Leggett & Platt Incorporated
) - the manufacturer of diversified engineered products and
components - reported third-quarter 2013 earnings per share from
continuing operations of 43 cents, down nearly 4.4% from 45 cents
in the comparable year-ago quarter. The quarterly earnings also
missed the Zacks Consensus Estimate by a penny.
The company's third-quarter earnings included a gain of 6 cents
from the acquisition completed during the quarter, including
which, earnings per share came in at 49 cents, up 8.9% from 45
cents in the prior-year quarter.
Total sales of this Zacks Rank #2 (Buy) company dipped 2.1% to
$957.7 million, compared with $978.1 million in the year-ago
quarter, while it also lagged the Zacks Consensus Estimate of
$993.0 million. Sales were negatively affected by a 3% decline in
same-store sales, resulting from diminished fixture unit volume,
partially offset by a 1% positive impact from acquisitions.
Gross profit declined 5.8% year over year to $193.0 million,
mainly due to lower sales, partly offset by a slight decline in
cost of goods sold.
Operating income rose 1.2% to $106.2 million from $104.9 million
in the year-ago quarter. Simultaneously, operating margin
improved 40 basis points to 11.1%.
Third-quarter Residential Furnishings revenues increased 5.6% to
$508.6 million, primarily due to a rise in volumes and raw
material prices. Operating income increased 18.4% year over year
to $47.0 million, on the back of higher unit volume.
Sales of Commercial Fixturing & Components slipped 20.5% to
$129.5 million due to the absence of robust sale of store
fixtures to a major retailer compared to last year. On the other
hand, operating income recorded a substantial decline of 58.3% to
$8.0 million, compared with $19.2 million in the comparable
prior-year quarter, primarily due to a decline in sales.
The Industrial Materials segment's sales witnessed a 4.5% decline
to $206.0 million, impacted by a 10.0% fall in same-location
sales. Same-location sales were negatively impacted by lower
trade sales at the rod mill, deflationary trends in steel prices
and lower unit volume. Operating income dipped 15.6% year over
year to $16.2 million, due to lower sales and metal margins.
Specialized Products segment's sales rose 1.2% year over year to
$192.0 million, driven by strong sales in Automotive, offset by
the downside in Commercial Vehicle Products (CVP). Operating
income declined 4.4% to $21.9 million, mainly due to lower sales
and operational challenges in CVP.
Other Financial Details
Leggett possesses a solid financial base as of the end of
third-quarter 2013, with cash and equivalents of $298.9 million,
long-term debt of $957.5 million, and shareholders' equity of
$1,463.7 million. The company's net debt to net capital ratio as
of Sep 30, 2013 was 27.9%, 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. In August, the company raised its
quarterly dividend to 30 cents per share, up 3.4% from
second-quarter 2013. Further enhancing investor returns, the
company bought back 1.1 million shares in the quarter, bringing
the total repurchases for the nine months of 2013 to 3.9 million
Leggett now expects its 2013 sales to increase 1% to $3.75
billion, against the previous forecast of $3.75-$3.85 billion.
For 2013, Leggett expects adjusted EPS in the range of
$1.50-$1.55, compared with the prior guidance of $1.50-$1.65. The
revised guidance excludes the 6 cents gain from the acquisition
in the third quarter. Including the acquisition gain, EPS is
expected to be in the range of $1.61-$1.66.
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 $85 million, while
the company hopes to pay $125 million toward dividend.
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 consumer
discretionary sector include
Deckers Outdoor Corp.
Brown Shoe Co. Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
BROWN SHOE CO (BWS): Free Stock Analysis
DECKERS OUTDOOR (DECK): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
LEGGETT & PLATT (LEG): Free Stock Analysis
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