LEGGETT & PLATT REPORTS 2Q RESULTS

CARTHAGE, Mo., July 31, 2023 /PRNewswire/ --

• 2Q sales of $1.22 billion, an 8% decrease vs 2Q22
• 2Q EPS of $.40, a decrease of $.30 vs 2Q22; 2Q adjusted¹ EPS of $.38, down $.32 vs 2Q22
• 2Q cash from operations of $111 million, a $21 million increase vs 2Q22
• 2023 guidance lowered: sales of $4.75–$4.95 billion; EPS of $1.50–$1.70, adjusted¹ EPS of $1.45–$1.65

President and CEO Mitch Dolloff commented, "Second quarter earnings were in line with expectations on lower than anticipated sales. We saw sustained strength in the Specialized Products segment results although weak consumer demand continued to affect results in the Bedding Products and Furniture, Flooring & Textile Products segments.

"We are lowering our full year guidance to reflect continued volatility in the macroeconomic environment and low visibility in several of our end markets. Our previous guidance anticipated a modest improvement in residential end markets in the second half of the year. We are encouraged by the continued recovery in our industrial businesses but have yet to see an upward trajectory in residential end markets. 

"We are maintaining our emphasis on improving areas within our control and proactively addressing the effects of the macroeconomic impacts on our business.  Our employees are doing an excellent job engaging with our customers on new product opportunities and driving operational efficiency and strong cash management. Our focused execution and enduring fundamentals position Leggett for long-term success."

SECOND QUARTER RESULTS

Second quarter sales were $1.22 billion, an 8% decrease versus second quarter last year.

• Organic sales² were down 11%
• Volume was down 6%, primarily from demand softness in residential end markets, partially offset by growth in our Automotive, Aerospace, and Hydraulic Cylinders businesses
• Raw material-related selling price decreases reduced sales 5%
• Currency impact was flat
• Acquisitions increased sales 3%

Second quarter EBIT was $96 million, down $47 million or 33% from second quarter 2022 EBIT, and adjusted¹ EBIT was $92 million, a $51 million decrease.

• EBIT and adjusted¹ EBIT decreased primarily from lower volume in residential end markets and lower metal margin in our Steel Rod business
• 2Q 2023 adjustment is for a $4 million gain from net insurance proceeds from April tornado damage at a shared Home Furniture and Bedding manufacturing facility
• EBIT margin was 7.8% and adjusted¹ EBIT margin was 7.5%, down from 10.7% in the second quarter of 2022

Second quarter EPS was $.40, a $.30 decrease versus second quarter 2022 EPS. Second quarter adjusted¹ EPS was $.38, down $.32 versus second quarter 2022 EPS. EPS decreased primarily from volume declines, lower metal margin, higher tax rate ($.02/share), and higher interest expense ($.01/share). 

DEBT, CASH FLOW, AND LIQUIDITY

• Net Debt¹ was 3.1x trailing 12-month adjusted EBITDA¹
• Debt at June 30
• Total debt of $2.0 billion, including $224 million of commercial paper outstanding
• No significant maturities until November 2024
• Operating cash flow was $111 million in the second quarter, an increase of $21 million versus second quarter 2022, reflecting working capital improvements partially offset by lower earnings
• Capital expenditures were $30 million
• Total liquidity was $632 million at June 30
• $272 million cash on hand
• $360 million in capacity remaining under revolving credit facility

DIVIDEND

• In May, Leggett & Platt's Board of Directors increased the second quarter dividend to $.46 per share, two cents higher than last year's second quarter dividend
• At an annual indicated dividend of $1.84 per share, the yield is 6.2% based upon Friday's closing stock price of $29.54 per share

STOCK REPURCHASES

• Net issuances of .1 million shares through employee benefit plans
• Shares outstanding at the end of the second quarter were 133.2 million

2023 GUIDANCE

• Full year 2023 sales and EPS guidance lowered
• Sales are expected to be $4.75–$4.95 billion, -4% to -8% versus 2022
• Volume at the midpoint expected to be down mid-single digits:
• Down mid to high single digits in Bedding Products Segment
• Up high single digits in Specialized Products Segment
• Down mid to high single digits in Furniture, Flooring & Textile Products Segment
• Raw material-related price decreases and currency impact combined expected to reduce sales mid-single digits
• Acquisitions completed in 2022 expected to add ~3% to sales
• EPS is expected to be $1.50–$1.70
• Decrease is primarily from lower expected volume in residential end markets
• Includes anticipated gain from net insurance proceeds from tornado damage of ~$0.05 per share
• Adjusted EPS is expected to be $1.45–$1.65
• Based on this framework, EBIT margin should be 7.5%–7.9%; adjusted EBIT margin should be 7.3%–7.7%
• Additional expectations:
• Depreciation and amortization $200 million
• Net interest expense $85 million
• Effective tax rate 24%
• Fully diluted shares 137 million
• Operating cash flow $450–$500 million
• Capital expenditures $100–$130 million
• Dividends $240 million
• Minimal acquisitions and share repurchases
• Prior Guidance:
• Sales: $4.8–$5.2 billion
• EPS: $1.50–$1.90

SEGMENT RESULTS – Second Quarter 2023 (versus 2Q 2022)

Bedding Products –

• Trade sales decreased 18%
• Volume decreased 9%, primarily due to demand softness in bedding markets and lower trade demand in our Steel Rod and Drawn Wire businesses partially offset by growth in Specialty Foam
• Raw material-related selling price decreases reduced sales 9%
• EBIT decreased $46 million, primarily from lower volume and lower metal margin

Specialized Products –

• Trade sales increased 23%
• Volume increased 13% from growth across the segment
• Raw material-related selling price increases added 1%
• Currency impact decreased sales 2%
• Hydraulic Cylinders acquisition completed in August 2022 added 11%
• EBIT increased $12 million, primarily from higher volume

Furniture, Flooring & Textile Products –

• Trade sales decreased 14%
• Volume decreased 14%, with declines across the segment
• Raw material-related selling price decreases reduced sales 2%
• Textiles acquisitions added 2%
• EBIT decreased $12 million, primarily from lower volume partially offset by a $3 million gain from net insurance proceeds from tornado damage at a Home Furniture manufacturing facility

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 Tuesday, August 1. The webcast can be accessed from Leggett's website. The dial-in number is (201) 689-8341; there is no passcode. 

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 140-year-old Company is comprised of 15 business units, approximately 20,000 employees, and 135 manufacturing facilities located in 18 countries. 

Leggett & Platt is the leading U.S.-based manufacturer of: a) bedding components; b) automotive seat support and lumbar systems; c) specialty bedding foams and private label finished mattresses; d) components for home furniture and work furniture; e) flooring underlayment; f) adjustable beds; and g) bedding industry machinery.

FORWARD-LOOKING STATEMENTS: This press release contains "forward-looking statements," including, but not limited to the amount of the Company's forecasted 2023 full-year volume; volume in residential end markets; insurance proceeds from tornado damage; acquisition sales growth; sales, EPS, adjusted EPS; capital expenditures; depreciation and amortization; net interest expense; fully diluted shares; operating cash flow; EBIT margin; adjusted EBIT margin; effective tax rate; amount of dividends; raw material related price decreases; currency impact; volume in each of the Company's segments; and minimal acquisitions and share repurchases. Such forward-looking statements are expressly qualified by the cautionary statements described in this provision and reflect only the beliefs of Leggett at the time the statement is made. Because all forward-looking statements deal with the future, they are subject to risks, uncertainties and developments which might cause actual events or results to differ materially from those envisioned or reflected in any forward-looking statement. Moreover, we do not have, and do not undertake, any duty to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement was made. Some of these risks and uncertainties include: the adverse impact on our sales, earnings, our liquidity impacting our ability to pay our obligations as they come due, margins, cash flow, costs, and financial condition caused by: the Russian invasion of Ukraine; global inflationary and deflationary impacts; macro-economic impacts; the demand for our products and our customers' products; growth rates in the industries in which we participate and opportunities in those industries; our manufacturing facilities' ability to remain fully operational and obtain necessary raw materials and parts, maintain appropriate labor levels and ship finished products to customers; the impairment of goodwill and long-lived assets; restructuring-related costs; our ability to access the commercial paper market or borrow under our revolving credit facility, including compliance with restrictive covenants that may limit our operational flexibility and our ability to timely pay our debt; adverse impact from supply chain shortages and disruptions; our ability to manage working capital; increases or decreases in our capital needs, which may vary depending on acquisition or divestiture activity; our ability to collect trade receivables; market conditions; price and product competition from foreign and domestic competitors; cost and availability of raw materials due to supply chain disruptions or otherwise; labor and energy costs; cash generation sufficient to pay the dividend; cash repatriation from foreign accounts; our ability to pass along raw material cost increases through increased selling prices; conflict between China and Taiwan; our ability to maintain profit margins if customers change the quantity or mix of our components in their finished products; our ability to maintain and grow the profitability of acquired companies; political risks; changing tax rates; increased trade costs; risks related to operating in foreign countries; cybersecurity incidents; customer bankruptcies, losses and insolvencies; disruption to our steel rod mill and other operations and supply chain because of severe weather-related events, natural disaster, fire, explosion, terrorism, pandemic, governmental action or labor strikes; ability to develop innovative products; bank failures; foreign currency fluctuation; the amount of share repurchases; the imposition or continuation of anti-dumping duties on innersprings, steel wire rod and mattresses; data privacy; climate change compliance costs and regulatory, market, technological and reputational impacts; our ESG obligations; litigation risks; and risk factors in the "Forward-Looking Statements" and "Risk Factors" sections in Leggett's most recent Form 10-K and Form 10-Q filed with the SEC.

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

¹ Please refer to attached tables for Non-GAAP Reconciliations
² Trade sales excluding acquisitions/divestitures in the last 12 months

 

LEGGETT & PLATT		Page 5 of 7								July 31, 2023
RESULTS OF OPERATIONS		SECOND QUARTER						YEAR TO DATE
(In millions, except per share data)		2023		2022		Change		2023		2022		Change
Trade sales		$  1,221.2		$  1,334.2		(8) %		$  2,434.8		$  2,656.5		(8) %
Cost of goods sold		1,000.1		1,065.8				1,995.1		2,120.8
Gross profit		221.1		268.4		(18) %		439.7		535.7		(18) %
Selling & administrative expenses		119.2		105.4		13 %		235.2		217.1		8 %
Amortization		16.8		16.4				33.7		33.4
Other (income) expense, net		(10.6)		3.6				(14.2)		4.6
Earnings before interest and taxes		95.7		143.0		(33) %		185.0	`	280.6		(34) %
Net interest expense		22.0		20.0				43.0		39.5
Earnings before income taxes		73.7		123.0				142.0		241.1
Income taxes		19.5		27.8				34.3		55.5
Net earnings		54.2		95.2				107.7		185.6
Less net income from noncontrolling interest		—		—				—		—
Net Earnings Attributable to L&P		$       54.2		$       95.2		(43) %		$     107.7		$     185.6		(42) %
Earnings per diluted share
Net earnings per diluted share		$       0.40		$       0.70		(43) %		$       0.79		$       1.36		(42) %
Shares outstanding
Common stock (at end of period)		133.2		132.6		0.5 %		133.2		132.6		0.5 %
Basic (average for period)		136.2		136.3				136.1		136.4
Diluted (average for period)		136.6		136.7		(0.1) %		136.4		136.8		(0.3) %
CASH FLOW		SECOND QUARTER						YEAR TO DATE
(In millions)		2023		2022		Change		2023		2022		Change
Net earnings		$       54.2		$       95.2				$     107.7		$     185.6
Depreciation and amortization		44.7		44.5				90.1		90.2
Working capital decrease (increase)		11.0		(55.7)				(7.8)		(170.1)
Impairments		—		—				—		—
Other operating activities		0.7		5.8				17.3		23.1
Net Cash from Operating Activities		$     110.6		$       89.8		23 %		$     207.3		$     128.8		61 %
Additions to PP&E		(30.5)		(22.1)				(68.2)		(40.8)
Purchase of companies, net of cash		—		—				—		—
Proceeds from disposals of assets and businesses		4.8		0.3				5.3		2.7
Dividends paid		(58.6)		(56.1)				(116.9)		(112.1)
Repurchase of common stock, net		(0.1)		(35.3)				(5.3)		(56.9)
Additions (payments) to debt, net		(90.2)		(18.5)				(61.7)		2.4
Other		(8.1)		(15.5)				(4.6)		(15.9)
Increase (Decrease) in Cash & Equivalents		$     (72.1)		$     (57.4)				$     (44.1)		$     (91.8)
FINANCIAL POSITION		Jun 30,		Dec 31,
(In millions)		2023		2022		Change
Cash and equivalents		$     272.4		$     316.5
Receivables		702.7		675.0
Inventories		857.8		907.5
Other current assets		72.9		59.0
Total current assets		1,905.8		1,958.0		(3) %
Net fixed assets		789.2		772.4
Operating lease right-of-use assets		212.0		195.0
Goodwill		1,477.1		1,474.4
Intangible assets and deferred costs, both at net		760.2		786.3
TOTAL ASSETS		$  5,144.3		$  5,186.1		(1) %
Trade accounts payable		$     507.4		$     518.4
Current debt maturities		8.2		9.4
Current operating lease liabilities		56.3		49.5
Other current liabilities		383.7		390.8
Total current liabilities		955.6		968.1		(1) %
Long-term debt		2,016.4		2,074.2		(3) %
Operating lease liabilities		167.2		153.6
Deferred taxes and other liabilities		336.5		348.8
Equity		1,668.6		1,641.4		2 %
Total Capitalization		4,188.7		4,218.0		(1) %
TOTAL LIABILITIES & EQUITY		$  5,144.3		$  5,186.1		(1) %
LEGGETT & PLATT		Page 6 of 7								July 31, 2023
SEGMENT RESULTS 1		SECOND QUARTER						YEAR TO DATE
(In millions)		2023		2022		Change		2023		2022		Change
Bedding Products
Trade sales		$     504.4		$     612.5		(18) %		$  1,032.9		$  1,251.9		(17) %
EBIT		23.0		69.1		(67) %		56.3		145.3		(61) %
EBIT margin		4.6 %		11.3 %		-670 bps	2	5.5 %		11.6 %		-610 bps
Gain from net insurance proceeds from tornado damage		(0.6)		—				(0.6)		—
Adjusted EBIT 3		22.4		69.1		(68) %		55.7		145.3		(62) %
Adjusted EBIT margin3		4.4 %		11.3 %		-690 bps		5.4 %		11.6 %		-620 bps
Depreciation and amortization		25.5		26.2				51.1		52.4
Adjusted EBITDA		47.9		95.3		(50) %		106.8		197.7		(46) %
Adjusted EBITDA margin		9.5 %		15.6 %		-610 bps		10.3 %		15.8 %		-550 bps
Specialized Products
Trade sales		$     321.2		$     260.1		23 %		$     641.9		$     524.2		22 %
EBIT		33.1		21.4		55 %		61.8		41.7		48 %
EBIT margin		10.3 %		8.2 %		210 bps		9.6 %		8.0 %		160 bps
Depreciation and amortization		10.3		9.9				21.0		20.7
EBITDA		43.4		31.3		39 %		82.8		62.4		33 %
EBITDA margin		13.5 %		12.0 %		150 bps		12.9 %		11.9 %		100 bps
Furniture, Flooring & Textile Products
Trade sales		$     395.6		$     461.6		(14) %		$     760.0		$     880.4		(14) %
EBIT		38.9		51.3		(24) %		67.2		94.0		(29) %
EBIT margin		9.8 %		11.1 %		-130 bps		8.8 %		10.7 %		-190 bps
Gain from net insurance proceeds from tornado damage		(3.0)		—				(3.0)		—
Adjusted EBIT 3		35.9		51.3		(30) %		64.2		94.0		(32) %
Adjusted EBIT Margin3		9.1 %		11.1 %		-200 bps		8.4 %		10.7 %		-230 bps
Depreciation and amortization		5.7		5.9				11.5		11.8
Adjusted EBITDA		41.6		57.2		(27) %		75.7		105.8		(28) %
Adjusted EBITDA margin		10.5 %		12.4 %		-190 bps		10.0 %		12.0 %		-200 bps
Total Company
Trade sales		$  1,221.2		$  1,334.2		(8) %		$  2,434.8		$  2,656.5		(8) %
EBIT - segments		95.0		141.8		(33) %		185.3		281.0		(34) %
Intersegment eliminations and other		0.7		1.2				(0.3)		(0.4)
EBIT		95.7		143.0		(33) %		185.0		280.6		(34) %
EBIT margin		7.8 %		10.7 %		-290 bps		7.6 %		10.6 %		-300 bps
Gain from net insurance proceeds from tornado damage3		(3.6)		—				(3.6)		—
Adjusted EBIT 3		92.1		143.0		(36) %		181.4		280.6		(35) %
Adjusted EBIT margin3		7.5 %		10.7 %		-320 bps		7.5 %		10.6 %		-310 bps
Depreciation and amortization - segments		41.5		42.0				83.6		84.9
Depreciation and amortization - unallocated 4		3.2		2.5				6.5		5.3
Adjusted EBITDA		$     136.8		$     187.5		(27) %		$     271.5		$     370.8		(27) %
Adjusted EBITDA margin		11.2 %		14.1 %		-290 bps		11.2 %		14.0 %		-280 bps
LAST SIX QUARTERS		2022								2023
Selected Figures (In Millions)		1Q		2Q		3Q		4Q		1Q		2Q
Trade sales		1,322.3		1,334.2		1,294.4		1,195.8		1,213.6		1,221.2
Sales growth (vs. prior year)		15 %		5 %		(2) %		(10) %		(8) %		(8) %
Volume growth (same locations vs. prior year)		(4) %		(6) %		(8) %		(12) %		(7) %		(6) %
Adjusted EBIT 3		137.6		143.0		113.2		91.2		89.3		92.1
Cash from operations		39.0		89.8		65.5		247.1		96.7		110.6
Adjusted EBITDA (trailing twelve months) 3		764.6		760.3		726.8		664.8		616.2		565.5
(Long-term debt + current maturities - cash and equivalents) / adj. EBITDA 3,5		2.32		2.39		2.63		2.66		2.88		3.10
Organic Sales (Vs. Prior Year) 6		1Q		2Q		3Q		4Q		1Q		2Q
Bedding Products		16 %		— %		(12) %		(19) %		(17) %		(18) %
Specialized Products		2 %		8 %		19 %		5 %		8 %		12 %
Furniture, Flooring & Textile Products		17 %		10 %		— %		(13) %		(15) %		(16) %
Overall		13 %		5 %		(3) %		(12) %		(11) %		(11) %
1 Segment and overall company margins calculated on net trade sales.
2 bps = basis points; a unit of measure equal to 1/100th of 1%.
3 Refer to next page for non-GAAP reconciliations.
4 Consists primarily of depreciation of non-operating assets.
5 EBITDA based on trailing twelve months.
6 Trade sales excluding sales attributable to acquisitions and divestitures consummated in the last 12 months.
LEGGETT & PLATT		Page 7 of 7								July 31, 2023
RECONCILIATION OF REPORTED (GAAP) TO ADJUSTED (Non-GAAP) FINANCIAL MEASURES 10
Non-GAAP Adjustments 7		2022								2023
(In millions, except per share data)		1Q		2Q		3Q		4Q		1Q		2Q
Gain from net insurance proceeds from tornado damage		—		—		—		—		—		(3.6)
Non-GAAP Adjustments (Pretax) 8		—		—		—		—		—		(3.6)
Income tax impact		—		—		—		—		—		0.9
Non-GAAP Adjustments (After Tax)		—		—		—		—		—		(2.7)
Diluted shares outstanding		136.9		136.7		136.1		136.1		136.3		136.6
EPS Impact of Non-GAAP Adjustments		—		—		—		—		—		(0.02)
Adjusted EBIT, EBITDA, Margin, and EPS 7		2022								2023
(In millions, except per share data)		1Q		2Q		3Q		4Q		1Q		2Q
Trade sales		1,322.3		1,334.2		1,294.4		1,195.8		1,213.6		1,221.2
EBIT (earnings before interest and taxes)		137.6		143.0		113.2		91.2		89.3		95.7
Non-GAAP adjustments (pretax)		—		—		—		—		—		(3.6)
Adjusted EBIT		137.6		143.0		113.2		91.2		89.3		92.1
EBIT margin		10.4 %		10.7 %		8.7 %		7.6 %		7.4 %		7.8 %
Adjusted EBIT Margin		10.4 %		10.7 %		8.7 %		7.6 %		7.4 %		7.5 %
EBIT		137.6		143.0		113.2		91.2		89.3		95.7
Depreciation and amortization		45.7		44.5		44.1		45.5		45.4		44.7
EBITDA		183.3		187.5		157.3		136.7		134.7		140.4
Non-GAAP adjustments (pretax)		—		—		—		—		—		(3.6)
Adjusted EBITDA		183.3		187.5		157.3		136.7		134.7		136.8
EBITDA margin		13.9 %		14.1 %		12.2 %		11.4 %		11.1 %		11.5 %
Adjusted EBITDA Margin		13.9 %		14.1 %		12.2 %		11.4 %		11.1 %		11.2 %
Diluted EPS		0.66		0.70		0.52		0.39		0.39		0.40
EPS impact of non-GAAP adjustments		—		—		—		—		—		(0.02)
Adjusted EPS		0.66		0.70		0.52		0.39		0.39		0.38
Net Debt to Adjusted EBITDA 9		2022								2023
		1Q		2Q		3Q		4Q		1Q		2Q
Total debt		2,104.4		2,090.8		2,141.0		2,083.6		2,117.8		2,024.6
Less: cash and equivalents		(327.3)		(269.9)		(226.2)		(316.5)		(344.5)		(272.4)
Net debt		1,777.1		1,820.9		1,914.8		1,767.1		1,773.3		1,752.2
Adjusted EBITDA, trailing 12 months		764.6		760.3		726.8		664.8		616.2		565.5
Net Debt / 12-month Adjusted EBITDA		2.32		2.39		2.63		2.66		2.88		3.10
7 Management and investors use these measures as supplemental information to assess operational performance.
8 The ($3.6) 2023 non-GAAP adjustment is included in the Other (income) expense, net line on the income statement.
9 Management and investors use this ratio as supplemental information to assess ability to pay off debt.  These ratios are calculated differently than the Company's credit    facility covenant ratio.
10 Calculations impacted by rounding.

 

 

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