Leggett & Platt Reports 4Q and Full Year Results

President and CEO Mitch Dolloff commented, “Leggett & Platt’s diverse portfolio of businesses, strong cash discipline, and the ingenuity and agility of our employees helped deliver solid results in 2022 despite weak demand in residential end markets. As we moved through the year, the dynamic macroeconomic and geopolitical environment pressured our markets and affected our results. We anticipate 2023 to be a challenging year driven by continued economic uncertainty.

“We are focused on improving the things that we can control and continuing to mitigate the impacts of market challenges on our business. We are working with our customers on new product opportunities, continuing our focus on improving operating efficiency, and driving strong cash management. Our financial strength gives us confidence in our ability to successfully navigate challenging markets while investing in long-term opportunities.

“Finally, I would like to thank our dedicated employees for continually making Leggett & Platt a better company. Your collaboration, dedication, and commitment to our values helped us navigate the many recent challenges and obstacles and will help us to capitalize on opportunities in the future.”

FOURTH QUARTER RESULTS

Fourth quarter 2022 sales were $1.2 billion, a 10% decrease versus fourth quarter 2021

• Organic sales³ were down 12%
  • Volume was down 12%, primarily from continued demand softness in residential end markets, partially offset by growth in our Automotive, Aerospace, and Hydraulic Cylinders businesses
  • Negative currency impact of 2% was offset by raw material-related selling price increases of 2%
• Acquisitions, net of divestitures, added 2% to sales

Fourth quarter EBIT was $91 million, down $61 million or 40% from fourth quarter 2021

• EBIT declined primarily from lower volume and lower overhead absorption as we intentionally cut production in our Steel Rod business below demand to reduce inventory levels. These declines were partially offset by metal margin expansion.
• As a result of these impacts and inflation, EBIT margin was 7.6%, down from 11.4% in the fourth quarter of 2021

Fourth quarter EPS was $.39, a $.38 decrease versus fourth quarter 2021 primarily from lower EBIT, higher tax rate ($.02/share), and higher interest expense ($.02/share).

FULL YEAR RESULTS

2022 sales a record¹ $5.15 billion, a 1% increase versus 2021

• Organic³ sales were flat
  • Volume down 7% from demand softness in residential end markets, partially offset by growth in automotive and industrial end markets
  • Raw material-related selling price increases added 9%
  • Currency impact decreased sales 2%
• Acquisitions, net of small divestitures, added 1% to sales

2022 EBIT was $485 million, down $111 million or 19% from 2021, and down $83 million or 15% versus 2021 adjusted² EBIT.

• EBIT decreased primarily from lower volume, lower overhead absorption from reduced production, operational inefficiencies in Specialty Foam, and higher raw material and transportation costs and operational inefficiencies in Automotive. These decreases were partially offset by metal margin expansion in our Steel Rod business and pricing discipline in the Furniture, Flooring & Textile segment.
  • 2021 adjustment was a $28 million gain on the sale of real estate associated with our exited Fashion Bed business
• EBIT margin was 9.4%, down from 2021 EBIT margin of 11.7% and adjusted² EBIT margin of 11.2%

2022 EPS was $2.27, a $.67 decrease versus 2021 EPS of $2.94 and a $.51 decrease versus adjusted² EPS of $2.78 primarily from lower EBIT and higher interest expense ($.04/share).

2022 DEBT, CASH FLOW, AND LIQUIDITY

• Net debt² was 2.66x trailing 12-month adjusted EBITDA² at year-end
• Operating cash flow was $441 million, up from $271 million in 2021
• Capital expenditures were $100 million
• Total liquidity was $1.0 billion at year-end

DIVIDEND

• Dividends were $1.74 per share in 2022, up $.08 from $1.66 per share in 2021
• In November, Leggett & Platt’s Board of Directors declared a $.44 per share fourth quarter dividend, two cents higher than last year’s fourth quarter dividend
• At an annual indicated dividend of $1.76 per share, the yield is 4.7% based upon Friday’s closing stock price of $37.23 per share

2022 STOCK REPURCHASES

• Repurchased 1.7 million shares at an average price of $35.94
• Issued .9 million shares through employee benefit plans
• Shares outstanding at the end of the year were 132.6 million

2023 GUIDANCE

• Sales are expected to be $4.8–$5.2 billion, -7% to +1% versus 2022
  • Volume at the midpoint expected to be down low single digits:
    • Down low single digits in Bedding Products Segment
    • Up high single digits in Specialized Products Segment
    • Down low 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–$1.90
  • Earnings at the midpoint primarily reflects:
    • Lower metal margins in our Steel Rod business
    • Lower volume in some businesses
    • Moderate pricing pressure from deflation
  • 1Q 2023 earnings expected to be down meaningfully vs 4Q 2022, primarily due to:
    • Timing of performance-based compensation accruals
    • Normal seasonality in some of our businesses
• Based on this framework, 2023 EBIT margin is expected to be 7.5% to 8.0%
• 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 million
  • Dividends $240 million
  • Minimal acquisitions and share repurchases

SEGMENT RESULTS – Fourth Quarter 2022 (versus 4Q 2021)

Bedding Products –

• Trade sales decreased 19%
  • Volume decreased 19% from continued demand softness in U.S. and European bedding markets and lower demand in our Steel Rod and Drawn Wire businesses
  • Currency impact of 1% offset by raw material-related selling price increases of 1%
• EBIT decreased $46 million, primarily from lower volume and lower overhead absorption as we intentionally cut production in our Steel Rod business below demand to reduce inventory levels. These decreases were partially offset by metal margin expansion.

Specialized Products –

• Trade sales increased 15%
  • Volume increased 10% from growth across the segment
  • Raw material-related selling price increases added 4%
  • Currency impact decreased sales 9%
  • Hydraulic Cylinders acquisition added 10%
• EBIT decreased $5 million, primarily from currency impact and higher raw material and labor costs, partially offset by higher volume

Furniture, Flooring & Textile Products –

• Trade sales decreased 12%
  • Volume decreased 14%, primarily from declines in Home Furniture, Fabric Converting, and Work Furniture
  • Raw material-related selling price increases added 2%
  • Currency impact decreased sales 1%
  • Textiles acquisitions added 1%
• EBIT decreased $13 million, primarily from lower volume partially offset by pricing discipline

SEGMENT RESULTS – Full Year 2022 (versus 2021)

Bedding Products –

• Trade sales decreased 4%
  • Volume decreased 16% from 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 12% to sales
  • Currency impact decreased sales by 1%
  • Kayfoam acquisition, net of divestitures of small operations in Drawn Wire and International Bedding, added 1%
• EBIT decreased $102 million, primarily from lower volume, lower overhead absorption as production and inventories were adjusted to meet reduced demand, operating inefficiencies in Specialty Foam, and the non-recurrence of prior year gain from sale of real estate associated with exited Fashion Bed business ($28 million). These decreases were partially offset by higher metal margin.

Specialized Products –

• Trade sales increased 12%
  • Volume increased 11% with growth across the segment
  • Raw material-related selling price increases added 3%
  • Currency impact decreased sales 6%
  • Hydraulic Cylinders acquisition completed in August 2022 added 4%
• EBIT decreased $17 million, primarily from higher raw material and transportation costs, operational inefficiencies and related premium freight costs in a North American Automotive facility primarily in the first half of the year, and currency impact. These decreases were partially offset by higher volume.

Furniture, Flooring & Textile Products –

• Trade sales increased 3%
  • Volume decreased 6% from declines in Home Furniture, Flooring, and Fabric Converting, partially offset by growth in Work Furniture
  • Raw material-related selling price increases added 10%
  • Currency impact decreased sales 1%
• EBIT increased $6 million, primarily from pricing discipline partially offset by 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.

Contact:

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

Source: Leggett & Platt, Incorporated