
13.0% |
13.1% |
14.0% |
13.8% |
13.5% |
13.8% |
13.7% |
11.3% |
||||||||
Diluted EPS from Continuing Operations |
2.27 |
2.62 |
0.67 |
0.57 |
0.63 |
0.72 |
0.67 |
0.60 |
||||||||
EPS impact of non-GAAP adjustments |
0.09 |
(0.13) |
- |
0.07 |
- |
(0.06) |
- |
(0.07) |
||||||||
Adjusted EPS ($) |
2.36 |
2.49 |
0.67 |
0.64 |
0.63 |
0.66 |
0.67 |
0.53 |
||||||||
Full Year |
2015 |
2016 |
||||||||||||||
Net Debt to Net Capitalization 6 |
2015 |
2016 |
3Q |
4Q |
1Q |
2Q |
3Q |
4Q |
||||||||
Long term debt |
942 |
956 |
985 |
942 |
1032 |
1044 |
1055 |
956 |
||||||||
Current debt maturities |
3 |
4 |
3 |
3 |
4 |
4 |
1 |
4 |
||||||||
Total Debt |
945 |
960 |
988 |
945 |
1036 |
1048 |
1056 |
960 |
||||||||
Less cash and equivalents |
(253) |
(282) |
(251) |
(253) |
(250) |
(285) |
(317) |
(282) |
||||||||
Net Debt |
692 |
678 |
737 |
692 |
786 |
763 |
739 |
678 |
||||||||
Total capitalization |
2263 |
2278 |
2311 |
2263 |
2344 |
2333 |
2383 |
2278 |
||||||||
Current debt maturities |
3 |
4 |
3 |
3 |
4 |
4 |
1 |
4 |
||||||||
Less cash and equivalents |
(253) |
(282) |
(251) |
(253) |
(250) |
(285) |
(317) |
(282) |
||||||||
Net Capitalization |
2013 |
1999 |
2063 |
2013 |
2098 |
2052 |
2067 |
1999 |
||||||||
Long Term Debt to Total Capitalization |
42% |
42% |
43% |
42% |
44% |
45% |
44% |
42% |
||||||||
Net Debt to Net Capital |
34% |
34% |
36% |
34% |
37% |
37% |
36% |
34% |
||||||||
Full Year |
2015 |
2016 |
||||||||||||||
Total Debt to EBITDA 7 |
2015 |
2016 |
3Q |
4Q |
1Q |
2Q |
3Q |
4Q |
||||||||
Total Debt |
945 |
960 |
988 |
945 |
1036 |
1048 |
1056 |
960 |
||||||||
EBIT |
486.5 |
522.0 |
141.5 |
114.1 |
127.1 |
146.5 |
130.2 |
118.2 |
||||||||
Depreciation and Amortization |
113.2 |
115.4 |
28.5 |
28.2 |
28.3 |
28.9 |
29.2 |
29.0 |
||||||||
EBITDA |
599.7 |
637.4 |
170.0 |
142.3 |
155.4 |
175.4 |
159.4 |
147.2 |
||||||||
Non-GAAP adjustments (pre-tax) |
23.1 |
(30.1) |
- |
16.1 |
- |
(14.4) |
- |
(15.7) |
||||||||
Adjusted EBITDA ($ millions) |
622.8 |
607.3 |
170.0 |
158.4 |
155.4 |
161.0 |
159.4 |
131.5 |
||||||||
Adjusted EBITDA, trailing 12 months |
623 |
607 |
----- |
623 |
631 |
645 |
634 |
607 |
||||||||
Total Debt / Adjusted 12-month EBITDA |
1.5 |
1.6 |
----- |
1.5 |
1.6 |
1.6 |
1.7 |
1.6 |
||||||||
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 uses 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. |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/leggett--platt-announces-record-full-year-eps-300398947.html
SOURCE