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L&P Results

Leggett & Platt Reports 4Q And Full Year 2020 Results And Announces 1Q Dividend

Mon February 8, 2021 4:07 PM|PR Newswire|About: LEG

CARTHAGE, Mo., Feb. 8, 2021 /PRNewswire/ —

  • 4Q sales grew 3% vs 4Q19, to $1.182 billion
  • 4Q EPS was a fourth quarter record $.76, an increase of $.12 vs 4Q19
  • 2020 sales decreased 10% vs 2019, to $4.28 billion
  • 2020 EPS was $1.82 and 2020 adjusted1 EPS was $2.13, decreases vs 2019
  • 2020 cash flow from operations was $603 million
  • Board of Directors declared first quarter dividend of $.40 per share
  • 2021 guidance: sales of $4.6–$4.9 billion and EPS of $2.30–$2.60

Chairman and CEO Karl Glassman commented, “We are pleased to have delivered a strong fourth quarter to end a very challenging 2020. Fourth quarter sales, EBIT, EBIT margin, and earnings per share increased versus the fourth quarter of 2019. For the full year, we generated strong operating cash flow, reduced debt levels, maintained significant liquidity, and increased the dividend for the 49th consecutive year.

“I would like to thank our employees for their dedication, ingenuity, and tenacity in what was a very challenging year as a result of the COVID-19 pandemic. Our teams across our corporate functions and businesses came together to find solutions and navigate the many issues that resulted from the global pandemic. I am extremely proud of all they accomplished. We finished 2020 as a stronger company as a result of their extraordinary efforts. 

“We expect continued recovery into 2021 as a result of strong consumer demand for home-related items and global automotive, and modest improvement in our businesses in industries that are experiencing ongoing impacts from COVID-19.  We also expect continued supply chain constraints, inflation in commodity costs, and recovery of those higher costs through selling price increases.”

Fourth quarter 2020 sales of $1.182 billion, a 3% increase versus fourth quarter 2019.

  • Organic sales were up 3%
    • Volume was up 1%2; strong demand in residential end markets and Automotive was largely offset by weakness in Aerospace and Work Furniture
    • Raw material-related selling price increases and currency benefit added 2%
  • Acquisitions and divestitures offset each other

Fourth quarter EBIT was $150 million, up $15 million or 11% from fourth quarter 2019, and up $10 million or 7% from fourth quarter 2019 adjusted1 EBIT.

  • EBIT benefited primarily from fixed cost reductions, the non-recurrence of a $5 million restructuring-related charge in fourth quarter 2019, and other smaller items partially offset by change in LIFO impact
    • Fixed cost reductions implemented earlier in the year reduced 4Q costs by approximately $25 million
    • LIFO expense was $8 million in 4Q 2020, versus a LIFO benefit of $14 million in 4Q 2019
  • EBIT margin was 12.7%, up from 11.8% in the fourth quarter of 2019 and up from an adjusted1 EBIT margin of 12.2% in that same period

Fourth quarter EPS was $.76, a fourth quarter record. EPS increased $.12 versus fourth quarter 2019 and $.08 versus adjusted1 EPS in fourth quarter 2019. Improved EBIT was the primary driver of the increase, augmented by lower interest expense ($.01 per share) and a lower tax rate ($.02 per share).

2020 sales of $4.28 billion, a 10% decrease versus 2019.

  • Organic sales were down 11%
    • Volume down 10%3, largely due to economic impact of COVID-19
    • Raw material-related selling price decreases earlier in the year reduced sales 1%
  • Acquisitions added 1% to sales

2020 EBIT was $401 million, down $113 million or 22% from 2019, and adjusted1 EBIT was $446 million, an $83 million or 16% decrease.

  • EBIT and adjusted1 EBIT declined primarily as a result of lower volume and change in LIFO impact, partially offset by fixed cost reductions
    • Fixed cost reductions totaled approximately $90 million for the year
    • LIFO expense was $8 million in 2020, versus a LIFO benefit of $32 million in 2019
    • 2020 adjustments were $25 million non-cash goodwill impairment charge related to our Hydraulic Cylinders business; $9 million of restructuring-related charges primarily from severance costs related to the pandemic; an $8 million non-cash impairment charge related to a note receivable; and a $4 million non-cash charge to write off stock associated with a prior year divestiture
    • 2019 adjustments were restructuring-related charges of $15 million and ECS transaction costs of $1 million
  • EBIT margin was 9.4%, down from 10.8% in 2019, and adjusted1 EBIT margin was 10.4%, a decrease from 11.1% in 2019

2020 EPS was $1.82, a decrease of $.65 versus 2019. Full year adjusted1 EPS was $2.13, a decrease of $.44, reflecting lower adjusted1 EBIT.

SEGMENT RESULTS – Fourth Quarter 2020 (versus 4Q 2019)

Bedding Products –

  • Trade sales increased 3%
    • Volume increased 2%; growth in ECS, European Spring, and U.S. Spring was partially offset by lower volume in Adjustable Bed and exited volume in Drawn Wire
    • Raw material-related selling price increases added 3%
    • Divestitures reduced sales by approximately 2% (small operations in Drawn Wire and former Fashion Bed business)
  • EBIT increased $6 million, primarily from fixed cost reductions and volume growth, partially offset by change in LIFO impact

SEGMENT RESULTS – Full Year 2020 (versus 2019)

Bedding Products –

  • Trade sales declined 10%
    • Volume was down 9%4, primarily due to pandemic-related economic declines earlier in the year
    • Raw material-related price decreases and currency impact reduced sales 1%
  • EBIT decreased $50 million, primarily from lower volume, change in LIFO impact, an $8 million impairment related to a note receivable, and lower metal margin in our rod mill partially offset by fixed cost reductions