Leggett & Platt Earnings Up 192% Over 2009 on Strong Sales

Jul.26.10 | About: Leggett & (LEG)

Leggett & Platt Incorporated (NYSE:LEG) recently reported earnings of 34 cents a share, which outpaced the Zacks Consensus Estimate of 30 cents a share. It rose 192% over the prior-year earnings per share of 12 cents backed by strong sales growth and better capacity utilization.

Revenue Details

Total sales of the company jumped 15% in the reported quarter to $874 million followed by a surge in unit volume of 14%.

Segment Details

Residential Furnishings recorded a total sales increase of 9%, driven by strong demand, unit volume increased 8%. Total sales of Commercial Fixturing & Components increased 8% as a result of new programs with office furniture manufacturers and strong position with value-oriented retailers.

Strength in unit prices led to the 28% growth in revenues of Industrial Materials. A perk-up in demand of automotives resulted in a 30% increase in revenues from Specialized Products.


A double-digit top-line growth offset the increase in cost of goods sold and resulted in a gross margin of 20.6% during the quarter. EBIT margin came in at 10.0%. Leggett anticipates an EBIT margin of 9.4% for the full year 2010. The company realized a net LIFO expense of $2.2 million during the quarter.

Dividend and Stock Repurchases

Leggett increased shareholder value by repurchasing 2.3 million shares at an average price of $23.17 and paid 26 cents as dividend, an increase of 1 cent from the year-ago quarter. This marks the 39th consecutive year of a hike in dividend by the company. Leggett also issued 2.0 million shares in the reported quarter.

Looking ahead, management expects to buy back a total of 5 to 7 million of its common stock and issue around 3 million shares in fiscal 2010. The company has the authorization to repurchase up to 10 million shares each year.

Balance Sheet and Cash Flow Position

Leggett ended the quarter with a modest increase in cash and cash equivalents at $243.5 million from the prior level of $222.2 million. Net cash from operations came in at $117.9 million compared with $288.4 million in the year-ago quarter.

Leggett expects to generate more than $300 million in cash from operations in 2010. The company anticipates a cash outlay of $75 million in capital expenditure and $155 million in dividends.

Revenue and Earnings Guidance

Leggett expects that when the economy recovers, it would be able to deliver sales growth of approximately 25%−33% in the long term, which should result in an incremental margin of 25%−35%. For fiscal 2010, it expects total sales in the range of $3.2−$3.4 billion, and EPS of $1.10−$1.30. Zacks Consensus Estimate for the year is currently pegged at $1.22.