CARTHAGE, MO - Diversified furniture manufacturer Leggett & Platt reported sales from continuing operations were $997 million, a second quarter record and an increase versus Q2 2014 (during which sales increased 9%). 

In the current quarter, sales volume grew 9% — roughly half from same location unit volume and half from acquisitions — but was partially offset by a 5% impact from raw material-related price deflation and currency translation. 

CEO Comments

CEO David S. Haffner said, "We continue to be very pleased with the progress we're making in 2015. In the second quarter we extended our string of strong quarterly results that began in the second quarter of last year.  

Leggett & Platt CEO David Haffner

"Nearly all of our businesses experienced volume growth during the quarter, despite strong prior year comparisons.  During the second quarter we saw unit volume growth in excess of 70% in Comfort Core innersprings and in adjustable beds.  In addition, we experienced organic volume growth in excess of 10% in U.S. Spring, Fashion Bed, Automotive, Aerospace, and Machinery.

"For the full year, we expect similar results: record sales from continuing operations, our highest EBIT margin since 2000, and record EPS.

"We are achieving these results while maintaining our strong financial base. At quarter's end, we had over $500 million available to us through our commercial paper program. Net debt to net capital was 36%, comfortably within our 30% - 40% target range."  

Dividends and Stock Repurchases
In May, Leggett & Platt's Board of Directors declared a $.31 second quarter dividend, one cent higher than last year's second quarter dividend.  2015 marks the 44th consecutive annual dividend increase for the company, with a compound annual growth rate of 13%. As of July 29, the dividend yield was 2.5%.

During the second quarter the company continued its stock buyback program, while issuing 0.2 million shares through employee benefit plans and option exercises. For the first half of the year, the company purchased 2.8 million shares, and issued 1.8 million. The number of shares outstanding decreased to 136.8 million.  

2015 Records Anticipated 
Leggett & Platt posted record adjusted EPS from continuing operations for each of the last three years, and expects to do so again in 2015. The company also expects to achieve, in 2015, record sales and EBIT from continuing operations, and its highest EBIT margin since 2000. 

Accordingly, the company is raising its EPS guidance, and now projects 2015 EPS of $2.00 - 2.15. Sales are anticipated to be $3.95 - 4.10 billion, growing 4% to 8%, and meeting or exceeding the company's 4% - 5% annual growth target. This sales forecast includes an expected 5% reduction in sales from raw material-related price deflation and currency translation impacts.

Cash from operations should exceed $350 million in 2015. Capital expenditures are expected to be roughly $120 million, and dividend payments should approximate $170 million.  

The company continues to prioritize remaining cash flow, after funding dividends and capital expenditures, toward acquisitions. Should no acquisitions come to fruition, and if excess cash flow is available, the company has standing authorization from the Board of Directors to repurchase up to 10 million shares each year.    

Residential Furnishings Sales Up 10% 

Residential Furnishings – Total sales increased $48 million, or 10%.  Same location sales improved 3%, with higher unit volume in most product categories (+7%) partially offset by the impact of raw material-related price deflation and currency translation (-4%). Acquisitions increased sales by 7%. EBIT (earnings before interest and income taxes) increased $2 million; the benefit from higher sales was partially offset by increased performance-based compensation expense.

Revised Segment Structure
As disclosed in its 8-K filed on April 16, 2015, the company reorganized its operating segment structure, given the divestiture last year of the majority of the Store Fixtures operations, and the retirement of one of the operating segment presidents. It now has 18 business units, in four groups. Furniture products are primarily found in the Commercial and Residential Groups. The other two groups are Industrial and Specialized Products.

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