Leggett & Platt Inc.
(
LEG
), the manufacturer of diversified engineered products and
components, posted a flat year-over-year earnings of 30 cents per
share for first-quarter 2012, missing the Zacks Consensus Estimate
of 32 cents. Benefits from increased sales were fully offset by
higher tax rate, resulting in flat year-over-year earnings
growth.
Total sales in the quarter climbed 5.7% to $946.8 million
compared with $895.8 million a year ago, benefitting from the
acquisition of Western Pneumatic Tube and increased same-location
sales. The company's quarterly sales also rose above the Zacks
Consensus Estimate of $928 million. Same-location sales increased
4.5%, driven by unit volume and inflation.
Segment Revenue
Residential Furnishings
revenue for the first quarter climbed 7.1% to $492.6 million driven
by 2% increase in inflation and a 5% rise in unit volume. However,
operating income declined 5% to $40.2 million compared with $42.1
million in the prior-year quarter as the benefit from increased
sales were more than offset by higher raw material costs and
unfavorable product mix.
Sales of
Commercial Fixturing & Components
moved down 11.5% to $114.2 million, primarily due to divesture and
an 8% decline in same location sales. Consequently, operating
income during the quarter decreased 12% to $7.2 million compared
with $8.2 million in the prior-year quarter.
First quarter sales for the
Industrial Materials
segment was up 13% to $237.7 million backed by higher inflation,
benefit from acquisition of Western Pneumatic Tube and higher same
location sales, partially offset by a 1% decline in unit volume.
Conversely, operating income declined 16%, primarily due to some
adjustment regarding the acquisition of Western Pneumatic Tube.
Specialized Products
segment witnessed growth of 6% to $185.3 million in the first
quarter. However, operating income inched down 1% to $17.9 million
compared with $18.1 million.
Margins
Gross profit for the quarter grew 4.9% to $178.3 million, while
gross margin contracted 20 basis points to 18.8%, mainly due to
higher cost of goods sold. Operating income remains almost flat at
$74.6 million compared with $74.2 million in the prior-year
quarter. However, operating margin shrunk 40 basis points to 7.9%
due to a 2% increase in selling & administrative expenses and
lower gross margin.
Other Financial Details
Leggett exited the first quarter of fiscal 2012 with cash and
equivalents of $261.2 million, long-term debt of $1,046.8 million,
and shareholders' equity of $1,343.2 million. During the quarter,
the company generated $65.1 million cash from operations and paid
$39 million toward dividend and $2.5 million to buy back the
company's shares.
Guidance
Going forward, the company expects to gain momentum as the
economy expands. Anticipating a modest economic recovery in 2012,
the company has raised its sales forecast for the fiscal in the
range of $3.65-$3.85 billion instead of $3.6-$3.8 billion
anticipated earlier. Further, the company forecasts earnings per
share between $1.25 and $1.45 for 2012, up from $1.20-$1.40 guided
earlier.
For 2012, the company expects to generate more than $325 million
in cash from operations instead of its previous expectation of $300
million, with capital spending and dividends estimated at about
$100 million and $160 million, respectively. Further, the company
remains open to capture acquisition opportunities that fit its
strategy and meet its criteria.
Leggett faces stiff competition from its rivals, such as
Flexsteel Industries Inc
. (
FLXS
),
Genuine Parts Company
(
GPC
) and
Steelcase Inc.
(
SCS
). The company currently retains a Zacks #4 Rank, which translates
to a short-term Sell rating.
Moreover, we remain cautious on the stock and uphold our
long-term Underperform recommendation. At this stage, our caution
is guided by the company's history of missing the Zacks Consensus
Estimate and we wait to see further catalysts before becoming more
positive on the stock.
GENUINE PARTS (
GPC
): Free Stock Analysis Report
LEGGETT & PLATT (
LEG
): Free Stock Analysis Report
STEELCASE INC (
SCS
): Free Stock Analysis Report
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