LEGGETT & PLATT AMENDS CREDIT AGREEMENT

Rhea-AI Summary

Leggett & Platt, a diversified manufacturer, has amended its credit agreement to increase borrowing capacity and financial flexibility. The leverage ratio has been raised from 3.5x to 4.0x until June 30, 2025, reverting back to 3.5x thereafter. President and CEO Mitch Dolloff emphasizes the company's commitment to financial strength amidst weak market demand. Leggett continues to focus on maintaining a stable financial position and evaluating capital allocation priorities.

Insights

Financial Analyst

The amendment of Leggett & Platt's credit agreement to increase the leverage ratio from 3.5x to 4.0x of trailing 12-months adjusted EBITDA signals a strategic move to bolster liquidity amidst a period of weakened demand in residential markets. This adjustment provides the company with a wider margin for debt relative to earnings before interest, taxes, depreciation and amortization, which can be interpreted as a cushion during economic headwinds. However, it is important to note that a higher leverage ratio also indicates increased financial risk. The reverting of the ratio back to 3.5x in 2025 suggests a planned return to a more conservative financial structure in the medium term.

From an investor's perspective, the key takeaway is the company's proactive approach to maintaining financial health. The increased borrowing capacity might support ongoing operations and strategic investments, potentially stabilizing stock performance in the near term. However, stakeholders should monitor the company's debt levels and interest coverage ratios closely, as the increased leverage could impact future financial flexibility and profitability.

Market Research Analyst

The mention of 'near-term weak demand in residential end markets' by Leggett & Platt's CEO Mitch Dolloff provides context for the company's decision to amend its credit agreement. It reflects broader industry trends where manufacturers are facing demand fluctuations, possibly due to economic uncertainty or shifts in consumer behavior. The company's response, focusing on liquidity and financial flexibility, is a common strategy to navigate such periods.

Investors should consider the company's historical performance in managing debt and its ability to generate cash flow from operations. Leggett & Platt's approach to evaluating capital allocation, including its dividend program, is indicative of a balanced strategy aimed at shareholder value while safeguarding the company's financial stability. The long-term success of the company will hinge on its operational efficiency and the effectiveness of its strategy in adapting to market conditions.

CARTHAGE, Mo., March 25, 2024 /PRNewswire/ -- Diversified manufacturer Leggett & Platt announced today that it has entered into an amended agreement for its existing revolving credit facility to provide additional borrowing capacity and financial flexibility.

Pursuant to the terms of the amended agreement, the Company has increased the leverage ratio under the financial covenant from 3.5x to 4.0x trailing 12-months adjusted EBITDA¹ through June 30, 2025. The leverage ratio will revert to 3.5x as of September 30, 2025, and remain at 3.5x until the facility's maturity date on September 30, 2026.

President and CEO Mitch Dolloff commented, "The amended credit agreement reflects our commitment to maintaining our long-held financial strength. We are confident that the amended agreement will provide us with ample liquidity and flexibility as we manage near-term weak demand in residential end markets."

Dolloff continued, "As a Board and management team, we are carefully evaluating our capital allocation priorities, including the amount of cash allocated to our dividend program, to ensure that we maintain a strong and stable financial position as we execute our operating initiatives and drive the long-term success of Leggett."

Additional details regarding the credit agreement amendment will be filed on the Form 8-K with the Securities and Exchange Commission.

FOR MORE INFORMATION: Visit Leggett's website at www.leggett.com.

COMPANY DESCRIPTION: Leggett & Platt (NYSE: LEG) is a diversified manufacturer that designs and produces a broad variety of engineered components and products that can be found in many homes and automobiles. The 141-year-old Company is a leading supplier of bedding components and private label finished goods; automotive seat comfort and convenience systems; home and work furniture components; geo components; flooring underlayment; hydraulic cylinders for material handling and heavy construction applications; and aerospace tubing and fabricated assemblies.

CONTACT: Investor Relations, (417) 358-8131 or invest@leggett.com
Cassie J. Branscum, Vice President, Investor Relations
Kolina A. Talbert, Manager, Investor Relations

¹ Calculated differently than the ratio presented in the Company's press releases and investor materials.

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SOURCE Leggett & Platt Incorporated

FAQ

What is the leverage ratio under Leggett & Platt's amended credit agreement?

The leverage ratio has been increased from 3.5x to 4.0x until June 30, 2025, reverting back to 3.5x thereafter.

Who commented on the amended credit agreement?

President and CEO Mitch Dolloff provided comments on the amended credit agreement.

What is Leggett & Platt's focus amidst weak market demand?

The company is focused on maintaining a strong financial position and evaluating capital allocation priorities.

Where can more information about the credit agreement amendment be found?

Additional details will be filed on the Form 8-K with the Securities and Exchange Commission.

What does Leggett & Platt specialize in manufacturing?

Leggett & Platt designs and produces a variety of engineered components and products for homes, automobiles, bedding, automotive, furniture, flooring, hydraulic cylinders, and aerospace.