Leggett & Platt Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

leg-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from to

Commission File Number 001-07845

LEGGETT & PLATT, INCORPORATED

(Exact name of registrant as specified in its charter)

Missouri

44-0324630

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

No. 1 Leggett Road

Carthage,

Missouri

64836

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (417) 358-8131

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.01 par value	LEG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Common stock outstanding as of July 29, 2020: 132,392,918

LEGGETT & PLATT, INCORPORATED

FORM 10-Q

TABLE OF CONTENTS

Page
Number

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Condensed Balance Sheets at June 30, 2020 and December 31, 2019

Consolidated Condensed Statements of Operations for the three and six months ended June 30, 2020 and 2019

Consolidated Condensed Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2020 and 2019

Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2020 and 2019

Notes to Consolidated Condensed Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

SIGNATURES

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)


(Amounts in millions)	June 30, 2020		December 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$	208.8	$	247.6
Trade receivables, net	556.9		564.4
Other receivables, net	20.4		27.5
Total receivables, net	577.3		591.9
Total inventories, net	574.1		636.7
Prepaid expenses and other current assets	50.1		61.9

Total current assets	1,410.3		1,538.1
PROPERTY, PLANT AND EQUIPMENT—AT COST
Machinery and equipment	1,363.2		1,388.8
Buildings and other	721.2		719.0
Land	42.4		43.5
Total property, plant and equipment	2,126.8		2,151.3
Less accumulated depreciation	1,329.4		1,320.5
Net property, plant and equipment	797.4		830.8
OTHER ASSETS
Goodwill	1,373.5		1,406.3
Other intangibles, less accumulated amortization of $239.3 and $222.3 as of June 30, 2020 and December 31, 2019, respectively	730.8		764.0
Operating lease right-of-use assets	167.9		158.8
Sundry	102.2		118.4

Total other assets	2,374.4		2,447.5
TOTAL ASSETS	$	4,582.1	$	4,816.4
CURRENT LIABILITIES
Current maturities of long-term debt	$	51.1	$	51.1
Current portion of operating lease liabilities	41.8		39.3
Accounts payable	361.4		463.4
Accrued expenses	240.5		281.0
Other current liabilities	80.7		93.3

Total current liabilities	775.5		928.1
LONG-TERM LIABILITIES
Long-term debt	2,083.2		2,066.5
Operating lease liabilities	128.6		121.6
Other long-term liabilities	168.0		173.5
Deferred income taxes	212.2		214.2
Total long-term liabilities	2,592.0		2,575.8
COMMITMENTS AND CONTINGENCIES
EQUITY
Common stock	2.0		2.0
Additional contributed capital	537.8		536.1
Retained earnings	2,663.1		2,734.5
Accumulated other comprehensive loss	(117.2)		(76.8)
Treasury stock	(1,871.5)		(1,883.8)
Total Leggett & Platt, Inc. equity	1,214.2		1,312.0
Noncontrolling interest	.4		.5
Total equity	1,214.6		1,312.5
TOTAL LIABILITIES AND EQUITY	$	4,582.1	$	4,816.4

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	Six Months Ended						Three Months Ended
	June 30,						June 30,
(Amounts in millions, except per share data)	2020		2019		2020		2019
Net trade sales	$	1,890.6	$	2,368.3	$	845.1	$	1,213.2
Cost of goods sold	1,521.5		1,865.6		698.8		943.5
Gross profit	369.1		502.7		146.3		269.7
Selling and administrative expenses	215.0		236.9		97.2		118.3
Amortization of intangibles	32.7		31.0		16.3		16.9
Impairments	29.4		4.3		25.9		1.4

Other (income) expense, net	(11.5)		(3.7)		(15.9)		(2.9)
Earnings before interest and income taxes	103.5		234.2		22.8		136.0
Interest expense	42.3		45.9		21.4		24.5
Interest income	1.9		4.0		1.0		2.6
Earnings before income taxes	63.1		192.3		2.4		114.1
Income taxes	23.5		44.9		8.5		27.8


Net earnings (loss)	39.6		147.4		(6.1)		86.3
(Earnings) attributable to noncontrolling interest, net of tax	—		—		—		(.1)
Net earnings (loss) attributable to Leggett & Platt, Inc. common shareholders	$	39.6	$	147.4	$	(6.1)	$	86.2






Net earnings (loss) per share attributable to Leggett & Platt, Inc. common shareholders
Basic	$	.29	$	1.10	$	(.05)	$	.64
Diluted	$	.29	$	1.09	$	(.05)	$	.64

Weighted average shares outstanding
Basic	135.5		134.5		135.7		134.7
Diluted	135.7		135.1		135.7		135.2

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Six Months Ended						Three Months Ended
	June 30,						June 30,
(Amounts in millions)	2020		2019		2020		2019
Net earnings (loss)	$	39.6	$	147.4	$	(6.1)	$	86.3
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(39.7)		9.8		25.8		1.0
Cash flow hedges	(2.6)		4.6		3.7		.7
Defined benefit pension plans	1.8		1.0		.6		.5
Other comprehensive income (loss)	(40.5)		15.4		30.1		2.2
Comprehensive income (loss)	(.9)		162.8		24.0		88.5
Add: comprehensive (earnings) attributable to noncontrolling interest	.1		—		—		(.1)
Comprehensive income (loss) attributable to Leggett & Platt, Inc.	$	(.8)	$	162.8	$	24.0	$	88.4

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(Amounts in millions)	2020		2019
OPERATING ACTIVITIES
Net earnings	$	39.6	$	147.4
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	59.2		58.4
Amortization of intangibles and supply agreements	34.8		37.9
Long-lived asset impairments	4.0		4.3
Goodwill impairment	25.4		—
Provision for losses on accounts and notes receivable	20.8		2.2
Writedown of inventories	6.3		6.6


Deferred income tax (benefit) expense	(1.2)		7.9
Stock-based compensation	12.9		16.5


Other, net	8.1		(1.7)
Increases/decreases in, excluding effects from acquisitions and divestitures:
Accounts and other receivables	(13.2)		(58.2)
Inventories	46.9		33.3
Other current assets	1.4		(4.5)
Accounts payable	(89.9)		(46.1)
Accrued expenses and other current liabilities	(32.6)		(.3)
NET CASH PROVIDED BY OPERATING ACTIVITIES	122.5		203.7
INVESTING ACTIVITIES
Additions to property, plant and equipment	(43.0)		(70.5)
Purchases of companies, net of cash acquired	—		(1,244.3)
Proceeds from sales of assets and businesses	3.6		2.0

Other, net	4.6		(7.7)
NET CASH USED FOR INVESTING ACTIVITIES	(34.8)		(1,320.5)
FINANCING ACTIVITIES
Additions to long-term debt	—		993.3
Payments on long-term debt	(25.0)		(12.5)
Change in commercial paper and short-term debt	33.0		260.1

Dividends paid	(105.6)		(99.4)
Issuances of common stock	.7		6.9
Purchases of common stock	(8.3)		(9.2)

Additional consideration paid on prior year acquisitions	(8.4)		(1.1)
Other, net	(3.8)		(1.7)
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(117.4)		1,136.4
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(9.1)		2.0
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(38.8)		21.6
CASH AND CASH EQUIVALENTS—January 1,	247.6		268.1
CASH AND CASH EQUIVALENTS—June 30,	$	208.8	$	289.7

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in millions, except per share data)

1. INTERIM PRESENTATION

The interim financial statements of Leggett & Platt, Incorporated (we, us or our) included herein have not been audited by an independent registered public accounting firm. The statements include all adjustments, including normal recurring accruals, which management considers necessary for a fair statement of our financial position and operating results for the periods presented. We have prepared the statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of results to be expected for an entire year.

The December 31, 2019 financial position data included herein was derived from the audited consolidated financial statements, but does not include all disclosures required by GAAP.

Reclassifications

Certain reclassifications have been made to the prior period's information in the Notes to the Consolidated Condensed Financial Statements to conform to the 2020 segment reporting changes in our management structure and all related internal reporting (See Note 4 - Segment Information). These reclassifications did not impact our consolidated earnings or assets of the company, and all prior periods presented have been restated to conform with these changes.

2. ACCOUNTING STANDARD UPDATES

The Financial Accounting Standards Board (FASB) regularly issues updates to the FASB Accounting Standards Codification that are communicated through issuance of an Accounting Standards Update (ASU). Below is a summary of the ASUs, effective for current or future periods, most relevant to our financial statements.

Adopted in 2020:

•On January 1, 2020, we adopted ASU 2016-13 “Financial Instruments—Credit Losses” (Topic 326) as discussed in Note 7.

•ASU 2017-04 “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. We adopted this ASU on January 1, 2020. This ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value up to the total amount of goodwill for the reporting unit. We applied this guidance to our annual goodwill impairment testing completed in the second quarter of 2020 as discussed in Note 5.

•ASU 2018-15 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”. We adopted this ASU on January 1, 2020. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The adoption of this ASU did not materially impact our financial statements.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

To be adopted in future years:

•ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”: This ASU will be effective January 1, 2021 and is a part of the FASB overall simplification initiative. We are currently evaluating this guidance.

The FASB has issued accounting guidance, in addition to the issuance discussed above, effective for current and future periods. This guidance did not have a material impact on our current financial statements, and we do not believe it will have a material impact on our future financial statements.

3. REVENUE

Performance Obligations and Shipping and Handling Costs

We recognize revenue when performance obligations under the terms of a contract with our customers are satisfied. Substantially all of our revenue is recognized upon transfer of control of our products to our customers, which is generally upon shipment from our facilities or upon delivery to our customers' facilities and is dependent on the terms of the specific contract. This conclusion considers the point at which our customers have the ability to direct the use of and obtain substantially all of the remaining benefits of the products that are transferred. Substantially all unsatisfied performance obligations as of June 30, 2020, will be satisfied within one year or less. Shipping and handling costs are included as a component of "Cost of goods sold".

Sales, value added, and other taxes collected in connection with revenue-producing activities are excluded from revenue.

Sales Allowances and Returns

The amount of consideration we receive and revenue we recognize varies with changes in various sales allowances, discounts and rebates (variable consideration) that we offer to our customers. We reduce revenue by our estimates of variable consideration based on contract terms and historical experience. Changes in estimates of variable consideration for the periods presented were not material.

Some of our products transferred to customers can be returned, and we recognize the following for this right:

•An estimated refund liability and a corresponding reduction to revenue based on historical returns experience.

•An asset and a corresponding reduction to cost of sales for our right to recover products from customers upon settling the refund liability. We reduce the carrying amount of these assets by estimates of costs associated with the recovery and any additional expected reduction in value.

Our refund liability and the corresponding asset associated with our right to recover products from our customers were immaterial for the periods presented.

Other

We expect that at contract inception, the time period between when we transfer a promised good to our customer and our receipt of payment from that customer for that good will be one year or less (our typical trade terms are 30 to 60 days for U.S. customers and up to 90 days for our international customers).

We generally expense costs of obtaining a contract because the amortization period would be one year or less.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Revenue by Product Line

We disaggregate revenue by customer group, which is the same as our product lines for each of our segments, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. For information on our new segment structure, see Note 4.


	Six Months Ended June 30,						Three Months Ended June 30,
	2020		2019		2020		2019
Bedding Products
Bedding group	$	901.2	$	1,122.7	$	410.6	$	568.4
	901.2		1,122.7		410.6		568.4

Specialized Products
Automotive group	279.2		398.0		105.5		201.9
Aerospace Products group	60.2		80.1		21.8		40.7
Hydraulic Cylinders group	35.9		51.8		13.5		24.4
	375.3		529.9		140.8		267.0

Furniture, Flooring & Textile Products
Home Furniture group	131.0		178.3		49.8		87.4
Work Furniture group	109.0		147.7		45.4		74.5
Flooring & Textile Products group	374.1		389.7		198.5		215.9
	614.1		715.7

Price	40.92	EPS	2
Shares	135	P/E	18
MCap	5,541	P/FCF	13
Net Debt	1,955	EBIT	437
TEV	7,496	TEV/EBIT	17
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-06
10-Q	2020-03-31	Filed 2020-05-08
10-K	2019-12-31	Filed 2020-02-20
10-Q	2019-09-30	Filed 2019-11-05
10-Q	2019-06-30	Filed 2019-08-06
10-Q	2019-03-31	Filed 2019-05-07
10-K	2018-12-31	Filed 2019-02-27
10-Q	2018-09-30	Filed 2018-11-07
10-Q	2018-06-30	Filed 2018-08-03
10-Q	2018-03-31	Filed 2018-05-08
10-K	2017-12-31	Filed 2018-02-22
10-Q	2017-09-30	Filed 2017-11-07
10-Q	2017-06-30	Filed 2017-08-04
10-Q	2017-03-31	Filed 2017-05-09
10-K	2016-12-31	Filed 2017-02-22
10-Q	2016-09-30	Filed 2016-11-08
10-Q	2016-06-30	Filed 2016-08-04
10-Q	2016-03-31	Filed 2016-05-04
10-K	2015-12-31	Filed 2016-02-25
10-Q	2015-09-30	Filed 2015-11-04
10-Q	2015-06-30	Filed 2015-08-05
10-Q	2015-03-31	Filed 2015-05-06
10-K	2014-12-31	Filed 2015-02-26
10-Q	2014-09-30	Filed 2014-11-04
10-Q	2014-06-30	Filed 2014-08-05
10-Q	2014-03-31	Filed 2014-05-07
10-K	2013-12-31	Filed 2014-02-26
10-Q	2013-09-30	Filed 2013-11-06
10-Q	2013-06-30	Filed 2013-08-08
10-Q	2013-03-31	Filed 2013-05-09
10-K	2012-12-31	Filed 2013-02-28
10-Q	2012-09-30	Filed 2012-11-08
10-Q	2012-06-30	Filed 2012-08-07
10-Q	2012-03-31	Filed 2012-05-04
10-K	2011-12-31	Filed 2012-02-24
10-Q	2011-09-30	Filed 2011-11-03
10-Q	2011-06-30	Filed 2011-08-04
10-Q	2011-03-31	Filed 2011-05-05
10-K	2010-12-31	Filed 2011-02-24
10-Q	2010-09-30	Filed 2010-11-03
10-Q	2010-06-30	Filed 2010-08-05
10-Q	2010-03-31	Filed 2010-05-05
10-K	2009-12-31	Filed 2010-02-25

8-K	2020-11-02	Earnings, Regulation FD, Exhibits
8-K	2020-08-03	Earnings, Regulation FD, Exhibits
8-K	2020-06-29	Officers, Other Events, Exhibits
8-K	2020-05-15
8-K	2020-05-15
8-K	2020-05-06
8-K	2020-05-04
8-K	2020-04-09
8-K	2020-04-03
8-K	2020-04-02
8-K	2020-02-18
8-K	2020-02-03
8-K	2019-11-04
8-K	2019-10-28
8-K	2019-09-25
8-K	2019-08-20
8-K	2019-08-05
8-K	2019-07-29
8-K	2019-07-15
8-K	2019-05-07
8-K	2019-05-07
8-K	2019-04-29
8-K	2019-03-08
8-K	2019-03-04
8-K	2019-02-26
8-K	2019-02-04
8-K	2019-01-15
8-K	2019-01-10
8-K	2018-12-12
8-K	2018-12-11
8-K	2018-11-07
8-K	2018-11-06
8-K	2018-11-05
8-K	2018-10-25
8-K	2018-08-08
8-K	2018-08-03
8-K	2018-07-26
8-K	2018-05-15
8-K	2018-04-26
8-K	2018-03-21
8-K	2018-03-06
8-K	2018-02-05

EX-31.1	legex311q22020.htm
EX-31.2	legex312q22020.htm
EX-32.1	legex321q22020.htm
EX-32.2	legex322q22020.htm

LEG 10Q Quarterly Report

Leggett & Platt Earnings 2020-06-30