Leggett & Platt, Incorporated
) - the manufacturer of diversified engineered products and
components - reported second-quarter 2013 earnings per share from
continuing operations at 44 cents, up nearly 13.0% from 39
cents in the comparable year-ago quarter. The quarterly earnings
came in line with the Zacks Consensus Estimate.
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During the quarter, the company discontinued three small
operations. Including the impact of these, earnings per share
came in at 48 cents, up 7.0% from 45 cents in the prior-year
Total sales of this Zacks Rank #3 (Hold) company rose 3.0% to
$958.8 million, compared with $934.6 million in the year-ago
quarter, while lagging the Zacks Consensus Estimate of $978.0
million. Sales were favorably impacted by a 2% rise in same-store
sales, a 3% rise in unit volume and positive impact of 1% due to
acquisitions, partly offset by declining rod mill trade sales.
Gross profit grew 6.6% year over year to $199.1 million, mainly
due to higher sales, partly offset by a rise in the cost of goods
Operating income rose 13.0% to $98.5 million from $86.8 million
in the year-ago quarter. Simultaneously, operating margin
improved 100 basis points to 10.3%.
Second-quarter Residential Furnishings revenues inched up 2.6% to
$484.4 million, primarily due to rises in volumes and raw
material prices. Operating income increased 6.0% year over year
to $42.4 million, on the back of higher unit volume, positive
product mix in the U.S. spring, and benefits from building sales,
which were partly offset by pressured margin in fabric
Sales of Commercial Fixturing & Components moved up 11.0% to
$126.2 million. On the other hand, operating income recorded a
whopping rise of 155.0% to $7.9 million, compared with $3.1
million in the comparable prior-year quarter, primarily due to
surge in sales and absence of the previous year's
The Industrial Materials segment's sales witnessed a 6.9% decline
to $155.8 million, impacted by a 9.0% fall in same-location
sales. Same-location sales were negatively impacted by lower
trade sales at the rod mill and deflationary trends in steel
prices. Operating income escalated 20.0% year over year to $21.9
million, due to absence of the past year's costs involved in
acquisition-related activities, benefit from equipment sales, and
earnings derived from acquisitions.
Specialized Products segment's sales rose 6.0% year over year to
$192.0 million. Operating income increased 9.0% to $28.4 million,
mainly due to higher sales.
Other Financial Details
Leggett had a solid financial base at the end of second-quarter
2013, with cash and equivalents of $280.3 million, long-term debt
of $973.9 million, and shareholders' equity of $1,433.7 million.
The company's net debt to net capital ratio as of Jun 30, 2013
was 29.3%, marginally below the company's long-term targeted
range of 30.0%-40.0%.
Simultaneously, Leggett has an impressive dividend policy focused
on returning better value to shareholders, along with a regular
share repurchase program. On Jul 15, the company paid a
quarterly dividend of 29 cents per share, up 3.6% from
second-quarter 2012, to shareholders of record as of Jun 14.
Further enhancing investor returns, the company bought back 1.2
million shares in the quarter.
Leggett now expects its 2013 sales to increase 1%-4% to
$3.75-$3.85 billion. Earlier, the company projected sales to
For 2013, Leggett expects EPS from continuing operations to be in
the range of $1.50-$1.65, marginally below the prior guidance of
$1.55-1.75. Including tax benefits from discontinued operations,
EPs is expected to be in the range of $1.55-$1.70.
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 likely be approximately $85
million, while the company hopes to pay $125 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.
Other Stocks to Consider
Apart from Leggett, other well performing stocks in the retail
Skechers USA Inc.
Wolverine World Wide Inc
Brown Shoe Co. Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).