UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 28, 2016
LEGGETT & PLATT, INCORPORATED
(Exact name of registrant as specified in its charter)
| Missouri | 001-07845 | 44-0324630 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| No. 1 Leggett Road, Carthage, MO |
64836 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code 417-358-8131
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On July 28, 2016, Leggett & Platt, Incorporated issued a press release announcing its financial results for the second quarter ended June 30, 2016. The press release is attached as Exhibit 99.1 and is incorporated herein by reference.
This information is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information shall not be incorporated by reference into any document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
On July 29, 2016, the Company will hold an investor conference call to discuss its second quarter results, annual guidance and related matters.
The press release contains the Company’s “Net Debt to Net Capital ratio,” “(Long term debt + current maturities)/Adjusted EBITDA (trailing twelve months) ratio,” “Adjusted EPS from Continuing Operations,” “Adjusted EBIT,” “Adjusted EBIT Margin” and “Adjusted EBITDA (trailing twelve months).”
Company management believes the presentation of Net Debt to Net Capital provides investors a useful way to evaluate the Company’s debt leverage if the Company was to use its cash to pay down debt. The Company’s cash has fluctuated, sometimes significantly, from period to period. Management uses this ratio as supplemental information to track leverage trends across time periods with variable levels of cash. Because we may not be able to use our cash to reduce our debt on a dollar-for-dollar basis, the Net Debt to Net Capital ratio may have material limitations.
Company management believes the presentation of (Long term debt + current maturities)/Adjusted EBITDA (trailing twelve months) provides investors a useful way to assess the time it would take the Company to pay off all of its debt, ignoring various factors including interest and taxes. Management uses this ratio as supplemental information to assess its ability to pay off its incurred debt.
Company management believes the presentation of Adjusted EPS from Continuing Operations, Adjusted EBIT, Adjusted EBIT Margin and Adjusted EBITDA (trailing twelve months) is useful to investors in that it aids investors’ understanding of underlying operational profitability. Management uses these non-GAAP measures as supplemental information to assess the Company’s operational performance.
The above non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered a substitute for, or more meaningful than, their GAAP counterparts.
Item 7.01 Regulation FD Disclosure.
The information provided in Item 2.02, including Exhibit 99.1, is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Press Release dated July 28, 2016 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LEGGETT & PLATT, INCORPORATED | ||||
| Date: July 28, 2016 | By: | /s/ JOHN G. MOORE | ||
| John G. Moore | ||||
| Senior Vice President – Chief Legal & HR Officer and Secretary | ||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release dated July 28, 2016 | |
Exhibit 99.1
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FOR IMMEDIATE RELEASE: JULY 28, 2016
LEGGETT & PLATT REPORTS RECORD 2Q EPS FROM CONTINUING OPERATIONS
Carthage, MO, July 28, 2016 —
| • | 2Q EPS from Continuing Operations was a record $.72, including $.06 of unusual items |
| • | Adjusted1 2Q EPS from Continuing Operations was $.66, a second quarter record, up 25% vs. 2Q 2015 |
| • | 2Q sales declined 4% to $959 million; 2% volume gain was masked by divestitures and commodity deflation |
| • | EBIT margin was 15.3%; Adjusted1 EBIT margin was 13.8% |
| • | Narrowing EPS guidance; anticipate record continuing ops EPS of $2.45-2.60 on sales of approx. $3.9 billion |
Diversified manufacturer Leggett & Platt reported quarterly earnings of $.87 per share. Continuing Operations posted EPS of $.72, including a $.05 gain on the sale of a small operation, a $.03 benefit from a litigation settlement, and an offsetting $.02 goodwill impairment charge. Discontinued Operations EPS of $.15 also reflects a benefit from the litigation settlement (attributable to the company’s former Prime Foam business).
Adjusted1 EPS from Continuing Operations was $.66, a second quarter record and a $.13, or 25%, improvement versus 2Q 2015. The EPS increase reflects higher unit volume, favorable product mix, operational improvements, a lower tax rate, and reduced share count. Adjusted1 EBIT margin improved 170 basis points versus second quarter last year, to 13.8%, also reflecting continued management of the business portfolio.
Sales from continuing operations were $959 million, a 4% decline versus 2Q 2015. Unit volume grew 2%, but was more than offset by divestitures, raw material-related price deflation, and currency impacts.
CEO Comments
President and CEO Karl G. Glassman commented, “We continue to be pleased with our operational progress in 2016, despite softer than forecasted volume growth. During the second quarter we generated higher margins, strong cash flow from operations, and record second quarter EPS. For the full year, we expect to achieve similar results: strong EBIT margin, significant growth in operating cash flow, and record EPS.
“Cash flow from operations, at $262 million for the first half of the year, was more than double the comparable amount from last year, in part due to the litigation settlement proceeds. For the full year, we expect cash from operations to exceed $500 million.
“We continue to actively manage our portfolio of businesses. During the second quarter we divested two small businesses that collectively produce about $80 million of annual sales, for total cash proceeds of $47 million. In addition, during the quarter we spent $35 million to buy out the minority interest in an Asian automotive joint venture that we have controlled and operated for several years.
“Our primary financial goal is to achieve Total Shareholder Return (TSR2) that ranks in the top third of the S&P 500 over rolling three-year periods. For the three years that began January 1, 2014, we have so far (over the last 31 months) generated TSR of 27% annually; that performance places L&P within the top 6% of the S&P 500.
| 1 | Refer to attached tables for non-GAAP reconciliations. |
| 2 | TSR = (Change in Stock Price + Dividends) / Beginning Stock Price; assumes dividends are reinvested. |
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“We are achieving these results while maintaining our strong financial base. During the quarter we increased to $750 million, and extended until 2021, our existing bank facility. We ended the quarter with over $450 million available through our commercial paper program. Net debt to net capital1 was 37%, comfortably within our 30% - 40% target range. At quarter end, the company’s debt was 1.6 times its trailing 12-month adjusted1 EBITDA.”
Dividends, and Stock Repurchases
In May, Leggett & Platt’s Board of Directors declared a $.34 second quarter dividend, a three cent increase versus last year’s second quarter dividend. Thus, 2016 marks the 45th consecutive annual dividend increase for the company, with a compound annual growth rate of 13%. Leggett & Platt is proud of its dividend record and plans to continue it.
At yesterday’s closing share price of $53.54, the indicated annual dividend of $1.36 per share generates a dividend yield of 2.5%, one of the higher dividend yields among the 50 stocks of the S&P 500 Dividend Aristocrats.
During the second quarter the company purchased 1.2 million shares of its stock at an average price of $49.39, and issued 0.3 million shares through employee benefit plans and option exercises. The number of shares outstanding declined to 133.4 million, a 2.5% reduction over the last 12 months.
Updated 2016 Continuing Operations EPS Guidance: $2.45 - $2.60
The company is narrowing its EPS guidance, and now expects 2016 EPS from continuing operations of $2.45 to $2.60. This guidance includes the second quarter’s net $.06 EPS benefit from unusual items ($.03 of which was included in prior guidance), and assumes a 25% full-year effective tax rate.
Sales guidance is now estimated at approximately $3.9 billion, or basically flat versus 2015. This guidance assumes unit volume growth in the mid-single digits, offset by a 2% reduction from commodity deflation and currency impacts, and a 3% year-over-year decrease from the combination of 4Q 2015 and 2Q 2016 divestitures, net of small acquisitions. The $100 million reduction in sales guidance (versus a prior midpoint of $4.0 billion) is due in equal parts to: i) recent divestitures, and ii) a more modest expectation for unit volume growth during 2016 (i.e. mid single digit growth, versus the prior expectation of mid-to-high single digit growth).
Based on this guidance, the 2016 adjusted EBIT margin should be approximately 13%. Margins in the back half of 2016 are expected to be lower than in the first half primarily due to the expected pricing lag associated with recent commodity inflation.
Discontinued operations EPS for 2016 is forecast at $.15, reflecting second quarter’s litigation settlement proceeds.
Cash from operations is expected to exceed $500 million in 2016. Capital expenditures are estimated to be $130 million, and dividend payments should approximate $175 million. The company’s target for dividend payout is 50-60% of net earnings. Actual payout was higher until 2015, but with recent growth in annual earnings, the company is now within its target payout range.
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. The company expects to repurchase 4-5 million shares in 2016, and issue about 2 million shares, primarily for employee benefit plans.
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. Increased commodity costs since the beginning of 2016 have resulted in a LIFO expense of $7 million for the first six months of the year. In contrast, during the first half of 2015, the company experienced a LIFO benefit of $10 million related to commodity deflation.
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SEGMENT RESULTS – Second Quarter 2016 (versus the same period in 2015)
Residential Furnishings – Total sales decreased $31 million, or 6%. Unit volume decreased 2%, and raw material-related price decreases and currency impact reduced sales by 4%. EBIT (earnings before interest and taxes) increased $15 million from several factors, including a litigation gain of $7 million. EBIT also benefited from pricing discipline, favorable product mix, and absence of last year’s foam litigation expense ($2 million); these improvements were partially offset by the impact of lower unit volume.
Commercial Products – Total sales decreased $6 million, or 4%, with growth in Work Furniture more than offset by lower sales in Adjustable Bed. EBIT was flat, with operational improvements offsetting the earnings decrease from lower sales.
Industrial Materials – Total sales decreased $50 million, or 25%. Same location sales decreased 13% from a combination of steel-related price decreases and lower unit volume in Drawn Wire. The remainder of the sales decrease resulted from the divestiture of the Steel Tubing business in December 2015, and the divestiture of a small Wire Products operations in June 2016. EBIT increased $1 million, with the impact from lower volume more than offset by operational improvements.
Specialized Products – Total sales increased $22 million, or 9%. Same location sales increased 9%, with a 10% volume gain partially offset by currency translation impact (-1%). EBIT increased $21 million, and reflected an $11 million divestiture gain, partially offset by a $4 million impairment charge in the CVP business. EBIT also grew significantly from higher unit volume, currency benefits, and cost reductions.
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 Friday, July 29. The webcast can be accessed (live or replay) from Leggett’s website. The dial-in number is (201) 689-8341; there is no passcode.
Investor Day
Leggett & Platt plans to host an Investor Day in New York City on the morning of September 14. The event will be webcast. An audio replay, along with handouts, will be available on the company’s website.
Third quarter results will be issued after market close Thursday, October 27, with a conference call the next morning.
FOR MORE INFORMATION: Visit Leggett’s website at www.leggett.com.
COMPANY DESCRIPTION: At Leggett & Platt (NYSE: LEG), we create innovative products that enhance people’s lives, generate exceptional returns for our shareholders, and provide sought-after jobs in communities around the world. L&P is a 133 year-old diversified manufacturer that designs and produces engineered products found in most homes and automobiles. The company is comprised of 17 business units, 21,000 employee-partners, and 130 manufacturing facilities located in 19 countries.
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
David M. DeSonier, Senior Vice President of Corporate Strategy and Investor Relations
Susan R. McCoy, Vice President of Investor Relations
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| LEGGETT & PLATT | Page 4 of 6 | July 28, 2016 |
| RESULTS OF OPERATIONS 1 |
SECOND QUARTER | YEAR TO DATE | ||||||||||||||||||||||
| (In millions, except per share data) |
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
| Net sales (from continuing operations) |
$ | 958.9 | $ | 997.3 | (4 | %) | $ | 1,897.3 | $ | 1,963.5 | (3 | %) | ||||||||||||
| Cost of goods sold |
724.9 | 766.6 | 1,429.7 | 1,515.0 | ||||||||||||||||||||
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| Gross profit |
234.0 | 230.7 | 467.6 | 448.5 | ||||||||||||||||||||
| Selling & administrative expenses |
99.7 | 106.6 | (6 | %) | 204.8 | 204.1 | 0 | % | ||||||||||||||||
| Amortization |
4.8 | 5.2 | 9.9 | 10.4 | ||||||||||||||||||||
| Other expense (income), net |
(17.0 | ) | (0.3 | ) | (20.7 | ) | 3.1 | |||||||||||||||||
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| Earnings before interest and taxes |
146.5 | 119.2 | 23 | % | 273.6 | 230.9 | 18 | % | ||||||||||||||||
| Net interest expense |
9.3 | 10.2 | 17.7 | 19.9 | ||||||||||||||||||||
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| Earnings before income taxes |
137.2 | 109.0 | 255.9 | 211.0 | ||||||||||||||||||||
| Income taxes |
37.7 | 32.3 | 65.4 | 61.0 | ||||||||||||||||||||
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| Net earnings from continuing operations |
99.5 | 76.7 | 190.5 | 150.0 | ||||||||||||||||||||
| Discontinued operations, net of tax |
20.3 | 1.8 | 20.4 | 1.3 | ||||||||||||||||||||
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| Net earnings |
119.8 | 78.5 | 210.9 | 151.3 | ||||||||||||||||||||
| Less net income from non-controlling interest |
1.4 | (0.8 | ) | (0.2 | ) | (1.9 | ) | |||||||||||||||||
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| Net earnings attributable to L&P |
$ | 121.2 | $ | 77.7 | $ | 210.7 | $ | 149.4 | ||||||||||||||||
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| Earnings per diluted share |
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| From continuing operations |
$ | 0.72 | $ | 0.53 | 36 | % | $ | 1.35 | $ | 1.03 | 31 | % | ||||||||||||
| From discontinued operations |
$ | 0.15 | $ | 0.01 | $ | 0.15 | $ | 0.01 | ||||||||||||||||
| Net earnings per diluted share |
$ | 0.87 | $ | 0.54 | $ | 1.50 | $ | 1.04 | ||||||||||||||||
| Shares outstanding |
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| Common stock (at end of period) |
133.4 | 136.8 | 133.4 | 136.8 | ||||||||||||||||||||
| Basic (average for period) |
137.8 | 141.4 | 138.4 | 141.7 | ||||||||||||||||||||
| Diluted (average for period) |
140.1 | 143.4 | 140.6 | 143.6 | ||||||||||||||||||||
| CASH FLOW |
SECOND QUARTER | YEAR TO DATE | ||||||||||||||||||||||
| (In millions) |
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
| Net earnings |
$ | 119.8 | $ | 78.5 | $ | 210.9 | $ | 151.3 | ||||||||||||||||
| Depreciation and amortization |
28.9 | 26.9 | 57.2 | 56.5 | ||||||||||||||||||||
| Working capital decrease (increase) |
1.2 | (22.2 | ) | (25.5 | ) | (116.5 | ) | |||||||||||||||||
| Impairments |
3.7 | 0.6 | 3.7 | 6.5 | ||||||||||||||||||||
| Other operating activity |
(2.8 | ) | 11.0 | 15.8 | 29.1 | |||||||||||||||||||
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| Net Cash from Operating Activity |
$ | 150.8 | $ | 94.8 | 59 | % | $ | 262.1 | $ | 126.9 | 107 | % | ||||||||||||
| Additions to PP&E |
(30.2 | ) | (29.6 | ) | (57.9 | ) | (51.3 | ) | 13 | % | ||||||||||||||
| Purchase of companies, net of cash |
(0.5 | ) | 1.1 | (16.9 | ) | (11.1 | ) | |||||||||||||||||
| Proceeds from business and asset sales |
51.7 | 9.2 | 54.0 | 15.5 | ||||||||||||||||||||
| Dividends paid |
(43.0 | ) | (42.8 | ) | (86.5 | ) | (85.5 | ) | ||||||||||||||||
| Repurchase of common stock, net |
(55.4 | ) | (54.2 | ) | (160.8 | ) | (114.6 | ) | ||||||||||||||||
| Additions (payments) to debt, net |
7.8 | 32.3 | 88.6 | 63.0 | ||||||||||||||||||||
| Other |
(46.6 | ) | 2.1 | (51.0 | ) | (0.6 | ) | |||||||||||||||||
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| Increase (Decr.) in Cash & Equiv. |
$ | 34.6 | $ | 12.9 | $ | 31.6 | $ | (57.7 | ) | |||||||||||||||
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| FINANCIAL POSITION |
30-Jun | |||||||||||||||||||||||
| (In millions) |
2016 | 2015 | Change | |||||||||||||||||||||
| Cash and equivalents |
$ | 284.8 | $ | 275.1 | ||||||||||||||||||||
| Receivables |
534.7 | 549.6 | ||||||||||||||||||||||
| Inventories |
523.4 | 510.8 | ||||||||||||||||||||||
| Held for sale |
0.0 | 28.3 | ||||||||||||||||||||||
| Other current assets |
37.2 | 72.4 | ||||||||||||||||||||||
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| Total current assets |
1,380.1 | 1,436.2 | (4 | %) | ||||||||||||||||||||
| Net fixed assets |
553.1 | 538.6 | ||||||||||||||||||||||
| Held for sale |
12.8 | 28.4 | ||||||||||||||||||||||
| Goodwill and other assets |
1,085.8 | 1,136.2 | ||||||||||||||||||||||
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| TOTAL ASSETS |
$ | 3,031.8 | $ | 3,139.4 | (3 | %) | ||||||||||||||||||
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| Trade accounts payable |
$ | 339.8 | $ | 358.6 | ||||||||||||||||||||
| Current debt maturities |
3.6 | 201.7 | ||||||||||||||||||||||
| Held for sale |
0.0 | 11.4 | ||||||||||||||||||||||
| Other current liabilities |
355.6 | 392.3 | ||||||||||||||||||||||
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| Total current liabilities |
699.0 | 964.0 | (27 | %) | ||||||||||||||||||||
| Long term debt |
1,044.3 | 827.4 | 26 | % | ||||||||||||||||||||
| Deferred taxes and other liabilities |
222.9 | 238.0 | ||||||||||||||||||||||
| Equity |
1,065.6 | 1,110.0 | (4 | %) | ||||||||||||||||||||
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| Total Capitalization |
2,332.8 | 2,175.4 | ||||||||||||||||||||||
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| TOTAL LIABILITIES & EQUITY |
$ | 3,031.8 | $ | 3,139.4 | ||||||||||||||||||||
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| LEGGETT & PLATT | Page 5 of 6 | July 28, 2016 |
| SEGMENT RESULTS 1 |
SECOND QUARTER | YEAR TO DATE | ||||||||||||||||||||||
| (In millions) | 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
| External Sales |
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| Residential Furnishings |
$ | 487.4 | $ | 516.8 | (5.7 | %) | $ | 968.8 | $ | 1,022.8 | (5.3 | %) | ||||||||||||
| Commercial Products |
136.8 | 135.4 | 1.0 | % | 278.1 | 258.9 | 7.4 | % | ||||||||||||||||
| Industrial Materials |
79.9 | 111.7 | (28.5 | %) | 157.0 | 229.4 | (31.6 | %) | ||||||||||||||||
| Specialized Products |
254.8 | 233.4 | 9.2 | % | 493.4 | 452.4 | 9.1 | % | ||||||||||||||||
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| Total |
$ | 958.9 | $ | 997.3 | (3.9 | %) | $ | 1,897.3 | $ | 1,963.5 | (3.4 | %) | ||||||||||||
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| Inter-Segment Sales |
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| Residential Furnishings |
$ | 6.2 | $ | 7.5 | $ | 13.7 | $ | 15.1 | ||||||||||||||||
| Commercial Products |
16.3 | 24.1 | 36.5 | 41.6 | ||||||||||||||||||||
| Industrial Materials |
70.2 | 88.4 | 150.3 | 189.9 | ||||||||||||||||||||
| Specialized Products |
10.7 | 9.8 | 21.1 | 19.3 | ||||||||||||||||||||
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| Total |
$ | 103.4 | $ | 129.8 | $ | 221.6 | $ | 265.9 | ||||||||||||||||
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| Total Sales (External + Inter-segment) |
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| Residential Furnishings |
$ | 493.6 | $ | 524.3 | (5.9 | %) | $ | 982.5 | $ | 1,037.9 | (5.3 | %) | ||||||||||||
| Commercial Products |
153.1 | 159.5 | (4.0 | %) | 314.6 | 300.5 | 4.7 | % | ||||||||||||||||
| Industrial Materials |
150.1 | 200.1 | (25.0 | %) | 307.3 | 419.3 | (26.7 | %) | ||||||||||||||||
| Specialized Products |
265.5 | 243.2 | 9.2 | % | 514.5 | 471.7 | 9.1 | % | ||||||||||||||||
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| Total |
$ | 1,062.3 | $ | 1,127.1 | (5.7 | %) | $ | 2,118.9 | $ | 2,229.4 | (5.0 | %) | ||||||||||||
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| EBIT |
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| Residential Furnishings |
$ | 65.5 | $ | 50.7 | 29 | % | $ | 113.2 | $ | 102.8 | 10 | % | ||||||||||||
| Commercial Products |
10.9 | 10.8 | 1 | % | 24.7 | 18.8 | 31 | % | ||||||||||||||||
| Industrial Materials |
16.6 | 15.3 | 8 | % | 36.7 | 23.3 | 58 | % | ||||||||||||||||
| Specialized Products |
58.3 | 37.7 | 55 | % | 104.6 | 77.0 | 36 | % | ||||||||||||||||
| Intersegment eliminations and other |
2.5 | (0.3 | ) | 1.7 | (1.0 | ) | ||||||||||||||||||
| Change in LIFO reserve |
(7.3 | ) | 5.0 | (7.3 | ) | 10.0 | ||||||||||||||||||
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| Total |
$ | 146.5 | $ | 119.2 | 23 | % | $ | 273.6 | $ | 230.9 | 18 | % | ||||||||||||
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| EBIT Margin 2 |
Basis Pts | Basis Pts | ||||||||||||||||||||||
| Residential Furnishings |
13.3 | % | 9.7 | % | 360 | 11.5 | % | 9.9 | % | 160 | ||||||||||||||
| Commercial Products |
7.1 | % | 6.8 | % | 30 | 7.9 | % | 6.3 | % | 160 | ||||||||||||||
| Industrial Materials |
11.1 | % | 7.6 | % | 350 | 11.9 | % | 5.6 | % | 630 | ||||||||||||||
| Specialized Products |
22.0 | % | 15.5 | % | 650 | 20.3 | % | 16.3 | % | 400 | ||||||||||||||
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| Overall from Continuing Operations |
15.3 | % | 12.0 | % | 330 | 14.4 | % | 11.8 | % | 260 | ||||||||||||||
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| LAST SIX QUARTERS |
2015 | 2016 | ||||||||||||||||||||||
| Selected Figures |
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | ||||||||||||||||||
| Net Sales ($ million) |
966 | 997 | 1,009 | 945 | 938 | 959 | ||||||||||||||||||
| Sales Growth (vs. prior year) |
10 | % | 4 | % | 1 | % | (1 | %) | (3 | %) | (4 | %) | ||||||||||||
| Unit Volume Growth (same locations, vs. prior year) |
9 | % | 4 | % | 5 | % | 3 | % | 4 | % | 2 | % | ||||||||||||
| Adjusted EBIT 3 |
112 | 121 | 142 | 130 | 127 | 132 | ||||||||||||||||||
| Cash from Operations ($ million) |
32 | 95 | 130 | 102 | 111 | 151 | ||||||||||||||||||
| Adjusted EBITDA (trailing twelve months) 4 |
n/a | n/a | n/a | 623 | 631 | 645 | ||||||||||||||||||
| (Long term debt + current maturities) / Adj. EBITDA4 |
n/a | n/a | n/a | 1.5 | 1.6 | 1.6 | ||||||||||||||||||
| Same Location Sales (vs. prior year) |
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | ||||||||||||||||||
| Residential Furnishings |
9 | % | 2 | % | (2 | %) | (3 | %) | (5 | %) | (6 | %) | ||||||||||||
| Commercial Products |
17 | % | 18 | % | 15 | % | (1 | %) | 7 | % | (4 | %) | ||||||||||||
| Industrial Materials |
12 | % | (4 | %) | (10 | %) | (16 | %) | (19 | %) | (13 | %) | ||||||||||||
| Specialized Products |
6 | % | 0 | % | 5 | % | 7 | % | 10 | % | 9 | % | ||||||||||||
| Overall from Continuing Operations |
6 | % | (1 | %) | (1 | %) | (2 | %) | (1 | %) | (1 | %) | ||||||||||||
| 1 | Segment information reflects the 4Q 2015 move of the logistics operations from Residential Furnishings to Industrial Materials. |
| 2 | Segment margins calculated on Total Sales. Overall company margin calculated on External Sales. |
| 3 | Refer to next page for non-GAAP reconciliations. |
| 4 | EBITDA based on trailing twelve months. |
| LEGGETT & PLATT | Page 6 of 6 | July 28, 2016 |
RECONCILIATION OF REPORTED (GAAP) TO ADJUSTED (Non-GAAP) FINANCIAL MEASURES
| 2015 | 2016 | |||||||||||||||||||||||
| Non-GAAP adjustments, Continuing Ops 5 |
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | ||||||||||||||||||
| 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 |
5.5 | — | — | — | — | 3.7 | ||||||||||||||||||
| Benefit from litigation settlement proceeds |
— | — | — | — | — | (6.9 | ) | |||||||||||||||||
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| Non-GAAP adjustments (pre-tax) |
5.5 | 1.5 | — | 16.1 | — | (14.4 | ) | |||||||||||||||||
| Income tax impact |
(1.9 | ) | (0.5 | ) | — | (6.1 | ) | — | 5.4 | |||||||||||||||
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| Non-GAAP adjustments (after tax) |
3.6 | 1.0 | — | 10.0 | — | (9.0 | ) | |||||||||||||||||
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| Diluted shares outstanding |
143.8 | 143.4 | 142.5 | 141.9 | 141.2 | 140.1 | ||||||||||||||||||
| EPS impact of non-GAAP adjustments |
0.02 | — | — | 0.07 | — | (0.06 | ) | |||||||||||||||||
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| Adjusted EBIT, Margin, and EPS 5 |
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | ||||||||||||||||||
| EBIT (earnings before interest and taxes) |
111.7 | 119.2 | 141.5 | 114.1 | 127.1 | 146.5 | ||||||||||||||||||
| Non-GAAP adjustments (pre-tax) |
5.5 | 1.5 | — | 16.1 | — | (14.4 | ) | |||||||||||||||||
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| Adjusted EBIT ($ millions) |
117.2 | 120.7 | 141.5 | 130.2 | 127.1 | 132.1 | ||||||||||||||||||
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| Net sales from continuing operations |
966 | 997 | 1,009 | 945 | 938 | 959 | ||||||||||||||||||
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| EBIT margin |
11.6 | % | 12.0 | % | 14.0 | % | 12.1 | % | 13.5 | % | 15.3 | % | ||||||||||||
| Adjusted EBIT margin |
12.1 | % | 12.1 | % | 14.0 | % | 13.8 | % | 13.5 | % | 13.8 | % | ||||||||||||
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| Diluted EPS from Continuing Operations |
0.50 | 0.53 | 0.67 | 0.57 | 0.63 | 0.72 | ||||||||||||||||||
| EPS impact of non-GAAP adjustments |
0.02 | — | — | 0.07 | — | (0.06 | ) | |||||||||||||||||
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| Adjusted EPS ($) |
0.52 | 0.53 | 0.67 | 0.64 | 0.63 | 0.66 | ||||||||||||||||||
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| Net Debt to Net Capitalization 6 |
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | ||||||||||||||||||
| Long term debt |
793 | 827 | 985 | 942 | 1032 | 1044 | ||||||||||||||||||
| Current debt maturities |
202 | 202 | 3 | 3 | 4 | 4 | ||||||||||||||||||
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| Total Debt |
995 | 1029 | 988 | 945 | 1036 | 1048 | ||||||||||||||||||
| Less cash and equivalents |
(262 | ) | (275 | ) | (251 | ) | (253 | ) | (250 | ) | (285 | ) | ||||||||||||
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| Net Debt |
733 | 754 | 737 | 692 | 786 | 763 | ||||||||||||||||||
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| Total capitalization |
2146 | 2175 | 2311 | 2263 | 2344 | 2333 | ||||||||||||||||||
| Current debt maturities |
202 | 202 | 3 | 3 | 4 | 4 | ||||||||||||||||||
| Less cash and equivalents |
(262 | ) | (275 | ) | (251 | ) | (253 | ) | (250 | ) | (285 | ) | ||||||||||||
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| Net Capitalization |
2086 | 2102 | 2063 | 2013 | 2098 | 2052 | ||||||||||||||||||
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| Long Term Debt to Total Capitalization |
37 | % | 38 | % | 43 | % | 42 | % | 44 | % | 45 | % | ||||||||||||
| Net Debt to Net Capital |
35 | % | 36 | % | 36 | % | 34 | % | 37 | % | 37 | % | ||||||||||||
| Total Debt to EBITDA 7 |
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | ||||||||||||||||||
| Total Debt |
995 | 1029 | 988 | 945 | 1036 | 1048 | ||||||||||||||||||
| EBIT |
111.7 | 119.2 | 141.5 | 114.1 | 127.1 | 146.5 | ||||||||||||||||||
| Depreciation and Amortization |
29.6 | 26.9 | 28.5 | 28.2 | 28.3 | 28.9 | ||||||||||||||||||
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| EBITDA |
141.3 | 146.1 | 170.0 | 142.3 | 155.4 | 175.4 | ||||||||||||||||||
| Non-GAAP adjustments (pre-tax) |
5.5 | 1.5 | — | 16.1 | — | (14.4 | ) | |||||||||||||||||
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| Adjusted EBITDA ($ millions) |
146.8 | 147.6 | 170.0 | 158.4 | 155.4 | 161.0 | ||||||||||||||||||
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| Adjusted EBITDA, trailing 12 months |
623 | 631 | 645 | |||||||||||||||||||||
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| Total Debt / Adjusted 12-month EBITDA |
n/a | n/a | n/a | 1.5 | 1.6 | 1.6 | ||||||||||||||||||
| 5 | These 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. |