Leggett Reports Mixed Quarter - Analyst Blog
05 Février 2013 - 11:20AM
Zacks
Leggett & Platt Inc. (LEG) – the
manufacturer of diversified engineered products and components –
reported fourth-quarter 2012 earnings per share of 32 cents that
rose sharply by 45% year over year. Quarterly earnings of this
Zacks Rank #3 (Hold) stock also swept past the Zacks Consensus
Estimate of 29 cents.
For the full year, Leggett posted record earnings per share of
$1.46, up 22% from 2011 level. However, earnings missed the Zacks
Consensus Estimate of $1.49. The year-over-year increase was mainly
driven by a sturdy operational performance that comprised superior
volume and margin growth, better cost management and the
acquisition of Western Pneumatic Tube.
Total sales during the quarter fell marginally to $853.0 million
compared with $854.1 million in the year-ago quarter, while it
missed the Zacks Consensus Estimate of $873 million. During the
quarter, sales were impacted by 2% decline in same location sales
and a fall in rod mill trade sales, partially offset by 1% increase
in unit volume and 2% jump in acquisitions.
Net sales for the full year grew 2% year over year to $3,720.8
million, but missed the Zacks Consensus Estimate of $3,740 million.
For the year, volume grew 3%, while acquisitions made for 1% of net
sales. However, sales results were offset by lower sales from rod
mill trade and currency translation effects.
Margins
Gross profit for the quarter surged 23.8% to $177.0 million, while
gross margin expanded 410 basis points to 20.8%, mainly due to
lower cost of goods sold.
Operating income increased substantially to $75.6 million from
$12.9 million in the year-ago quarter, benefiting from higher unit
volumes, diminished raw material costs in certain businesses and
the acquisition of Western Pneumatic Tube. Simultaneously,
operating margin also improved 740 basis points to 8.9%.
Segment Details
Fourth quarter Residential Furnishings revenues
climbed 4.2% to $454.8 million, benefiting mainly from unit volume
growth. Operating income increased 66% year over year to $34.4
million, on the back of increased sales and absence of
restructuring costs that occurred in the year-ago quarter.
Sales of Commercial Fixturing & Components
moved down 7.2% to $90.8 million resulting from the divestiture. On
the other hand, operating income recorded a whopping increase to
$0.9 million compared with an operating loss of $6.7 million in the
prior-year quarter, driven by higher cost improvement benefits and
absence of last year’s restructuring costs.
Fourth quarter sales of the Industrial Materials
segment witnessed a 5.8% decline to $189.1 million impacted by
lower trade sales from the steel mill, offset by revenues from
acquisitions. Operating income escalated substantially to $15.8
million versus a loss of $10.9 million reported in the year-ago
quarter, on the back of lower costs, absence of last year's
restructuring related costs and improved earnings from
acquisitions.
Specialized Products segment’s sales inched up
0.6% to $188.3 million. Operating income grew 16% to $19.6 million,
mainly due to absence of last year's restructuring related
costs.
Other Financial Details
Leggett had a solid financial base at the end of 2012 with cash and
equivalents of $359.1 million, long-term debt of $853.9 million,
and shareholders' equity of $1,442.2 million. The company’s net
debt to net capital ratio as of Dec 31, 2012 was 29.4%.
The cash generated from operations increased 64% to $208.7 million
in the fourth quarter, with net cash from operations increasing 37%
to $449.7 million for the year.
Simultaneously, the company has an impressive dividend policy
alongside a regular share repurchase program, focused on returning
better value to the shareholders. During the year, the company
declared 4 quarterly dividends, but paid 5 of them. This was due to
the advance payment of the Jan 2013 dividend in Dec 2012. In doing
so, the company paid $200 million of its cash for dividend payments
in 2012.
Further enhancing investor returns, the company bought back nearly
2.0 million shares in 2012 and issued 4.7 million shares, of which
two-thirds related to employee stock options exercises.
Guidance
Leggett forecasted full-year 2013 earnings per share between $1.50
and $1.75, representing a significant rise from earnings per share
of $1.46 reported in 2012. Net sales are anticipated in the range
of $3.75–$3.95 billion, reflecting growth of 1% to 6%.
Further, continuing its trend of generating cash in excess of the
amount required to fund dividends and capital expenditures, the
company predicted operating cash flows of over $350 million.
Capital expenditures for the year are expected to be about $100
million, while the company anticipates paying $125 million toward
dividend.
Going into 2013, the company plans to return to its normal dividend
payment trend of 4 dividends a year. As a result, the company
expects to announce 4 dividends but pay only 3 of them, with the
fourth dividend being payable in Jan 2014. Further, the company
expects to continue its share repurchase program, having a standing
authorization to buy back up to 10 million shares every year.
Moreover, the company expects to issue about 3 million shares
through employee benefit schemes in 2013.
Other Stocks to Consider
Apart from Leggett, furnishing peers that are performing well
include Sealy Corporation (ZZ), Virco Mfg.
Corporation (VIRC), both of which have a Zacks Rank #1
(Strong Buy) and Hooker Furniture Corp. (HOFT),
which carries a Zacks Rank #2 (Buy).
HOOKER FURNITUR (HOFT): Free Stock Analysis Report
LEGGETT & PLATT (LEG): Free Stock Analysis Report
(VIRC): ETF Research Reports
SEALY CORP (ZZ): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Sealy (NYSE:ZZ)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Sealy (NYSE:ZZ)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024