雅虎香港財經 Why Is Legget & Platt (LEG) Down 20.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Legget & Platt (LEG). Shares have lost about 20.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Legget & Platt due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Leggett Lags on Q1 Earnings & Sales, Cuts Dividend by 89%
Leggett & Platt, Incorporated reported tepid first-quarter 2024 results, wherein earnings and net sales missed the Zacks Consensus Estimate.
The metrics declined on a year-over-year basis due to persistent weak demand in most of the markets served and lower price realization.
Leggett significantly reduced its second-quarter dividend to 5 cents from the prior-year figure of 46 cents. The company noted that the move has been undertaken to free up capital to accelerate the deleveraging of its balance sheet and solidify long-held financial strength.
The dividend will be paid on Jul 15, 2024, to shareholders of record on Jun 14.
Quarter in Details
Leggett reported adjusted earnings per share (EPS) of 23 cents, which lagged the consensus estimate of 25 cents by 8% and decreased 41% from 39 cents reported a year ago.
Net trade sales of $1.1 billion missed the consensus mark of $1.11 billion by 1.5% and declined 9.6% from the prior-year quarter’s level of $1.2 billion (all organic).
Volume declined 6% due to continued demand softness in residential end markets. Raw material-related selling prices lowered sales by 4%.
Adjusted EBIT declined to $64 million from the prior-year quarter’s level of $89 million. The decline was due to lower volume, higher bad debt reserve, less benefit from a reduction to a contingent purchase price liability associated with the prior-year acquisition, and the non-recurrence of pandemic-related cost reimbursements. This was partially offset by lower amortization expense.
Adjusted EBIT margin contracted 160 basis points (bps) to 5.8% from the year-ago quarter’s figure of 7.4%. Adjusted EBITDA margin also contracted 230 bps to 8.8% from the year-ago quarter.
Segmental Details
Bedding Products' (excluding intersegment sales) net trade sales decreased 15% (fully organic) from the year-ago quarter’s level to $448 million. A volume decline of 10% was caused by softness in the U.S. and European bedding markets. Raw material-related selling price, net of currency benefit, reduced sales by 6%.
Adjusted EBIT margin contracted 250 bps to 3.8%, primarily due to lower volume, increased bad debt reserve, and steel-related pricing adjustments partially offset by lower amortization expense.
Adjusted EBITDA margin also contracted 400 bps year over year to 7.1%.
The Specialized Products segment's trade sales slipped 1% (all organic) from the prior-year quarter’s figure to $316 million. Volume was flat as growth in Aerospace was offset by declines in Hydraulic Cylinders. Raw material-related selling price and currency translation impacted sales by 1%.
EBIT margin declined 140 bps to 7.5%. EBITDA margin also contracted 160 bps year over year to 10.7%.
Trade sales in the Furniture, Flooring & Textile Products segment declined 9% from the prior-year quarter’s level to $333 million. Volume was down 5%, mainly due to continued weakness in residential end-market demand. Raw material-related selling price decrease reduced sales by 4%.
Adjusted EBIT margin of 6.9% was down 90 bps from the prior-year level due to lower volume. Adjusted EBITDA margin also contracted 90 bps to 8.5%.
Financials
As of Mar 31, 2024, the company had $806 million in liquidity. It had cash and equivalents worth $361 million at the end of March, down from $365.5 million at 2023-end.
Long-term debt totaled $1.77 billion, up from $1.68 billion recorded at 2023-end.
The trailing 12-month net debt-to-adjusted EBITDA was 3.61x compared with 3.16x at the end of 2023.
Cash to operations for the reported quarter totaled $6 million versus cash from operations of $97 million in the prior-year period.
Capital expenditures totaled $26 million for the first quarter versus $38 million a year ago.
2024 Guidance Maintained
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 by high-single digits in the Bedding Products and down by low single-digit in Furniture, Flooring & Textile Products segments. Nonetheless, the same is expected to be up low single-digits in Specialized Products.
EPS is projected to be between 95 cents and $1.25. 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 EPS is likely to be in the range of $1.05-$1.35, down from $1.39 reported in 2023. 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 and metal margin compression. This is partially offset by lower amortization resulting from the 2023 long-lived asset impairment. LEG expects adjusted EBIT margin in the range of 6.4-7.2% compared with 7.1% a year ago.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Legget & Platt has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. It's no surprise Legget & Platt has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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