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LEGGETT & PLATT REPORTS RECORD 2Q SALES

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·13 min read
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CARTHAGE, Mo., Aug. 1, 2022 /PRNewswire/ --

  • 2Q sales1 were a quarterly record $1.33 billion, a 5% increase vs 2Q21

  • 2Q EBIT of $143 million, down $29 million vs 2Q21 and down $1 million vs 2Q21 adjusted2 EBIT

  • 2Q EPS of $.70, a decrease of $.12 vs 2Q21 and an increase of $.04 vs 2Q21 adjusted2 EPS

  • 2022 guidance lowered: sales of $5.2–$5.4 billion; EPS of $2.65–$2.80

Diversified manufacturer Leggett & Platt reported record quarterly sales1 in second quarter of $1.33 billion, a 5% increase versus second quarter last year.

  • Organic sales3 were up 5%

  • Acquisitions and divestitures offset

Second quarter EBIT was $143 million, down $29 million from second quarter 2021, and down $1 million from second quarter adjusted2 EBIT.

  • EBIT decreased primarily from the non-recurrence of last year's $28 million gain on the sale of real estate associated with our exited Fashion Bed business

  • EBIT decreased versus prior year's adjusted2 EBIT primarily from volume declines and lower overhead absorption as production and inventory levels were adjusted to meet reduced demand mostly in Bedding. These decreases were largely offset by metal margin expansion and pricing discipline in the Furniture, Flooring & Textile Products segment.

  • EBIT margin was 10.7%, down from 13.5% in the second quarter of 2021 and down from an adjusted2 second quarter 2021 EBIT margin of 11.3%

Second quarter EPS was $.70. EPS decreased $.12 versus second quarter 2021 primarily from the non-recurrence of last year's real estate gain ($.16/share) partially offset by lower tax rate ($.04/share). EPS increased $.04 versus adjusted2 second quarter 2021 primarily from lower tax rate.

CEO COMMENTS

President and CEO Mitch Dolloff commented, "We delivered quarterly record sales1, solid earnings, and strong cash from operations. These results are attributable to the excellent work of our employees as they continue to effectively navigate a dynamic operating environment and reflects the value of the diversity of our portfolio.

"We are lowering our full-year guidance to reflect macroeconomic uncertainties including impacts of inflation, tightening monetary policy, and softening consumer demand continuing through the back half of the year. We expect solid demand in our industrial and automotive end markets to partially offset softer consumer markets.

"The strength of our balance sheet supports our capital allocation discipline. We continue to invest in our businesses to capture near- and long-term growth opportunities, both organically and through strategic, bolt-on acquisitions. During the second quarter, we increased our dividend and marked 51 consecutive years of annual dividend increases. We also repurchased $35 million of our stock in the quarter. As we move through the remainder of the year, we will continue to evaluate our capital deployment options while monitoring the current macroeconomic uncertainties."

DEBT, CASH FLOW, AND LIQUIDITY

  • Net Debt2 was 2.39x trailing 12-month adjusted EBITDA2

  • Operating cash flow was $90 million in the second quarter, an increase of $49 million versus second quarter 2021. Working capital increased significantly last year due to restocking efforts following inventory depletion in 2020 but increased to a lesser extent this year as we continue to return to levels of inventory more reflective of current demand.

  • Capital expenditures were $22 million

  • Total liquidity was $1.3 billion

DIVIDEND

  • In May, Leggett & Platt's Board of Directors declared a $.44 per share second quarter dividend, two cents higher than last year's second quarter dividend

  • At an annual indicated dividend of $1.76 per share, the yield is 4.4% based upon Friday's closing stock price of $39.64 per share

STOCK REPURCHASES

  • Repurchased 1.0 million shares at an average price of $35.01

  • Issued .1 million shares through employee benefit plans

  • Shares outstanding at the end of the second quarter were 132.6 million

2022 GUIDANCE

  • Full year 2022 sales and EPS guidance lowered

  • Sales are expected to be $5.2–$5.4 billion, +2% to +6% versus 2021

  • EPS is expected to be $2.65–$2.80

  • Based on this framework, EBIT margin should be 10.5% to 10.7%

  • Additional expectations:

  • Prior Guidance:

SEGMENT RESULTS – Second Quarter 2022 (versus 2Q 2021)

Bedding Products

  • Trade sales increased 1%

  • EBIT decreased $31 million, primarily from the non-recurrence of last year's $28 million gain on the sale of real estate associated with our exited Fashion Bed business. Additionally, lower volume and lower overhead absorption as production and inventory levels were adjusted to meet reduced demand were partially offset by higher metal margin.

Specialized Products

  • Trade sales increased 8%

  • EBIT decreased $6 million, primarily from higher raw material and transportation costs, labor inefficiencies, and currency impact, partially offset by higher volume

Furniture, Flooring & Textile Products

  • Trade sales increased 10%

  • EBIT increased $7 million, primarily from pricing discipline partially offset by lower volume

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 2. The webcast can be accessed 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 Monday, October 31, 2022, with a conference call the next morning.

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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 most homes and automobiles. The 139-year-old Company is comprised of 15 business units, approximately 20,000 employees, and 130 manufacturing facilities located in 17 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, volume growth; acquisition and divestiture activity; the amount of sales, EPS, capital expenditures, depreciation and amortization, net interest expense, fully diluted shares, operating cash flow; our EBIT margin, effective tax rate, amount of dividends, raw material-related price increases, consumer demand, volume in each of the Company's segments, and demand in industrial and automotive end markets. Such forward-looking statements are expressly qualified by the cautionary statements described in this provision and reflect only the beliefs of Leggett or its management 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, liquidity, cash flow, costs, and financial condition caused by the COVID-19 pandemic which has had, and depending on the length and severity of the pandemic and the percentage of the population vaccinated and effectiveness of any vaccines, could, in varying degrees, negatively impact (a) the demand for our products and our customers' products, growth rates in the industries in which we participate, and opportunities in those industries, (b) our manufacturing facilities' ability to remain open and fully operational, obtain necessary raw materials and parts, maintain appropriate labor levels and ship finished products to customers, (c) impairment of goodwill and long-lived assets, (d) restructuring-related costs, and (e) 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 Russia's invasion of Ukraine; adverse impact from supply chain disruptions; our ability to deleverage; our ability to manage working capital; increases or decreases in our capital needs, which may vary depending on acquisition or divestiture activity, our working capital needs and capital expenditures; market conditions; price and product competition from foreign and domestic competitors; cost and availability of raw materials (including semiconductors and chemicals) due to supply chain disruptions or otherwise, labor, and energy costs; inflationary impacts; 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; changing tax rates; increased trade costs; cybersecurity breaches; customer losses and insolvencies; disruption to our steel rod mill; foreign currency fluctuation; the imposition or continuation of anti-dumping duties on innersprings, steel wire rod and mattresses; data privacy; climate change compliance costs and market, technological and reputational impacts, and 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 reports 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

_________________
1 Sales from continuing operations
2 Please refer to attached tables for Non-GAAP Reconciliations
3 Trade sales excluding acquisitions/divestitures in the last 12 months

LEGGETT & PLATT


Page 5 of 7






August 1, 2022

RESULTS OF OPERATIONS


SECOND QUARTER


YEAR TO DATE

(In millions, except per share data)


2022


2021


Change


2022


2021


Change

Trade sales


$ 1,334.2


$ 1,269.6


5 %


$ 2,656.5


$ 2,420.5


10 %

Cost of goods sold


1,065.8


1,000.3




2,120.8


1,903.7



Gross profit


268.4


269.3


— %


535.7


516.8


4 %

Selling & administrative expenses


105.4


112.6


(6) %


217.1


218.9


(1) %

Amortization


16.4


18.0




33.4


33.8



Other expense (income), net


3.6


(33.2)




4.6


(35.5)



Earnings before interest and taxes


143.0


171.9


(17) %


280.6

`

299.6


(6) %

Net interest expense


20.0


18.7




39.5


37.1



Earnings before income taxes


123.0


153.2




241.1


262.5



Income taxes


27.8


40.9




55.5


62.7



Net earnings


95.2


112.3




185.6


199.8



Less net income from noncontrolling interest


-


(0.1)




-


(0.1)



Net Earnings Attributable to L&P


$ 95.2


$ 112.2


(15) %


$ 185.6


$ 199.7


(7) %

Earnings per diluted share













Net earnings per diluted share


$ 0.70


$ 0.82


(15) %


$ 1.36


$ 1.46


(7) %

Shares outstanding













Common stock (at end of period)


132.6


133.3


(0.5) %


132.6


133.3


(0.5) %

Basic (average for period)


136.3


136.3




136.4


136.1



Diluted (average for period)


136.7


136.8


(0.1) %


136.8


136.6


0.1 %














CASH FLOW


SECOND QUARTER


YEAR TO DATE

(In millions)


2022


2021


Change


2022


2021


Change

Net earnings


$ 95.2


$ 112.3




$ 185.6


$ 199.8



Depreciation and amortization


44.5


48.1




90.2


94.2



Working capital decrease (increase)


(55.7)


(111.0)




(170.1)


(263.5)



Impairments


-


-




-


-



Other operating activities


5.8


(8.5)




23.1


(0.2)



Net Cash from Operating Activities


$ 89.8


$ 40.9


120 %


$ 128.8


$ 30.3


325 %

Additions to PP&E


(22.1)


(25.0)




(40.8)


(49.0)



Purchase of companies, net of cash


-


(124.6)




-


(151.9)



Proceeds from business and asset sales


0.3


30.9




2.7


30.9



Dividends paid


(56.1)


(53.3)




(112.1)


(106.3)



Repurchase of common stock, net


(35.3)


(0.3)




(56.9)


(7.0)



Additions (payments) to debt, net


(18.5)


22.1




2.4


131.3



Other


(15.5)


7.1




(15.9)


4.4



Increase (Decrease) in Cash & Equivalents


$ (57.4)


$ (102.2)




$ (91.8)


$ (117.3)
















FINANCIAL POSITION


Jun 30,


Dec 31,









(In millions)


2022


2021


Change







Cash and equivalents


$ 269.9


$ 361.7









Receivables


722.6


651.5









Inventories


1,026.9


993.2









Other current assets


72.4


58.9









Total current assets


2,091.8


2,065.3


1 %







Net fixed assets


750.4


781.5









Operating lease right-of-use assets


189.3


192.6









Goodwill


1,430.4


1,449.6









Intangible assets and deferred costs, both at net


768.7


818.3









TOTAL ASSETS


$ 5,230.6


$ 5,307.3


(1) %







Trade accounts payable


$ 602.0


$ 613.8









Current debt maturities


301.3


300.6









Current operating lease liabilities


44.8


44.5









Other current liabilities


383.3


376.8









Total current liabilities


1,331.4


1,335.7


— %







Long-term debt


1,789.5


1,789.7


— %







Operating lease liabilities


149.5


153.0









Deferred taxes and other liabilities


345.6


380.3









Equity


1,614.6


1,648.6


(2) %







Total Capitalization


3,899.2


3,971.6


(2) %







TOTAL LIABILITIES & EQUITY


$ 5,230.6


$ 5,307.3


(1) %

































LEGGETT & PLATT


Page 6 of 7






August 1, 2022

SEGMENT RESULTS 1


SECOND QUARTER


YEAR TO DATE

(In millions)


2022


2021


Change


2022


2021


Change

Bedding Products













Trade sales


$ 612.5


$ 608.7


1 %


$ 1,251.9


$ 1,144.5


9 %

EBIT


69.1


100.4


(31) %


145.3


164.2


(12) %

EBIT margin


11.3 %


16.5 %


-520 bps

2

11.6 %


14.3 %


-270 bps

Gain on sale of real estate


-


(28.2)




-


(28.2)



Adjusted EBIT


69.1


72.2


(4) %


145.3


136.0


7 %

Adjusted EBIT margin


11.3 %


11.9 %


-60 bps


11.6 %


11.9 %


-30 bps

Depreciation and amortization


26.2


26.4




52.4


52.5



EBITDA


95.3


98.6


(3) %


197.7


188.5


5 %

EBITDA margin


15.6 %


16.2 %


-60 bps


15.8 %


16.5 %


-70 bps














Specialized Products













Trade sales


$ 260.1


$ 241.7


8 %


$ 524.2


$ 499.3


5 %

EBIT


21.4


27.4


(22) %


41.7


62.6


(33) %

EBIT margin


8.2 %


11.3 %


-310 bps


8.0 %


12.5 %


-450 bps

Depreciation and amortization


9.9


12.2




20.7


23.3



EBITDA


31.3


39.6


(21) %


62.4


85.9


(27) %

EBITDA margin


12.0 %


16.4 %


-440 bps


11.9 %


17.2 %


-530 bps














Furniture, Flooring & Textile Products













Trade sales


$ 461.6