Leggett & Platt Report First Quarter Financial Results

April 30, 2024  by HFBusiness Staff in Business Strategy, Industry   

"We are taking proactive steps to ensure the long-term success of our business and deliver sustainable returns for our shareholders. Our near- to mid-term strategic priorities include strengthening our balance sheet and liquidity, improving margins by optimizing operations and our general and administrative cost structure, and positioning the company for profitable growth opportunities.

"Consistent with these priorities, we are reducing the dividend to free up capital to accelerate the deleveraging of our balance sheet and solidify our long-held financial strength. Over the longer term, we expect to grow our business both organically and through strategic acquisitions, while also returning cash to shareholders via a combination of dividends and share buybacks. We are confident that the actions we are taking will better position us for the future and enhance shareholder value."

President and CEO Mitch Dolloff commented, "First quarter results were in line with our expectations and our full year sales and EPS guidance range remain unchanged. We are making steady progress on the restructuring plan announced in January to optimize our manufacturing and distribution footprint and remain on track to achieve our objectives within our stated timeline.”

"We are taking proactive steps to ensure the long-term success of our business and deliver sustainable returns for our shareholders. Our near- to mid-term strategic priorities include strengthening our balance sheet and liquidity, improving margins by optimizing operations and our general and administrative cost structure, and positioning the company for profitable growth opportunities.”

"Consistent with these priorities, we are reducing the dividend to free up capital to accelerate the deleveraging of our balance sheet and solidify our long-held financial strength. Over the longer term, we expect to grow our business both organically and through strategic acquisitions, while also returning cash to shareholders via a combination of dividends and share buybacks. We are confident that the actions we are taking will better position us for the future and enhance shareholder value."

FIRST QUARTER RESULTS
First quarter sales were $1.1 billion, a 10% decrease versus first quarter last year

• Organic sales2 were down 10%
  - Volume was down 6%, primarily from continued weak demand in residential end markets
  - Raw material-related selling price decreases reduced sales 4%
• First quarter EBIT was $63 million, down $26 million or 29% from first quarter 2023 EBIT, and adjusted1 EBIT was $64 million, a $25 million decrease.
• EBIT and adjusted1 EBIT decreased primarily from lower volume, increased bad debt reserve, less benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition, and the non-recurrence of pandemic-related cost reimbursements. These decreases were partially offset by lower current year amortization expense.
• EBIT margin was 5.7% and adjusted1 EBIT margin was 5.8%, down from 7.4% in the first quarter of 2023
• First quarter EPS and adjusted1 EPS were $.23, a $.16 decrease versus first quarter 2023 EPS of $.39, reflecting lower EBIT.

RESTRUCTURING PLAN UPDATE

The restructuring plan in our Bedding Products segment and in our Furniture, Flooring & Textile Products segment is progressing as planned. 

• Annualized EBIT benefit of $40–$50 million expected to be realized after initiatives are fully implemented in late 2025

• Approximately $5–$10 million of EBIT benefit expected to be realized in the second half of 2024

• Expect $100 million of annual sales attrition after initiatives are fully implemented in late 2025
• Also expect to receive cash from the sale of real estate associated with the plan, with transactions largely complete by the end of 2025
• Approximately half of restructuring and restructuring-related costs expected to be incurred in 2024 and the remainder in 2025

• Majority of cash costs anticipated to be incurred in 2024
• Expect $20–$25 million of restructuring and restructuring-related costs in first half of 2024 (approximately half in cash costs)

2024 GUIDANCE

• Full year 2024 sales and EPS guidance unchanged
• Sales are expected to be $4.35–$4.65 billion, -2% to -8% versus 2023
• EPS is expected to be $.95–$1.25

• Adjusted EPS is expected to be $1.05–$1.35
• Based on this framework, 2024 EBIT margin is expected to be 6.0%–6.8%; adjusted EBIT margin is expected to be 6.4%–7.2%

SLIDES AND CONFERENCE CALL

A set of slides containing summary financial information and business update is available from the Investor Relations section of Leggett's website at www.leggett.com. The webcast can be accessed from Leggett's website.

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