Leggett & & Platt reports 4Q and Full Year 2020 Results and Announces 1Q Dividend

•             4Q sales grew 3% vs 4Q19, to USD 1.182 billion

•             4Q EPS was a fourth quarter record USD .76, an increase of USD .12 vs 4Q19

•             2020 sales decreased 10% vs 2019, to USD 4.28 billion

•             2020 EPS was USD 1.82 and 2020 adjusted1 EPS was USD 2.13, decreases vs 2019

•             2020 cash flow from operations was USD 603 million

•             Board of Directors declared first quarter dividend of USD .40 per share

•             2021 guidance: sales of USD 4.6–USD 4.9 billion and EPS of USD 2.30–USD 2.60

Chairman and CEO Karl Glassman commented, “We are pleased to have delivered a strong fourth quarter to end a very challenging 2020. Fourth quarter sales, EBIT, EBIT margin, and earnings per share increased versus the fourth quarter of 2019. For the full year, we generated strong operating cash flow, reduced debt levels, maintained significant liquidity, and increased the dividend for the 49th consecutive year.

“I would like to thank our employees for their dedication, ingenuity, and tenacity in what was a very challenging year as a result of the COVID-19 pandemic. Our teams across our corporate functions and businesses came together to find solutions and navigate the many issues that resulted from the global pandemic. I am extremely proud of all they accomplished. We finished 2020 as a stronger company as a result of their extraordinary efforts. 

“We expect continued recovery into 2021 as a result of strong consumer demand for home-related items and global automotive, and modest improvement in our businesses in industries that are experiencing ongoing impacts from COVID-19.  We also expect continued supply chain constraints, inflation in commodity costs, and recovery of those higher costs through selling price increases.”

FOURTH QUARTER RESULTS

Fourth quarter 2020 sales of USD 1.182 billion, a 3 % increase versus fourth quarter 2019.

•             Organic sales were up 3%

o            Volume was up 1 %; strong demand in residential end markets and Automotive was largely offset by weakness in Aerospace and Work Furniture

o            Raw material-related selling price increases and currency benefit added 2%

•             Acquisitions and divestitures offset each other

Fourth quarter EBIT was USD 150 million, up USD 15 million or 11% from fourth quarter 2019, and up USD 10 million or 7% from fourth quarter 2019 adjusted1 EBIT.

•             EBIT benefited primarily from fixed cost reductions, the non-recurrence of a USD 5 million restructuring-related charge in fourth quarter 2019, and other smaller items partially offset by change in LIFO impact

o            Fixed cost reductions implemented earlier in the year reduced 4Q costs by approximately USD 25 million

o            LIFO expense was USD 8 million in 4Q 2020, versus a LIFO benefit of USD 14 million in 4Q 2019

•             EBIT margin was 12.7%, up from 11.8% in the fourth quarter of 2019 and up from an adjusted1 EBIT margin of 12.2% in that same period

Fourth quarter EPS was USD .76, a fourth quarter record. EPS increased USD .12 versus fourth quarter 2019 and USD .08 versus adjusted1 EPS in fourth quarter 2019. Improved EBIT was the primary driver of the increase, augmented by lower interest expense (USD .01 per share) and a lower tax rate (USD .02 per share).

FULL YEAR RESULTS

2020 sales of USD 4.28 billion, a 10 % decrease versus 2019.

•             Organic sales were down 11 %

o            Volume down 10 %, largely due to economic impact of COVID-19

o            Raw material-related selling price decreases earlier in the year reduced sales 1 %

•             Acquisitions added 1 % to sales

2020 EBIT was USD 401 million, down USD 113 million or 22 % from 2019, and adjusted1 EBIT was USD 446 million, an USD 83 million or 16 % decrease.

•             EBIT and adjusted1 EBIT declined primarily as a result of lower volume and change in LIFO impact, partially offset by fixed cost reductions

o            Fixed cost reductions totaled approximately USD 90 million for the year

o            LIFO expense was USD 8 million in 2020, versus a LIFO benefit of USD 32 million in 2019

o            2020 adjustments were USD 25 million non-cash goodwill impairment charge related to our Hydraulic Cylinders business; USD 9 million of restructuring-related charges primarily from severance costs related to the pandemic; an USD 8 million non-cash impairment charge related to a note receivable; and a USD 4 million non-cash charge to write off stock associated with a prior year divestiture

o            2019 adjustments were restructuring-related charges of USD 15 million and ECS transaction costs of USD 1 million

•             EBIT margin was 9.4 %, down from 10.8 % in 2019, and adjusted1 EBIT margin was 10.4 %, a decrease from 11.1 % in 2019

2020 EPS was USD 1.82, a decrease of USD .65 versus 2019. Full year adjusted1 EPS was USD 2.13, a decrease of USD .44, reflecting lower adjusted1 EBIT.

2020 DEBT, CASH FLOW, AND DIVIDEND

•             Reduced debt by USD 228 million

•             Net Debt was 2.44x trailing 12-month adjusted EBITDA1 at year-end

•             Operating cash flow was USD 603 million, down USD 65 million from a record USD 668 million in 2019

•             Capital expenditures were USD 66 million for the year

•             Dividends were USD 1.60 per share, up USD .02 from USD 1.58 per share in 2019

LIQUIDITY AND BALANCE SHEET

•             USD 1.5 billion of liquidity at December 31

o            USD 349 million of cash on hand

o            USD 1.2 billion in capacity remaining under revolving credit facility

•             Debt at December 31

o            Total debt of USD 1.9 billion; no commercial paper outstanding

o            No significant maturities until August 2022

DIVIDEND

•             The Company’s Board of Directors declared first quarter dividend of USD .40

•             Dividend will be paid on April 15, 2021 to shareholders of record on March 15, 2021

•             At an annual indicated dividend of USD 1.60 per share, the yield is 3.7% based upon Friday’s closing stock price of USD 43.02 per share, one of the highest yields among the S&P 500 Dividend Aristocrats

2021 GUIDANCE

•             Sales are expected to be USD 4.6–USD 4.9 billion, +7 % to 14 % versus 2020

o            Volume expected to grow mid-single digits

o            Raw material-related price increases and currency benefit expected to add sales growth

o            Small acquisitions expected to be largely offset by prior year divestitures

•             EPS is expected to be USD 2.30–USD 2.60

o            Reflects higher volume partially offset by increasing steel, chemical, and other raw material costs, as well as the pricing lag associated with passing along these costs, particularly in 1Q 2021

o            Assumes no LIFO impact in 2021

•             Based on this guidance framework, EBIT margin should be 10.5 % to 11.0 %

•             Additional guidance expectations:

o            Depreciation and amortization USD 195 million

o            Net interest expense USD 75 million

o            Effective tax rate 23 %

o            Fully diluted shares 137 million

o            Operating cash flow approximately USD 450 million

o            Capital expenditures USD 150 million

o            Dividends USD 220 million

SEGMENT RESULTS – Fourth Quarter 2020 (versus 4Q 2019)

Bedding Products

•             Trade sales increased 3 %

o            Volume increased 2 %; growth in ECS, European Spring, and U.S. Spring was partially offset by lower volume in Adjustable Bed and exited volume in Drawn Wire

o            Raw material-related selling price increases added 3 %

o            Divestitures reduced sales by approximately 2 % (small operations in Drawn Wire and former Fashion Bed business)

•             EBIT increased USD 6 million, primarily from fixed cost reductions and volume growth, partially offset by change in LIFO impact

Specialized Products

•             Trade sales increased 1 %

o            Volume was down 2 %; growth in Automotive was more than offset by weak demand in Aerospace

o            Currency benefit increased sales 3 %

•             EBIT increased USD 2 million, primarily from fixed cost reductions partially offset by lower volume

Furniture, Flooring & Textile Products

•             Trade sales increased 5 %

o            Volume increased 2 %; strong demand in Fabric Converting, Geo Components, and Home Furniture was partially offset by weak demand in Work Furniture and Flooring Products’ hospitality business

o            Currency benefit increased sales 1 %

o            A small Geo Components acquisition completed in December 2019 added 2 % to sales

•             EBIT increased USD 6 million, primarily from fixed cost reductions partially offset by change in LIFO impact

SEGMENT RESULTS – Full Year 2020 (versus 2019)

 Bedding Products

•             Trade sales declined 10 %

o            Volume was down 9 %, primarily due to pandemic-related economic declines earlier in the year

o            Raw material-related price decreases and currency impact reduced sales 1%

•             EBIT decreased USD 50 million, primarily from lower volume, change in LIFO impact, an USD 8 million impairment related to a note receivable, and lower metal margin in our rod mill partially offset by fixed cost reductions

Specialized Products

•             Trade sales decreased 16 %

o            Volume was down 17 %, primarily due to pandemic-related economic declines earlier in the year and continued weak demand in Aerospace

o            Currency benefit increased sales 1%

•             EBIT decreased USD 79 million, primarily from volume declines and a USD 25 million goodwill impairment charge in Hydraulic Cylinders partially offset by fixed cost reductions

Furniture, Flooring & Textile Products –

•             Trade sales were down 6 %

o            Volume decreased 8 %, primarily due to pandemic-related economic declines earlier in the year and continued weak demand in Work Furniture and Flooring Products’ hospitality business

o            A small Geo Components acquisition completed in December 2019 added 2% to sales

o            Raw material-related selling price decreases were offset by a currency benefit

•             EBIT increased USD 19 million, primarily from fixed cost reductions, improved pricing, and lower restructuring-related charges (USD 5 million) partially offset by lower volume.

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 138-year-old diversified manufacturer that designs and produces engineered products found in most homes and automobiles. The Company is comprised of 15 business units, 20,000 employee-partners, and 132 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.

www.leggett.com