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Leggett & Platt Sales Slip 6%, Profits Flat in Q3

Furniture and bedding components supplier Leggett & Platt (LEG) said third-quarter profits were essentially even with last year’s third quarter, as sales declined 6% to $948.9 million.

The company attributed most of the sales decline to the divestiture of four small businesses during the previous 12 months, although same-location sales fell 2% in the most recent quarter due to slightly lower unit volume, raw material-related price decreases and currency fluctuation.

Net income totaled $93.5 million or 67 cents per share. That compared with $95.2 million in last year’s third quarter, which also equaled 67 cents per share.

"Third quarter earnings and EBIT margin were stronger than we forecast, despite softer than expected sales,” said Karl Glassman, president and CEO. “In July, we assumed that the second quarter's steel inflation would hold through the remainder of the year. Instead, market prices for steel began to deflate as the third quarter progressed.”

Sales in the company’s residential furnishings segment, which includes furniture and bedding components, fell 7.5% to $490.2 million in the quarter. Sales in the commercial products segment, which includes adjustable beds and its Fashion Bed Group finished furniture business, were off 4% to $164.3 million.

Because of the stronger-than-expected third-quarter earnings and lower commodity costs, Glassman said the company is increasing its earnings estimate for the 2016 calendar year. The new forecast of $2.55 to $2.62 per share is up from a July forecast of $2.45 to $2.60 per share.

Full-year sales, however, are now projected at $3.75 billion, a 4% decrease from 2015 and below a July estimate of $3.9 billion.

He said the sales estimate assumes a 2% growth in unit volume, offset by a 3% reduction from commodity deflation and currency fluctuation and a 3% decrease from recent divestitures.

"Regarding our long-term growth expectations, we believe the macro environment will support modest revenue growth in our end markets over the next few years” Glassman said. “Within those markets, we will concentrate on extending our record of content gains and new program awards across our businesses, thereby growing organically faster than our markets. In addition, strategic acquisitions are expected to supplement the organic growth we achieve.”

For the nine months ended Sept. 30, sales were down 4.3% to $2.85 billion. Nine-month net income totaled $304.2 million or $2.17 per share. That compares with $244.6 million or $1.71 per share in the first nine months of 2015.



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