L&P Lowers Guidance
October 10, 2022
LEGGETT & PLATT LOWERS FULL-YEAR GUIDANCE AND ANNOUNCES RECENT ACQUISITIONS
Oct. 10, 2022 4:10 PM ETLeggett & Platt, Incorporated (LEG)
CARTHAGE, Mo., Oct. 10, 2022 /PRNewswire/ —
- Full year 2022 sales guidance lowered to $5.1–$5.2 billion
- Full year 2022 EPS guidance reduced to $2.30–$2.45
- Acquired a Hydraulic Cylinders business and two Textiles businesses
Diversified manufacturer Leggett & Platt (LEG) lowered its full-year 2022 guidance:
- Sales guidance now $5.1 to $5.2 billion (vs prior $5.2–$5.4 billion)
- Decrease is primarily due to lower volume than previously expected
- EPS guidance now $2.30 to $2.45 (vs prior $2.65–$2.80)
- Decrease is primarily from lower volume, reduced production, slower than anticipated cost recovery in Automotive, and operational inefficiencies in Specialty Foam
- Expect sequential improvement from 3Q to 4Q
- Based upon this guidance, EBIT margin range should be 9.5% to 10.0% (vs prior 10.5%–10.7%)
- Cash from operations expected to be $400 to $450 million (vs prior $550–$600 million)
President and CEO Mitch Dolloff commented, “The increasingly challenged global economic environment and consumer backdrop is expected to result in lower than previously anticipated sales and earnings in the third and fourth quarters of 2022. Demand in the U.S. bedding market is fairly stable but remains at relatively weak levels as industry headwinds persist, including inflationary and monetary policy impacts on consumer spending and consumer sentiment as well as higher inventory levels. Given the bedding demand environment and slowing market for steel generally, we are cutting production in our Rod and Wire businesses to reduce inventory.
“Our Specialty Foam business has experienced larger demand impacts as a result of previous pandemic-related supply issues and channel specific pressures. Lower demand in Specialty Foam in combination with operational inefficiencies, which are being addressed by continuing integration work, are taking longer than originally expected to resolve.
“Demand in International Bedding has declined more significantly amid geopolitical and macroeconomic disruptions in Europe. Home Furniture demand has softened significantly in the last few months with slower consumer demand and excess inventory at retail.
“Volume and cost recovery are improving sequentially in Automotive, but at a slower rate than anticipated. While improving year-over-year, industry production forecasts remain dynamic as supply chain and geopolitical impacts bring continued volatility.
“We continue to focus on things we can control and are taking action to mitigate the impact of these challenges by aligning costs, production levels, and inventory with demand; evaluating near-term opportunities with our customers and working with them on new product developments; and continuing to build out our existing businesses through acquisitions. Our strong balance sheet and cash flow give us confidence in our ability to navigate challenging markets while investing in long-term opportunities.”
In late August, Leggett & Platt acquired a leading global manufacturer of hydraulic cylinders for heavy construction machinery. The company has manufacturing facilities in Eschwege, Germany and Ningbo, China and a distribution facility in Halifax, Pennsylvania with combined 2021 sales of approximately $65 million. Also, in late August, the Company acquired a converter of construction fabrics for the furniture and bedding industries located in Shannon, Mississippi. On October 3, Leggett & Platt acquired a distributor of geo components located in Ottawa, Canada. Each of these Textiles businesses have annual sales under $10 million.