LEG - Earnings call transcript Q4 2018 | Leggett & Platt, Incorporated

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Leggett & Platt, Incorporated Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure your my Ms. now is to host, introduce It Investor Wendy of Watson, Director Relations. you, Thank Ms. Watson.

begin. may You

Wendy Watson

events, financial President Industrial me Davis, and questions Mitch is risks trends results due the discuss morning Actual The of I Specialized & need and revise Products to call. for Watson. events outlook and update no Glassman President a remarks President differ Those this quarter Leggett that statements. call obligation for as future financial of company of we Flanigan, Matt & Matt the Chief any Leggett EVP Leggett’s Platt’s We for conference expressed set segment; and recorded Karl today’s Products undertakes of portion posted finally, press and segment; details that and of uncertainties, And EVP on along A summary will results PowerPoint call, With material. Cassie conference the Products XXXX. Operating discuss yesterday’s our release answer and segment to yesterday’s reconciliations. information Karl major Wendy is summary available the objectives, broadcast or and and number with or CEO; am Branscum, not you morning of and group Financial to a may be of recorded agenda Manager the the Good being and details. I transcribed, non-GAAP IR. in remind documents you this strategies, EVP, address will Residential supplement This fourth Furniture of call thank Officer; follows: This a and release; that made the or call materially forward-looking our statements. is these replay Relations Investor permission. for with Products IR taking or information without Chief copyrighted have. are portion from may Perry the statements and Platt Glassman, expectations, start including our to press Dolloff, website. is contain today part constitute in Officer we you the website will any slides concerning

summary entitled For the please to Forward-Looking the and a additional and risk and XX-K these Karl. to yesterday’s XX-Qs call now refer I’ll of in factors information, Statements. release our section over press turn

Karl Glassman

in Good morning. our participating And thank you call. for quarter fourth

very this to would around year. They fellow thank are First, world past dedicated I much employees efforts the your our appreciated. during like for

X%. a growth a $X.XX. at several X% were currency earnings. in added impact to also per despite in Fashion with are our faced Fourth related operational increases notably billion We on Home most and some XXXX our amount items quarter to Bed. Furniture This performance includes of net earnings pleased acquisitions from Fourth and Raw X% increased yesterday’s and per share to price release sales reduction $X.XX sales the of that flat operations volume. quarter challenges material press we share $X.XX outlined continuing businesses,

acquisition Core improvements and share content $X.XX and the quarter divestitures in Acquisitions, to by that share and sales Tax benefited from and continuing Rod of were Adjustable in in XXXX a primarily Steel of share have proprietary and net a foam is styles our reduction commercial continued growth. specialized X% related per five-year price earnings group. Through through In increases net we completed industries. loan last adjusted from lag Cuts some benefit was just have and increased Products. business. billion strategic bank X% for made a X% awards that $X.XX cylinder share should a million impact. Edge Spring ongoing declines springs competition per in current inflation. other market. Home earnings in financed our earnings achievement related and raw leader Tax we Elite include $X.XX sales per The of Jobs program a increase a XXXX, along the acquisition $X.XX third XXXX. technology a $X.XX we margins engineered higher Aerospace. to the a Furniture, furniture along $X.XX. in of production identified PHC associated finish from cost Excluding combination issuance operations purchase per our the games and share ECS and currency at month. gained earnings and the improved November, quarter strong by in were per from and market completed benefit the is up reduction share. mattresses. increased global growth critical the per foam Precision the acquisition, Adjusted ECS Automotive, we shift our of was metal from important business scale to to Full-year and expense grew label from the and full-year leading technology share primarily Flooring to XXXX Cuts largely announced our year. Jobs Bed These partially benefited added ongoing in these market of new In manufacturer from $X.X sales EPS proprietary Fashion capabilities growth for Solutions cylinders, Full-year X% passing cost, and primarily of U.S. through including handling volume paper a price Work and of with X% Comfort material mentioned term per items, offset mill Comfort and industry, Quantum Hydraulic Act gains increased materials bedding to with last hydraulic in we in we Act. $X.XX $X.XX and of In sales. reinforce fourth goals. $XXX included of inner private due program LIFO $X.XX with primarily steel sales improvements first expansion quarter offset financial XXXX, an reduction, from long-term X% Full-year the with a improved our margins Adjusted Bed, These XXXX higher for analysis. Cylinders, is In fourth organic net This billion hydraulic steel Earnings our the metal acquired businesses to moves in and January, with Furniture $X.XX share primarily associated from X%

annualized foams fiscal XXXX year bedding foam leading were the technology, Our ended for us combined we unit of million reporting for industry. to differentiated in sales $XXX and the within September ECS’ segment growth in provider products in make Perry. Residential Products expertise to and the XXXX. the add ECS million expect spring is new approximately global specialty ECS our to $XXX business sales

Fashion charges restructuring initiatives our and continued the we analysis acquisitions of in our in and will later In businesses, million XXXX. complete and $XX margins. initiated The additional growth XXXX, Restructuring XXXX an drive we were late discussed, Furniture previously we guidance by end in of Leggett in-depth discuss to year. of this the expect Matt increased be and sales an call. and expect million the As these activity $XX Bed substantially for restructuring activities year should year. Home related last charges

in and we unit website, our higher that rates Finally, springs dollar to the With do dollar we of box spring; unit within other our XXXX, slide Matt. growth Relations pieces will for for as growth growth we beginning have content I’ll posted spring springs or first springs provide to Products other and quarterly Accordingly, decks inner the contains strong we Core continue quarter business our segment. inner the growth disconnected. reporting and growth and to over Comfort units. become gains the of now call Investor unit units, Residential dollar including inner value Because stop turn will all, increasingly box growth of and

Matt Flanigan

of included and operating cash generated fourth once Thank million, XXXX, strong quarter typically we cash which our Karl, you, everyone. morning $XXX performance. flow good flow In our again

percentage fourth focus a total In per working a $XXX in $X.XX ended quarterly to November, and declared year repatriated XXXX. million. a of $XXX capital strong and X% have offshore a full-year We million to increase management adjusted dividend, sales versus the XX.X%. continue bringing of with sharp as of We the working capital our on we cash the share we quarter quarter at fourth

XX% percentage XXXX, in to the of adjusted Our XX%. increase as our of earnings. target modest in earnings dividend dividend in of announced a the of adjusted top was XX% from target at Beginning with payout our to acquisition, range leverage payout payout ECS we change the dividend XXXX conjunction in approximately a for XX%

associated among with XX debt as We one X.X%, current price Friday’s which continue increasing dividend ECS expect is XXX’s the the $XX.XX, that we of At S&P repay the our of to acquisition. highest Dividend the yields Aristocrats. comprise yield the is companies closing

the at For X.X million issued exercises. primarily shares for million and of shares average stock of we’ve benefit stock year, employee X.X an our option repurchased full $XX.XX and price plans

we small Geo year, PHC operations. the Component acquired During and two

under increased After We We ECS automotive the XX capacity the growth billion million We connection to months and acquisition January, our borrowing organic our year commercial with program the ended the debt also trailing funding continued with approximately levels in a bedding. in at times. expected paper $X.X as of to investing capital X.X the ECS debt $XXX our transaction. increased in from opportunities support primarily X.X EBITDA. times adjusted completing to

trailing EBITDA to return to assess times of maintaining of credit our spending rolling to suspending share our that a deleverage grade temporarily reducing operating on expect committed by using to approximately investment We strong other and are to our a months total companies three-year repay debt. of basis. repurchases, rating overall XX comparing shareholder a performance flow peer cash X.X target ratio We by to acquisitions debt and

target TSR believe per the the S&P of long we XXX top XX% XX% in to of the will over Our one an year. to third is require TSR average which term, achieve

of continue our has achievement top third XXXX prudent of over performance not benefit Sales strongly will target, recent growth our this will to ECS time. significantly growth our support met from disciplined While goal and strategy in acquisition. believe we the use capital

promotional aerospace XX% activity offset by planned and and from sales. billion $X.XX $XXX declines We Automotive, in in billion, be XX% Cylinders, XXXX year. Adjustable to efforts Spring, up partially should to last to million sales Hydraulic restructuring less to over $X.X Fashion U.S. in are approximately expect related Furniture ECS Bed. Home expected or also and add growth Bed sales to

higher to In per be cost. organic related sales restructuring ECS, approximately Therefore, share addition slightly flat up are partially higher be is $X.XX offset to expected $X.XX tax expected steel to share EPS to to moderating adjusted rate. be expected same of to by sales and inflation to including $X.XX growth X%. per location Earnings $X.XX cents $X.XX reflecting is

have As in XXXX, to benefit we executive we of releases from a in is a allowance expected previously to rate tax the XXXX. effective benefited of interest versus valuation full-year stated, limits EPS XX% of ECS reflects non-recurrence compensation to be acquisition neutral The stock XXXX. and ECS financing higher tax XX% implications impact This in of smaller guidance the expected higher rate expansion from the in assumes compensation some XXXX. the due transaction. TCJA EPS

not XX.X% to and million million. we to full-year framework, while diluted margin guidance and adjusted be quarters We of net specific rates EBIT do across growth XXXX. $XX should million, this amortization depreciation to XXXX of consistent approximately revenue $XXX upon shares expect we expect XXXX $XXX the quarterly approximately our guidance, be somewhat interest Based issue XX.X% fully in

to expenditures slightly acquired cash. first for Cash in the purchase last for quarter than margins lower adjusted expect approximate the flat from be half $XXX in in and million year-over-year the the ECS margins expect should due should year part to quarter inventory million improving be Capital second to near should we be and $XXX accounting We of first require the million year $XXX by operations year. to XXXX. of adjusted dividends

approximately XX% dividend be out pay of adjusted anticipated earnings. our XXXX for of ratio above to is Our target

of working investments; dividends; capital cash repurchases. share capital organic use strategic and three, for involving four, expenditures priorities remain; long-term Our growth one, acquisitions two, and

prioritize and With previously will over organic Wendy. call acquisition repayment and comments, growth stated, dividends. As to temporarily turn share after back the spending, we suspend repurchases, reduce those I’ll debt

Wendy Watson

an we’ll yield our and prepared thank answer order for participate, participant. be of we remarks. In ask concludes one everyone then next That you that to any questions. allow only attention glad to We your your the to you question to opportunity and request

ready will answer well. to Michelle, and we have to If you re-enter we’re those questions, additional begin the the questions you’re session. as queue welcome Q&A

Operator

Instructions]. [Operator

Our proceed of Please first line question. comes the with with your question Maklari Suisse. from Susan Credit

Chris Kalata

on for Chris is for questions. taking our This Susan. Thanks Kalata Hi.

Products just segment. the is Industrial on question First

You’ve second significant the the been pricing of in able amount XXXX. to realize half of

this just much was what wondering, that are additional pricing I how year to could So, your have you and benefit margins? expecting

Perry Davis

– this inputs prices scrap overall, and both a pretty in I scrap that we’ve rod remain we few fact, in over is at January, this the run-up seen year pricing. in But, Perry we constant. rod are particularly a much believe Davis. We in saw deflation January decrease that input cost pricing little don’t believe months in last which a is next uncommon. We peak. Chris, relatively our since point in in at will we scrap XXXX. definitely We the feel some saw slight time and

Chris Kalata

second impact you my and full-year a environment? XX% And what quantify – to XX%? able question, your the would full XX% then be headwinds between Okay, include just thanks. of that does the incremental are the the guidance tariff And

Karl Glassman

it’s is no. top-line through. tariff. expect to Chris, as know. to fact answer XX% We they to to do The them We in expansion the increased our assume pass don’t We tariff not tariffs Karl. that forecast, know of in the are just activity. relates will if that But include don’t it what

Chris Kalata

Okay. that. Thanks for

Operator

Thank you.

of comes question proceed the from Bobby line Financial. with Raymond next James with Our question. your Griffin Please

Bobby Griffin

and Good taking you question. you. for I guys thank Yes, morning appreciate everybody my

Karl Glassman

Bobby. Good morning,

Bobby Griffin

XXXX segment kind how assuming see the First, on for of I went guidance and your want of in to the the is, and touch outlook trended program kind automotive XXXX? what

Mitch Dolloff

I our Automotive really changed. will perform Good that morning, Mitch. continues business and our This of take is outlook Bobby. one, course, to well hasn’t long-term

every had awarded us program give CAGR production our of I’ve pipeline our We’ve time. future to in increases of this new growth double been since basis XX% in points. of XXXX strong digit since vehicle confidence over since year a awards continues by beating goal overall, that counting Our XXXX. the

our So, the strong we of there, double-digit and X.X% it to by up still gives a online for feel markets, production about case visibility globally and at confident at XXXX, target. goal. in we what we X% ending. net that about us coming the have We take major stand we forecast look really versus is program’s be to our have

Bobby Griffin

a recently? announced the forecast Automotive any assume China that stimulant demand production of Does for Okay. they type

Karl Glassman

I don’t know.

tell I general variety in, of China. with think trade that Certainly, impact that but you happening it’s the of in malaise kind some people of factors hard some have hopeful to some been a have there, it’s are there’s disputes. kind certainly economic kicks incentive still from that

that for So, little forecast bit better. XXXX I is China think a

down see in was XXXX. X.X% that and XXXX in forecast it I up So, it the X.X% shows

by low So a terms, – that’s fairly historical that’s still still China. for not

Bobby Griffin

Furniture, I Fashion those and stationary business was should they’re probably million year that motion half businesses that help understand be in and we so can Fashion standpoint, know detail. Furniture that Okay. of last offer guys any How a I appreciated. half appreciate or from is two a XXXX? smaller, for on think but me, greatly business probably Bed? roughly a Home million combined. sales be going is then $XXX to $XXX from would and you down help was and wind any And lastly standpoint, around modeling modeling about just the there I Bed Home

Mitch Dolloff

good when got activity we’re progress can and detail. this Again, think is lot input been of Bobby. you terms shot there about Furniture on Mitch. the low whole, further if I I’ll margin talk operations there’s price overhead and to move home progress shedding and in me we’ll making a production good a costs Chinese operating We transferring take and we’ve in business. of made our but good additional and let capacity. that to increases we’ve Okay, are jump advantage first take passing costs to lower excess reduce loan of underway and forward reducing

to the starting you’re performance fourth I stabilize think see quarter. in that

moving year. the first We’re implementation end half complete of the the largely and the to expect by of aggressively

sales for about some earnings in on significantly like I So, thinking digits, we mid side. – but business, single with think power increased terms of XXXX it that shrinkage increased probably see do in of that

we’ll Bed more about think product categories the to there little trim think in impact. Fashion to would we sales I are probably the XX% with earnings focused see really the continue very declines side, On significant inventory. I on they as range sales decline and closer being monetizing XX%

Bobby Griffin

queue jump in Okay. best I I’ll appreciate the of this detail. luck back all year. that and

Mitch Dolloff

Thank you, Bobby.

Operator

Thank you.

your next with line Stifel. of with comes John Our question proceed Baugh from question. Please the

John Baugh

guidance. I I the Is situation? questions. assumed there Thank rate guess or XXXX around two antidumping on you. Good first morning. have just anything timing

Karl Glassman

no, continue John, for the know shutdown have impact optimistic. of be until reason out with early and determination. we The us. expect May how the We positive every optimistic timing end pushed do be don’t to quantify to is to government some that

kind were just it, of perspective. guidance from we So a ignored

John Baugh

Thank then how box giving a what comment units us flooring and on and on the year about that dollar could trade? quarter you’re the year losing seeing gaining Thank about weakness, the both you now? decline. adjustable on then, net in you. think they’re the you units steep for the on fourth impact like do not springs. the anyway comment one of the What’s But And saw maybe dollar, we obviously the net appreciate side, follow-up, springs, box but what maybe then right Okay. you. as in last And and

Karl Glassman

those two I’ll take are last one. the segments. Remember different in

that’s that springs and going platform fewer the just – because the probably to average cases, bed $XX bridge $XXX in in furniture frames a an correlate, being order fewer other structure, is There’s of box a just on good springs the Bed I advent the a unit and in box those trade higher when of U.S. Remember, fewer are Adjustable frames bed steel $XXX some on is spring there’s is being in guess of so to But a beds, going springs, and box range, Residential. selling in so sold is markets. price box positive, with differently things in reported a beds and they’re subset there Spring that, of So box trade. of one $XX. significantly there’s there’s adjustables lot

As ahead, to go Perry. it relates weakness, flooring

Perry Davis

of a kind were QX, down Yes. there of played that drop. factors John, looking a at bit little into and a few

had customers, which then the we some – and mean, some all, I secondary, chain. customers secondary of down value First

went during firm quarter, a So where they where liquidated – inventories. the mattress of fourth through period a, they some time excessive

been also some of we’ve quarter. fourth We conversations of we duties, the the determinations dumping the that glut during among been groups feel And had occur preparation we based major Chinese that the then, for also, have having, like, our the exported U.S. mattresses saw dumped of into preliminary that customer on a in

so quarter And the think had work something an results. as probably fourth first like they we that, through definitely that effect through on quarter, that,

of Karl’s a the whenever would they’re effect, cost get basis a of that around back. that of an to product thing, be understand their is going the cooling order. shut And that somewhere has government place delay, to because the importing on XX-day comments product. to importer pushed lot With the back record February, look obviously landed subject because cases dumping to needs that in other in now a out, of we The like effort end down feel being

somewhere believe product. and of in place repatriate preliminary in dumb see end the of there, some favorable we’ll of U.S. that the product So we that or to hopefully somewhere that it’s May around still determination, we’ll along

Karl Glassman

the the Flooring, Hey, were carpet external on in sorry, Flooring. – they you X% the sales John, quarter, the yards. down think fourth square in I I’m fourth reports about asked also

correlation with a correlated obviously there’s sales just sales. market total, our and the Again, carpet it’s housing softness. general led, that in between I Carpet think So Cushion high that highly so

at question, fewer shipping is business share. Flooring answer one it’s just flattish January, through We but the have with Products in lost day, your not The down to X%, about so all January.

John Baugh

luck. that Good for you Thank color.

Karl Glassman

Thanks, John.

Operator

you. Thank

with line Keith Robinson the Our with of comes next SunTrust your Hughes question. Please proceed from question Humphrey.

Keith Hughes

Do better point in what Thank on to you. be Elite? have a purchase on you at One kit this accounting is the question Elite. feel XXXX going

Matt Flanigan

Matt. is Keith, this

modelling being XX% the the much the filed. And to goodwill all dollars will that helps still we we in transaction of don’t that, and the expectations, some we that’s first picture if associated is bigger have upshot we the but be accounting would your don’t be you’ll will We’re it million estimate around inventory a purchase I know quantified. XX% something certainly get reviewing that with currently that impact, it few price. quarter, some as case all see finalized but of very specifically

Keith Hughes

drops after over goodwill that now, period but time, of off parts kind three years. right amortize what of of of different the And like it, there’s some it

Matt Flanigan

goodwill balance That’s that the be just on will sheet. straightforward

Keith Hughes

Okay. here kind the XXXX second LIFO, release. guidance fourth the in press in discussed And question was year you from on you’ve of on And that your LIFO? expectations in the quarter? negative do then impact as a it what Did have

Matt Flanigan

this Keith, – again. Matt, of As is

As year a we have than crystal to assuming else there that basically anyone neither expense. the year LIFO anything flat and start we ball income be assume we the always will nor else, better not

all at commodity historically. with or the assumption trends talk guidance in consistent moment, will throughout we move and LIFO of about all that’s practice our we But and certainly Perry the of right now around heard year. provided You have expense a any the trends past bit income don’t

Wendy Watson

year just say, was be would LIFO million lower $XX Keith, I’d XXXX. full expect than it we And in

Keith Hughes

or the over positive It will Okay. on negative? play fourth quarter

Wendy Watson

quarter, fourth it quarter going out came will of the we $XX it that at the It estimated we was the to and million. at – as was million trued-it it in third had of be when $XX end

Matt Flanigan

on almost course. happens rarely thought that basically days what we before it in XX came of with So, and spot

Keith Hughes

Okay.

Matt Flanigan

in right expense. XXXX that you look LIFO we won’t expense the don’t now here, this forward that modelling for there any year, we some LIFO of nearly of our assume of gate if out But anticipate to be magnitude and purposes of

Wendy Watson

we’ll estimate quarter. each And that update estimate that each we’ll –

Karl Glassman

Keith to million. was fourth quarter $X of the LIFO impact the

Keith Hughes

million. $X was LIFO quarter Fourth

$X correct? Okay negative, million

Matt Flanigan

Yes.

Karl Glassman

The expense, that’s correct.

Keith Hughes

All Thank Okay. right. you.

Karl Glassman

welcome. You’re Thank you.

Operator

you. Thank

question of your CJS with Securities. next question. the from Please line Our Dan Moore comes proceed with

Dan Moore

questions. morning, for taking the Good thanks

As it since bad, it’s Elite, only what wondering anything but you’ve to a closing relates short acquisition? the if good while learned, or very been now,

Karl Glassman

products, strategies were Vegas. mattresses in a we are are Dan early, of made high-grade it’s boxed the then will Vegas, the all box analysis three beds or at bed predictions in that Las a true right, Elite of in had Las week Furniture of the of and be us and environments lot very, growth – we number And but that Vegas with are numbers sold that Market apparent business very and brick-and-mortar conventional marketed Las you proving our it as displayed were it’s the are own tell number the just to tomorrow, goodness the that we’re I really and weeks amongst around that being can but of Elite with conversations a team. management Perry last seeing I’ve ourselves very of you is, that thank that very,

the We’re also specialty seeing attributes in and of of terms around foams increased heat dissipation. significant specialty foams conversation

we that blessed team. that group fantastic business. of deal. So and thank And such cautious, that them again, early, done incredible we’re we’ve frankly employees admittedly always what Culturally, connectivity goodness a the but an on to have managers in there’s feel, we’re

Dan Moore

charges, there? restructuring just sense to the spread any Got through loaded, evenly the in little be it. of do a expect pencil year, those bit you And more of front-end remaining sharpening terms

Karl Glassman

the for first the back but heavily sure, may there to a loaded residual First-half be little into half. loaded half,

Dan Moore

bit automatically Got opportunistic cognizant leverage just repurchase and than more of very cash the free it. given are thought philosophical, but outlook? But rather remain flow lastly, And suspend it’s of a kind process, appreciated. then little understanding strong why the you really share

Karl Glassman

to on Dan, between we there’s what based it it because a any trying and not the value if I, be like fall – stock fight that have but shares, our off belief us for almost will Matt equity the to you’re very is the conversation, as of sounds pick in repurchase price. to difficult

opinion We trade are – probably the company’s is now. a undervalued future bullish believe extremely and personal on right the well, perspective from stock

ourselves we’ve made difficult we’ll to longer or it’s be to us. for us and Perry to than continue So, times both of high for and either, is sure, X.X Matt but has lenders that in a to been I’s at the deleverage remarkably commitment history here

to continue be – and but I it So for watch it it that will melt to will any one hard But would pounce. off, we’ll Matt arm-wrestle later.

Matt Flanigan

Yes. Dan.

aligned the order We’re is There’s cash typically. is of is all we quite and it. cash certainly in but to predictable, it, capital seasonality a deployment of and very some our it with news good predictable the flow considerations and have lot

So we’re in the over take we comfortable next something place months that XX earmarking the deleveraging is that very it estimating promptly. and to feel XX will happen

Dan Moore

Okay. Understood. Appreciate the color again.

Karl Glassman

Yes.

Operator

Thank you.

with Piper with proceed Our your next question Peter Jaffray. comes from of question. Keith Please the line

Peter Keith

everyone. Good thanks. morning Hey,

on $XXX on, last the of million from that plan is the of and key pulling are operating I rate what the years. in run levers cash flow you comfortable point, two big follow-on to drivers? us million get pretty is just What guess, just comfort Could the $XXX last you step-up acceleration? So that your the

Matt Flanigan

jump all, then this will expectation ECS certainly we Perry Mitch to Karl, can Matt. that Peter, $XXX and and ECS sales estimated very I’ll this don’t the Yes, But in from be stating is the acquisition, is of and arrive first clearly have amplify. it Wendy course be reflects million. year that been of and surprised that

that margin anticipate sales we will reading higher be the than on base average. EBITDA fully that that recall also the company You

we XXXX to $XXX million Leggett for owned So could just there, level from math that we driving you before see higher do the EBITDA of will significantly posted companywide ECS. this be

the be that in to Mitch quarter, capital XX% and and ride Secondly, performance did working working the capital, know as range hard both certainly, to are able fourth Karl XXXX. not our working and which strongly you once I saw of Perry of ended on year we again most

go flush hard up the of by pretty a is that cash. improved sustained XXXX. We and mentioned. as significant pretty otherwise, capital amount year dialing And the talked the expenditure share is down just further you think end to in will Karl of working flow statement when nature about We’re make throughout naturally repurchases sure same to predictable. M&A of performance cash That about meaningful significantly

use of higher family, very again, $XXX to of on that ECS working that and of part surprise no in circa expectation cash flow we feel readily operating really, correlated focus side. So the the confident And you should being capital about concentration million operating uses and earnings the your is that cash model.

Peter Keith

Okay. Thanks, Matt.

just and back you I’m I guess, growth. guiding bigger target, XX% where for X% are One the guess this X%. follow-up historically are of to I year, for the at TSR referred EPS to you the midpoint, picture And around looking

So are in lots puts being just business of takes TSR there sort right with sweep XXXX? high-level in line now, for are challenges but could provide you not the a maybe was the what hoping on, your and to I of main

Wendy Watson

take a Yes. at This stab Wendy. this. is I’ll

the you first the If think for the three-year it’s going short-term growth. about really at a period EPS, to sales generator big over be in least

our think XX% ECS Matt the are that to lower. we’re operating margin consistent we going to be TSR. added to strong to course, margin repurchases said performance be expect with be expected XX% achieve in able of improvement in We going other to businesses, share But to as

share of So it’s bit, while to not think about instance, we, we’re they’ll position and XX%. we achieve little long-term, we’re as the not company repurchase, to In the but think changing the our short-term, TSR. target been XX% we well change for TSR individual a that it components changing

Peter Keith

speaking to Okay. a about even buyback I is maybe I was And ex guess – I growth X% follow up, was at XX%. just earnings

are flat to If why Leggett mic, light, give just is top-line could guiding if those brush what for the in any to are looking year away the a little you that broad of a to margins XXXX? someone again growth say, is kind out strokes So, going this key down. go challenges are on even us,

Karl Glassman

in with – purchase have will an perspective, Yes. challenge mitigated The some the ECS accounting degree is, be from key dealing we well the to which time. issue, we’re

environment, from this is it about other of we two. downs certainly size shut that don’t kind in earlier we to Government an to in good it’s challenges one know. of doing guide difficult for tariffs don’t degree that’s we, So impact good know. year in lesser issue, perspective one There macro accounting know. in one don’t a the acquisition the year the an environment, uncertainty Brexit with you of pay question

with up that that that targets we coming we’re And in very So, here we feel the sit comfortable those putting best TSR’s term Wendy as are we feel range. guidance said, and today we’ll longer out comfortable as be there.

Peter Keith

all a Karl. appreciate I Okay. the Thanks color, lot.

Karl Glassman

you. Thank

Operator

you. [Operator Instructions]. Thank

the Bergner Gabelli Justin from proceed with your comes of Please Our next question. Company. with question & line

Justin Bergner

Good morning everyone.

Karl Glassman

Good morning.

Matt Flanigan

Good morning, Justin.

Justin Bergner

at with almost start I rate that end to should from run in million, amortization step-up is ECS, the just of guess that $XXX all million I and the ECS? think of year sort $XXX of increase depreciation to the

Karl Glassman

Virtually all…

Matt Flanigan

Yes.

higher some capital few that had majority associated we’ve So, vast but with of know spending in the is last you the ECS. as yes, years,

Justin Bergner

Okay.

framework, correct? cost your so in And adjusted cost you’re of EPS any ECS adding outside transaction back not

Karl Glassman

sure We are question. I back not – any make adding understand your additional

So...

Justin Bergner

adding for you’re ECS cost are only transaction costs? The back

Karl Glassman

maybe in and accounting treatment the write-up – and we’ve Well, first gap that happen the it’s inventory talked will an at quarter an phenomena about. end that

there’s and ECS. cost Beyond associated with that, no add significant back

Justin Bergner

your added cost EPS back for But not will inventory framework. be the adjusted

eat that first the cost in quarter. You’ll

Karl Glassman

Yes. Yes.

Justin Bergner

XXXX, more less to announced compared $XXX that the you think in growth September? Has you than that ECS it’s the might to range. end tapered sales have sales a the sort Okay. expectations sales, because markets I when the million or like a taper of XX% seems double-digit Should growth XX for XX% view through down? the for down caused little had deal, of I for in months mean, maybe it bit

Karl Glassman

its Karl. Justin, market, – end not not this deflation. is It’s It’s

back. X% about growth in the of being expected that is pulled ECS chemical differently there’s cost early the have Said decreased significantly. So, that input

lower So, the dollars be by originally be that. than the negatively but margins not will resultant impacted sales will EBITDA expected,

we is would you – looking been input cost at XX% correct. forecast rate. material have growth about your is So about would XX% stayed neutral, a If are raw a observation The have growth.

Justin Bergner

Okay.

you will similar? mean you stay will when EBITDA similar, said or So EBITDA stay margin do dollars

Karl Glassman

said I dollars. have should

Justin Bergner

Okay. And non-ECS thought. That’s related questions. just what I then other two

have keeping I growth, I X% your you that Fashion And actions offsetting wondering, to for mentioned timing least you’ll at pricing the constant, You organically. from margin guess earnings guess steel from the organic you XXXX, Furniture tax, some aren’t to some sales the why framework in pretty profile and related seeing seeing besides I’m or operating timing from your the Home that in X% deal be given related benefit should leverage taking. Bed benefit you’re

Wendy Watson

to and core to in addition see have expect And the going ECS to a do to got expense improvement some business. higher to in higher Leggett rate, share slightly count. we’re we is margin our dilutive we’ve going EBIT Remember, higher from be – interest margins. tax Justin,

improvement small Leggett few a core you margin business. have we in the expect do But So, if headwinds, to see we will.

Justin Bergner

Okay, any quarter. in Edge that’s helpful. growth lastly, Quantum on comment then And the

I spoke about last think you quarter.

Perry Davis

this Edge and continues grow. the Justin, of Core, Yeah. Comfort Perry. Quantum category is overall to

year quarter. XX% is fourth a It our the stronger in grow. about And in to as of last Comfort year, innersprings the Comfort little XX%. Quantum about the a Core For Core continues quarter, were percentage than fourth was innersprings, full our Edge. those, That that of

we of saw Edge. ActiveEdge, representation fact, encompasses a great which what call we Quantum In

those recently of Las lines we market. introductions products saw foaming at of opposed and completed as great All a product new Vegas to products, the case existing coil encased representation

So, been we believe will now for throughout content continue some gain we’ve that that preaching time XXXX. story

Justin Bergner

all Thank my for you taking questions.

Karl Glassman

Thank you.

Perry Davis

Thanks, Justin.

Operator

Watson to turn questions would over remarks. Thank at to any Ms. time. closing call I no back you. There are further the this like for

Wendy Watson

talk you to we’ll participating next today, for everybody again you Thank and quarter.

Operator

teleconference. today’s This concludes Thank you.

at You Thank your a lines may participation this day. you your disconnect and time. have wonderful for

Leggett & Platt (LEG) 5 Feb 192018 Q4 Earnings call transcript