CARTHAGE, Mo. - Diversified manufacturer Leggett & Platt Incorporated (NYSE:LEG) disclosed a 10% decline in first-quarter sales compared to the same period last year, with revenues dropping to $1.1 billion. The company also reported a decrease in earnings per share (EPS) from $0.39 in the first quarter of 2023 to $0.23 in the same quarter of 2024.
The company's board declared a second-quarter dividend of $0.05 per share, which is a significant reduction from the previous year's second-quarter dividend. This move is part of Leggett & Platt's updated capital allocation strategy, which includes a focus on strengthening the balance sheet and liquidity, improving margins, and positioning for profitable growth opportunities.
Despite the lower sales and EPS for the first quarter, the company's full-year guidance for 2024 remains unchanged, with sales projected to be between $4.35 billion and $4.65 billion, and EPS forecasted at $0.95 to $1.25. Adjusted EPS is expected to be in the range of $1.05 to $1.35.
The decrease in sales was attributed to a 10% drop in organic sales, with a 6% decline in volume, primarily due to continued weak demand in residential end markets. Additionally, raw material-related selling price decreases contributed to a 4% reduction in sales.
The company's earnings before interest and taxes (EBIT) for the first quarter were $63 million, a 29% decrease from the first quarter of 2023. The reduced EBIT and adjusted EBIT were mainly due to lower volume, an increased bad debt reserve, and other factors, partially offset by lower current-year amortization expenses.
Net debt was 3.61 times the trailing 12-month adjusted EBITDA, and the company amended its existing credit agreement on March 22, 2024, to provide more liquidity and flexibility.
Leggett & Platt is progressing with its restructuring plan, which was announced in January, aiming for an annualized EBIT benefit of $40 million to $50 million to be fully realized by late 2025. The plan includes expected sales attrition and proceeds from the sale of real estate, with the majority of the restructuring and related costs anticipated to be incurred in 2024.
This article is based on a press release statement from Leggett & Platt Incorporated.
InvestingPro Insights
As Leggett & Platt Incorporated (NYSE:LEG) navigates through a challenging market, the company's financial metrics and strategic moves come under investor scrutiny. According to real-time data from InvestingPro, LEG's market capitalization stands at $2.42 billion, reflecting the scale of the business amidst current market conditions.
Despite a challenging quarter, the company boasts a significant dividend yield of 10.04%, which is particularly attractive to income-focused investors. This aligns with one of the InvestingPro Tips that highlights LEG's strong commitment to returning value to shareholders, as evidenced by its history of raising its dividend for 53 consecutive years.
Another notable InvestingPro Tip for LEG is that analysts are predicting the company will return to profitability this year. This is a critical aspect for investors considering the long-term potential of the stock, especially after the reported decrease in earnings per share for the first quarter of 2024. The anticipated growth in net income could signal an upcoming turnaround in performance, which would be a key driver for the stock's recovery.
InvestingPro users can access a wealth of additional insights, including 11 more InvestingPro Tips for LEG, which could further inform investment decisions. For those interested in a deeper dive into Leggett & Platt's financials and strategic outlook, using the coupon code PRONEWS24 provides an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Key metrics such as the adjusted P/E ratio of 13.12 and the PEG ratio of 0.12 suggest that the stock may be undervalued, especially when considering the company's long history of dividend payments and the expectation of profitability in the current fiscal year.
The company's commitment to a solid dividend despite the current headwinds is a testament to its financial resilience and management's confidence in the future.
With LEG trading near its 52-week low, value investors might see this as an opportunity to consider the stock, especially with the next earnings date set for April 30, 2024. The upcoming earnings will be a significant indicator of the company's ability to navigate through the current economic landscape and deliver on its full-year guidance.
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