Thursday, engineered component maker Leggett & Platt, Inc. (LEG) reported a profit for the fourth quarter, compared to a loss in last year, as a result of cost reduction efforts, pricing discipline, and a LIFO benefit. Adjusted earnings per share for the quarter exceeded analysts' expectations. Even though sales dropped 13% due to steel-related price deflation, it came in above estimates. The company also issued guidance for the fiscal year 2010.
Carthage, Missouri-based Leggett posted fourth quarter net income attributable to the company of $35.2 million or $0.23 per share, compared to a loss of $18.0 million or $0.11 per share in the same period last year.
Earnings from continuing operations for the quarter were $42.5 million or $0.26 per share, compared to a loss of $7.6 million or $0.05 per share in the previous year period. Excluding an unusual international tax item, adjusted earnings from continuing operations for the quarter were $0.30 per share, compared to $0.03 per share in the year-ago period.
On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.24 per share. Analysts' estimates typically exclude special items.
Earnings for the quarter reflect a LIFO benefit of $14.8 million, with no corresponding steel deflation impact, compared to LIFO expense of $27.1 million in the preceding year quarter.
Net sales from continuing operations decreased 13% to $769.7 million from $882.5 million in the previous year quarter, due mainly to steel-related price deflation. Five analysts had a consensus revenues estimate of $722.76 million for the quarter. Unit volumes declined about 3%.
Total sales for the quarter dropped 14.8% to $825.9 million from $969.7 million in the comparable period last year.
Segment wise, total sales from Residential Furnishings declined 9.6% to $415.6 million, due to steel-related price deflation. Commercial Fixturing and components sales dropped 25.5% to $101.2 million, due to the company's decision to walk away from sales with unacceptable profit margins, market softness in office furniture components, and reduced spending by retailers.
Industrial Materials sales plunged 26.2% to $157.2 million, as a result of steel-related price deflation. Specialized products revenues decreased 5.8% to $151.9 million reflecting weaker demand for machinery and Commercial Vehicle Products was partially offset by improvement in automotive demand.
For the fiscal 2009, net earnings attributable to the company was $111.8 million or $0.70 per share, compared to $104.4 million or $0.62 per share in the previous year. Earnings from continuing operations for the year were $121.1 million or $0.74 per share, compared to $127.5 million or $0.73 per share in the prior year.
Adjusted earnings from continuing operations declined to $0.86 per share from $0.88 per share a year ago. Cost structure improvements and pricing discipline nearly offset the earnings impact of extremely weak market demand.
Yearly net sales from continuing operations decreased 25% to $3.06 billion from $4.08 billion in the preceding year, largely due to unit volume decline.
Wall Street analysts estimated the company to report earnings of $0.72 per share on revenues of $3.00 billion for the full year.
Looking into the fiscal 2010, Leggett expects sales in the range of about $2.9 billion to $3.3 billion, reflecting the company's belief that the economy will likely remain depressed.
The company anticipates earnings from continuing operations to be between $0.75 and $1.15 per share, based on sales expectation and considering other uncertainties including inflation, steel pricing, and margins.
Street analysts currently expect earnings of $1.07 per share on revenues of $3.07 billion for fiscal 2010.
LIFO-related impacts are not anticipated to be as significant during 2010.
LEG closed Thursday's regular trading at $19.81, down $0.24 or 1.20%, on a volume of 1.22 million shares. In the last 52-week period, the stock traded in the range of $10.03 to $21.44, with a three-month average volume of 1.48 million shares.
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