Leggett & Platt Reports Full-Year Sales Increase of 8%

Carthage, Missouri-based Leggett & Platt Inc. surpassed Wall Street expectations (Zacks Consensus Estimate) in its fourth quarter of 2018. The company posted quarterly sales of $1.05 billion, a 6% increase over the fourth quarter of 2017, on flat volume. L&P had adjusted earnings per share of $0.62 (9% above analysts’ forecasts), reflecting a 5% rise compared with the prior year. The increase was partly a result of improved steel rod margins, L&P said.

Full-year sales in 2018 grew 8% to $4.27 billion, and same-location sales increased 6%. Volume was up 3%, with gains in adjustable bed, aerospace, automotive, bedding and work furniture partially offset by declines in other businesses, primarily fashion bed, flooring and home furniture products. Full-year adjusted EPS from continuing operations increased 1% to $2.48. Higher sales and better metal margins were largely offset by higher raw material costs and weak performance in home furniture and fashion bed, the company said.

In the fourth quarter, Furniture Products segment sales, which includes adjustable beds and the Fashion Bed Group, were down 1% to $278.7 million. For full-year 2018, total sales in the segment were $1.15 billion, a 4% increase over 2017.

In the Industrial Products segment, which includes steel rod and wire, fourth-quarter sales were $166.1 million, up 22% compared with 2017. Total sales in 2018 for the segment were $662.4 million, an increase of 21%.

In the Residential Products segment, which includes bedding components, foam, other bedding-related products, Spuhl AG wire-forming machinery and the Global Systems Group, fourth-quarter sales were $424.7 million, a 6% increase versus the same quarter of 2017. The segment’s full-year sales were $1.72 billion, a 5% increase for the year.

“(Our) growth came primarily from … automotive … bedding, adjustable bed, and raw material-related price increases,” said Karl Glassman, L&P president and chief executive officer. “Other businesses, including aerospace and work furniture, also contributed to sales growth during the year.

“Portfolio management remains a strategic priority. … Through acquisition (of Elite Comfort Solutions), we gained critical capabilities in proprietary foam technology along with scale in the production of private-label finished mattresses. Our combined expertise in spring and foam technology makes us the leading provider of differentiated products for the global bedding industry.

As we have previously discussed, the fashion bed and home furniture businesses have underperformed expectations. … An in-depth analysis of these businesses was conducted, and we have initiated restructuring activity. We are exiting low-margin business, reducing operating costs and eliminating excess capacity.

“Looking forward, 2019 sales growth will benefit significantly from the ECS acquisition. We also expect sales growth in automotive, U.S. spring, aerospace and hydraulic cylinders, partially offset by planned declines in fashion bed and home furniture related to restructuring activity and from less promotional activity in adjustable bed. With the realization of higher sales and moderating steel inflation, we anticipate improved earnings in the coming year.”

L&P expects revenues in its new ECS business unit, which it purchased in January, to reach $675 million in 2019. Total company sales for the year are expected to range from $4.95 to $5.1 billion, an increase of 16% to 19% compared with 2018.

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