Company News

November 8, 2018

Amazon Bets Big on Chinese Mattresses and Tariff Timing

Retailers place Black Friday bets on plush bathrobes, mattresses, toys and scooters

  • Kohl’s is betting on shopper demand for ladies’ cardigans, cable knit holiday stockings, cook pots and radio-controlled toys, the data show.
  • Amazon ordered 50 containers full of Paw Patrol Ultimate toy fire trucks.
  • Target shipped 32,000 Razor A2 Elite scooters, 24,375 Sunbeam microwave ovens and 30,798 18-quart turkey roasters.
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CNBC_sizing_up_holiday_spending_christmas.jpg

Photo: Betsie Van der Meer | Stone | Getty Images

Giant containers of plush bathrobes, air fryers, scooters and flat-screen televisions have made their way from Asia to the U.S. in time to fill retailers’ shelves for the start of the holiday shopping season.

Retailers also ordered shipping containers and containers of cookware, toys, appliances and mattresses, according to import and shipping data from August through October as tracked by Ocean Audit, a firm that assists companies with freight issues.

Kohl’s is betting on shopper demand for ladies’ cardigans, cable knit holiday stockings, cook pots and radio-controlled toys, the data show. Amazon ordered 50 containers full of Paw Patrol Ultimate toy fire trucks. Target shipped 32,000 Razor A2 Elite scooters, 24,375 Sunbeam microwave ovens and 30,798 18-quart turkey roasters.

“These are classic doorbusters,” said Ocean Audit CEO Steve Ferreira, who analyzed the data for CNBC.

The large shipments, which left Asia in July packed in 40-foot containers on ships bound for the U.S., come amid an escalating trade conflict. China has slapped tariffs on billions of dollars of U.S. goods in retaliation for the duties the Trump administration has applied to $200 billion of its imports.

Source: Ocean Audit

A 40-foot container fits the equivalent of a three-bedroom apartment or 800 flat-screen TVs, according to BoxHub.co. Ocean Audit’s data show toy shipments are up 22 percent from last year, with some 64,512 units on order.

The data can be used to forecast what retailers are planning to promote for the year-end holiday rush, Ferreira said. “Retailer’s give a ‘tell,’ like a poker player, on what they are planning and then actually importing. These unusual container surges between August and October mean three things: Black Friday, Christmas merchandise and tariffs.”

Amazon loaded up on mattresses, which are subject to the latest U.S. tariffs imposed in September. From August to October, the e-commerce giant imported 4,000 containers of mattresses, a 397 percent increase from last year. That’s 1.6 million mattresses, assuming 400 fit on a container.

Amazon’s orders shot up the most among the retailers from August to Halloween, with 23,331 containers compared with just 2,429 in the period last year. According to the company’s freight bills, over 97 percent of its container shipments originate from China, where Amazon recently started a logistics company that enables it to work with smaller exporters.

“We are starting to see the full effects of their ability to roll up small- and medium-size Chinese exporters into one large shipment,” Ferreira said. By reaching smaller sellers, Amazon can cut deals competitors don’t have access to, he added. A men’s exotic belt might be $400 at Nordstrom but $125 at Amazon as “Amazon is reaching more smaller, boutique type exporters in China, offering arrays of products at price points we’ve never seen before.”

https://www.cnbc.com/2018/11/01/black-friday-secrets-goods-shipped-to-retailers-offer-holiday-hints.html

November 7, 2018

Leggett to Acquire Elite Comfort Solutions

Leggett & Platt To Acquire Elite Comfort Solutions For $1.25 Billion

– Combined company will be leading provider of differentiated products for the bedding industry

– Significantly expands presence in growing specialty foam and hybrid boxed bed market segment

– Opportunity to leverage Elite Comfort Solutions’ substantial and proprietary R&D capabilities and technologies

– ECS Fiscal Year 2018 sales of $611 million; EBITDA margins accretive to company average

– Expect to finance with expanded commercial paper program and $500 million 5-year term loan

– Leggett & Platt reiterates commitment to dividend track record and financial strength

– Conference call scheduled for November 7th at 8:30 a.m. Eastern (7:30 a.m. Central)

News provided by

Leggett & Platt

06:30 ET

CARTHAGE, Mo., Nov. 7, 2018 /PRNewswire/ — Diversified manufacturer Leggett & Platt (NYSE: LEG) today announced that it has entered into a definitive agreement to acquire Elite Comfort Solutions, Inc. (ECS) for $1.25 billion in cash. The transaction has been approved by the Board of Directors of Leggett & Platt and is expected to close in January 2019, subject to customary closing conditions and regulatory approvals.

ECS, a portfolio company of Arsenal Capital Partners (Arsenal), is a leader in proprietary specialized foam technology primarily for the bedding and furniture industries.  ECS’s annual sales for the fiscal year ended September 30, 2018 were $611 million. With 16 facilities across the United States, ECS operates a vertically integrated model, producing specialty foam, developing many of the chemicals and additives used in foam production, and manufacturing private-label finished products. These innovative specialty foam products include finished mattresses sold through both traditional and online channels, mattress components, mattress toppers and pillows, and furniture foams.

ECS is expected to generate double-digit sales growth and strong EBITDA margins that should be accretive to company average margins. Due to impacts from purchase accounting, ECS is expected to have a slightly negative effect on consolidated EBIT margins. For modeling purposes, in 2019, Leggett anticipates net interest expense of approximately $90 million, fully diluted shares of 136 million, and an approximate 23% tax rate. Including these factors, the acquisition is expected to be neutral to EPS in 2019 and accretive to EPS beginning in 2020.

CEO and Arsenal Comments

Karl G. Glassman, President and Chief Executive Officer of Leggett & Platt, said, “Through the combination of Leggett & Platt and Elite Comfort Solutions, we will become the leading provider of differentiated products for the bedding industry and gain critical capabilities in proprietary foam technology, along with scale in the production of private-label finished mattresses. ECS is uniquely qualified to provide e-commerce, retail and OEM customers the most advanced technology solutions in specialty foams today. With our best-in-class manufacturing capabilities and ECS’s proprietary and patented technology, we plan to capitalize on current and future trends in the market. Those trends include growth of the online mattress channel, the emergence of boxed bed brands, and those brands’ and traditional mattress manufacturers’ increasing use of hybrid and specialty grade foam technology in compressed and conventional mattresses. We look forward to benefiting from ECS’s technical expertise and working together to implement manufacturing best practices across the acquired operations. We welcome the talented team of ECS to Leggett & Platt and are excited to work closely together to better serve our customers, drive growth and deliver strong value creation for our shareholders.”

“Joining forces with Leggett & Platt enables us to provide a wider range of products and services to both companies’ valued customers,” said Chris Chrisafides, Chief Executive Officer of Elite Comfort Solutions. “We admire Leggett & Platt’s storied history, as well as its global footprint and leading product portfolio. I look forward to working closely with Karl, Perry Davis, and the entire Leggett & Platt team as we work towards a seamless integration of our two companies.”

John Televantos, a Partner at Arsenal, added “We have built ECS together with our management team to be the innovator in the polyurethane foam and bedding markets.   We are delighted to see a great permanent home for ECS and its employees.  Leggett & Platt is uniquely capable of continuing and strengthening the path we set for ECS, and we expect that the long history and great value they bring to the bedding industry will be enhanced with this acquisition.”

Transaction Financing

Leggett & Platt plans to fund the acquisition through the expansion of its commercial paper program and related revolving credit agreement. In addition, Leggett plans to enter into a $500 million 5-year term loan with its current bank group. After the transaction closes, Leggett & Platt will evaluate financing alternatives for the reduction of outstanding commercial paper, which may include issuance of notes in the debt capital markets. The company is committed to maintaining a strong, investment grade profile and expects to quickly deleverage (to a target level ratio of debt to trailing 12-months EBITDA of approximately 2.5x) by suspending share repurchases, reducing other acquisition spending, and using part of the combined company’s operating cash flow to repay debt. With all of these factors considered, Leggett & Platt is modestly changing its dividend payout target to approximately 50% of earnings (from 50-60% of earnings previously). The company strongly maintains its commitment to long-term dividend growth and expects to extend its 47-year dividend growth track record.

Compelling Strategic and Financial Rationale

  • Establishes a Global Leader in Bedding Technology and Manufacturing: ECS is a leading provider of proprietary foam technology for the bedding and furniture industries. ECS has a diversified customer mix and a strong position in the high-growth boxed bed market segment. ECS is recognized as the leader in innovative, high-quality specialty foam. Paired with Leggett & Platt’s existing bedding capabilities, international footprint and manufacturing competencies, the combined company will be the global leader in bedding technology and manufacturing.
  • Adds R&D Capabilities and Proprietary Foam Technologies: ECS’s significant proprietary and patented technology is a market differentiator and allows the company to develop unique specialty foam products for individual customers. ECS maintains numerous branded specialty additives designed to enhance foam performance by reducing heat retention, improving durability, and improving air flow. Leggett & Platt will create new hybrid products utilizing the combined company’s best-in-class specialty foam innovation and spring technologies. Leggett & Platt plans to leverage ECS’s core competency in boxed bed innovation, supply chain, and production to capitalize on this new and growing sales channel.
  • Creates Synergies Through Growth of New Hybrid Products: This opportunity to create new hybrid products utilizing the capabilities of Leggett & Platt in Comfort Core® innersprings and ECS in premium specialty foam represents strong synergies to the combined company.
  • Positions the Company to Grow Internationally: Leggett & Platt sees opportunities to capitalize on ECS’s innovative portfolio and expand internationally. The company expects to capture a greater share of global specialty foam for bedding than ECS could achieve on its own.
  • Supports Achievement of Revenue Growth Target: ECS is an outstanding match with Leggett & Platt’s acquisition screening criteria and supports achievement of the company’s long-term 6-9% revenue growth target. The acquired business is expected to grow well above Leggett’s average for the next several years.
  • Enables Strong Cash Flow Generation: The combined company expects 2019 pro forma operating cash flow to approximate $550 million. Leggett & Platt is committed to maintaining a strong, investment grade rating profile and expects to quickly de-lever through operating cash flow to approximately 2.5x debt to trailing 12-months EBITDA in 2020.

Management

Following the closing of the transaction, ECS will become a separate business unit and operate within the Residential Products segment. The ECS management team will continue to lead the business. Leggett & Platt has a history of successfully acquiring and integrating companies and looks forward to welcoming ECS’s team members to the Leggett & Platt family. Leggett & Platt plans to maintain all 16 of ECS’s manufacturing and warehousing facilities.

https://www.prnewswire.com/news-releases/leggett–platt-to-acquire-elite-comfort-solutions-for-1-25-billion-300745199.html

November 7, 2018

Leggett to Acquire Elite Comfort Solutions

Leggett & Platt To Acquire Elite Comfort Solutions For $1.25 Billion

– Combined company will be leading provider of differentiated products for the bedding industry

– Significantly expands presence in growing specialty foam and hybrid boxed bed market segment

– Opportunity to leverage Elite Comfort Solutions’ substantial and proprietary R&D capabilities and technologies

– ECS Fiscal Year 2018 sales of $611 million; EBITDA margins accretive to company average

– Expect to finance with expanded commercial paper program and $500 million 5-year term loan

– Leggett & Platt reiterates commitment to dividend track record and financial strength

– Conference call scheduled for November 7th at 8:30 a.m. Eastern (7:30 a.m. Central)

News provided by

Leggett & Platt

06:30 ET

CARTHAGE, Mo., Nov. 7, 2018 /PRNewswire/ — Diversified manufacturer Leggett & Platt (NYSE: LEG) today announced that it has entered into a definitive agreement to acquire Elite Comfort Solutions, Inc. (ECS) for $1.25 billion in cash. The transaction has been approved by the Board of Directors of Leggett & Platt and is expected to close in January 2019, subject to customary closing conditions and regulatory approvals.

ECS, a portfolio company of Arsenal Capital Partners (Arsenal), is a leader in proprietary specialized foam technology primarily for the bedding and furniture industries.  ECS’s annual sales for the fiscal year ended September 30, 2018 were $611 million. With 16 facilities across the United States, ECS operates a vertically integrated model, producing specialty foam, developing many of the chemicals and additives used in foam production, and manufacturing private-label finished products. These innovative specialty foam products include finished mattresses sold through both traditional and online channels, mattress components, mattress toppers and pillows, and furniture foams.

ECS is expected to generate double-digit sales growth and strong EBITDA margins that should be accretive to company average margins. Due to impacts from purchase accounting, ECS is expected to have a slightly negative effect on consolidated EBIT margins. For modeling purposes, in 2019, Leggett anticipates net interest expense of approximately $90 million, fully diluted shares of 136 million, and an approximate 23% tax rate. Including these factors, the acquisition is expected to be neutral to EPS in 2019 and accretive to EPS beginning in 2020.

CEO and Arsenal Comments

Karl G. Glassman, President and Chief Executive Officer of Leggett & Platt, said, “Through the combination of Leggett & Platt and Elite Comfort Solutions, we will become the leading provider of differentiated products for the bedding industry and gain critical capabilities in proprietary foam technology, along with scale in the production of private-label finished mattresses. ECS is uniquely qualified to provide e-commerce, retail and OEM customers the most advanced technology solutions in specialty foams today. With our best-in-class manufacturing capabilities and ECS’s proprietary and patented technology, we plan to capitalize on current and future trends in the market. Those trends include growth of the online mattress channel, the emergence of boxed bed brands, and those brands’ and traditional mattress manufacturers’ increasing use of hybrid and specialty grade foam technology in compressed and conventional mattresses. We look forward to benefiting from ECS’s technical expertise and working together to implement manufacturing best practices across the acquired operations. We welcome the talented team of ECS to Leggett & Platt and are excited to work closely together to better serve our customers, drive growth and deliver strong value creation for our shareholders.”

“Joining forces with Leggett & Platt enables us to provide a wider range of products and services to both companies’ valued customers,” said Chris Chrisafides, Chief Executive Officer of Elite Comfort Solutions. “We admire Leggett & Platt’s storied history, as well as its global footprint and leading product portfolio. I look forward to working closely with Karl, Perry Davis, and the entire Leggett & Platt team as we work towards a seamless integration of our two companies.”

John Televantos, a Partner at Arsenal, added “We have built ECS together with our management team to be the innovator in the polyurethane foam and bedding markets.   We are delighted to see a great permanent home for ECS and its employees.  Leggett & Platt is uniquely capable of continuing and strengthening the path we set for ECS, and we expect that the long history and great value they bring to the bedding industry will be enhanced with this acquisition.”

Transaction Financing

Leggett & Platt plans to fund the acquisition through the expansion of its commercial paper program and related revolving credit agreement. In addition, Leggett plans to enter into a $500 million 5-year term loan with its current bank group. After the transaction closes, Leggett & Platt will evaluate financing alternatives for the reduction of outstanding commercial paper, which may include issuance of notes in the debt capital markets. The company is committed to maintaining a strong, investment grade profile and expects to quickly deleverage (to a target level ratio of debt to trailing 12-months EBITDA of approximately 2.5x) by suspending share repurchases, reducing other acquisition spending, and using part of the combined company’s operating cash flow to repay debt. With all of these factors considered, Leggett & Platt is modestly changing its dividend payout target to approximately 50% of earnings (from 50-60% of earnings previously). The company strongly maintains its commitment to long-term dividend growth and expects to extend its 47-year dividend growth track record.

Compelling Strategic and Financial Rationale

  • Establishes a Global Leader in Bedding Technology and Manufacturing: ECS is a leading provider of proprietary foam technology for the bedding and furniture industries. ECS has a diversified customer mix and a strong position in the high-growth boxed bed market segment. ECS is recognized as the leader in innovative, high-quality specialty foam. Paired with Leggett & Platt’s existing bedding capabilities, international footprint and manufacturing competencies, the combined company will be the global leader in bedding technology and manufacturing.
  • Adds R&D Capabilities and Proprietary Foam Technologies: ECS’s significant proprietary and patented technology is a market differentiator and allows the company to develop unique specialty foam products for individual customers. ECS maintains numerous branded specialty additives designed to enhance foam performance by reducing heat retention, improving durability, and improving air flow. Leggett & Platt will create new hybrid products utilizing the combined company’s best-in-class specialty foam innovation and spring technologies. Leggett & Platt plans to leverage ECS’s core competency in boxed bed innovation, supply chain, and production to capitalize on this new and growing sales channel.
  • Creates Synergies Through Growth of New Hybrid Products: This opportunity to create new hybrid products utilizing the capabilities of Leggett & Platt in Comfort Core® innersprings and ECS in premium specialty foam represents strong synergies to the combined company.
  • Positions the Company to Grow Internationally: Leggett & Platt sees opportunities to capitalize on ECS’s innovative portfolio and expand internationally. The company expects to capture a greater share of global specialty foam for bedding than ECS could achieve on its own.
  • Supports Achievement of Revenue Growth Target: ECS is an outstanding match with Leggett & Platt’s acquisition screening criteria and supports achievement of the company’s long-term 6-9% revenue growth target. The acquired business is expected to grow well above Leggett’s average for the next several years.
  • Enables Strong Cash Flow Generation: The combined company expects 2019 pro forma operating cash flow to approximate $550 million. Leggett & Platt is committed to maintaining a strong, investment grade rating profile and expects to quickly de-lever through operating cash flow to approximately 2.5x debt to trailing 12-months EBITDA in 2020.

Management

Following the closing of the transaction, ECS will become a separate business unit and operate within the Residential Products segment. The ECS management team will continue to lead the business. Leggett & Platt has a history of successfully acquiring and integrating companies and looks forward to welcoming ECS’s team members to the Leggett & Platt family. Leggett & Platt plans to maintain all 16 of ECS’s manufacturing and warehousing facilities.

https://www.prnewswire.com/news-releases/leggett–platt-to-acquire-elite-comfort-solutions-for-1-25-billion-300745199.html

November 1, 2018

Tosoh First Half Results

Tosoh : Reports on First-Half Consolidated Results for Fiscal 2019

Tokyo, Japan-Tosoh Corporation is pleased to announce its consolidated results for the first half of fiscal 2019, from April 1, 2018, to September 30, 2018.

The company’s consolidated net sales amounted to ¥424.5 billion (US$3.8 billion), up ¥32.8 billion, or 8.4%, from the same period a year earlier. The increase was attributable to higher sales prices driven by an increase in the price of naphtha and by rising overseas product markets, and to progress in the Engineering Group’s plant projects in the electronic industry.

Operating income also increased ¥1.5 billion, or 2.8%, over the same period the preceding year, to ¥56.0 billion (US$509.1 million). Although trade conditions worsened because of increased raw material and fuel prices, the increased earnings recorded by the Specialty and Engineering groups helped to drive the increase in operating income.

Ordinary income climbed ¥2.4 billion, or 4.3%, compared with the first half of fiscal 2018, to ¥60.7 billion (US$552.2 million). This rise was due to foreign exchange gains. Profit attributable to owners of the parent company totaled ¥41.7 billion (US$378.8 million), an increase of ¥1.4 billion, or 3.4%, over the same term the previous year.

Results by Business Segment

Petrochemical Group

Petrochemical Group net sales rose ¥5.0 billion, or 5.6%, to ¥93.9 billion (US$853.8 million), compared with the first half of fiscal 2018. The group’s operating income decreased ¥2.3 billion, or 22.2%, to ¥8.0 billion (US$72.6 million).

Shipments of olefin products, such as ethylene and propylene, decreased in line with a decrease in production volume due to fiscal 2019 being a scheduled maintenance year. The group, however, increased sales prices of its olefin products to reflect increased naphtha costs.

Shipments of polyethylene resin in Japan decreased, but the group again increased product prices to reflect the increase in naphtha costs. Chloroprene rubber shipments likewise decreased because of a decline in production volume, but export prices rose, driven by strong overseas demand.

Chlor-alkali Group

The Chlor-alkali Group’s net sales increased ¥12.7 billion, or 8.1%, to ¥168.7 billion (US$1.5 billion). Its operating income likewise rose, ¥157 million, or 0.6%, to ¥25.1 billion (US$227.8 million), compared with the corresponding period the preceding year.

Domestic and international shipments of caustic soda were strong. Additionally, prices were revised upward due to domestic caustic soda price adjustments. Vinyl chloride monomer shipments increased. Prices also increased, driven by improvements in overseas markets. Polyvinyl chloride resin shipments declined on account of decreased production volume, but domestic price adjustments and improved conditions in overseas markets likewise resulted in an increase in product prices.

Domestic shipments of cement were strong. Cement exports, however, decreased.

Shipments of methylene diphenyl diisocyanate (MDI) fell. But MDI export prices rose to reflect the improvement in overseas market conditions.

https://www.marketscreener.com/TOSOH-CORPORATION-6491225/news/Tosoh-Reports-on-First-Half-Consolidated-Results-for-Fiscal-2019-27523298/

 

November 1, 2018

Tosoh First Half Results

Tosoh : Reports on First-Half Consolidated Results for Fiscal 2019

Tokyo, Japan-Tosoh Corporation is pleased to announce its consolidated results for the first half of fiscal 2019, from April 1, 2018, to September 30, 2018.

The company’s consolidated net sales amounted to ¥424.5 billion (US$3.8 billion), up ¥32.8 billion, or 8.4%, from the same period a year earlier. The increase was attributable to higher sales prices driven by an increase in the price of naphtha and by rising overseas product markets, and to progress in the Engineering Group’s plant projects in the electronic industry.

Operating income also increased ¥1.5 billion, or 2.8%, over the same period the preceding year, to ¥56.0 billion (US$509.1 million). Although trade conditions worsened because of increased raw material and fuel prices, the increased earnings recorded by the Specialty and Engineering groups helped to drive the increase in operating income.

Ordinary income climbed ¥2.4 billion, or 4.3%, compared with the first half of fiscal 2018, to ¥60.7 billion (US$552.2 million). This rise was due to foreign exchange gains. Profit attributable to owners of the parent company totaled ¥41.7 billion (US$378.8 million), an increase of ¥1.4 billion, or 3.4%, over the same term the previous year.

Results by Business Segment

Petrochemical Group

Petrochemical Group net sales rose ¥5.0 billion, or 5.6%, to ¥93.9 billion (US$853.8 million), compared with the first half of fiscal 2018. The group’s operating income decreased ¥2.3 billion, or 22.2%, to ¥8.0 billion (US$72.6 million).

Shipments of olefin products, such as ethylene and propylene, decreased in line with a decrease in production volume due to fiscal 2019 being a scheduled maintenance year. The group, however, increased sales prices of its olefin products to reflect increased naphtha costs.

Shipments of polyethylene resin in Japan decreased, but the group again increased product prices to reflect the increase in naphtha costs. Chloroprene rubber shipments likewise decreased because of a decline in production volume, but export prices rose, driven by strong overseas demand.

Chlor-alkali Group

The Chlor-alkali Group’s net sales increased ¥12.7 billion, or 8.1%, to ¥168.7 billion (US$1.5 billion). Its operating income likewise rose, ¥157 million, or 0.6%, to ¥25.1 billion (US$227.8 million), compared with the corresponding period the preceding year.

Domestic and international shipments of caustic soda were strong. Additionally, prices were revised upward due to domestic caustic soda price adjustments. Vinyl chloride monomer shipments increased. Prices also increased, driven by improvements in overseas markets. Polyvinyl chloride resin shipments declined on account of decreased production volume, but domestic price adjustments and improved conditions in overseas markets likewise resulted in an increase in product prices.

Domestic shipments of cement were strong. Cement exports, however, decreased.

Shipments of methylene diphenyl diisocyanate (MDI) fell. But MDI export prices rose to reflect the improvement in overseas market conditions.

https://www.marketscreener.com/TOSOH-CORPORATION-6491225/news/Tosoh-Reports-on-First-Half-Consolidated-Results-for-Fiscal-2019-27523298/