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Leggett & Platt, Incorporated (LEG - Free Report) reported mixed results for fourth-quarter 2023, wherein its earnings met the Zacks Consensus Estimate but sales beat the same.
The top and bottom lines declined on a year-over-year basis. The downtrend was caused by persistent weak demand in the Bedding Products and Furniture and Flooring & Textile Products segments, partially offset by strong demand in the Specialized Products segment.
Following the results, the shares of the company declined 3.1% in the after-hour trading session on Feb 8. Investors' sentiments might have been hurt by bleak 2024 projections for net sales and earnings.
Quarter in Details
Leggett reported adjusted earnings of 26 cents per share, which met the consensus estimate but decreased 33% from 39 cents reported a year ago.
Leggett & Platt, Incorporated Price, Consensus and EPS Surprise
Net trade sales of $1.115 billion beat the consensus mark of $1.096 billion by 1.7% but declined 7% from the prior-year quarter’s level of $1.2 billion. Organically, sales were down 7% year over year.
Volume declined 3% due to continued demand softness in residential end markets, partially offset by growth in the automotive and industrial end markets within its Specialized Products segment. Raw material-related selling prices lowered sales by 5%, but acquisitions and positive currency translation benefited the same by 1%. Acquisitions increased sales by less than 1%.
Adjusted EBIT declined from the prior-year quarter’s level to $66 million due to lower metal margin in the Steel Rod business and lower volume in residential end markets. Adjusted EBIT margin contracted 170 basis points (bps) to 5.9% from the year-ago quarter’s figure. The metric also declined 150 bps to 9.9%.
Segmental Details
Bedding Products (excluding intersegment sales): Net trade sales decreased 14% from the year-ago quarter’s level to $448.5 million. A volume decline of 6% was caused by softness in the U.S. and European bedding markets, partially offset by higher trade sales in Steel Rod. Raw material-related selling price decreases, net of currency benefit of 1%, reduced sales by 9%. Organically, sales were down 14% year over year.
Adjusted EBIT margin contracted 340 bps to 2.4%, primarily due to metal margin compression and lower volume. Adjusted EBITDA margin also contracted 250 bps year over year to 8.3%.
Specialized Products: The segment's trade sales rose 5% from the prior-year quarter’s figure to $318.5 million. Volume increased 3% across the segment. Raw material-related selling price increases and positive currency translation added 1% each to trade sales. Organically, sales were up 5% year over year.
EBIT margin expanded 130 bps to 10%. EBITDA margin also expanded 90 bps year over year to 13%.
Furniture, Flooring & Textile Products: Trade sales in the segment declined 6% from the prior-year quarter’s level to $348.1 million. Volume was down 4%, mainly due to declines across most of the segment, partially offset by growth in Geo Components. Raw material-related selling price decrease, net of currency benefits, reduced sales by 3%, while Textiles’ acquisition added 1% to trade sales. Organically, sales were down 7% year over year.
Adjusted EBIT margin of 6.4% was down 240 bps from the prior-year level. Adjusted EBITDA margin also contracted 240 bps to 8%. This was due to lower volume and other smaller items, partially offset by pricing discipline.
2023 Highlights
Net revenues for the year totaled $4.7 billion, down 8% from $5.15 billion recorded in the year-ago period. The figure also decreased 10% organically year over year. Volume was down 6% due to demand softness in the residential end markets, partially offset by growth in automotive and industrial end markets. Reduced raw material-related selling price and currency impact lowered sales by 4%. Meanwhile, acquisitions, net of small divestitures, added 2% to the growth.
Adjusted EBIT fell 31.1% from the prior-year level to $333.5 million, owing to lower metal margin in the Steel Rod business and lower volume in the residential end markets. Adjusted EBIT margin also contracted 230 bps from the year-ago figure to 7.1%.
Adjusted earnings came in at $1.39 per share compared with $2.27 in 2022. Adjusted EBITDA margin declined 200 bps to 10.9%.
Financials
As of Dec 31, 2023, the company had $697 million in liquidity. It had cash and equivalents worth $365.5 million at the end of 2023, up from $316.5 million recorded at the end of 2022.
Long-term debt totaled $1.68 billion, down 19% from $2.07 billion recorded at 2022-end. The trailing 12-month net debt-to-adjusted EBITDA was 3.16x compared with 2.66x at the end of 2022.
Cash from operations for the reported quarter totaled $146.1 million compared with $247.1 million in the prior-year period. The same for 2023 amounted to $497.2 million compared with $441.4 million in 2022. Capital expenditures totaled $114 million for the year.
2024 Guidance
Leggett expects sales in the range of $4.35-$4.65 billion, indicating a 2-8% decline year over year. Volume is expected to be down low to mid-single digits. Raw-material-related price decreases and currency impact are likely to reduce sales by low single-digits.
Volume is likely to be down high-single digits in the Bedding Products and down low single-digit in Furniture, Flooring & Textile Products segments. Nonetheless, the same is expected to be up low single-digits in Specialized Products.
Earnings are projected to be between 95 cents and $1.25 per share. This includes a 20-25 cents per share negative impact from restructuring costs and a 10-15 cents per share gain from sales of real estate, consisting of idle real estate and real estate exited from restructuring initiatives.
Adjusted earnings are likely to be in the $1.05-$1.35 per share range, down from the prior-year level. This is due to lower expected volume in the Bedding Products and Furniture, Flooring & Textile Products segments, pricing responses related to global steel cost differentials, modest metal margin compression, and several expense items that were abnormally low in 2023 but are expected to normalize in 2024. This is partially offset by lower amortization resulting from the 2023 long-lived asset impairment.
LEG expects adjusted EBIT margin to be in the range of 6.4-7.2%.
Capital expenditures, depreciation and amortization costs and operating cash flow are estimated to be $100-$120 million, $135 million and $325-$375 million, respectively. Dividend and net interest expenses are likely to be $245 million and $85 million, respectively. The effective tax rate for the year is anticipated to be 25%. Fully diluted shares are projected to be approximately 138 million.
Restructuring Impacts
On Jan 16, LEG announced a restructuring plan within its Bedding Products segment and Furniture, Flooring & Textile Products unit (to a lesser extent).
Under this, nearly $40 million of sales attrition is expected to be recognized this year. Also, approximately $5-$10 million of EBIT benefit is likely to be realized in the second half of 2024.
This apart, it expects nearly half of the total restructuring and related costs to be incurred in 2024, of which $20-$25 million is anticipated in the first half (approximately half in cash costs). Also, most of the cash costs are anticipated to be incurred in 2024.
Hilton Worldwide Holdings Inc. (HLT - Free Report) reported impressive fourth-quarter 2023 results, wherein earnings and total revenues topped the Zacks Consensus Estimate and increased on a year-over-year basis.
The company’s quarterly results notably benefited from solid improvement in revenue per available room (RevPAR) on the back of increased occupancy rates and average daily rate (ADR). Furthermore, during the quarter, HLT witnessed a record number of openings, which encouraged the uptrend to a great extent. The company states that it is well-positioned to continue driving innovation and growth through 2024, owing to the improving trends.
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported mixed fourth-quarter 2023 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. However, the top and the bottom lines increased on a year-over-year basis.
The quarterly results reflect unprecedented demand for the brands from new and loyal guests. The company reported record bookings, both in terms of rate and volume. Going forward, management emphasized delivering long-term shareholder value through industry-leading global brands, innovative fleets and diverse destinations. RCL expects to achieve two Trifecta goals ahead of schedule.
Las Vegas Sands Corp. (LVS - Free Report) reported mixed fourth-quarter 2023 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same. The top and the bottom line increased on a year-over-year basis.
The company reported continued improvement in the operating environment in Macao and Singapore. In Macao, the company reported a sustained recovery across each of its segments. Singapore’s Marina Bay Sands demonstrated solid financial and operational performance. The introduction of new suite options and improved services is in line with the improving airlift capacity and the continuous recovery in travel and tourism spending, especially from China and the broader region.
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Leggett (LEG) Q4 Earnings Meet Estimates, 2024 View Tepid
Leggett & Platt, Incorporated (LEG - Free Report) reported mixed results for fourth-quarter 2023, wherein its earnings met the Zacks Consensus Estimate but sales beat the same.
The top and bottom lines declined on a year-over-year basis. The downtrend was caused by persistent weak demand in the Bedding Products and Furniture and Flooring & Textile Products segments, partially offset by strong demand in the Specialized Products segment.
Following the results, the shares of the company declined 3.1% in the after-hour trading session on Feb 8. Investors' sentiments might have been hurt by bleak 2024 projections for net sales and earnings.
Quarter in Details
Leggett reported adjusted earnings of 26 cents per share, which met the consensus estimate but decreased 33% from 39 cents reported a year ago.
Leggett & Platt, Incorporated Price, Consensus and EPS Surprise
Leggett & Platt, Incorporated price-consensus-eps-surprise-chart | Leggett & Platt, Incorporated Quote
Net trade sales of $1.115 billion beat the consensus mark of $1.096 billion by 1.7% but declined 7% from the prior-year quarter’s level of $1.2 billion. Organically, sales were down 7% year over year.
Volume declined 3% due to continued demand softness in residential end markets, partially offset by growth in the automotive and industrial end markets within its Specialized Products segment. Raw material-related selling prices lowered sales by 5%, but acquisitions and positive currency translation benefited the same by 1%. Acquisitions increased sales by less than 1%.
Adjusted EBIT declined from the prior-year quarter’s level to $66 million due to lower metal margin in the Steel Rod business and lower volume in residential end markets. Adjusted EBIT margin contracted 170 basis points (bps) to 5.9% from the year-ago quarter’s figure. The metric also declined 150 bps to 9.9%.
Segmental Details
Bedding Products (excluding intersegment sales): Net trade sales decreased 14% from the year-ago quarter’s level to $448.5 million. A volume decline of 6% was caused by softness in the U.S. and European bedding markets, partially offset by higher trade sales in Steel Rod. Raw material-related selling price decreases, net of currency benefit of 1%, reduced sales by 9%. Organically, sales were down 14% year over year.
Adjusted EBIT margin contracted 340 bps to 2.4%, primarily due to metal margin compression and lower volume. Adjusted EBITDA margin also contracted 250 bps year over year to 8.3%.
Specialized Products: The segment's trade sales rose 5% from the prior-year quarter’s figure to $318.5 million. Volume increased 3% across the segment. Raw material-related selling price increases and positive currency translation added 1% each to trade sales. Organically, sales were up 5% year over year.
EBIT margin expanded 130 bps to 10%. EBITDA margin also expanded 90 bps year over year to 13%.
Furniture, Flooring & Textile Products: Trade sales in the segment declined 6% from the prior-year quarter’s level to $348.1 million. Volume was down 4%, mainly due to declines across most of the segment, partially offset by growth in Geo Components. Raw material-related selling price decrease, net of currency benefits, reduced sales by 3%, while Textiles’ acquisition added 1% to trade sales. Organically, sales were down 7% year over year.
Adjusted EBIT margin of 6.4% was down 240 bps from the prior-year level. Adjusted EBITDA margin also contracted 240 bps to 8%. This was due to lower volume and other smaller items, partially offset by pricing discipline.
2023 Highlights
Net revenues for the year totaled $4.7 billion, down 8% from $5.15 billion recorded in the year-ago period. The figure also decreased 10% organically year over year. Volume was down 6% due to demand softness in the residential end markets, partially offset by growth in automotive and industrial end markets. Reduced raw material-related selling price and currency impact lowered sales by 4%. Meanwhile, acquisitions, net of small divestitures, added 2% to the growth.
Adjusted EBIT fell 31.1% from the prior-year level to $333.5 million, owing to lower metal margin in the Steel Rod business and lower volume in the residential end markets. Adjusted EBIT margin also contracted 230 bps from the year-ago figure to 7.1%.
Adjusted earnings came in at $1.39 per share compared with $2.27 in 2022. Adjusted EBITDA margin declined 200 bps to 10.9%.
Financials
As of Dec 31, 2023, the company had $697 million in liquidity. It had cash and equivalents worth $365.5 million at the end of 2023, up from $316.5 million recorded at the end of 2022.
Long-term debt totaled $1.68 billion, down 19% from $2.07 billion recorded at 2022-end. The trailing 12-month net debt-to-adjusted EBITDA was 3.16x compared with 2.66x at the end of 2022.
Cash from operations for the reported quarter totaled $146.1 million compared with $247.1 million in the prior-year period. The same for 2023 amounted to $497.2 million compared with $441.4 million in 2022. Capital expenditures totaled $114 million for the year.
2024 Guidance
Leggett expects sales in the range of $4.35-$4.65 billion, indicating a 2-8% decline year over year. Volume is expected to be down low to mid-single digits. Raw-material-related price decreases and currency impact are likely to reduce sales by low single-digits.
Volume is likely to be down high-single digits in the Bedding Products and down low single-digit in Furniture, Flooring & Textile Products segments. Nonetheless, the same is expected to be up low single-digits in Specialized Products.
Earnings are projected to be between 95 cents and $1.25 per share. This includes a 20-25 cents per share negative impact from restructuring costs and a 10-15 cents per share gain from sales of real estate, consisting of idle real estate and real estate exited from restructuring initiatives.
Adjusted earnings are likely to be in the $1.05-$1.35 per share range, down from the prior-year level. This is due to lower expected volume in the Bedding Products and Furniture, Flooring & Textile Products segments, pricing responses related to global steel cost differentials, modest metal margin compression, and several expense items that were abnormally low in 2023 but are expected to normalize in 2024. This is partially offset by lower amortization resulting from the 2023 long-lived asset impairment.
LEG expects adjusted EBIT margin to be in the range of 6.4-7.2%.
Capital expenditures, depreciation and amortization costs and operating cash flow are estimated to be $100-$120 million, $135 million and $325-$375 million, respectively. Dividend and net interest expenses are likely to be $245 million and $85 million, respectively. The effective tax rate for the year is anticipated to be 25%. Fully diluted shares are projected to be approximately 138 million.
Restructuring Impacts
On Jan 16, LEG announced a restructuring plan within its Bedding Products segment and Furniture, Flooring & Textile Products unit (to a lesser extent).
Under this, nearly $40 million of sales attrition is expected to be recognized this year. Also, approximately $5-$10 million of EBIT benefit is likely to be realized in the second half of 2024.
This apart, it expects nearly half of the total restructuring and related costs to be incurred in 2024, of which $20-$25 million is anticipated in the first half (approximately half in cash costs). Also, most of the cash costs are anticipated to be incurred in 2024.
Zacks Rank & Recent Consumer Discretionary Releases
Leggett currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Hilton Worldwide Holdings Inc. (HLT - Free Report) reported impressive fourth-quarter 2023 results, wherein earnings and total revenues topped the Zacks Consensus Estimate and increased on a year-over-year basis.
The company’s quarterly results notably benefited from solid improvement in revenue per available room (RevPAR) on the back of increased occupancy rates and average daily rate (ADR). Furthermore, during the quarter, HLT witnessed a record number of openings, which encouraged the uptrend to a great extent. The company states that it is well-positioned to continue driving innovation and growth through 2024, owing to the improving trends.
Royal Caribbean Cruises Ltd. (RCL - Free Report) reported mixed fourth-quarter 2023 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. However, the top and the bottom lines increased on a year-over-year basis.
The quarterly results reflect unprecedented demand for the brands from new and loyal guests. The company reported record bookings, both in terms of rate and volume. Going forward, management emphasized delivering long-term shareholder value through industry-leading global brands, innovative fleets and diverse destinations. RCL expects to achieve two Trifecta goals ahead of schedule.
Las Vegas Sands Corp. (LVS - Free Report) reported mixed fourth-quarter 2023 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same. The top and the bottom line increased on a year-over-year basis.
The company reported continued improvement in the operating environment in Macao and Singapore. In Macao, the company reported a sustained recovery across each of its segments. Singapore’s Marina Bay Sands demonstrated solid financial and operational performance. The introduction of new suite options and improved services is in line with the improving airlift capacity and the continuous recovery in travel and tourism spending, especially from China and the broader region.