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Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE: APRIL 28, 2016

LEGGETT & PLATT REPORTS $.63 EPS, A FIRST QUARTER RECORD

Carthage, MO, April 28, 2016 —

 

    1Q EPS was $.63, a first quarter record and 26% improvement versus 1Q 2015

 

    1Q sales were $938 million, a 3% decrease versus 1Q 2015 due to commodity deflation and divestitures

 

    EBIT margin improved to 13.5%, a 190 basis point gain over 1Q last year

 

    Raising EPS guidance; anticipate record continuing ops EPS of $2.40—2.60 on sales of $3.9—4.1 billion

Diversified manufacturer Leggett & Platt reported earnings of $.63 per share, a first quarter record. The EPS improvement (versus $.50 in 2015) reflects higher unit volume, a tax-related benefit ($.04) from the adoption of a new accounting standard regarding stock-based compensation, and non-recurrence of last year’s impairment charge ($.02) in the now-divested Steel Tubing business unit.

Sales from continuing operations were $938 million, a decline of 3% versus 1Q 2015 as a result of late-2015 divestitures. Unit volume grew 4%, and acquisitions added 1% to sales; however, these gains were offset by raw material-related price deflation and currency rate changes.

EBIT margin improved 190 basis points versus first quarter last year, from 11.6% to 13.5%, as a result of higher unit volume, efficiency improvements, and continued portfolio management.

CEO Comments

President and CEO Karl G. Glassman commented, “We are very pleased with our start to 2016. During the first quarter we generated volume gains and improved margins, strong cash flow from operations, and record first quarter EPS. For the full year, we expect to achieve similar results: strong EBIT margin, significantly improved operating cash flow, and record EPS.

“Overall unit volume grew 4% during the quarter, despite short-term demand softness in certain of our residential end markets. We continue to benefit from ongoing content gains and new program awards in our Automotive business, the bedding market’s shift to Comfort Core springs, and demand strength in our Adjustable Bed unit.

“Our primary financial goal is to achieve Total Shareholder Return (TSR1) that ranks in the top third of the S&P 500 over rolling three-year periods. For the three years that began January 1, 2014, we have so far (over the last 28 months) generated TSR of 25% annually; that performance ranks within the top 10 percent of the S&P 500.

“We are achieving these results while maintaining our strong financial base. We ended the quarter with over $300 million available through our commercial paper program. Net debt to net capital was 37%, comfortably within our 30%—40% target range. At quarter end, the company’s debt was 1.6 times its trailing 12-month adjusted2 EBITDA.”

 

 

1  TSR = (Change in Stock Price + Dividends) / Beginning Stock Price; assumes dividends are reinvested.
2  To aid understanding of underlying operational profitability, adjusted EBITDA excludes a foam litigation expense accrual of $6m pretax in 2015, and a non-cash pension buyout charge of $12m pretax in 2015.

 

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Dividends, and Stock Repurchases

In February, Leggett & Platt’s Board of Directors declared a $.32 first quarter dividend, one cent higher than last year’s first quarter dividend. Thus, 2016 marks the 45th consecutive annual dividend increase for the company, with a compound annual growth rate of 13%. Leggett & Platt is proud of its dividend record and plans to continue it.

At yesterday’s closing share price of $48.59, the indicated annual dividend of $1.28 per share generates a dividend yield of 2.6%, one of the higher dividend yields among the 50 stocks of the S&P 500 Dividend Aristocrats.

During the first quarter the company purchased 2.5 million shares of its stock at an average price of $43.75, and issued 1.1 million shares through employee benefit plans and option exercises. The number of shares outstanding declined to 134.2 million, a 2.6% reduction over the last 12 months.

Increasing 2016 Continuing Operations EPS Guidance to $2.40—$2.60

With strong first quarter earnings, the company is raising EPS guidance by $.10. For 2016, EPS from continuing operations is now expected to be $2.40 to $2.60. The new accounting standard for stock-based compensation resulted in a tax-related first quarter EPS benefit of $.04, but is expected to have a much smaller impact on each of the remaining quarters of 2016. Accordingly, this guidance assumes a 27% full-year effective tax rate.

Sales guidance is unchanged at $3.9-$4.1 billion, which equates to overall growth between zero and 5%. This guidance assumes unit volume growth in the mid-to-high single digits, reflecting strong demand in many of the company’s product categories and improvement in the majority of its end markets. As partial offsets to the volume growth, sales guidance includes an approximate 2% reduction from commodity deflation, and a 2% decrease from late 2015 divestitures, net of small acquisitions.

Based upon this guidance, 2016 EBIT margin should be equivalent to, or slightly above, 2015’s adjusted EBIT margin of 12.9%. The benefit to margin from higher unit volume should be partially offset by non-recurrence of the 2015 pricing lag.

Discontinued operations EPS for 2016 is forecast at $.15 due to the benefit the company receives, as plaintiff, from settlement of a longstanding antitrust claim. This cash settlement should generate $25 million of after-tax income in the second quarter. The bulk of the benefit ($21 million) is associated with discontinued operations, and specifically attributable to Leggett’s former Prime Foam Products business (which was sold in 2007).

Cash from operations is expected to be approximately $500 million in 2016, which includes the $25 million of antitrust settlement proceeds. Capital expenditures should be roughly $130 million, and dividend payments should approximate $175 million. The company’s target for dividend payout is 50-60% of net earnings; however, actual payout was higher for several years prior to 2015, and as a result dividend growth was modest. But with recent growth in annual earnings, the company is now within its target payout range, and has flexibility to consider future dividend growth that more closely aligns with EPS growth.

The company’s top priorities for use of cash are organic growth, dividends, and strategic acquisitions. After funding those priorities, if there is still cash available, the company generally intends to repurchase its stock (rather than repay debt early or stockpile cash). Management has standing authorization from the Board of Directors to buy up to 10 million shares each year; however, no specific repurchase commitment or timetable has been established. The company expects to repurchase 4-5 million shares in 2016, and issue about 2 million shares, primarily for employee benefit plans.

SEGMENT RESULTS – First Quarter 2016 (versus the same period in 2015)

Residential Furnishings – Total sales decreased $25 million, or 5%. Same location sales decreased 5%; unit volume increased 2%, but was more than offset by raw material-related price decreases and currency impacts. EBIT (earnings before interest and taxes) decreased $4 million, with the benefit from overall higher unit volume more than offset by a FIFO inventory impact and lower unit volume in stronger-margin businesses.

 

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Commercial Products – Total sales increased $21 million, or 15%. Same location sales grew 7%, primarily from unit volume growth in Adjustable Bed and Fashion Bed. EBIT increased $6 million due to higher sales, operational improvements, and a $2 million gain on sale of a building.

Industrial Materials – Total sales decreased $62 million, or 28%. Same location sales decreased due to steel-related price deflation and lower Drawn Wire volume. Divestiture of the Steel Tubing business in December 2015 reduced sales by $25 million. EBIT increased $12 million, with the impact from lower volume more than offset by cost and efficiency improvements, and non-recurrence of last year’s $6 million impairment charge in the Steel Tubing business unit.

Specialized Products – Total sales increased $21 million, or 9%. Same location sales increased 10%, with volume gains across the segment partially offset by currency impacts (-2%). EBIT increased $7 million primarily due to increased volumes.

Slides and Conference Call

A set of slides containing summary financial information is available from the Investor Relations section of Leggett’s website at www.leggett.com. Management will host a conference call at 7:30 a.m. Central (8:30 a.m. Eastern) on Friday, April 29. The webcast can be accessed (live or replay) from Leggett’s website. The dial-in number is (201) 689-8341; there is no passcode.

Second quarter results will be released after the market closes on Thursday, July 28, with a conference call the next morning.

FOR MORE INFORMATION: Visit Leggett’s website at www.leggett.com.

COMPANY DESCRIPTION: At Leggett & Platt (NYSE: LEG), we create innovative products that enhance people’s lives, generate exceptional returns for our shareholders, and provide sought-after jobs in communities around the world. L&P is a 133 year-old diversified manufacturer that designs and produces engineered products found in most homes and automobiles. The company is comprised of 17 business units, 20,000 employee-partners, and 130 manufacturing facilities located in 19 countries.

Leggett & Platt is the leading U.S. manufacturer of: a) components for home furniture and bedding; b) carpet cushion; c) adjustable bed bases; d) work furniture and components; e) high-carbon drawn steel wire; f) automotive seat support & lumbar systems; and g) bedding machinery.

FORWARD-LOOKING STATEMENTS: Statements in this release that are not historical in nature are “forward-looking.” These statements involve uncertainties and risks, including the company’s ability to improve operations and realize cost savings, price and product competition from foreign and domestic competitors, changes in demand for the company’s products, cost and availability of raw materials and labor, fuel and energy costs, future growth of acquired companies, general economic conditions, possible goodwill or other asset impairment, foreign currency fluctuation, litigation risks, and other factors described in the company’s Form 10-K. Any forward-looking statement reflects only the company’s beliefs when the statement is made. Actual results could differ materially from expectations, and the company undertakes no duty to update these statements.

CONTACT: Investor Relations, (417) 358-8131 or invest@leggett.com

David M. DeSonier, Senior Vice President of Corporate Strategy and Investor Relations

Susan R. McCoy, Vice President of Investor Relations

 

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LEGGETT & PLATT    Page 4 of 5    April 28, 2016

 

 

RESULTS OF OPERATIONS 1

   FIRST QUARTER  

(In millions, except per share data)

   2016      2015      Change  

Net sales (from continuing operations)

   $ 938.4       $ 966.2         (3 %) 

Cost of goods sold

     704.8         748.4      
  

 

 

    

 

 

    

Gross profit

     233.6         217.8         7

Selling & administrative expenses

     105.1         97.5         8

Amortization

     5.1         5.2      

Other expense (income), net

     (3.7      3.4      
  

 

 

    

 

 

    

Earnings before interest and taxes

     127.1         111.7         14

Net interest expense

     8.4         9.7      
  

 

 

    

 

 

    

Earnings before income taxes

     118.7         102.0      

Income taxes

     27.7         28.7      
  

 

 

    

 

 

    

Net earnings from continuing operations

     91.0         73.3      

Discontinued operations, net of tax

     0.1         (0.5   
  

 

 

    

 

 

    

Net earnings

     91.1         72.8      

Less net income from non-controlling interest

     (1.6      (1.1   
  

 

 

    

 

 

    

Net earnings attributable to L&P

   $ 89.5       $ 71.7         25
  

 

 

    

 

 

    

Earnings per diluted share

        

From continuing operations

   $ 0.63       $ 0.50         26

From discontinued operations

   $ 0.00       ($ 0.00   

Net earnings per diluted share

   $ 0.63       $ 0.50         26

Shares outstanding

        

Common stock (at end of period)

     134.2         137.8         (2.6 %) 

Basic (average for period)

     139.1         141.9      

Diluted (average for period)

     141.2         143.8         (1.8 %) 

CASH FLOW

   FIRST QUARTER  

(In millions)

   2016      2015      Change  

Net earnings

   $ 91.1       $ 72.8      

Depreciation and amortization

     28.3         29.6      

Working capital decrease (increase)

     (26.7      (94.3   

Impairments

     0.0         5.9      

Other operating activity

     18.6         18.1      
  

 

 

    

 

 

    

Net Cash from Operating Activity

   $ 111.3       $ 32.1         247

Additions to PP&E

     (27.7      (21.7   

Purchase of companies, net of cash

     (16.4      (12.2   

Proceeds from asset sales

     2.3         6.3      

Dividends paid

     (43.5      (42.7   

Repurchase of common stock, net

     (105.4      (60.4   

Additions (payments) to debt, net

     80.8         30.7      

Other

     (4.4      (2.7   
  

 

 

    

 

 

    

Increase (Decr.) in Cash & Equiv.

   $ (3.0    $ (70.6   
  

 

 

    

 

 

    

FINANCIAL POSITION

   31-Mar  

(In millions)

   2016      2015      Change  

Cash and equivalents

   $ 250.2       $ 262.2      

Receivables

     531.3         532.0      

Inventories

     522.1         506.0      

Held for sale

     5.7         30.0      

Other current assets

     32.6         78.8      
  

 

 

    

 

 

    

Total current assets

     1,341.9         1,409.0         (5 %) 

Net fixed assets

     554.7         523.1      

Held for sale

     20.0         35.9      

Goodwill and other assets

     1,107.8         1,130.6      
  

 

 

    

 

 

    

TOTAL ASSETS

   $ 3,024.4       $ 3,098.6         (2 %) 
  

 

 

    

 

 

    

Trade accounts payable

   $ 332.1       $ 357.5      

Current debt maturities

     3.5         202.2      

Held for sale

     2.7         11.3      

Other current liabilities

     341.7         382.1      
  

 

 

    

 

 

    

Total current liabilities

     680.0         953.1         (29 %) 

Long term debt

     1,032.0         793.4         30

Deferred taxes and other liabilities

     221.2         235.7      

Equity

     1,091.2         1,116.4         (2 %) 
  

 

 

    

 

 

    

Total Capitalization

     2,344.4         2,145.5         9
  

 

 

    

 

 

    

TOTAL LIABILITIES & EQUITY

   $ 3,024.4       $ 3,098.6         (2 %) 
  

 

 

    

 

 

    

 


LEGGETT & PLATT    Page 5 of 5    April 28, 2016

 

SEGMENT RESULTS 1

   FIRST QUARTER  

(In millions)

   2016     2015     Change  

External Sales

      

Residential Furnishings

   $ 481.4      $ 506.0        (4.9 %) 

Commercial Products

     141.3        123.5        14.4

Industrial Materials

     77.1        117.7        (34.5 %) 

Specialized Products

     238.6        219.0        8.9
  

 

 

   

 

 

   

 

 

 

Total

   $ 938.4      $ 966.2        (2.9 %) 
  

 

 

   

 

 

   

 

 

 

Total Sales (External + Inter-Segment)

      

Residential Furnishings

   $ 488.9      $ 513.6        (4.8 %) 

Commercial Products

     161.5        141.0        14.5

Industrial Materials

     157.2        219.2        (28.3 %) 

Specialized Products

     249.0        228.5        9.0
  

 

 

   

 

 

   

 

 

 

Total

   $ 1,056.6      $ 1,102.3        (4.1 %) 
  

 

 

   

 

 

   

 

 

 

EBIT

      

Residential Furnishings

   $ 47.7      $ 52.1        (8 %) 

Commercial Products

     13.8        8.0        73

Industrial Materials

     20.1        8.0        151

Specialized Products

     46.3        39.3        18

Intersegment eliminations and other

     (0.8     (0.7     (14 %) 

Change in LIFO reserve

     0.0        5.0        (100 %) 
  

 

 

   

 

 

   

 

 

 

Total

   $ 127.1      $ 111.7        14
  

 

 

   

 

 

   

 

 

 
                 Basis Pts  

EBIT Margin 2

      

Residential Furnishings

     9.8     10.1     (30

Commercial Products

     8.5     5.7     280   

Industrial Materials

     12.8     3.6     920   

Specialized Products

     18.6     17.2     140   
  

 

 

   

 

 

   

 

 

 

Overall from Continuing Operations

     13.5     11.6     190   
  

 

 

   

 

 

   

 

 

 

 

LAST SIX QUARTERS

   2014     2015     2016  

Selected Figures

   4Q     1Q     2Q     3Q     4Q     1Q  

Net Sales ($ million)

     953        966        997        1009        945        938   

Sales Growth (vs. prior year)

     11     10     4     1     (1 %)      (3 %) 

Adjusted EBIT 3

     90        112        121        142        130        127   

Cash from Operations ($ million)

     166        32        95        130        102        111   

Adjusted EBIT Margin 3

     9.5     11.6     12.1     14.0     13.8     13.5

Adjusted EPS—continuing operations (diluted) 3

   $ 0.41      $ 0.50      $ 0.53      $ 0.67      $ 0.64      $ 0.63   

Adjusted EBITDA (trailing twelve months) 4

     503        529        545        579        617        632   

(Long term debt + current maturities) / Adj. EBITDA4

     1.9        1.9        1.9        1.7        1.5        1.6   

Net Debt to Net Capitalization

            

Long term debt

     762        793        827        985        942        1032   

Current debt maturities

     202        202        202        3        3        4   

Less cash and equivalents

     (333     (262     (275     (251     (253     (250
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Debt

     631        733        754        737        692        785   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total capitalization

     2143        2146        2175        2311        2263        2344   

Current debt maturities

     202        202        202        3        3        4   

Less cash and equivalents

     (333     (262     (275     (251     (253     (250
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Capitalization

     2012        2086        2102        2063        2013        2098   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Long Term Debt to Total Capitalization

     35     37     38     43     42     44

Net Debt to Net Capital

     31     35     36     36     34     37

Management uses Net Debt to Net Capital to track leverage trends across time periods with variable levels of cash.

  

Same Location Sales (vs. prior year)

   4Q     1Q     2Q     3Q     4Q     1Q  

Residential Furnishings

     9     9     2     (2 %)      (3 %)      (5 %) 

Commercial Products

     24     17     18     15     (1 %)      7

Industrial Materials

     9     12     (4 %)      (10 %)      (16 %)      (19 %) 

Specialized Products

     6     6     0     5     7     10

Overall from Continuing Operations

     6     6     (1 %)      (1 %)      (2 %)      (1 %) 

 

1  Segment information the 4Q 2015 move of the logistics operations from Residential Furnishings to Industrial Materials.
2  Segment margins calculated on Total Sales. Overall company margin calculated on External Sales.
3  Excludes litigation accruals of $22m pretax ($.09/share) in 4Q’14, $1.5m pretax (< $.01/share) in 2Q’15, and $4m pretax ($.02/share) in 4Q’15; excludes $12m pretax ($.05/share) one-time noncash pension buyout charge in 4Q’15.
4  EBITDA based on trailing twelve months. Excludes items in Footnote 3.