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 27, 2017
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
On July 27, 2017, Leggett & Platt, Incorporated issued a press release announcing its financial results for the second quarter ended June 30, 2017. 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 28, 2017, 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, Total Debt or (Long term debt + current maturities)/Adjusted EBITDA (trailing twelve months) ratio, Adjusted EPS, 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 Total Debt or (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, 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 |
Description | |
| 99.1 | Press Release dated July 27, 2017 | |
2
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 27, 2017 | By: | /S/ SCOTT S. DOUGLAS | ||||
| Scott S. Douglas | ||||||
| Senior Vice President – | ||||||
| General Counsel & Secretary | ||||||
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EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release dated July 27, 2017 | |
4
Exhibit 99.1
FOR IMMEDIATE RELEASE: JULY 27, 2017
LEGGETT & PLATT REPORTS 2Q EPS OF $.64 ON 3% SALES GROWTH
Carthage, MO, July 27, 2017 —
| • | 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 Leggett & Platt reported second quarter sales of $989 million, an increase of 3% versus second quarter 2016. Organic sales grew 4% from continued strength primarily in Automotive and Adjustable Bed, and raw-material related price inflation. Divestitures, net of acquisitions, reduced sales slightly.
Second quarter earnings were $.64 per share, versus $.72 in 2Q 2016. Compared to last year’s 2Q adjusted1 EPS of $.66, EPS declined $.02. The earnings benefit from sales growth and a lower effective tax rate was offset primarily by higher raw material costs. EBIT and EBIT margin declined versus second quarter last year due, in part, to the pricing lag the company experiences when passing along commodity inflation.
CEO Comments
President and CEO Karl G. Glassman commented, “The growth we experienced in the first quarter continued into the second, with organic sales growing 4% during 2Q from both volume gains and inflation. This is a welcome change after two years of reported quarterly sales declines in 2015 and 2016.
“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 $50 million, or approximately 1%. We now expect full year sales of $3.9-4.0 billion, and 4%-7% sales growth. Given the lower sales expectation, we are also reducing the midpoint of our full-year EPS guidance by $.05, to $2.60 (from $2.65).
“For a decade now our primary financial goal has been to achieve Total Shareholder Return (TSR) that ranks within the top third of the S&P 500 over rolling three-year periods. In the three-year period that began January 1, 2015, we have so far (over the last 31 months) generated TSR of 11% annually, which ranks within the top 40 percent of the S&P 500, and exceeds the 10% annual TSR of the S&P 500 index.
“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, Leggett & Platt’s Board of Directors declared a $.36 second quarter dividend, two cents higher than last year’s second quarter dividend. This marks the company’s 46th annual dividend increase, a record of consecutive dividend increases that fewer than a dozen S&P 500 companies have exceeded. Leggett & Platt is proud of its dividend record and plans to extend it.
| 1 | Refer to attached tables for non-GAAP reconciliations. |
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At yesterday’s closing share price of $51.83, the indicated annual dividend of $1.44 per share generates a dividend yield of 2.8%, one of the higher dividend yields among the 51 stocks of the S&P 500 Dividend Aristocrats.
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 $2.55 to $2.65 versus the prior expectation of $2.55 to $2.75. The $.05 reduction to the midpoint of EPS guidance primarily reflects lower sales guidance. Sales are now anticipated to be $3.9-4.0 billion, which equates to growth of 4%-7%; this is a $50 million reduction versus the April sales guidance range. Unit volume growth is expected to be in the low-to-mid-single digits, from strength in Automotive, Adjustable Bed, International Spring, Work Furniture, and Geo Components. Raw material-related price increases should also contribute to sales growth. Based upon this guidance, 2017 EBIT margin should be approximately 12.5% to 13.0%.
Cash from operations is expected to approximate $450 million in 2017, with working capital increases from sales growth and inflation being a significant use of cash. Capital expenditures should be roughly $160 million, and dividend payments are expected to approximate $185 million. Dividend payout is targeted to be 50-60% of adjusted earnings.
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 January 1, the company’s segment reporting structure was modified to align with changes made to the management organizational structure. The company filed an 8-K on April 10, 2017 that included revised segment financials from 2012 through 2016 (quarters and years). The new structure is described in the 8-K; there were only two changes to the business unit structure:
| • | 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 $2 million; however, last year’s EBIT included a $7 million litigation gain. Setting aside that gain, EBIT improved due to pricing discipline and a favorable sales mix.
Industrial Products – Total sales decreased 7% due to divestitures completed in 2016. EBIT decreased $6 million due to the lag in recovering higher steel costs.
Furniture Products – Total sales increased 7%, primarily due to gains in Adjustable Bed. EBIT decreased $4 million due to an unfavorable sales mix and raw material cost increases.
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 $11 million; however, 2016 included a net $8 million benefit from two unusual items (a gain on sale, and an offsetting goodwill impairment). The EBIT benefit from higher sales was more than offset by growth-related costs in Automotive, higher raw material costs, and other small items.
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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 28. The webcast can be accessed (live or replay) from Leggett’s website. The dial-in number is (201) 689-8341; there is no passcode.
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 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 134 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.
Leggett & Platt is the leading U.S. manufacturer of: a) bedding components; b) automotive seat support and lumbar systems; c) components for home furniture and work furniture; d) carpet cushion; e) adjustable beds; f) high-carbon drawn steel wire; and g) bedding industry machinery.
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
David M. DeSonier, Senior Vice President of Corporate Strategy and Investor Relations
Susan R. McCoy, Vice President of Investor Relations
Wendy M. Watson, Director of Investor Relations
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| LEGGETT & PLATT | Page 4 of 6 | 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 | ||||||||||||||||||||
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| 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 | ) | ||||||||||||||||
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| 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 | ||||||||||||||||||||
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| Earnings before income taxes |
113.4 | 137.2 | 220.7 | 255.9 | ||||||||||||||||||||
| Income taxes |
25.8 | 37.7 | 47.0 | 65.4 | ||||||||||||||||||||
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| Net earnings from continuing operations |
87.6 | 99.5 | 173.7 | 190.5 | ||||||||||||||||||||
| Discontinued operations, net of tax |
— | 20.3 | — | 20.4 | ||||||||||||||||||||
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| Net earnings |
87.6 | 119.8 | 173.7 | 210.9 | ||||||||||||||||||||
| Less net income from non-controlling interest |
— | 1.4 | — | (0.2 | ) | |||||||||||||||||||
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| Net earnings attributable to L&P |
$ | 87.6 | $ | 121.2 | (28 | %) | $ | 173.7 | $ | 210.7 | ||||||||||||||
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| Earnings per diluted share |
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| 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 |
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| 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 | |||||||||||||||||||
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| 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 | ) | ||||||||||||||||||
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| Increase (Decr.) in Cash & Equiv. |
$ | 66.5 | $ | 34.6 | $ | 53.2 | $ | 31.6 | ||||||||||||||||
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| 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 | ||||||||||||||||||||||
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| 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 | ||||||||||||||||||||||
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| TOTAL ASSETS |
$ | 3,281.5 | $ | 3,031.8 | 8 | % | ||||||||||||||||||
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| Trade accounts payable |
$ | 388.3 | $ | 339.8 | ||||||||||||||||||||
| Current debt maturities |
3.4 | 3.6 | ||||||||||||||||||||||
| Other current liabilities |
350.0 | 355.6 | ||||||||||||||||||||||
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| 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 | % | ||||||||||||||||||||
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| Total Capitalization |
2,539.8 | 2,332.8 | 9 | % | ||||||||||||||||||||
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| TOTAL LIABILITIES & EQUITY |
$ | 3,281.5 | $ | 3,031.8 | 8 | % | ||||||||||||||||||
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| LEGGETT & PLATT | Page 5 of 6 | July 27, 2017 |
|
SEGMENT RESULTS 1 |
SECOND QUARTER | YEAR TO DATE | ||||||||||||||||||||||
| (In millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||||
| External Sales |
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| 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 | % | ||||||||||||||||
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| Total |
$ | 989.3 | $ | 958.9 | 3.2 | % | $ | 1,949.6 | $ | 1,897.3 | 2.8 | % | ||||||||||||
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| Inter-Segment Sales |
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| 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 | ||||||||||||||||||||
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| Total |
$ | 73.6 | $ | 93.5 | $ | 152.2 | $ | 201.2 | ||||||||||||||||
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| Total Sales (External + Inter-segment) |
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| 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 | % | ||||||||||||||||
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| Total |
$ | 1,062.9 | $ | 1,052.4 | 1.0 | % | $ | 2,101.8 | $ | 2,098.5 | 0.2 | % | ||||||||||||
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| EBIT |
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| 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 | ||||||||||||||||||||
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| Total |
$ | 122.3 | $ | 146.5 | (17 | %) | $ | 238.2 | $ | 273.6 | (13 | %) | ||||||||||||
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| 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 | ) | ||||||||||||
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| Overall from Continuing Operations |
12.4 | % | 15.3 | % | (290 | ) | 12.2 | % | 14.4 | % | (220 | ) | ||||||||||||
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| 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 | % | ||||||||||||
| 1 | Segment information reflects the Q1 2017 segment changes. |
| 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 27, 2017 |
| RECONCILIATION OF REPORTED (GAAP) TO ADJUSTED (Non-GAAP) FINANCIAL |
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| 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 | ) | — | — | — | — | |||||||||||||||||
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| Non-GAAP adjustments (pre-tax) |
— | (14.4 | ) | — | (15.7 | ) | — | — | ||||||||||||||||
| Income tax impact |
— | 5.4 | — | 6.5 | — | |||||||||||||||||||
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| Non-GAAP adjustments (after tax) |
— | (9.0 | ) | — | (9.2 | ) | — | — | ||||||||||||||||
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| 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 | ) | — | — | ||||||||||||||||
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| 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 | ) | — | — | ||||||||||||||||
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| Adjusted EBIT ($ millions) |
127.1 | 132.1 | 130.2 | 102.5 | 115.9 | 122.3 | ||||||||||||||||||
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| Net sales from continuing operations |
938 | 959 | 949 | 904 | 960 | 989 | ||||||||||||||||||
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| 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 | % | ||||||||||||
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| 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 | ) | — | — | ||||||||||||||||
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| Adjusted EPS ($) |
0.63 | 0.66 | 0.67 | 0.53 | 0.62 | 0.64 | ||||||||||||||||||
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| 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 | ||||||||||||||||||
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| Total Debt |
1036 | 1048 | 1056 | 960 | 1123 | 1187 | ||||||||||||||||||
| Less cash and equivalents |
(250 | ) | (285 | ) | (317 | ) | (282 | ) | (269 | ) | (335 | ) | ||||||||||||
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| Net Debt |
786 | 763 | 739 | 678 | 854 | 852 | ||||||||||||||||||
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| 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 | ) | ||||||||||||
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| Net Capitalization |
2098 | 2052 | 2067 | 2000 | 2137 | 2208 | ||||||||||||||||||
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| 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 | ||||||||||||||||||
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| EBITDA |
155.4 | 175.4 | 159.4 | 147.2 | 146.2 | 154.2 | ||||||||||||||||||
| Non-GAAP adjustments (pre-tax) |
— | (14.4 | ) | — | (15.7 | ) | — | — | ||||||||||||||||
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| Adjusted EBITDA ($ millions) |
155.4 | 161.0 | 159.4 | 131.5 | 146.2 | 154.2 | ||||||||||||||||||
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| Adjusted EBITDA, trailing 12 months |
631 | 645 | 634 | 607 | 598 | 591 | ||||||||||||||||||
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| Total Debt / Adjusted 12-month EBITDA |
1.6 | 1.6 | 1.7 | 1.6 | 1.9 | 2.0 | ||||||||||||||||||
| 5 | Management 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. |
| 8 | Calculations impacted by rounding. |