Leggett & Platt Inc. Earnings: Margins Shrink Again, Net Income Falls
S&P 500 (NYSE:SPY) component Leggett & Platt Inc. (NYSE:LEG) reported its results for the fourth quarter. Leggett & Platt manufactures a range of engineered components and products, including residential furnishings, commercial fixtures and components, and industrial materials.
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Leggett & Platt Earnings Cheat Sheet for the Fourth Quarter
Results: Net income for the home furnishings and fixtures company fell to $8.7 million (6 cents per share) vs. $31.4 million (21 cents per share) a year earlier. This is a decline of 72.3% from the year earlier quarter.
Revenue: Rose 6.5% to $854.1 million from the year earlier quarter.
Actual vs. Wall St. Expectations: Leggett & Platt Inc. reported adjusted net income of 22 cents per share. By that measure, the company beat the mean estimate of 21 cents per share. It beat the average revenue estimate of $826.3 million.
Quoting Management: President and CEO David S. Haffner commented, “We remain well poised for earnings growth when the economy expands. That has not yet occurred broadly; to the contrary, in our markets, aggregate demand was essentially flat in 2011. As a result, we continue to tightly manage costs, exit unprofitable businesses, and focus on other elements of our strategic imperatives. “Though sales grew in 2011, most of the increase was due to inflation and currency rates, which didn’t generate much profit. After improving for the last three years, EBIT margin declined in 2011 due to restructuring costs, inflation, and weak market demand for some of our products. We are dedicated to reversing this trend in 2012.”
Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.9 percentage point to 16.7% from the year earlier quarter. Over that time, margins have contracted on average 1.9 percentage points per quarter on a year-over-year basis.
Revenue has risen the past four quarters. Revenue increased 8.6% to $940.9 million in the third quarter. The figure rose 8.1% in the second quarter from the year earlier and climbed 9.7% in the first quarter from the year-ago quarter.
The company has now seen net income fall in each of the last two quarters. In the third quarter, net income fell 5.3% from the year earlier quarter.
The company beat estimates last quarter after falling short in the previous two quarters. In the third quarter, it missed the mark by 5 cents, and in the second quarter, it fell short by 2 cents.
Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved up from 34 cents a share to 35 cents over the last sixty days. The average estimate for the fiscal year has remained at $1.19 per share.
(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)
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