Leggett & Platt Reports 3Q23 Results

President and CEO Mitch Dolloff commented, “I would like to thank our employees for their tremendous efforts in what was another challenging quarter. Ongoing weak demand impacted our Bedding Products and Furniture, Flooring, & Textile Products segments but was partially offset by continued demand strength in our Specialized Products segment.

• 3Q sales of $1.18 billion, a 9% decrease vs 3Q22
• 3Q EPS of $.39, a decrease of $.13 vs 3Q22; 3Q adjusted¹ EPS of $.36, down $.16 vs 3Q22
• 3Q cash from operations of $144 million, a $78 million increase vs 3Q22
• 2023 guidance lowered: sales of $4.7–$4.75 billion; EPS of $1.45–$1.55, adjusted¹ EPS of $1.35–$1.45

“We are lowering our full year guidance to reflect continued volatility in the macroeconomic environment, continued low consumer demand in residential end markets, and the modest impact we have experienced so far from the UAW strike on several North American automakers. The UAW strike had minimal impact on our Automotive business in the third quarter. So far in the fourth quarter, the sales impact has been approximately $5 million, which may not be indicative of future impacts. Due to uncertainties around the duration and severity of the strike, our updated full year guidance does not include impacts beyond what we have experienced so far.

“We are focused on anticipating and adapting to market changes, improving operating efficiency, driving strong cash management, and engaging with our customers on new product opportunities. We are evaluating opportunities across our businesses, including further integration of our specialty foam and innerspring operations, that are expected to support improved profitability, a strong balance sheet, and continued shareholder returns.”   

Third Quarter Results

Third quarter sales were $1.18 billion, a 9% decrease versus third quarter last year.

• Organic sales² were down 11%
  • Volume was down 6%, primarily from demand softness in domestic residential end markets, partially offset by growth in our Aerospace and Automotive businesses
  • Raw material-related selling price decreases, net of currency benefit, reduced sales 5%
• Acquisitions increased sales 2%

Third quarter EBIT was $91 million, down $22 million or 19% from third quarter 2022 EBIT, and adjusted¹ EBIT was $86 million, a $27 million decrease.

• EBIT and adjusted¹ EBIT decreased primarily from lower metal margin in our Steel Rod business and lower volume in residential end markets. These decreases were partially offset by lower incentive compensation and lower bad debt expense.
  • 3Q 2023 adjustment is for a $5 million gain from a real estate sale within our Bedding segment
• EBIT margin was 7.8% and adjusted¹ EBIT margin was 7.3%, down from 8.7% in the third quarter of 2022

Third quarter EPS was $.39, a $.13 decrease versus third quarter 2022 EPS. Third quarter adjusted¹ EPS was $.36, down $.16 versus third quarter 2022 EPS.

Debt, Cash Flow, and Liquidity

• Net Debt¹ was 3.15x trailing 12-month adjusted EBITDA¹
• Debt at September 30
  • Total debt of $2.0 billion, including $171 million of commercial paper outstanding
  • No significant maturities until November 2024
• Operating cash flow was $144 million in the third quarter, an increase of $78 million versus third quarter 2022, reflecting working capital improvements partially offset by lower earnings
• Capital expenditures were $22 million
• Total liquidity was $595 million at September 30
  • $274 million cash on hand
  • $321 million in capacity remaining under revolving credit facility

Dividend

• In August, Leggett & Platt’s Board of Directors declared a $.46 per share third quarter dividend, two cents higher than last year’s third quarter dividend

Stock Repurchases

• Net issuances of .1 million shares through employee benefit plans
• Shares outstanding at the end of the third quarter were 133.3 million

2023 Guidance

• Full year 2023 sales and EPS guidance lowered. Guidance does not include impacts from the UAW strike beyond what we have experienced so far due to uncertainties around the duration and severity of the strike.
• Sales are expected to be $4.7–$4.75 billion, -8% to -9% versus 2022
  • Volume at the midpoint expected to be down mid-single digits:
    • Down high single digits in Bedding Products Segment
    • Up high single digits in Specialized Products Segment
    • Down low double 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 ~2% to sales
• EPS is expected to be $1.45–$1.55
  • Decrease is primarily from lower expected volume in our Furniture, Flooring & Textile Products and Bedding Products segments
  • Includes anticipated gain from net insurance proceeds from tornado damage of ~$.07 per share and gain on the sale of real estate of $.03 per share
• Adjusted EPS is expected to be $1.35–$1.45
• Based on this framework, EBIT margin should be 7.4%–7.7%; adjusted EBIT margin should be 7.0%–7.3%
• Additional expectations:
  • Depreciation and amortization $185 million
  • Net interest expense $85 million
  • Effective tax rate 24%
  • Fully diluted shares 137 million
  • Operating cash flow $450–$500 million
  • Capital expenditures $110–$130 million
  • Dividends $240 million
  • Minimal acquisitions and share repurchases
• Implied 4Q Guidance:
  • Sales: $1.09–$1.14 billion
  • EPS: $.27–$.37
  • Adjusted EPS: $.22–$.32
• Prior Full Year Guidance:
  • Sales: $4.75–$4.95 billion
  • EPS: $1.50–$1.70
  • Adjusted EPS: $1.45–$1.65

Segment Results – Third Quarter 2023 (versus 3Q 2022)

Bedding Products –

• Trade sales decreased 17%
  • Volume decreased 8%, primarily due to demand softness in domestic markets
  • Raw material-related selling price decreases reduced sales 10%
  • Currency benefit increased sales 1%
• EBIT decreased $13 million, primarily from lower metal margin and lower volume, partially offset by a $5 million gain from a real estate sale

Specialized Products –

• Trade sales increased 10%
  • Volume increased 3% from growth in Aerospace and Automotive
  • Raw material-related selling price decreases were offset by currency benefit
  • Hydraulic Cylinders acquisition completed in August 2022 added 7%
• EBIT was flat on higher sales primarily offset by consolidation costs at an Automotive facility and the lag associated with passing through raw material-related pricing changes in Hydraulic Cylinders

Furniture, Flooring & Textile Products –

• Trade sales decreased 11%
  • Volume decreased 11%, with declines across the segment
  • Raw material-related selling price decreases, net of currency benefit, reduced sales 3%
  • Textiles acquisitions added 3%
• EBIT decreased $9 million, primarily from lower volume

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