L&P Q2 sales down 30%, cites COVID-19 impact
CARTHAGE, Mo. – Leggett & Platt second quarter sales were down 30% compared with the second quarter last year as the company was “significantly impacted” by the COVID-19 pandemic.
Organic sales were down 31%; raw material-related selling price decreases and negative currency impact reduced sales 2%. Acquisitions added 1% to sales growth.
“Our second quarter results were significantly impacted by the economic effects of the COVID-19 pandemic,” said Karl Glassman, chairman and CEO. “We were pleased to see sales improve sequentially throughout the quarter as demand improved in most of our markets. The swift cost reduction actions implemented at the onset of the pandemic helped to mitigate some of the earnings impact from lower demand levels.
“We continue to see demand recovering through July, although at varied rates across our markets and geographies given the ongoing effects of the pandemic and continuing economic uncertainty,” he continued. “We have improved our liquidity and will continue to carefully manage our cash and expenses. We are committed to maintaining our strong balance sheet, investment grade credit rating and position as a Dividend Aristocrat.”
Second quarter earnings per share were a loss of 5 cents, a decrease of 69 cents vs.second quarter 2019, and included a goodwill impairment charge of 19 cents and restructuring charges of 2 cents.
Operating cash flow was $112 million in the second quarter, a decrease of $60 million vs. the second quarter last year primarily from lower earnings. The second quarter dividend was 40 cents, equal to last year’s second quarter dividend.
Glassman said the company’s focus remains on the health and safety of its employees and their families, along with its customers, suppliers and the communities it serves around the world.
“Our long-term fundamentals have not changed,” he said. “We continue to be leaders in most of our markets, focused on innovation and working closely with our customers to provide more of what they need to be successful. Our capabilities are unmatched in our large and expanding addressable markets. We are dedicated to our long-term vision for the company and are confident that we will emerge from this crisis strong and focused on the future.”
L&P said that sales improved sequentially throughout the quarter after hitting their lowest point in early April, and sales continued to improve in the first three weeks of Q3 to levels near the prior year.
The company said that trade sales in its bedding products business were down 28% in the second quarter. Volume was down 25%, primarily from COVID-related demand declines and exited volume in the Fashion Bed and drawn wire businesses.
As of June 30, L&P had long-term debt of $2.1 billion, including $102 million of commercial paper outstanding. It has no significant maturities until August 2022.
The company amended its existing credit agreement on May 6 to allow for additional liquidity.
L&P said it is not providing guidance at this time given “continued macroeconomic uncertainty” related to the effects of COVID-19.