Leggett & Platt Reports 2Q Results

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.

• 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

“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

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.

Source: Leggett & Platt, Incorporated