Leggett & Platt Beats by a Cent - Analyst Blog
February 07 2012 - 3:30AM
Zacks
Leggett & Platt
Inc. (LEG), the manufacturer of diversified engineered
products and components, posted fourth-quarter and full-year 2011
results, surpassing the Zacks Consensus Estimates.
Leggett's fourth-quarter earnings
of 22 cents per share, marginally inched above the Zacks Consensus
Estimate and year-ago earnings of 21 cents. The company’s full-year
2011 earnings of $1.20 per share beat the Zacks Consensus Estimate
by 1 cent per share and the year-ago earnings by 5 cents per share.
The increase in the bottom line was attributed to the company’s
share buyback program and a lower effective tax rate.
Total sales in the quarter climbed
6.5% to $854.1 million compared with $801.9 million a year ago,
benefitting from inflation and higher trade sales at the steel
mill. The company’s quarterly sales also rose above the Zacks
Consensus Estimate of $827 million. Same location sales of 6% in
the quarter were flat compared with the year-ago quarter.
For full year, Leggett reported
total sales of $3.636 billion, up 8% from the year-ago sales of
$3.359 billion. The company’s yearly sales mainly benefitted from
inflation and currency rate changes. Total sales for the year also
compared favorably with the Zacks Consensus Estimate of $3.609
billion. Yearly volumes per unit recorded a growth of 3% driven by
a shift in the sales mix at the company's steel mill.
Segment
Revenue
Residential Furnishings revenue for
the fourth quarter increased 6.2% to $434.7 million driven by
inflation and a 1% increase in unit volume. Segment revenue for
2011 was up 5% to $1.827 billion, again on the back of inflation
and currency changes.
Sales of Commercial Fixturing &
Components moved down 4% to $96.8 million. Full-year sales totaled
$502.4 million, down 5.3%, primarily due to reduced volumes in the
store fixture operations.
Fourth quarter sales for the
Industrial Materials segment was up 19.8% to $148.1 million, backed
by steel-related price inflation and higher trade sales from steel
mill. The company’s full-year sales increased 23.8% to $616.7
million.
Specialized Products segment
witnessed a growth of 3.9% to $174.5 million in the fourth quarter,
while full-year sales came in at $689.1 million, increasing 16.6%.
The increase was driven mainly by unit volume growth in all three
sectors of the segment.
Margins
Gross profit for the quarter inched
up 1.1% to $143.0 million, and gross margin contracted 90 basis
points to 16.7%, mainly due to higher cost of goods sold. Operating
income dropped 74% to $12.9 million, and operating margin shrunk
470 basis points to 1.5% due to a 10% increase in selling &
administrative expenses.
Sighting a flat demand scenario in
2011, the company remains focused on tightly managing costs,
divesture of loss making units and other elements of its strategic
plan. However, operating profit for the year declined 17% with
margins contracting 210 basis points. The 2011 margins decline
emanated from restructuring costs, inflation, and weak market
demand for some products. However, the company is hopeful of
reversing this trend in 2012.
Leggett Returns Value to
Shareholders
Leggett remains committed to
returning value to shareholders. Fiscal 2011 marked the 40th
consecutive year of a dividend hike, which has been increasing at a
CAGR of 14.0% and a yield of about 5%. The board of directors
increased the quarterly dividend by a penny to 28 cents per share
in 2011.
During 2011, the company also
repurchased 10.1 million shares and issued 3.3 million shares under
employee benefit and stock purchase plans. This brings the year-end
total shares outstanding count to 139 million, a 5% decline from
the previous year.
Other Financial
Details
Leggett exited fiscal 2011 with
cash and cash equivalents of $236.3 million, long-term debt of
$833.3 million, and shareholders' equity of $1,307.7 million.
During the year, the company produced $329 million cash from
operations, of which $231 million was used to pay dividends and
toward capital expenditure and $205 million to buy back the
company’s shares.
Guidance
Going forward, the company expects
to gain momentum as the economy expands. Anticipating a modest
economic recovery in 2012, the company is forecasting sales in the
range of $3.6-$3.8 billion. Further, the company is guiding
earnings per share in the $1.20-$1.40 range for 2012. The company’s
2012 earnings is expected to include a 7 cents to 10 cents gain
related to its restructuring activities, offset in part, by higher
anticipated interest expense and effective tax rates. The current
Zacks Consensus Estimate for fiscal 2012 is $1.36 per share.
For 2012, the company expects to
generate more than $300 million in cash from operations, with
capital spending and dividends estimated at about $100 million and
$160 million, respectively. Further, the company remains open to
capturing acquisition opportunities that fit its strategy and meet
its criteria.
Leggett faces stiff competition
from its rivals, such as Flexsteel Industries Inc.
(FLXS), Genuine Parts Company (GPC) and
Steelcase Inc. (SCS). The company currently
retains a Zacks #2 Rank, which translates to a short-term Buy
rating. However, we remain cautious on the stock and uphold our
long-term 'Underperform' recommendation. At this stage, our caution
is guided by the company's history of missing the Zacks Consensus
Estimate and we wait to see further catalysts before becoming more
positive on the stock.
GENUINE PARTS (GPC): Free Stock Analysis Report
LEGGETT & PLATT (LEG): Free Stock Analysis Report
STEELCASE INC (SCS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Flexsteel Industries (NASDAQ:FLXS)
Historical Stock Chart
From May 2024 to Jun 2024
Flexsteel Industries (NASDAQ:FLXS)
Historical Stock Chart
From Jun 2023 to Jun 2024