Leggett & Platt Earnings: Earnings Higher Than Expected

S&P 500 (NYSE:SPY) component Leggett & Platt Inc. (NYSE:LEG) reported net income above Wall Street’s expectations for the third quarter. Leggett & Platt manufactures a range of engineered components and products, including residential furnishings, commercial fixtures and components, and industrial materials.

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Leggett & Platt Inc. Earnings Cheat Sheet

Results: Net income for Leggett & Platt Inc. rose to $65.8 million (45 cents per share) vs. $44.9 million (31 cents per share) in the same quarter a year earlier. This marks a rise of 46.5% from the year-earlier quarter.

Revenue: Rose 4.4% to $982.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Leggett & Platt Inc. beat the mean analyst estimate of 38 cents per share. Analysts were expecting revenue of $978.9 million.

Quoting Management: President and CEO David S. Haffner commented, “In the third quarter we set a new record of $.45 for EPS from continuing operations. Prior to 2012, that quarterly record was $.39, set in 2006. Importantly, we accomplished this milestone based upon strong operational performance as a result of higher volumes and margins, and without the benefit of unusual income items. As expected, we realized significant earnings leverage on higher unit volumes. Quarterly EBIT improved 47% versus last year as a result of unit volume growth, lower raw material costs in some business units, late-2011 restructuring activity, and the Western Tube acquisition. Third quarter EBIT margin increased from 7.6% last year to 10.7% for 2012. We are comfortable that, in 2012, we will set a new record for full year EPS from continuing operations. In addition, we are encouraged by improved consumer confidence and housing statistics, which bode well for longer term future demand. We continue to maintain a very strong financial base. Through the first three quarters, cash from operations was $241 million, a 19% increase versus last year. Net debt to net capital was 33% at quarter’s end, comfortably within our long-term 30% – 40% target range. We issued $300 million of debt in August, and used the proceeds to repay commercial paper. At quarter’s end, we had nearly $600 million available under our existing commercial paper program and revolver facility. We continue to assess our overall performance by comparing our Total Shareholder Return (TSR) to that of peer companies on a rolling three-year basis. For the three-year period that began January 1, 2010, we have so far (over the last 34 months) generated TSR of 42%, compared to TSR of 34% for the S&P 500 index. Our TSR performance ranks in the upper half of the S&P 500 companies, but is still a bit short of our goal to achieve TSR in the top one-third of the S&P 500 over the long-term.”

Key Stats:

The company has now beaten estimates the last two quarters. In the second quarter, it topped expectations with net income of 39 cents versus a mean estimate of net income of 36 cents per share.

Net income has dropped 2.9% year-over-year on average across the last five quarters. Performance was hurt by a 72.3% decline in the fourth quarter of the last fiscal year from the year-earlier quarter.

Revenue rose last quarter after dropping in the previous quarter. Revenue fell 0.7% to $938.8 million in the second quarter from the year earlier.

Looking Forward: The average estimate for the fourth quarter is steady at 28 cents a share. The average estimate for the fiscal year has risen to $1.40 per share from $1.39 in the past month.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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