Leggett & Platt 3Q Sales up 7%

October 21, 2010  by in UnCategorized   

By Home Furnishings Business in Bedding on October 22, 2010

Components and bedding supplier Leggett & Platt (NYSE: LEG) reported third-quarter 2010 sales of $867 million, a 7 percent increase over the prior-year period.

Third quarter net income of $47.4 million was up 13 percent over the same period in 2009.

Year to date, sales of $2.6 billion are 12 percent higher than the first nine months of 2009; and net income of $145.2 million is almost double the $76.6 million recorded through last year's first three quarters.

"Certain of our key markets, primarily related to residential furnishings, weakened noticeably in the third quarter," said President and CEO David S. Haffner. "As a result, our third quarter sales were lower than those of second quarter, which rarely occurs. Though aggregate unit volume increased 6 percent in the third quarter (compared to 3Q 2009), this was a much slower pace than the 15 percent unit growth experienced during the first half of 2010. We believe the stronger consumer demand during the first half of the year was driven, in part, by larger income tax refunds and house purchase incentives. In addition, raw material costs temporarily increased beyond the amounts anticipated when we implemented price increases during the second quarter; however, we are seeing costs begin to retreat to expected levels. As a result, we are revising our full year EPS guidance to the lower half of our prior range."

Haffner noted that during the quarter Carthage, Mo.-based L&P completed the sale of the seventh, and last, of the businesses it planned to divest as part of the company's strategic realignment. The seven divestitures collectively generated $433 million of after tax cash proceeds, exceeding the original $400 million goal.

"We remain well positioned as the economy recovers," he said. "Given our unused production capacity, sales can rebound to at least $4 billion before we need to invest much capital. We continue to expect an incremental EBIT margin of 25-35 percent as unit volumes increase; as a result, EBIT margin should improve as sales grow."

Leggett anticipates full year 2010 sales of approximately $3.3 billion to $3.35 billion, and earnings per share between $1.10 and 1.20.