Leggett & Platt Inc. (LEG, Financial) filed Quarterly Report for the period ended 2009-03-31.
Leggett & Platt Inc. is one of the leading manufacturers of engineered products serving several major markets. Sales and production are focused on residential furnishings commercial furnishings aluminum products industrial materials and specialized products. The company has facilities throughout North America and in numerous international locations. (Company Press Release) Leggett & Platt Inc. has a market cap of $2.46 billion; its shares were traded at around $15.71 with a P/E ratio of 23.1 and P/S ratio of 0.6. The dividend yield of Leggett & Platt Inc. stocks is 6.3%. Leggett & Platt Inc. had an annual average earning growth of 0.3% over the past 10 years.
Exit activities associated with the 2007 Strategic Plan discussed in Note 3 of the Notes to Consolidated Condensed Financial Statements were substantially complete by the end of 2008. We incurred $.7 million and $.6 million of restructuring-related and asset impairment costs related to this plan in the first quarter of 2009 and 2008, respectively. To date, we have incurred total costs associated with this plan of $341 million ($154 million continuing and $187 million discontinued operations) and do not anticipate additional significant charges. Other asset impairments and restructuring-related charges incurred outside of the strategic plan for first quarters of 2009 and 2008 were not significant. For more information about restructuring, see Note 4 of the Notes to Consolidated Condensed Financial Statements.
Earnings per share from continuing operations for the quarter were $.02 per diluted share. In the first quarter of 2008, earnings per share from continuing operations were $.23. The year-over-year reduction in quarterly earnings from continuing operations was primarily due to lower unit sales volumes and increased provision for bad debts, partially offset by improved margins on selected products as a result of better pricing discipline.
All of our segments use the first-in, first-out (FIFO) method for valuing inventory. In our consolidated financials, an adjustment is made at the corporate level (i.e. outside the segments) to convert about 60% of our inventories to the last-in, first-out (LIFO) method. Steel cost decreases in the first quarter of 2009 were significant, and contributed to an anticipated full year LIFO benefit of $68.0 million (for continuing operations). Of this annual benefit, $17.0 million was recognized in the first quarter 2009 (versus LIFO expense of $3.6 million in first quarter 2008). Our LIFO estimate for the full year incorporates certain assumptions about year-end steel prices and inventory levels (both are very difficult to accurately predict). Therefore, LIFO benefit for the full year could be significantly different from that currently estimated. Any further change in the annual estimate of LIFO benefit will be reflected in subsequent quarters. See Note 6 of the Notes to Consolidated Condensed Financial Statements for further discussion of inventories.
With planned improvements in returns, a decrease in capital spending and acquisitions, and the completion of the divestitures, we expect (and have recently had) more available cash to return to shareholders. Higher annual dividends are one means by which that will occur. We declared a first quarter dividend of $.25 per share (paid on April 15). Our targeted dividend payout is approximately 50-60% of net earnings, but has been higher recently and will likely remain above targeted levels for the next few years. Maintaining and increasing the dividend remains a high priority. We expect to spend approximately $155 million on dividends in 2009 to be funded solely from operating cash flow, which is anticipated to exceed $300 million. Cash from operations has been in recent years, and is expected to continue to be, sufficient to fund both capital expenditures and dividends.
Cash from operations for the three months ended March 31, 2009 was $114.8 million. This is $61.7 million higher than the first three months of 2008. Extremely weak market demand (which resulted from the financial and credit market distress and related impact on U.S. and global economies) negatively impacted earnings. We expect this demand weakness to continue throughout 2009. Working capital decreased in the first quarter of 2009 compared to year-end. Reduced raw material purchases contributed to lower inventory levels (versus the prior year). Accounts receivable also declined primarily due to weak sales. We continue to aggressively manage our operations in an effort to further improve our working capital position. Some of our specific actions include reducing raw material purchases and production levels where appropriate, increasing collection efforts to ensure customer accounts are paid on time, and optimizing payment terms with our vendors.
Read the The complete ReportLEG is in the portfolios of Arnold Van Den Berg of Century Management, John Keeley of Keeley Fund Management, Richard Aster Jr of Meridian Fund, Richard Aster Jr of Meridian Fund.
Leggett & Platt Inc. is one of the leading manufacturers of engineered products serving several major markets. Sales and production are focused on residential furnishings commercial furnishings aluminum products industrial materials and specialized products. The company has facilities throughout North America and in numerous international locations. (Company Press Release) Leggett & Platt Inc. has a market cap of $2.46 billion; its shares were traded at around $15.71 with a P/E ratio of 23.1 and P/S ratio of 0.6. The dividend yield of Leggett & Platt Inc. stocks is 6.3%. Leggett & Platt Inc. had an annual average earning growth of 0.3% over the past 10 years.
Highlight of Business Operations:
As a result, this 10-Q filing reflects first quarter earnings of $.02 per share rather than the $.06 announced in our press release of April 22. The $.04 per share earnings reduction is solely due to the shutdown of Consolidated Beddings operations.Exit activities associated with the 2007 Strategic Plan discussed in Note 3 of the Notes to Consolidated Condensed Financial Statements were substantially complete by the end of 2008. We incurred $.7 million and $.6 million of restructuring-related and asset impairment costs related to this plan in the first quarter of 2009 and 2008, respectively. To date, we have incurred total costs associated with this plan of $341 million ($154 million continuing and $187 million discontinued operations) and do not anticipate additional significant charges. Other asset impairments and restructuring-related charges incurred outside of the strategic plan for first quarters of 2009 and 2008 were not significant. For more information about restructuring, see Note 4 of the Notes to Consolidated Condensed Financial Statements.
Earnings per share from continuing operations for the quarter were $.02 per diluted share. In the first quarter of 2008, earnings per share from continuing operations were $.23. The year-over-year reduction in quarterly earnings from continuing operations was primarily due to lower unit sales volumes and increased provision for bad debts, partially offset by improved margins on selected products as a result of better pricing discipline.
All of our segments use the first-in, first-out (FIFO) method for valuing inventory. In our consolidated financials, an adjustment is made at the corporate level (i.e. outside the segments) to convert about 60% of our inventories to the last-in, first-out (LIFO) method. Steel cost decreases in the first quarter of 2009 were significant, and contributed to an anticipated full year LIFO benefit of $68.0 million (for continuing operations). Of this annual benefit, $17.0 million was recognized in the first quarter 2009 (versus LIFO expense of $3.6 million in first quarter 2008). Our LIFO estimate for the full year incorporates certain assumptions about year-end steel prices and inventory levels (both are very difficult to accurately predict). Therefore, LIFO benefit for the full year could be significantly different from that currently estimated. Any further change in the annual estimate of LIFO benefit will be reflected in subsequent quarters. See Note 6 of the Notes to Consolidated Condensed Financial Statements for further discussion of inventories.
With planned improvements in returns, a decrease in capital spending and acquisitions, and the completion of the divestitures, we expect (and have recently had) more available cash to return to shareholders. Higher annual dividends are one means by which that will occur. We declared a first quarter dividend of $.25 per share (paid on April 15). Our targeted dividend payout is approximately 50-60% of net earnings, but has been higher recently and will likely remain above targeted levels for the next few years. Maintaining and increasing the dividend remains a high priority. We expect to spend approximately $155 million on dividends in 2009 to be funded solely from operating cash flow, which is anticipated to exceed $300 million. Cash from operations has been in recent years, and is expected to continue to be, sufficient to fund both capital expenditures and dividends.
Cash from operations for the three months ended March 31, 2009 was $114.8 million. This is $61.7 million higher than the first three months of 2008. Extremely weak market demand (which resulted from the financial and credit market distress and related impact on U.S. and global economies) negatively impacted earnings. We expect this demand weakness to continue throughout 2009. Working capital decreased in the first quarter of 2009 compared to year-end. Reduced raw material purchases contributed to lower inventory levels (versus the prior year). Accounts receivable also declined primarily due to weak sales. We continue to aggressively manage our operations in an effort to further improve our working capital position. Some of our specific actions include reducing raw material purchases and production levels where appropriate, increasing collection efforts to ensure customer accounts are paid on time, and optimizing payment terms with our vendors.
Read the The complete ReportLEG is in the portfolios of Arnold Van Den Berg of Century Management, John Keeley of Keeley Fund Management, Richard Aster Jr of Meridian Fund, Richard Aster Jr of Meridian Fund.
