Leggett & Platt Reports 11% Sales Growth And $.63 EPS
- 2Q sales were
$1.1 billion , an 11% increase versus 2Q 2017; volume up 6% - 2Q EPS was
$.63 , a$.01 decrease versus 2Q 2017 - Reducing 2018 sales guidance to
$4.25-$4.35 billion ; reducing EPS guidance to$2.55-$2.70
Diversified manufacturer
Second quarter earnings were
The company is reducing sales and EPS guidance for the full year due to a combination of factors.
CEO Comments
President and CEO
"Notably, our Comfort Core® innerspring units were up 25% in the second quarter reflecting the improvement in our U.S. Spring business from market share gains with both traditional and direct-to-consumer customers. We continue to experience increasingly higher value content in our customers' mattresses.
"To accommodate ongoing growth, we are increasing our full year estimate for capital expenditures by
"As predicted in our first quarter press release, inflation continued to be a margin headwind in the second quarter, as we were not yet ahead of the pricing lag that we experience with steel cost inflation. This primarily affected margins in our Residential and Furniture Products segments. Assuming steel scrap prices continue their recent stability, we expect to see margin improvement in the second half of 2018.
"We are maintaining our strong financial base. We ended the quarter with
"Our decade long goal of achieving Total Shareholder Return (TSR) that ranks within the top third of the
Dividends and Stock Repurchases
In May,
During the second quarter the company purchased 1.3 million shares of its stock at an average price of
2018 Guidance
2018 sales guidance is reduced to
Continuing operations EPS is reduced to
Cash from operations is now expected to approximate
The company's top priorities for use of cash remain organic growth, dividends, and strategic acquisitions. After funding those priorities, 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
Approximately 50% of our inventories are valued on the last-in, first-out (LIFO) method. These are primarily the company's domestic, steel-related inventories. Because of increased commodity costs since the beginning of 2018, we now anticipate full year LIFO expense to be
SEGMENT RESULTS – Second Quarter 2018 (versus the same period in 2017)
Residential Products – Total sales grew 8%, from a 7% increase in same location sales and 1% from acquisitions completed in 2017. Volume increased 4% and raw material-related price increases and currency impact added 3% to sales growth. EBIT decreased
Industrial Products – Total sales grew 23% from raw material-related price increases and higher volume. EBIT increased by
Furniture Products – Total sales increased 9%, primarily from volume gains in Adjustable Bed and
Specialized Products – Total sales increased 15%. Same location sales increased 11%, from volume gains in
Slides and Conference Call
A set of slides containing summary financial information is available from the Investor Relations section of Leggett's website at www.leggett.com. Management will host a conference call at
Third quarter results will be released after the market closes on
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, the impact of the Tax Cuts and Jobs Act, 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 Forms 10-K and 10-Q. 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
LEGGETT & PLATT |
||||||||||||
RESULTS OF OPERATIONS 1 |
SECOND QUARTER |
YEAR TO DATE |
||||||||||
(In millions, except per share data) |
2018 |
2017 |
Change |
2018 |
2017 |
Change |
||||||
Net sales (from continuing operations) |
$1,102.5 |
$ 989.3 |
11% |
$2,131.3 |
$1,949.6 |
9% |
||||||
Cost of goods sold |
871.5 |
758.6 |
1,682.9 |
1,492.2 |
||||||||
Gross profit |
231.0 |
230.7 |
0% |
448.4 |
457.4 |
(2%) |
||||||
Selling & administrative expenses |
107.8 |
104.7 |
3% |
212.5 |
210.8 |
1% |
||||||
Amortization |
5.1 |
4.7 |
10.1 |
9.8 |
||||||||
Other expense (income), net |
(3.0) |
(1.0) |
(2.7) |
(1.4) |
||||||||
Earnings before interest and taxes |
121.1 |
122.3 |
(1%) |
228.5 |
238.2 |
(4%) |
||||||
Net interest expense |
13.6 |
8.9 |
25.6 |
17.5 |
||||||||
Earnings before income taxes |
107.5 |
113.4 |
202.9 |
220.7 |
||||||||
Income taxes |
22.4 |
25.8 |
39.9 |
47.0 |
||||||||
Net earnings from continuing operations |
85.1 |
87.6 |
163.0 |
173.7 |
||||||||
Discontinued operations, net of tax |
- |
- |
- |
- |
||||||||
Net earnings |
85.1 |
87.6 |
163.0 |
173.7 |
||||||||
Less net income from non-controlling interest |
(0.1) |
- |
(0.1) |
- |
||||||||
Net earnings attributable to L&P |
$ 85.0 |
$ 87.6 |
(3%) |
$ 162.9 |
$ 173.7 |
(6%) |
||||||
Earnings per diluted share |
||||||||||||
From continuing operations |
$0.63 |
$0.64 |
(2%) |
$1.20 |
$1.26 |
(5%) |
||||||
From discontinued operations |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
||||||||
Net earnings per diluted share |
$0.63 |
$0.64 |
(2%) |
$1.20 |
$1.26 |
|||||||
Shares outstanding |
||||||||||||
Common stock (at end of period) |
130.1 |
132.3 |
(1.7%) |
130.1 |
132.3 |
|||||||
Basic (average for period) |
134.1 |
136.0 |
134.7 |
136.4 |
||||||||
Diluted (average for period) |
135.0 |
137.4 |
(1.7%) |
135.7 |
137.8 |
|||||||
CASH FLOW |
SECOND QUARTER |
YEAR TO DATE |
||||||||||
(In millions) |
2018 |
2017 |
Change |
2018 |
2017 |
Change |
||||||
Net earnings |
$ 85.1 |
$ 87.6 |
$ 163.0 |
$ 173.7 |
||||||||
Depreciation and amortization |
33.8 |
31.9 |
67.2 |
62.2 |
||||||||
Working capital decrease (increase) |
(55.5) |
(30.1) |
(133.4) |
(109.6) |
||||||||
Impairments |
0.0 |
0.1 |
0.2 |
0.1 |
||||||||
Other operating activity |
17.1 |
8.9 |
27.6 |
29.7 |
||||||||
Net Cash from Operating Activity |
$ 80.5 |
$ 98.4 |
(18%) |
$ 124.6 |
$ 156.1 |
(20%) |
||||||
Additions to PP&E |
(40.9) |
(44.8) |
(81.2) |
(79.1) |
3% |
|||||||
Purchase of companies, net of cash |
(4.4) |
(0.9) |
(90.2) |
(38.8) |
||||||||
Proceeds from business and asset sales |
0.3 |
0.3 |
1.9 |
1.6 |
||||||||
Dividends paid |
(47.3) |
(45.0) |
(94.8) |
(90.4) |
||||||||
Repurchase of common stock, net |
(52.4) |
(10.4) |
(107.3) |
(113.3) |
||||||||
Additions (payments) to debt, net |
46.2 |
60.8 |
190.0 |
215.0 |
||||||||
Other |
(30.2) |
8.1 |
(22.7) |
2.1 |
||||||||
Increase (Decr.) in Cash & Equiv. |
$ (48.2) |
$ 66.5 |
$ (79.7) |
$ 53.2 |
||||||||
FINANCIAL POSITION |
30-Jun |
|||||||||||
(In millions) |
2018 |
2017 |
Change |
|||||||||
Cash and equivalents |
$ 446.4 |
$ 335.1 |
||||||||||
Receivables |
649.8 |
577.7 |
||||||||||
Inventories |
634.2 |
580.0 |
||||||||||
Other current assets |
57.0 |
47.4 |
||||||||||
Total current assets |
1,787.4 |
1,540.2 |
16% |
|||||||||
Net fixed assets |
709.3 |
616.2 |
||||||||||
Goodwill and other assets |
1,151.9 |
1,125.1 |
||||||||||
TOTAL ASSETS |
$3,648.6 |
$3,281.5 |
11% |
|||||||||
Trade accounts payable |
$ 455.2 |
$ 388.3 |
||||||||||
Current debt maturities |
153.7 |
3.4 |
||||||||||
Other current liabilities |
332.6 |
350.0 |
||||||||||
Total current liabilities |
941.5 |
741.7 |
27% |
|||||||||
Long-term debt |
1,298.0 |
1,183.5 |
10% |
|||||||||
Deferred taxes and other liabilities |
280.5 |
222.7 |
||||||||||
Equity |
1,128.6 |
1,133.6 |
(0%) |
|||||||||
Total Capitalization |
2,707.1 |
2,539.8 |
7% |
|||||||||
TOTAL LIABILITIES & EQUITY |
$3,648.6 |
$3,281.5 |
11% |
1 |
2017 results retrospectively adjusted for new accounting guidance on the presentation of pension cost. |
LEGGETT & PLATT |
||||||||||||
SEGMENT RESULTS |
SECOND QUARTER |
YEAR TO DATE |
||||||||||
(In millions) |
2018 |
2017 |
Change |
2018 |
2017 |
Change |
||||||
External Sales |
||||||||||||
Residential Products |
$ 438.8 |
$ 407.8 |
7.6% |
$ 836.9 |
$ 799.1 |
4.7% |
||||||
Industrial Products |
96.4 |
75.9 |
27.0% |
178.4 |
145.7 |
22.4% |
||||||
Furniture Products |
291.4 |
267.2 |
9.1% |
572.7 |
532.0 |
7.7% |
||||||
Specialized Products |
275.9 |
238.4 |
15.7% |
543.3 |
472.8 |
14.9% |
||||||
Total |
$1,102.5 |
$ 989.3 |
11.4% |
$2,131.3 |
$1,949.6 |
9.3% |
||||||
Inter-Segment Sales |
||||||||||||
Residential Products |
$ 4.7 |
$ 4.2 |
$ 9.3 |
$ 9.0 |
||||||||
Industrial Products |
74.1 |
63.3 |
144.5 |
128.9 |
||||||||
Furniture Products |
3.6 |
4.4 |
6.5 |
10.7 |
||||||||
Specialized Products |
0.6 |
1.7 |
1.3 |
3.6 |
||||||||
Total |
$ 83.0 |
$ 73.6 |
$ 161.6 |
$ 152.2 |
||||||||
Total Sales (External + Inter-segment) |
||||||||||||
Residential Products |
$ 443.5 |
$ 412.0 |
7.6% |
$ 846.2 |
$ 808.1 |
4.7% |
||||||
Industrial Products |
170.5 |
139.2 |
22.5% |
322.9 |
274.6 |
17.6% |
||||||
Furniture Products |
295.0 |
271.6 |
8.6% |
579.2 |
542.7 |
6.7% |
||||||
Specialized Products |
276.5 |
240.1 |
15.2% |
544.6 |
476.4 |
14.3% |
||||||
Total |
$1,185.5 |
$1,062.9 |
11.5% |
$2,292.9 |
$2,101.8 |
9.1% |
||||||
EBIT |
||||||||||||
Residential Products |
$ 40.0 |
$ 50.2 |
(20%) |
$ 75.0 |
$ 92.7 |
(19%) |
||||||
Industrial Products |
13.4 |
7.1 |
89% |
22.4 |
15.9 |
41% |
||||||
Furniture Products |
16.3 |
20.3 |
(20%) |
34.3 |
40.6 |
(16%) |
||||||
Specialized Products |
51.9 |
44.1 |
18% |
98.0 |
87.1 |
13% |
||||||
Intersegment eliminations and other |
(0.5) |
0.6 |
(1.2) |
1.9 |
||||||||
Total |
$ 121.1 |
$ 122.3 |
(1%) |
$ 228.5 |
$ 238.2 |
(4%) |
||||||
EBIT Margin 2 |
Basis Pts |
Basis Pts |
||||||||||
Residential Products |
9.0% |
12.2% |
(320) |
8.9% |
11.5% |
(260) |
||||||
Industrial Products |
7.9% |
5.1% |
280 |
6.9% |
5.8% |
110 |
||||||
Furniture Products |
5.5% |
7.5% |
(200) |
5.9% |
7.5% |
(160) |
||||||
Specialized Products |
18.8% |
18.4% |
40 |
18.0% |
18.3% |
(30) |
||||||
Overall from Continuing Operations |
11.0% |
12.4% |
(140) |
10.7% |
12.2% |
(150) |
||||||
LAST SIX QUARTERS |
2017 |
2018 |
||||||||||
Selected Figures |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Net Sales ($ million) |
960 |
989 |
1,010 |
984 |
1,029 |
1,102 |
||||||
Sales Growth (vs. prior year) |
2% |
3% |
6% |
9% |
7% |
11% |
||||||
Unit Volume Growth (same locations, vs. prior year) |
4% |
2% |
4% |
5% |
1% |
6% |
||||||
Adjusted EBIT 3 |
116 |
122 |
117 |
112 |
107 |
121 |
||||||
Cash from Operations ($ million) |
58 |
98 |
105 |
182 |
44 |
81 |
||||||
Adjusted EBITDA (trailing twelve months) 3 |
598 |
591 |
581 |
594 |
588 |
589 |
||||||
(Long-term debt + current maturities) / Adj. EBITDA 3,4 |
1.9 |
2.0 |
2.1 |
2.1 |
2.4 |
2.5 |
||||||
Same Location Sales (vs. prior year) |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Residential Products |
(2%) |
(3%) |
2% |
3% |
1% |
7% |
||||||
Industrial Products |
(4%) |
1% |
(3%) |
7% |
13% |
23% |
||||||
Furniture Products |
(0%) |
6% |
7% |
8% |
3% |
9% |
||||||
Specialized Products |
9% |
5% |
9% |
10% |
11% |
11% |
||||||
Overall from Continuing Operations |
4% |
4% |
6% |
9% |
6% |
10% |
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 |
||||||||||||
RECONCILIATION OF REPORTED (GAAP) TO ADJUSTED (Non-GAAP) FINANCIAL MEASURES 8 |
||||||||||||
2017 |
2018 |
|||||||||||
Non-GAAP adjustments, Continuing Ops 5 |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Gain/loss on sale of operations |
- |
- |
3.3 |
- |
- |
- |
||||||
Gain on sale of real estate |
- |
- |
- |
(23.4) |
- |
- |
||||||
Pension settlement charge |
- |
- |
- |
15.3 |
- |
- |
||||||
Goodwill and related asset impairment |
- |
- |
4.6 |
- |
- |
- |
||||||
Non-GAAP adjustments (pretax) |
- |
- |
7.9 |
(8.1) |
- |
- |
||||||
Income tax impact |
- |
- |
(2.8) |
2.5 |
- |
- |
||||||
Tax Cuts and Jobs Act impact |
- |
- |
- |
50.4 |
- |
- |
||||||
Tax benefit of CVP divestiture |
- |
- |
(5.7) |
(1.9) |
- |
- |
||||||
Non-GAAP adjustments (after tax) |
- |
- |
(0.6) |
42.9 |
- |
- |
||||||
Diluted shares outstanding |
138.1 |
137.4 |
136.9 |
136.6 |
136.3 |
135.0 |
||||||
EPS impact of non-GAAP adjustments |
- |
- |
(0.00) |
0.32 |
- |
- |
||||||
2017 |
2018 |
|||||||||||
Adjusted EBIT, Margin, and EPS 5 |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
EBIT (earnings before interest and taxes) |
115.9 |
122.3 |
109.2 |
120.5 |
107.4 |
121.1 |
||||||
Non-GAAP adjustments (pretax) |
- |
- |
7.9 |
(8.1) |
- |
- |
||||||
Adjusted EBIT ($ millions) |
115.9 |
122.3 |
117.1 |
112.4 |
107.4 |
121.1 |
||||||
Net sales from continuing operations |
960 |
989 |
1,010 |
985 |
1,029 |
1,102 |
||||||
EBIT margin |
12.1% |
12.4% |
10.8% |
12.2% |
10.4% |
11.0% |
||||||
Adjusted EBIT margin |
12.1% |
12.4% |
11.6% |
11.4% |
10.4% |
11.0% |
||||||
Diluted EPS from Continuing Operations |
0.62 |
0.64 |
0.61 |
0.27 |
0.57 |
0.63 |
||||||
EPS impact of non-GAAP adjustments |
- |
- |
(0.00) |
0.32 |
- |
- |
||||||
Adjusted EPS ($) |
0.62 |
0.64 |
0.61 |
0.59 |
0.57 |
0.63 |
||||||
2017 |
2018 |
|||||||||||
Net Debt to Net Capitalization 6 |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Long-term debt |
1,120 |
1,184 |
1,044 |
1,098 |
1,239 |
1,298 |
||||||
Current debt maturities |
3 |
3 |
153 |
154 |
154 |
154 |
||||||
Total Debt |
1,123 |
1,187 |
1,198 |
1,252 |
1,393 |
1,452 |
||||||
Less cash and equivalents |
(269) |
(335) |
(343) |
(526) |
(495) |
(446) |
||||||
Net Debt |
854 |
852 |
855 |
726 |
898 |
1,005 |
||||||
Total capitalization |
2,403 |
2,540 |
2,432 |
2,575 |
2,714 |
2,707 |
||||||
Current debt maturities |
3 |
3 |
153 |
154 |
154 |
154 |
||||||
Less cash and equivalents |
(269) |
(335) |
(343) |
(526) |
(495) |
(446) |
||||||
Net Capitalization |
2,137 |
2,208 |
2,243 |
2,203 |
2,374 |
2,415 |
||||||
Long-Term Debt to Total Capitalization |
47% |
47% |
43% |
43% |
46% |
48% |
||||||
Net Debt to Net Capital |
40% |
39% |
38% |
33% |
38% |
42% |
||||||
2017 |
2018 |
|||||||||||
Total Debt to EBITDA 7 |
1Q |
2Q |
3Q |
4Q |
1Q |
2Q |
||||||
Total Debt |
1,123 |
1,187 |
1,198 |
1,252 |
1,393 |
1,452 |
||||||
EBIT |
115.9 |
122.3 |
109.2 |
120.5 |
107.4 |
121.1 |
||||||
Depreciation and Amortization |
30.3 |
31.9 |
32.2 |
31.5 |
33.4 |
33.8 |
||||||
EBITDA |
146.2 |
154.2 |
141.4 |
152.0 |
140.8 |
154.9 |
||||||
Non-GAAP adjustments (pretax) |
- |
- |
7.9 |
(8.1) |
- |
- |
||||||
Adjusted EBITDA ($ millions) |
146.2 |
154.2 |
149.3 |
143.9 |
140.8 |
154.9 |
||||||
Adjusted EBITDA, trailing 12 months |
598 |
591 |
581 |
594 |
588 |
589 |
||||||
Total Debt / Adjusted 12-month EBITDA |
1.9 |
2.0 |
2.1 |
2.1 |
2.4 |
2.5 |
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. |
View original content with multimedia:http://www.prnewswire.com/news-releases/leggett--platt-reports-11-sales-growth-and-63-eps-300687481.html
SOURCE