Leggett & Platt Reports 3Q Results

• 3Q sales were $1.29 billion, a 2% decrease vs 3Q21
• 3Q EBIT of $113 million, down $31 million vs 3Q21
• 3Q EPS of $.52, a decrease of $.19 vs 3Q21
• 2022 guidance unchanged from October 10 announcement: sales of $5.1–$5.2 billion; EPS of $2.30–$2.45

Diversified manufacturer Leggett & Platt reported third quarter sales of $1.29 billion, a 2% decrease versus third quarter last year.

• Organic sales¹ were down 3%
  • Volume was down 8%, primarily from continued demand softness in residential end markets, partially offset by growth in automotive and industrial end markets
  • Raw material-related selling price increases added 8% to sales
  • Currency impact decreased sales 3%
• Previously announced Hydraulic Cylinders and Textile acquisitions completed in August, net of small divestitures, added 1% to sales

Third quarter EBIT was $113 million, down $31 million from third quarter 2021.

• EBIT decreased primarily from lower volume, lower overhead absorption from reduced production, and operational inefficiencies in Specialty Foam, partially offset by metal margin expansion
• EBIT margin was 8.7%, down from 10.9% in the third quarter of 2021

Third quarter EPS was $.52. EPS decreased $.19 versus third quarter 2021 primarily reflecting lower EBIT. 

CEO Comments

President and CEO Mitch Dolloff commented, “The current global economic environment and its effect on the consumer negatively impacted our third quarter results. As anticipated, we continue to experience demand and margin recovery in our Specialized Products segment. The U.S. bedding market remains fairly stable but at relatively weak levels, and we began to see slowing in other markets such as European bedding, home furniture, work furniture, and steel. As a result of these lower demand levels and the increasingly challenging macroeconomic environment, we lowered our full year guidance on October 10th.

“Third quarter earnings per share were slightly better than expected primarily due to incentive compensation adjustments. At the midpoint of guidance, fourth quarter is now expected to be slightly lower than third quarter primarily due to further reductions in steel rod production in response to the slowing steel market.

“We continue to focus on things we can control and are taking action to mitigate the impact of these challenges by aligning costs, production levels, and inventory with demand; evaluating near-term opportunities with our customers and working with them on new product developments; and continuing to build out our existing businesses through acquisitions. Our strong balance sheet and cash flow give us confidence in our ability to navigate challenging markets while investing in long-term opportunities.”

Debt, Cash Flow, and Liquidity

• Net Debt² was 2.63x trailing 12-month adjusted EBITDA²
• Operating cash flow was $65 million in the third quarter, an increase of $15 million versus third quarter 2021, reflecting a smaller use of working capital partially offset by lower earnings
• Capital expenditures were $25 million
• Total liquidity was $1.0 billion

Dividend

• In August, Leggett & Platt’s Board of Directors declared a $.44 per share third quarter dividend, two cents higher than last year’s third quarter dividend
• At an annual indicated dividend of $1.76 per share, the yield is 5.3% based upon Friday’s closing stock price of $33.42 per share

Stock Repurchases

• Repurchased .1 million shares at an average price of $38.42
• Issued .05 million shares through employee benefit plans
• Shares outstanding at the end of the third quarter were 132.6 million

2022 Guidance

• Full year 2022 sales and EPS guidance unchanged from October 10 announcement
• Sales are expected to be $5.1–$5.2 billion, roughly flat to +2% versus 2021
  • Volume is expected to be down high single digits:
    • Down mid-teens in Bedding Products Segment
    • Up low double digits in Specialized Products Segment
    • Down low single digits in Furniture, Flooring & Textile Products Segment
  • Raw material-related price increases, net of currency impact, expected to mostly offset volume declines
  • Acquisitions, net of small divestitures, expected to add ~1% to sales
• EPS is expected to be $2.30–$2.45
• Based on this framework, EBIT margin should be 9.5% to 10.0%
• Additional expectations:
  • Depreciation and amortization $180 million
  • Net interest expense $80 million
  • Effective tax rate 23%
  • Operating cash flow $400–$450 million
  • Capital expenditures $115 million
  • Dividends $230 million
  • Fully diluted shares 137 million
• Implied 4Q Guidance:
  • Sales: $1.15–$1.25 billion
  • EPS: $.42–$.57

Segment Results – Third Quarter 2022 (versus 3Q 2021)

Bedding Products –

• Trade sales decreased 12%
  • Volume decreased 20% from continued demand softness in U.S. and European bedding markets partially offset by trade sales growth in our Steel Rod and Drawn Wire businesses
  • Raw material-related selling price increases added 9%
  • Currency impact decreased sales 1%
• EBIT decreased $37 million, primarily from lower volume, lower overhead absorption as production and inventory levels were adjusted to meet reduced demand, and operational inefficiencies in Specialty Foam. These decreases were partially offset by higher metal margin.

Specialized Products –

• Trade sales increased 24%
  • Volume was up 22%, driven by sales growth in Automotive, Aerospace, and Hydraulic Cylinders
  • Raw material-related price increases added 5%
  • Currency impact decreased sales 8%
  • Hydraulic Cylinders acquisition completed on August 26 added 5% to sales growth
• EBIT increased $9 million, primarily from higher volume partially offset by currency impact, higher raw material costs, and labor inefficiencies

Furniture, Flooring & Textile Products –

• Trade sales were flat
  • Volume was down 6% with declines in Home Furniture, Fabric Converting, and Flooring partially offset by growth in Geo Components and Work Furniture
  • Raw material-related selling price increases added 7%
  • Currency impact decreased sales 1%
• EBIT decreased $3 million, primarily from lower volume partially offset by pricing discipline

For the complete press release, click here.

About Leggett & Platt

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.

Contact:

Susan R. McCoy – Senior Vice President Investor Relations – invest@leggett.com – (417) 358-8131

Source: Leggett & Platt, Incorporated