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Leggett (LEG) Q2 Earnings Top, Sales Miss on Lower Volumes
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Leggett & Platt, Incorporated (LEG - Free Report) reported mixed second-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same.
Following the earnings release, the company’s shares dropped more than 3% in the after-hours trading session on Aug 3. It witnessed lower sales and earnings in the quarter, largely due to the economic impact of the COVID-19 pandemic. Also, the company did not provide any guidance for 2020 due to coronavirus-led macroeconomic uncertainty.
Quarter in Details
Leggett reported adjusted earnings of 16 cents per share, which beat the Zacks Consensus Estimate of 8 cents by 100%. However, the figure declined 75% from the year-ago period due to lower EBIT.
Total sales were $845 million, which missed the consensus mark of $914 million by 7.5% and decreased 30% from the prior-year level. The downside was mainly due to a 31% decline in organic sales given 29% lower volume. Also, raw material-related selling price decreases and negative currency impacted sales by 2%. Meanwhile, acquisitions contributed 1% to sales growth.
Adjusted EBIT fell 62% from the prior-year period to $51 million, partially offset by lower fixed costs. Adjusted EBIT margin also contracted 520 basis points (bps) to 6%. Adjusted EBITDA margin also contracted 380 bps year over year to 11.5%.
Leggett Platt, Incorporated Price, Consensus and EPS Surprise
Net trade sales in Bedding Products decreased 28% from the year-ago level to $410.6 million due to 25% lower volume. Raw material-related price decreases and currency impact reduced sales by 3% due to COVID-related disruptions, and exited volume in Fashion Bed and Drawn Wire.
Adjusted EBIT margin contracted 570 bps to 5.2%. Adjusted EBITDA margin also fell 430 bps year over year.
The Specialized Products segment's trade sales declined 47% from the prior-year figure to $140.8 million. The downside was due to a 46% year-over-year decline in volumes, thanks to the COVID-19 outbreak. Negative currency further impacted sales by 1%. Adjusted EBIT margin decreased 1,150 bps to 4%. EBITDA margin also contracted 780 bps from the prior year.
Trade sales in the Furniture, Flooring & Textile Products segment declined 22% from the prior-year level to $293.7 million, mainly due to 25% lower organic sales due to 24% volume decline. Raw material-related selling price decreases and currency impact reduced sales by 1%. Adjusted EBIT margin of 8.1% was down 60 bps from the prior year. Adjusted EBITDA margin also fell 30 bps year over year to 10.2%.
Financials
As of Jun 30, 2020, the company had $1.3 billion of liquidity, $209 million cash on hand and $1.1 billion available under the revolving credit facility.
Long-term debt at June-end was $2.1 billion, down from $2.4 billion reported in the first quarter. There are no significant maturities until August 2022. Cash flow from operations was $112 million, down $60 million from a year ago.
It expects capital expenditure to be $60 million for 2020.
Zacks Rank
Leggett — which shares space with Masonite International Corporation (DOOR - Free Report) , American Woodmark Corporation (AMWD - Free Report) and WillScot Corporation (WSC - Free Report) in the Zacks Furniture industry — currently carries a Zacks Rank #2 (Buy).
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Leggett (LEG) Q2 Earnings Top, Sales Miss on Lower Volumes
Leggett & Platt, Incorporated (LEG - Free Report) reported mixed second-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same.
Following the earnings release, the company’s shares dropped more than 3% in the after-hours trading session on Aug 3. It witnessed lower sales and earnings in the quarter, largely due to the economic impact of the COVID-19 pandemic. Also, the company did not provide any guidance for 2020 due to coronavirus-led macroeconomic uncertainty.
Quarter in Details
Leggett reported adjusted earnings of 16 cents per share, which beat the Zacks Consensus Estimate of 8 cents by 100%. However, the figure declined 75% from the year-ago period due to lower EBIT.
Total sales were $845 million, which missed the consensus mark of $914 million by 7.5% and decreased 30% from the prior-year level. The downside was mainly due to a 31% decline in organic sales given 29% lower volume. Also, raw material-related selling price decreases and negative currency impacted sales by 2%. Meanwhile, acquisitions contributed 1% to sales growth.
Adjusted EBIT fell 62% from the prior-year period to $51 million, partially offset by lower fixed costs. Adjusted EBIT margin also contracted 520 basis points (bps) to 6%. Adjusted EBITDA margin also contracted 380 bps year over year to 11.5%.
Leggett Platt, Incorporated Price, Consensus and EPS Surprise
Leggett Platt, Incorporated price-consensus-eps-surprise-chart | Leggett Platt, Incorporated Quote
Segment Details
Net trade sales in Bedding Products decreased 28% from the year-ago level to $410.6 million due to 25% lower volume. Raw material-related price decreases and currency impact reduced sales by 3% due to COVID-related disruptions, and exited volume in Fashion Bed and Drawn Wire.
Adjusted EBIT margin contracted 570 bps to 5.2%. Adjusted EBITDA margin also fell 430 bps year over year.
The Specialized Products segment's trade sales declined 47% from the prior-year figure to $140.8 million. The downside was due to a 46% year-over-year decline in volumes, thanks to the COVID-19 outbreak. Negative currency further impacted sales by 1%. Adjusted EBIT margin decreased 1,150 bps to 4%. EBITDA margin also contracted 780 bps from the prior year.
Trade sales in the Furniture, Flooring & Textile Products segment declined 22% from the prior-year level to $293.7 million, mainly due to 25% lower organic sales due to 24% volume decline. Raw material-related selling price decreases and currency impact reduced sales by 1%. Adjusted EBIT margin of 8.1% was down 60 bps from the prior year. Adjusted EBITDA margin also fell 30 bps year over year to 10.2%.
Financials
As of Jun 30, 2020, the company had $1.3 billion of liquidity, $209 million cash on hand and $1.1 billion available under the revolving credit facility.
Long-term debt at June-end was $2.1 billion, down from $2.4 billion reported in the first quarter. There are no significant maturities until August 2022. Cash flow from operations was $112 million, down $60 million from a year ago.
It expects capital expenditure to be $60 million for 2020.
Zacks Rank
Leggett — which shares space with Masonite International Corporation (DOOR - Free Report) , American Woodmark Corporation (AMWD - Free Report) and WillScot Corporation (WSC - Free Report) in the Zacks Furniture industry — currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>