Leggett & Platt Inc.
) - the manufacturer of diversified engineered products -
reported better-than-expected fourth quarter and full-year 2013
results. This generated positive sentiment in the market as
reflected in the company's share price, which rose 2.3% in the
after-hour trading session.
Leggett's fourth-quarter adjusted earnings from continuing
operations increased 9% year over year to 35 cents per share and
beat the Zacks Consensus Estimate by a couple of cents. The
improved bottom-line results were primarily driven by increased
sales, leverage operating expenses, lower interest payments and a
decline in outstanding number of shares. These positives were
partly offset by higher steel costs.
The company's fourth-quarter adjusted earnings excluded a
non-cash impairment charge of 31 cents, which, if included would
have led to earnings per share of 4 cents, down 92% from the
year-ago comparable quarter figure of 50 cents (including
one-time items). Fourth-quarter 2012 earnings included an unusual
tax benefit of 18 cents per share.
Net sales of the company grew 5% to $896.8 million from $850.1
million in the prior-year quarter and surpassed the Zacks
Consensus Estimate of $890.0 million. The year-over-year
improvement in the top line was largely attributable to a 3%
increase in unit volume and 2% benefit from acquisitions.
Despite solid top-line growth, gross profit declined 5.9% year
over year to $166.2 million mainly due to higher cost of goods
sold. Consequently, gross margin contracted 230 basis points
(bps) in the quarter to 18.5%. Further, operating income
including non-cash impairment charge declined to $0.7 million
from $75.8 million in the year-ago quarter.
revenues increased 6.2% to $482.8 million on the back of a rise
in volumes and increased pricing for Carpet Underlay. Operating
income increased 17% year over year to $40.3 million owing to
Sales of Commercial
Fixturing & Components
fell 7.8% to $83.7 million. On the other hand, the segment
recorded an operating loss of $2.5 million, compared with an
income of $0.9 million in the comparable prior-year quarter,
primarily due to a decline in sales.
segment's sales witnessed 5.8% growth to $197.9 million, mainly
benefiting from acquisitions but partially offset by a 4% fall in
same-location sales. Same-location sales were adversely affected
by decline in steel prices at the beginning of the quarter that
more than offset the benefit of increased unit volume. Operating
income dipped 20% year over year to $12.6 million, due to lower
segment's sales rose 8.6% year over year to $203.7 million,
driven by strong sales in Automotive and Machinery, offset by the
downside in Commercial Vehicle Products (CVP). However, the
segment recorded an operating loss of $38.8 million, mainly due
to CVP impairment charges.
Highlights of Full-Year 2013 Performance
The company's adjusted earnings for 2013 came in at $1.54 per
share, up 5% from the comparable year-ago figure of $1.47. The
rise was primarily driven by solid top-line growth, leveraged
operating expenses and lower share count. Adjusted earnings also
exceeded the Zacks Consensus Estimate by a penny. Total sales for
the year rose 1% year over year to $3,706.1 million. However, the
company's top line missed the Zacks consensus Estimate of $3,744
Other Financial Details
Leggett, which competes with
Stanley Furniture Co. Inc.
), maintained a solid financial position as of the end of 2013,
with cash and equivalents of $272.7 million, long-term debt of
$688.4 million and shareholders' equity of $1,399.2 million. The
company's net debt to net capital ratio as of Dec 31, 2013 was
27%, below the 2012 level of 29% as well as the company's
long-term targeted range of 30.0%-40.0%.
During 2013, Leggett generated cash flow of $417 million from
its operational activities, which it utilized to meet capital
expenditure and in dividend payments and share buybacks. During
the period, the company made capital expenditure of $81 million,
dividend payment of $125 million and repurchased shares of worth
Buoyed by better-than-expected 2013 performance, Leggett is
expecting higher growth in sales, EBIT margin and operating
earnings per share (EPS) in 2014. The company projects its sales
in 2014 to grow in the range of 3%-8% and come in between $3.85
billion and $4.05 billion. On this basis, EPS is anticipated to
come in the range of $1.65-$1.85. Currently, the Zacks Consensus
Estimate is pegged at $1.72 per share.
Additionally, continuing its trend of generating more cash
than required to fund dividends and capital expenditures, the
company expects operating cash flows of over $350 million.
Capital expenditure for the year will approximately be $100
million, while the company hopes to spend $170 million toward
Further, Leggett expects to continue with its share repurchase
program, having a standing authorization to buy back up to 10
million shares every year. Further, the company intends to issue
nearly 2.5 million shares under the employee benefit plans in
Other Stocks to Consider
Currently, Leggett carries a Zacks Rank #3 (Hold). However,
other well performing stocks in the furniture industry include
Hooker Furniture Corp.
Virco Mfg. Corp.
). Both these have a Zacks Rank #1 (Strong Buy).
HOOKER FURNITUR (HOFT): Free Stock Analysis
LEGGETT & PLATT (LEG): Free Stock Analysis
STANLEY FURN CO (STLY): Free Stock Analysis
VIRCO MFG (VIRC): Get Free Report
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