Leggett & Platt Reports Record 2Q Sales

• 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%
  • Volume was down 6%, primarily from demand softness in residential end markets, partially offset by growth in industrial end markets and Automotive
  • Raw material-related selling price increases added 13% to sales
  • Currency impact decreased sales 2%
• 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
  • Volume is expected to be down low-to-mid single digits:
    • Down low double digits in Bedding Products Segment
    • Up low double digits in Specialized Products Segment
    • Roughly flat in Furniture, Flooring & Textile Products Segment
  • Raw material-related price increases, net of currency impact, expected to add sales growth
  • Small acquisitions completed in 2021 are expected to mostly offset divestitures
• EPS is expected to be $2.65–$2.80
• Based on this framework, EBIT margin should be 10.5% to 10.7%
• Additional expectations:
  • Depreciation and amortization $200 million
  • Net interest expense $80 million
  • Effective tax rate 23%
  • Operating cash flow $550–600 million
  • Capital expenditures $130 million
  • Dividends $230 million
  • Fully diluted shares 137 million
• Prior Guidance:
  • Sales: $5.3–$5.6 billion
  • EPS: $2.70–$3.00
  • Operating cash flow approximately $600 million
  • Capital expenditures $150 million

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

Bedding Products –

• Trade sales increased 1%
  • Volume decreased 15%, primarily from demand softness in U.S. and European bedding markets partially offset by strong trade demand in our Steel Rod and Drawn Wire businesses
  • Raw material-related selling price increases added 16%
  • Currency impact decreased sales 1%
  • Acquisitions, net of divestitures, added 1% to sales growth
    • The Kayfoam acquisition completed in June 2021 contributed 2% to sales
    • Divestitures of small operations in Drawn Wire and International Bedding decreased sales by 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%
  • Volume was up 11%, driven by sales growth in Automotive, Aerospace, and Hydraulic Cylinders
  • Raw material-related price increases added 3%
  • Currency impact decreased sales 6%
• 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%
  • Volume was down 2% with declines in Home Furniture, Textiles, and Flooring partially offset by growth in Work Furniture
  • Raw material-related selling price increases added 13%
  • Currency impact decreased sales 1%
• EBIT increased $7 million, primarily from pricing discipline partially offset by lower volume

For the complete press release, click here.

Contact:

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

Source: Leggett & Platt, Incorporated