Leggett & Platt Reports Record 1Q EBIT and EPS; Increases 2Q Dividend
–1Q sales increased 10% vs 1Q20, to $1.151 billion
–1Q EPS was a first quarter record $.64, an increase of $.31 vs 1Q20 and an increase of $.24 vs adjusted1 EPS in 1Q20
–Board of Directors increased second quarter dividend $.02 to $.42 per share
–Increased 2021 guidance: sales of $4.8–$5.0 billion and EPS of $2.55–$2.75
–Changed methodology for valuing domestic steel-related inventory from LIFO to FIFO
Diversified manufacturer Leggett & Platt reported first quarter 2021 sales of $1.151 billion, a 10% increase versus first quarter last year.
Organic sales were up 11%
–Volume was up 4%; strong demand in residential end markets and Automotive was partially offset by weakness in Aerospace
–Raw material-related selling price increases of 5% and currency benefit of 2% added to sales growth
Divestitures reduced sales by 1% (small operations in Drawn Wire and former Fashion Bed business)
First quarter EBIT was $128 million, a first quarter record. EBIT increased $49 million or 62% from first quarter 2020, and up $37 million or 41% from first quarter 2020 adjusted1 EBIT.
–EBIT benefited primarily from volume growth, lower fixed costs, and the non-recurrence of an $8 million impairment charge related to a note receivable and a $4 million charge to write off stock associated with a prior year divestiture in first quarter 2020
–Fixed cost reductions implemented in 2020 reduced 1Q 2021 costs by approximately $20 million
–EBIT margin was 11.1%, up from 7.5% in the first quarter of 2020 and up from an adjusted1 EBIT margin of 8.7% in that same period
First quarter EPS was $.64, also a first quarter record. EPS increased $.31 versus first quarter 2020 and $.24 versus adjusted1 EPS in first quarter 2020. Improved EBIT was the primary driver of the increase, augmented by a lower tax rate ($.02 per share) and lower interest expense ($.01 per share).
Effective January 1, 2021, the Company changed its accounting methodology for valuing its domestic steel-related inventory from a last-in, first-out (LIFO) basis to a first-in, first-out (FIFO) basis. All prior periods presented have been retrospectively adjusted to apply the effects of the change.
Chairman and CEO Karl Glassman commented, “We had a very strong start to the year, delivering better-than-expected first quarter results thanks to the efforts of an incredible team of more than 20,000 employees who remain focused on servicing our customers and keeping each other safe. We generated record first quarter EBIT, EBITDA, and EPS. Our results demonstrate our agility and resilience in dealing with inflationary pressure and supply chain constraints. Strong demand combined with our disciplined cost control provides us confidence to raise our full year guidance.
“We are also very pleased to be increasing our dividend for the 50th consecutive year, honoring our ongoing commitment to return value to our shareholders. As a result of this commitment over many decades, next year we will become a member of a select group of companies referred to as Dividend Kings.
“Lastly, we’re proud to have issued our inaugural Sustainability Report last month, which signifies our commitment to further enhance responsible environmental, social, and governance (ESG) practices across our global operations.”
Debt, Cash Flow, and Liquidity
–Net Debt was 2.46x trailing 12-month adjusted1 EBITDA
–Operating cash flow was a negative $11 million in the first quarter, a decrease of $21 million versus first quarter 2020, primarily from working capital investments to support growth and inflationary impact, which more than offset higher earnings
–Capital expenditures were $24 million
–Total liquidity was $1.4 billion
–The Company’s Board of Directors increased second quarter dividend to $.42
–Dividend will be paid on July 15, 2021 to shareholders of record on June 15, 2021
–At an annual indicated dividend of $1.68 per share, the yield is 3.4% based upon Friday’s closing stock price of $49.67 per share, one of the higher yields among the S&P 500 Dividend Aristocrats
–Increased full year 2021 guidance
–Sales are expected to be $4.8–$5.0 billion, +12% to 17% versus 2020
–Volume expected to grow mid-to-high-single digits
–Raw material-related price increases and currency benefit expected to add sales growth
–Small acquisitions expected to be largely offset by prior year divestitures
–EPS is expected to be $2.55–$2.75
–Reflects higher volume and higher metal margin
–Excludes potential gain from real estate sale that may occur as early as 2Q
–Based on this guidance framework, EBIT margin should be 11.0% to 11.5%
–Additional guidance expectations:
–Depreciation and amortization $195 million
–Net interest expense $75 million
–Effective tax rate 23%
–Fully diluted shares 137 million
–Operating cash flow approximately $500 million
–Capital expenditures $150 million
–Dividends $220 million
–Sales: $4.6–$4.9 billion
Segment Results – First Quarter 2021 (versus 1Q 2020)
–Trade sales increased 9%
–Volume increased 2%, primarily from growth in ECS, European Spring, and U.S. Spring
–Raw material-related selling price increases added 9%
–Currency benefit increased sales 1%
–Divestitures reduced sales by approximately 3% (small operations in Drawn Wire and former Fashion Bed business)
–EBIT increased $36 million, primarily from volume growth, higher metal margin, lower fixed costs, a reduction of bad debt expense, and the non-recurrence of an $8 million impairment charge related to a note receivable in first quarter 2020
–Trade sales increased 10%
–Volume increased 3%; growth in Automotive and Hydraulic Cylinders was partially offset by weak demand in Aerospace
–Currency benefit increased sales 6%
–An Aerospace acquisition completed in January 2021 added 1% to sales
–EBIT increased $8 million, primarily from volume growth in Automotive and lower fixed costs, partially offset by lower volume in Aerospace
Furniture, Flooring & Textile Products
–Trade sales increased 12%
–Volume increased 8%, driven by strong demand in Geo Components, Home Furniture, and Flooring Products’ residential business
–Raw material-related selling price increases added 3%
–Currency benefit increased sales 1%
–EBIT increased $2 million, primarily from volume growth and lower fixed costs, partially offset by pricing lag associated with passing along higher raw material costs
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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 138-year-old Company is comprised of 15 business units, 20,000 employee-partners, and 135 manufacturing facilities located in 17 countries. Leggett & Platt is a member of the S&P 500 and the S&P 500 Dividend Aristocrats, and is one of Fortune’s World’s Most Admired Companies.
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.
Susan R. McCoy – Senior Vice President Investor Relations – email@example.com – (417) 358-8131
Source: Leggett & Platt, Incorporated