Company News
November 4, 2020
Leggett & Platt Investors’ Call Highlights
Karl Glassman
Good morning and thank you for joining us today. First and foremost, I would like to thank our employees for their continued commitment to keeping each other safe and healthy while serving our customers. We are pleased to deliver strong third quarter results in these uncertain times and this could not have happened without the dedication and hard work of our people.
As we reported yesterday, third quarter earnings per share were a quarterly record of $0.77; this included $6 million of restructuring charges incurred primarily from pandemic-related cost reductions. Third quarter 2019 EPS was $0.74 and included $0.02 per share of restructuring-related charges. Excluding these items, third quarter adjusted earnings of $0.80 were up $0.04 from adjusted 2019 third quarter earnings.
Third quarter EBIT was a quarterly record $147 million. EBIT increased in the quarter versus third quarter last year primarily due to lower fixed cost, partially offset by lower volume and a change in LIFO impact. EBIT margin increased 60 basis points to 12.2%, while adjusted EBIT margin increased 80 basis points to 12.7% and adjusted EBITDA margins increased 80 basis points to 16.6%.
Third quarter sales were $1.208 billion, down 3% versus third quarter of 2019. Continued strong demand in residential end markets was more than offset by weaknesses in Aerospace and Work Furniture. Operating cash flow in the quarter was a record $261 million. Adjusted working capital as a percent of annualized sales for the quarter improved to a notable 8.7% versus 10.7% in the third quarter of 2019. As we also reported yesterday, our Board of Directors declared a $0.40 per share fourth quarter dividend. At an annual dividend of $1.60 per share, we have increased our annual dividend for 49 consecutive years. We remain committed to our position as a Dividend Aristocrat.
At the end of October, we received positive news related to the US mattress industries anti-dumping petition on mattress importers from seven countries including Vietnam, Indonesia and Cambodia. The Department of Commerce made a preliminary determination that mattresses were being sold at prices that violate the US trade laws and imposed preliminary duties that range from 3% to 990%. Also, in the quarter, the Department of Commerce imposed preliminary countervailing duties of 98% on China. We anticipate final determinations in these investigations in 2021 likely during second quarter. This should allow domestic mattress producers to compete on a more level playing field.
The Company remains well positioned both competitively and financially to capitalize on long-term opportunities in various end markets. Our enduring long-term fundamentals give us confidence in our ability to continue to create value for our shareholders.
Mitch Dolloff
While challenges remain in most of these areas, we continue to make headway and will provide more detail as we discuss each segment. Sales in our Bedding Products segment were down 2% in the third quarter. Strong demand throughout the quarter in the bedding market drove sales growth in ECS, US Spring, and European Spring. This growth was more than offset by lower volume in Adjustable bed and exited volume in Fashion Bed and Drawn Wire. We continue to increase production while managing supply challenges with non-woven fabrics and labor shortages. We found some alternatives for our non-woven fabrics, but they are less efficient and constrained production and are higher cost. We also incurred significant additional cost to air freight non-woven materials in an effort to better meet demand.
In our US Spring business, staffing is above the pre-COVID levels and we continue adding employees in response to strong demand. During the quarter, we also began to face supply constraints on TDI, a chemical used in the production of foam. Producers of TDI declared force majeure and significantly reduced supply of the chemical. While the supply constraints have relaxed to a degree, we expect to see reduced supply through at least the end of the year. Within the last month, we have also seen shortages of polyols and MDI, chemical more widely used in our specialty foams. Producers have pointed to equipment outages and hurricanes in the Gulf as well as raw material availability as impediments to production. We anticipate a tight supply of these chemicals through mid-2021. Our supply chains have also been hampered by congested ports, especially on the West Coast of the US. We are working diligently to address these issues and increase production so that we can better meet growing levels of market demand.
Keith Hughes
Thank you. A couple of questions. First, your Specialty Foam sales were up as you noted in the slides. Given some of these force majeure on various chemicals, is growth going to deteriorate during the fourth quarter as a result of the actions that occurred?
Karl Glassman
Mitch, do you want to handle it, It’s to be determined based on chemical availability, it’s going to be tight. But Mitch, do you want to elaborate?
Mitch Dolloff
Yes, I mean I think that’s the best way to answer it, Karl. We are on allocation under all — of all those chemicals under force majeure. There has been a number of issues that have popped up from mechanical issues to availability of raw materials, to hurricanes and tropical storms that have all impacted these things. So we are — I think we’re getting by but it’s tight and it’s hard to predict how long this will last. So I think at this point, I wouldn’t be — I wouldn’t put a negative spin on the fourth quarter, but it’s going to be tight.
Keith Hughes
Okay. And if we switch over to Home Furniture, it was up 4% in the quarter, that’s another area where you’ve heard kind of surging sales. Is there — were there operational issues there or production issues there or where do you think you stand versus market growth?
Karl Glassman
Yes, why don’t I start and then Steve, if you want to pile on that. Remember, if you look at the whole segment of FF&T, through the first three weeks of July, we told you that sales were up 7% and then they ended up being 1%. And I don’t want anyone to think that’s a call on Home Furniture in that Home Furniture was up strongly in early July because in 2020, the Home Furniture producers in the United States produced as opposed to taking our normal, always the July 4 week and sometimes two weeks of July. So the comp was exceeded significantly. Home Furniture demand subsequent to those first three weeks of the quarter continued to be strong. Our customers have been somewhat impacted by labor availability issues, so have we to a lesser degree. They have been impacted by the TDI issue that was most acute in September that Mitch made reference to. So furniture demand is strong, we have — we are very comfortable with our market share position and the position that the industry holds. Said differently, there is a backlog in Home Furniture that is consistent with the backlog in Bedding. So all is well on Home Furniture. But Steve, I’ve jumped in front of you.
November 4, 2020
Leggett & Platt Investors’ Call Highlights
Karl Glassman
Good morning and thank you for joining us today. First and foremost, I would like to thank our employees for their continued commitment to keeping each other safe and healthy while serving our customers. We are pleased to deliver strong third quarter results in these uncertain times and this could not have happened without the dedication and hard work of our people.
As we reported yesterday, third quarter earnings per share were a quarterly record of $0.77; this included $6 million of restructuring charges incurred primarily from pandemic-related cost reductions. Third quarter 2019 EPS was $0.74 and included $0.02 per share of restructuring-related charges. Excluding these items, third quarter adjusted earnings of $0.80 were up $0.04 from adjusted 2019 third quarter earnings.
Third quarter EBIT was a quarterly record $147 million. EBIT increased in the quarter versus third quarter last year primarily due to lower fixed cost, partially offset by lower volume and a change in LIFO impact. EBIT margin increased 60 basis points to 12.2%, while adjusted EBIT margin increased 80 basis points to 12.7% and adjusted EBITDA margins increased 80 basis points to 16.6%.
Third quarter sales were $1.208 billion, down 3% versus third quarter of 2019. Continued strong demand in residential end markets was more than offset by weaknesses in Aerospace and Work Furniture. Operating cash flow in the quarter was a record $261 million. Adjusted working capital as a percent of annualized sales for the quarter improved to a notable 8.7% versus 10.7% in the third quarter of 2019. As we also reported yesterday, our Board of Directors declared a $0.40 per share fourth quarter dividend. At an annual dividend of $1.60 per share, we have increased our annual dividend for 49 consecutive years. We remain committed to our position as a Dividend Aristocrat.
At the end of October, we received positive news related to the US mattress industries anti-dumping petition on mattress importers from seven countries including Vietnam, Indonesia and Cambodia. The Department of Commerce made a preliminary determination that mattresses were being sold at prices that violate the US trade laws and imposed preliminary duties that range from 3% to 990%. Also, in the quarter, the Department of Commerce imposed preliminary countervailing duties of 98% on China. We anticipate final determinations in these investigations in 2021 likely during second quarter. This should allow domestic mattress producers to compete on a more level playing field.
The Company remains well positioned both competitively and financially to capitalize on long-term opportunities in various end markets. Our enduring long-term fundamentals give us confidence in our ability to continue to create value for our shareholders.
Mitch Dolloff
While challenges remain in most of these areas, we continue to make headway and will provide more detail as we discuss each segment. Sales in our Bedding Products segment were down 2% in the third quarter. Strong demand throughout the quarter in the bedding market drove sales growth in ECS, US Spring, and European Spring. This growth was more than offset by lower volume in Adjustable bed and exited volume in Fashion Bed and Drawn Wire. We continue to increase production while managing supply challenges with non-woven fabrics and labor shortages. We found some alternatives for our non-woven fabrics, but they are less efficient and constrained production and are higher cost. We also incurred significant additional cost to air freight non-woven materials in an effort to better meet demand.
In our US Spring business, staffing is above the pre-COVID levels and we continue adding employees in response to strong demand. During the quarter, we also began to face supply constraints on TDI, a chemical used in the production of foam. Producers of TDI declared force majeure and significantly reduced supply of the chemical. While the supply constraints have relaxed to a degree, we expect to see reduced supply through at least the end of the year. Within the last month, we have also seen shortages of polyols and MDI, chemical more widely used in our specialty foams. Producers have pointed to equipment outages and hurricanes in the Gulf as well as raw material availability as impediments to production. We anticipate a tight supply of these chemicals through mid-2021. Our supply chains have also been hampered by congested ports, especially on the West Coast of the US. We are working diligently to address these issues and increase production so that we can better meet growing levels of market demand.
Keith Hughes
Thank you. A couple of questions. First, your Specialty Foam sales were up as you noted in the slides. Given some of these force majeure on various chemicals, is growth going to deteriorate during the fourth quarter as a result of the actions that occurred?
Karl Glassman
Mitch, do you want to handle it, It’s to be determined based on chemical availability, it’s going to be tight. But Mitch, do you want to elaborate?
Mitch Dolloff
Yes, I mean I think that’s the best way to answer it, Karl. We are on allocation under all — of all those chemicals under force majeure. There has been a number of issues that have popped up from mechanical issues to availability of raw materials, to hurricanes and tropical storms that have all impacted these things. So we are — I think we’re getting by but it’s tight and it’s hard to predict how long this will last. So I think at this point, I wouldn’t be — I wouldn’t put a negative spin on the fourth quarter, but it’s going to be tight.
Keith Hughes
Okay. And if we switch over to Home Furniture, it was up 4% in the quarter, that’s another area where you’ve heard kind of surging sales. Is there — were there operational issues there or production issues there or where do you think you stand versus market growth?
Karl Glassman
Yes, why don’t I start and then Steve, if you want to pile on that. Remember, if you look at the whole segment of FF&T, through the first three weeks of July, we told you that sales were up 7% and then they ended up being 1%. And I don’t want anyone to think that’s a call on Home Furniture in that Home Furniture was up strongly in early July because in 2020, the Home Furniture producers in the United States produced as opposed to taking our normal, always the July 4 week and sometimes two weeks of July. So the comp was exceeded significantly. Home Furniture demand subsequent to those first three weeks of the quarter continued to be strong. Our customers have been somewhat impacted by labor availability issues, so have we to a lesser degree. They have been impacted by the TDI issue that was most acute in September that Mitch made reference to. So furniture demand is strong, we have — we are very comfortable with our market share position and the position that the industry holds. Said differently, there is a backlog in Home Furniture that is consistent with the backlog in Bedding. So all is well on Home Furniture. But Steve, I’ve jumped in front of you.
November 3, 2020
Univar to Distribute Huntsman Catalysts
Huntsman Appoints Univar Solutions as Distributor of Polyurethane Additives Portfolio in the Americas
News provided by Univar Solutions Inc.
Nov 02, 2020, 16:30 ET
DOWNERS GROVE, Ill., Nov. 2, 2020 /PRNewswire/ — Univar Solutions Inc. (NYSE: UNVR) (“Univar Solutions” or “the Company”), a global chemical and ingredient distributor and provider of value-added services, announced today that it has been appointed distributor of Huntsman’s Performance Products division’s portfolio of polyurethane additives into the Americas polyurethane market. These specialty lines include the JEFFADD® Aldehyde Scavenger and JEFFCAT® Catalyst product brands, which are used extensively in the production of polyurethane foams, coatings, adhesives, elastomers and high-modulus castings for the automotive, refrigeration, furniture and bedding, as well as building and construction markets.
“We’re very excited to represent Huntsman’s portfolio of polyurethane additives throughout the Americas as our network, digital technology, technical expertise, and market knowledge is expected to help customers’ efforts with developing low emission polyurethane systems for better sustainability profiles,” said Nick Powell, President, Specialty Chemicals and Ingredients for Univar Solutions.
With a high-level focus on reducing aldehyde, fogging, odor and volatile organic compound emissions, Huntsman Performance Products’ specialized JEFFADD® Aldehyde Scavenger and JEFFCAT® Catalyst technologies help meet some of the most stringent emission specifications in the polyurethane industry. And Univar Solutions features polyurethane centers of excellence through a global network of solutions centers with resources dedicated to its new Industrial Solutions vertical market approach for the coatings, adhesives, sealants and elastomers segments.
David Ming, vice president of Huntsman’s Performance Products Americas business, said, “We are excited to build on our existing partnership with Univar Solutions Inc. which will bring a first class experience to our customers and help enable their success.”
November 3, 2020
Univar to Distribute Huntsman Catalysts
Huntsman Appoints Univar Solutions as Distributor of Polyurethane Additives Portfolio in the Americas
News provided by Univar Solutions Inc.
Nov 02, 2020, 16:30 ET
DOWNERS GROVE, Ill., Nov. 2, 2020 /PRNewswire/ — Univar Solutions Inc. (NYSE: UNVR) (“Univar Solutions” or “the Company”), a global chemical and ingredient distributor and provider of value-added services, announced today that it has been appointed distributor of Huntsman’s Performance Products division’s portfolio of polyurethane additives into the Americas polyurethane market. These specialty lines include the JEFFADD® Aldehyde Scavenger and JEFFCAT® Catalyst product brands, which are used extensively in the production of polyurethane foams, coatings, adhesives, elastomers and high-modulus castings for the automotive, refrigeration, furniture and bedding, as well as building and construction markets.
“We’re very excited to represent Huntsman’s portfolio of polyurethane additives throughout the Americas as our network, digital technology, technical expertise, and market knowledge is expected to help customers’ efforts with developing low emission polyurethane systems for better sustainability profiles,” said Nick Powell, President, Specialty Chemicals and Ingredients for Univar Solutions.
With a high-level focus on reducing aldehyde, fogging, odor and volatile organic compound emissions, Huntsman Performance Products’ specialized JEFFADD® Aldehyde Scavenger and JEFFCAT® Catalyst technologies help meet some of the most stringent emission specifications in the polyurethane industry. And Univar Solutions features polyurethane centers of excellence through a global network of solutions centers with resources dedicated to its new Industrial Solutions vertical market approach for the coatings, adhesives, sealants and elastomers segments.
David Ming, vice president of Huntsman’s Performance Products Americas business, said, “We are excited to build on our existing partnership with Univar Solutions Inc. which will bring a first class experience to our customers and help enable their success.”
November 2, 2020
Tosoh Results
Tosoh Reports Its Consolidated Results for Fiscal 2020
October 30, 2020 –
Tokyo, Japan—Tosoh Corporation is pleased to announce its consolidated results for the first half of fiscal 2021, from April 1, 2020, to September 30, 2020.
The company’s consolidated net sales amounted to ¥328.5 billion (US$3.1 billion), down ¥67.9 billion, or 17.1%, from the same period a year earlier. The decrease was attributable to a contraction in global demand caused by the spread of the coronavirus and to the resulting decline in overseas market conditions for naphtha and other products.
Operating income also decreased, ¥22.8 billion, or 56.3%, over the same period the preceding year, to ¥17.6 billion (US$164.6 million). Lower sales volumes, worsening trade conditions as declining sales prices exceeding the impact of lower raw material and fuel prices, and a deterioration in the difference between product receipt and payment contributed to the decrease in operating income.
Ordinary income was ¥18.0 billion (US$168.4 million), a decrease of ¥23.9 billion, or 57.1%, compared with the first half of fiscal 2020. Profit attributable to owners of the parent company totaled ¥11.7 billion ((US$109.4 million), a decrease of ¥15.1 billion, or 56.3%, over the same term the previous year.
During the period under review, the spread of the coronavirus brought about restrictions on economic and social activities and rapid declines in demand domestically and abroad. These conditions led to a rapid decline in both Japanese and global economies. As for the global economy, China, which resumed economic activity early, is experiencing an economic recovery. However, the number of infections continues to rise in Europe, the United States, and emerging countries. And the pace of recovery in demand varies by region, due to the different timing and extent of easing of restrictions on economic activity, as well as to regional economic measures. Given this, prolonged economic stagnation remains a concern.
Results by Business Segment
Chlor-alkali Group
The Chlor-alkali Group’s net sales decreased ¥28.4 billion, or 19.3%, to ¥119.0 billion (US$1.1 billion). Its operating income likewise fell, ¥10.3 billion, or 91.6%, to ¥0.9 billion (US$8.4 million), on account of the decline in sales prices exceeding the impact of lower raw material and fuel prices, as well as decreased shipments of urethane raw materials and polyvinyl chloride (PVC) resin.
An increase in production volume led to an increase in shipments of caustic soda, primarily for export. And product prices fell, reflecting the deterioration in overseas market conditions. Shipments of vinyl chloride monomer (VCM) rose in line with an increase in production volume, and worsening market conditions abroad and falling naphtha prices exerted downward pressure on product prices. The spread of coronavirus infection suppressed demand for PVC resin both domestically and overseas, leading to a decrease in shipments. And worsening market conditions abroad caused product prices to fall.
Domestic shipments of cement decreased due to sluggish demand.
Domestic and export shipments of methylene diphenyl diisocyanate (MDI) fell due to the impact of the coronavirus. Moreover, product prices fell, reflecting the decline in overseas markets. Shipments in Japan and abroad of hexamethylene diisocyanate (HDI) hardeners decreased as the spread of the coronavirus suppressed demand.
Specialty Group
Compared with the first half of the previous fiscal year, net sales by the Specialty Group decreased ¥7.5 billion, or 8.0%, to ¥86.7 billion (US$811.0 million). The group’s operating income also decreased, 26.5%, or ¥4.1 billion, to ¥11.3 billion (US$105.7 million). The decreases in net sales and operating income resulted from lower sales volume caused by the spread of the coronavirus.
The decline in demand brought about by the spread of the coronavirus led to a decrease in ethyleneamine domestic shipments.
Among the Specialty Group’s separation media-related products, shipments of packing materials for liquid chromatography, mostly to Europe and the United States, increased. Diagnostic-related product shipments, especially of in vitro diagnostic reagents bound for Europe, the United States, and China, fell due to sluggish demand attributable to the spread of the coronavirus.
Shipment of high-silica zeolites, mainly for automotive exhaust gas catalyst applications, decreased due to flagging demand caused by the coronavirus. Shipments of zirconia for decorative applications, however, increased. Shipments of quartz glass likewise increased, buoyed by a robust semiconductor market.
Everchem Updates Archive 
Sign Up for Email Updates