LEGGETT & PLATT, INCORPORATED CARTHAGE, Mo., Oct. 22, 2014 /PRNewswire/ --
-- 3Q adjusted EPS from continuing operations was a record $.51, a 31%
increase versus last year
-- 3Q sales from continuing operations grew 14% versus last year
-- Store Fixtures business unit now classified as a discontinued operation
-- Raising low end of EPS guidance; now expect 2014 adjusted EPS of
$1.75-1.85
Diversified manufacturer Leggett & Platt reported record third quarter adjusted EPS(1 )of $.51 from continuing operations, a 31% increase compared to $.39 in the prior year. The EPS increase reflects sales growth, a lower tax rate, and reduced share count.
Third quarter EPS, unadjusted, was $.34, including the $40 million(2) foam litigation settlement expense announced in August. Third quarter 2013 EPS was $.49, including discontinued operations and an unusual acquisition-related gain.
Third Quarter Year-to-Date
EPS, $/share: 2014 2013 Change 2014 2013 Change
------------- ---- ---- ------ ---- ---- ------
Continuing Operations, adjusted .51 .39 31% 1.37 1.12 22%
Acquisition Gain -- .06 -- .06
Foam Litigation Settlement (.14) -- (.14) --
---- --- ---- ---
Continuing Operations .37 .45 1.23 1.18
Discontinued Operations,
adjusted .00 .04 (.01) .12
Goodwill Impairment -- -- (.65)
--
Foam Litigation Settlement (.03) -- (.03)
--
---
EPS, as reported .34 .49 .54
1.30
Net Trade Sales, Continuing
Ops, $m 997 878 14% 2,829 2,618 8%
Third quarter 2014 sales from continuing operations grew 14% versus the prior year, the strongest quarterly sales growth achieved since 2011. Same location sales improved 9% due to strong volume gains in most of the company's residential markets (including bedding, adjustable beds, home furniture, geo components, fabric converting, and carpet underlay), and also in the automotive markets. Acquisitions contributed 5% to sales.
Year-to-date adjusted EPS from continuing operations was $1.37, a 22% improvement over comparable 2013 EPS of $1.12. Year-to-date EPS, with no adjustments, declined to $.54 in 2014, from $1.30 in 2013, but includes several unusual items. As shown in the table above, 2014 EPS reflects the second quarter noncash goodwill impairment charge, the third quarter foam litigation settlement expense, and a small loss in discontinued operations. 2013 EPS includes earnings from discontinued operations and the unusual acquisition-related gain.
CEO Comments
Board Chair and CEO David S. Haffner commented, "We're very pleased that continuing operations have generated 8% sales growth year-to-date, which significantly exceeds our 4-5% annual growth target. The rate of growth has improved from 2% in the first quarter, to 9% in the second quarter, to 14% in the third quarter. For the last two quarters we've seen strong broad based growth across the bulk of the company.
"As a result, earnings have improved meaningfully. Adjusted EPS for continuing operations increased 31% in the third quarter, and 22% year-to-date. Adjusted EBIT margin for continuing operations was 10.7% in the third quarter, and 10.4% year-to-date.
"A major component of our strategy, since 2007, has been the optimization of our portfolio of businesses. We remain committed to improving or exiting businesses that consistently underperform our margin and return on capital expectations. Accordingly, we now classify our Store Fixtures business unit as a discontinued operation. Prior financial results have been adjusted to reflect continuing operations.
"We continue to place a priority on maintaining our strong financial base. At quarter's end we had nearly $450 million available under our existing commercial paper program. We ended the quarter with net debt to net capital at 34.8%, a modest decrease versus last quarter and comfortably in the middle of our long-term 30%-40% target range.
"Since 2007, our primary financial goal has been to consistently rank in the top third of the S&P 500 companies for Total Shareholder Return (TSR(3)) as measured over rolling 3-year periods. For the three year period that began January 1, 2012, we have generated TSR of 22% per year (over the last 34 months), which places us above the midpoint of the S&P 500 companies, but shy of the top third.
"Given our sales growth, in 2014 we expect to again post record adjusted EPS from continuing operations for the full year. And as we look beyond 2014, we are encouraged by the positive momentum of several businesses including Automotive, Bedding, Home Furniture, and Aerospace."
Dividends and Stock Repurchases
In August, Leggett & Platt's Board of Directors increased the quarterly dividend by one cent, or 3%, to $.31. Thus, 2014 marks the 43(rd) consecutive annual dividend increase for the company, at a compound annual growth rate of 13%. Only one other S&P 500 company can claim as high a rate of dividend growth for as many years.
At yesterday's closing share price of $35.64, the indicated annual dividend of $1.24 per share generates a dividend yield of 3.5%, one of the highest dividend yields among the 54 stocks of the S&P 500 Dividend Aristocrats.
During the third quarter the company purchased 0.8 million shares of its stock at an average price of $34.62. Year-to-date, the company has purchased 4.7 million shares and issued 2.9 million shares (largely from option exercises). Shares outstanding have decreased by 1.8 million in 2014, or 1.3%, to 137.6 million.
2014 Guidance
Sales guidance for 2014 remains unchanged, except that Store Fixtures is now classified as a discontinued operation. For continuing operations, sales guidance is unchanged at $3.70-3.80 billion. This represents a 6-9% increase versus $3.48 billion from continuing operations in 2013, and reflects growth in excess of the company's 4-5% target.
The company is increasing the low end of its EPS guidance range by $.05. Guidance for 2014 adjusted EPS (including discontinued operations) is now $1.75-1.85; prior guidance, issued in April and reaffirmed in July, was $1.70-1.85. Including the $.65 goodwill impairment and $.17 foam litigation settlement, the company now projects 2014 EPS of $.93-1.03.
Cash from operations in 2014 should again exceed $350 million. Capital expenditures are expected to be about $100 million, and dividend payments should approximate $170 million.
As has been the company's practice, after funding dividends and capital expenditures, any remaining cash flow will likely be targeted toward acquisitions or stock repurchases. For the full year 2014, the company anticipates the purchase of approximately 5 million shares, and the issuance of approximately 3 million shares via employee benefit plans. Share purchases and issuances in the fourth quarter may be relatively modest, since target levels of purchase and issuance for 2014 have nearly already been attained. No specific repurchase commitment has been established; however, the company has standing authorization from the Board of Directors to repurchase up to 10 million shares each year.
SEGMENT RESULTS - Third Quarter 2014 (versus the same period in 2013)
Residential Furnishings - Total sales increased $96 million, or 19%. Same location sales grew 11%, with unit volume growth in most product categories. Acquisitions contributed the remainder of the sales growth. EBIT (earnings before interest and income taxes) decreased $14 million as higher sales and a $2 million hurricane-related insurance gain were more than offset by a $32 million foam litigation expense.
Commercial Fixturing & Components - Total sales increased $1 million, or 2%. EBIT was flat.
Industrial Materials - Total sales increased $18 million, or 9%. Same location sales improved 7%, and acquisitions contributed 2%. EBIT increased $2 million due to higher sales.
Specialized Products - Total sales increased $27 million, or 14%, due to strong demand for the company's automotive components and higher machinery sales. EBIT increased $6 million, with the earnings impact of higher sales partially offset by a $3 million litigation accrual.
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 8:00 a.m. Central (9:00 a.m. Eastern) on Thursday, October 23. The webcast can be accessed (live or replay) from Leggett's website. The dial-in number is (201) 689-8341; there is no passcode.
Fourth quarter results will be released after the market closes on Thursday, January 29, with a conference call the next morning.
FOR MORE INFORMATION: Visit Leggett's website at www.leggett.com.
COMPANY DESCRIPTION: For over 130 years Leggett & Platt (NYSE: LEG) has been making people's lives more comfortable as a diversified manufacturer that designs and produces engineered products found in most homes and automobiles. Continuing Operations are comprised of 18 business units, 19,000 employee-partners, and 130 manufacturing facilities located in 18 countries.
Leggett & Platt is the leading U.S. manufacturer of: a) components for residential furniture and bedding; b) work furniture and components; c) drawn steel wire; d) automotive seat support & lumbar systems; e) carpet underlay; f) adjustable bed bases; 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 improve operations and realize cost savings, price and product competition from foreign and domestic competitors, 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
1 To
aid
investors'
awareness
of
underlying
operational
profitability,
3Q
2014
adjusted
EPS
from
continuing
operations
excludes
the
foam
litigation
settlement
expense,
and
3Q
2013
excludes
the
gain
related
to
an
acquisition.
2 $32 million recorded in continuing operations; $8 million recorded in discontinued operations.
(3)TSR
=
(Change
in
Stock
Price
+
Dividends)
/
Beginning
Stock
Price;
assumes
dividends
are
reinvested
LEGGETT & PLATT October 22, 2014
----------------
RESULTS OF OPERATIONS (1) THIRD QUARTER YEAR TO DATE
------------------------ ------------- ------------
(In millions, except per share
data) 2014 2013 Change 2014 2013 Change
------------------------------ ---- ---- ------ ---- ---- ------
Net sales (from continuing
operations) $997.4 $877.6 14% $2,829.0 $2,618.0 8%
Cost of goods sold 788.3 698.0 2,242.4 2,073.2
----- ----- ------- -------
Gross profit 209.1 179.6 586.6 544.8
Selling & administrative expenses 131.4 85.4 54% 317.6 276.8 15%
Amortization 4.9 5.3 14.5 16.1
Other expense (income), net (2.6) (10.5) (8.9) (17.5)
---- ----- ---- -----
Earnings before interest and taxes 75.4 99.4 (24%) 263.4 269.4 (2%)
Net interest expense 8.9 8.9 26.9 28.1
--- --- ---- ----
Earnings before income taxes 66.5 90.5 236.5 241.3
Income taxes 13.1 24.0 57.5 65.5
---- ---- ---- ----
Net earnings from continuing
operations 53.4 66.5 179.0 175.8
Discontinued operations, net of
tax (4.4) 5.5 (99.4) 17.6
---- --- ----- ----
Net earnings 49.0 72.0 79.6 193.4
Less net income from non-
controlling interest 0.8 0.7 2.2 1.7
--- --- --- ---
Net earnings attributable to L&P $48.2 $71.3 (32%) $77.4 $191.7 (60%)
===== ===== ===== ======
Earnings per diluted share
From continuing operations $0.37 $0.45 (18%) $1.23 $1.18 4%
From discontinued operations ($0.03) $0.04 ($0.69) $0.12
Net earnings per diluted share $0.34 $0.49 (31%) $0.54 $1.30 (58%)
Shares outstanding
Common stock (at end of period) 137.6 141.2 137.6 141.2
Basic (average for period) 140.7 144.9 141.5 145.6
Diluted (average for period) 142.5 147.0 143.2 147.7
CASH FLOW THIRD QUARTER YEAR TO DATE
--------- ------------- ------------
(In millions) 2014 2013 Change 2014 2013 Change
------------ ---- ---- ------ ---- ---- ------
Net earnings $49.0 $72.0 $79.6 $193.4
Depreciation and amortization 29.2 29.2 87.6 88.3
Working capital decrease
(increase) 67.2 21.3 (59.1) (75.6)
Impairments 0.0 0.0 109.1 2.3
Other operating activity (13.1) (6.9) (1.5) 30.4
----- ---- ---- ----
Net Cash from Operating Activity $132.3 $115.6 14% $215.7 $238.8 (10%)
Additions to PP&E (24.6) (18.1) (63.0) (60.0) 5%
Purchase of companies, net of cash (19.0) (16.4) (70.2) (26.5)
Proceeds from asset sales 2.2 2.4 12.0 16.8
Dividends paid (41.2) (41.2) (124.9) (82.6)
Repurchase of common stock, net (3.2) (28.4) (112.5) (78.1)
Additions (payments) to debt, net (104.9) (18.7) 132.8 (92.0)
Liquidation of unconsolidated
entity 0.0 21.2 0.0 21.2
Other (2.9) 2.2 (19.7) 2.2
---- --- ----- ---
Increase (Decr.) in Cash & Equiv. $(61.3) $18.6 $(29.8) $(60.2)
====== ===== ====== ======
FINANCIAL POSITION 30-Sep
------------------ ------
(In millions) 2014 2013 Change
------------ ---- ---- ------
Cash and equivalents $242.9 $298.9
Receivables 584.4 574.7
Inventories 476.5 488.9
Held for sale 66.6 0.0
Other current assets 64.6 45.4
---- ----
Total current assets 1,435.0 1,407.9 2%
Net fixed assets 546.6 579.9
Held for sale 49.7 16.9
Goodwill and other assets 1,153.4 1,300.4
------- -------
TOTAL ASSETS $3,184.7 $3,305.1 (4%)
======== ========
Trade accounts payable $356.9 $326.2
Current debt maturities 381.6 1.1
Held for sale 21.5 0.0
Other current liabilities 384.4 311.5
----- -----
Total current liabilities 1,144.4 638.8 79%
Long term debt 619.2 957.5 (35%)
Deferred taxes and other
liabilities 192.5 245.1
Equity 1,228.6 1,463.7 (16%)
------- -------
Total Capitalization 2,040.3 2,666.3
TOTAL LIABILITIES & EQUITY $3,184.7 $3,305.1
======== ========
LEGGETT & PLATT
SEGMENT RESULTS (1) THIRD QUARTER YEAR TO DATE
------------------ ------------- ------------
(In millions) 2014 2013 Change 2014 2013 Change
---- ---- ------ ---- ---- ------
External Sales
--------------
Residential Furnishings $594.5 $500.3 18.8% $1,609.5 $1,470.0 9.5%
Commercial Fixturing & Components 49.1 48.1 2.1% 143.4 137.8 4.1%
Industrial Materials 151.5 150.7 0.5% 471.1 466.1 1.1%
Specialized Products 202.3 178.5 13.3% 605.0 544.1 11.2%
Total $997.4 $877.6 13.6% $2,829.0 $2,618.0 8.1%
====== ====== ==== ======== ======== ===
Inter-Segment Sales
-------------------
Residential Furnishings $10.0 $8.3 $29.8 $14.2
Commercial Fixturing & Components 1.1 1.2 3.2 3.1
Industrial Materials 72.8 55.3 187.0 179.8
Specialized Products 16.8 13.5 43.2 42.6
Total $100.7 $78.3 $263.2 $239.7
====== ===== ====== ======
Total Sales
-----------
Residential Furnishings $604.5 $508.6 18.9% $1,639.3 $1,484.2 10.5%
Commercial Fixturing & Components 50.2 49.3 1.8% 146.6 140.9 4.0%
Industrial Materials 224.3 206.0 8.9% 658.1 645.9 1.9%
Specialized Products 219.1 192.0 14.1% 648.2 586.7 10.5%
Total $1,098.1 $955.9 14.9% $3,092.2 $2,857.7 8.2%
======== ====== ==== ======== ======== ===
EBIT
----
Residential Furnishings $32.0 $46.3 (31%) $135.6 $129.7 5%
Commercial Fixturing & Components 3.4 3.5 (3%) 9.6 7.6 26%
Industrial Materials 17.5 16.0 9% 42.3 59.0 (28%)
Specialized Products 27.8 21.6 29% 87.7 65.3 34%
Intersegment eliminations and
other (4.1) 8.1 (10.2) (0.4)
Change in LIFO reserve (1.2) 3.9 (1.6) 8.2
Total $75.4 $99.4 (24%) $263.4 $269.4 (2%)
===== ===== ==== ====== ====== ===
EBIT Margin (2) Basis Pts Basis Pts
-------------- --------- ---------
Residential Furnishings 5.3% 9.1% (380) 8.3% 8.7% (40)
Commercial Fixturing & Components 6.8% 7.1% (30) 6.5% 5.4% 110
Industrial Materials 7.8% 7.8% 0 6.4% 9.1% (270)
Specialized Products 12.7% 11.3% 140 13.5% 11.1% 240
Overall from Continuing Operations 7.6% 11.3% (370) 9.3% 10.3% (100)
=== ==== ==== === ==== ====
LAST SIX QUARTERS 2013 2014
----------------- ---- ----
Selected Figures 2Q 3Q 4Q 1Q 2Q 3Q
---------------- --- --- --- --- --- ---
Trade Sales ($ million) 880 878 859 876 956 997
Sales Growth (vs. prior year) 1% 2% 6% 2% 9% 14%
EBIT ($ million) 92 99 5 86 102 75
Cash from Operations ($ million) 99 116 178 (20) 103 132
EBIT Margin 10.4% 11.3% 0.6% 9.8% 10.7% 7.6%
Adjusted EBIT Margin (3) 10.4% 10.3% 8.4% 9.8% 10.7% 10.7%
EPS -continuing operations
(diluted) $0.40 $0.45 $0.07 $0.38 $0.48 $0.37
Adjusted EPS -continuing ops
(diluted) (3) $0.40 $0.39 $0.38 $0.38 $0.48 $0.51
Net Debt to Net Capitalization
------------------------------
Long term debt 973.9 957.5 688.4 811 926.0 619.2
Current debt maturities 1.8 1.1 181.1 181.4 181.3 381.6
Less cash and equivalents (280.3) (298.9) (272.7) (268.6) (304.2) (242.9)
------ ------ ------ ------ ------ ------
Net Debt 695.4 659.7 596.8 723.8 803.1 757.9
===== ===== ===== ===== ===== =====
Total capitalization 2,648.0 2,666.3 2,278.6 2,387.5 2,378.6 2,040.3
Current debt maturities 1.8 1.1 181.1 181.4 181.3 381.6
Less cash and equivalents (280.3) (298.9) (272.7) (268.6) (304.2) (242.9)
------ ------ ------ ------ ------ ------
Net Capitalization 2,369.5 2,368.5 2,187.0 2,300.3 2,255.7 2,179.0
======= ======= ======= ======= ======= =======
Long Term Debt to Total
Capitalization 36.8% 35.9% 30.2% 34.0% 38.9% 30.3%
Net Debt to Net Capital 29.3% 27.9% 27.3% 31.5% 35.6% 34.8%
Management uses Net Debt to Net Capital to track leverage trends across time periods with variable levels of cash.
Same Location Sales (vs. prior
year) 2Q 3Q 4Q 1Q 2Q 3Q
------------------------------ --- --- --- --- --- ---
Residential Furnishings 3% 6% 6% 2% 9% 11%
Commercial Fixturing & Components 2% 4% (8%) 5% 5% 2%
Industrial Materials (9%) (10%) (4%) (12%) (4%) 7%
Specialized Products 7% 1% 8% 6% 10% 13%
Overall from Continuing Operations 1% 0% 4% 0% 7% 9%
(1)Prior year results have been
restated for discontinued
operations.
(2)Segment margins calculated
on Total Sales. Overall
company margin calculated on
External Sales.
(3)Excludes $9 million ($.06 /
share) gain on acquisition in
3Q 2013, $67 million ($.31 /
share) CVP impairment in 4Q
2013, $32 million ($.14 /
share) foam litigation
settlement in 3Q 2014.
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SOURCE Leggett & Platt
