Delivering profitable growth and generating strong cash flow are important goals that Leggett & Platt, like many other companies, strives to achieve. We recognize that those are only the first steps on our path to success. Equally important is what we choose to do with our capital and the cash we generate.
Continued investment in our strongest performing businesses is crucial to Leggett & Platt’s long-term success. That’s exactly what we are doing. On the next few pages, you will read about some specific investments that we are making to support growth in attractive product categories, expand our geographic scope, and enhance our manufacturing process and product-design capabilities. We think you will agree that we are creating attractive long-term opportunities as we Invest for the Future.
One of the strongest performing product categories across the company is Comfort Core®, Leggett & Platt’s fabric-encased spring coils used in hybrid and other mattresses. Mattress producers have moved to higher valued innersprings like Comfort Core® in more of their product lines, typically replacing foam cores or traditional innersprings. Our Comfort Core® volume has doubled in just two years, currently representing 17% of our total U.S. innerspring units, and volume could easily double again in the next few years.
We are investing aggressively in uniquely versatile innerspring manufacturing equipment (produced in our own Swiss operation) to keep up with that growing demand. Our acquisition this past year of Tempur Sealy’s three innerspring production facilities – and the related exclusive supply agreement – coupled with international growth in the Comfort Core® product category, augment the need for these investments.
Our automotive business has led Leggett & Platt’s growth over the past five years. We are investing globally to ensure the ongoing success of this business. Sales should continue to be strong as global auto demand grows and more vehicles are offered with enhanced comfort and convenience features. That added content is a significant catalyst for our business, with higher valued seating comfort features, including advanced mechanical and pneumatic lumbar supports and massage, becoming more predominant in cars around the world. The cables, small motors, and actuators, common in lumbar supports and used in an increasing number of vehicle convenience features, represent further growth opportunities.
As a truly global business with operations in 10 countries, our automotive unit is making significant investments in critical resources. These include people, plant capacity, and enhanced technical capability to support our expanding geographic and product scope.
In order to supply higher quality specialty rod to our own operations and to outside customers, we are investing in process improvements at our steel rod mill. One example of these improvements is the electromagnetic stirring of the molten steel during billet casting, an early stage of steel rod production, to improve the consistency of the chemistry and physical properties of the rod.
These improvements will enable us to supply higher quality and higher margin steel rod and wire to a broader range of end markets. Transitioning a portion of our rod output into products used in more demanding applications – including armoring wire for undersea fiber optic cables, automotive transmission rings, and reinforcement wire for power transmission cables and water lines – should enhance the earnings of an already strong-performing operation within Leggett & Platt.
Consumers around the world prize individualized comfort. Chairs and sofas that recline are becoming increasingly prevalent – today they represent approximately 40% of upholstered furniture sold in the U.S. Leggett & Platt benefits from this trend as the leading producer of recliner mechanisms in North America and Asia. Our home furniture components business has enjoyed growth over the past few years, with global sales increasing 8% in 2014.
This past year, we complemented our already strong position with the acquisition of Kintec-Solution, a German designer and distributor of high-end, European-styled motion components. This investment enables us to meet varying design preferences and broadens the range of products we can offer to our customers around the world. Kintec also provides a well-established European base for distributing our traditional furniture component lines.
Leggett & Platt (NYSE: LEG), a member of the S&P 500 index and pioneer in the development of steel coil bedsprings, was founded in 1883 as a partnership in Carthage, Missouri. Our stock was first publicly traded in 1967, and listed on the NYSE in 1979. Today, Leggett & Platt is a diversified manufacturer that conceives, designs, and produces a wide range of engineered components and products that can be found in most homes, offices, and automobiles, and also in many airplanes.
Our firm is composed of 18 business units, 19,000 employee-partners, and 130 manufacturing facilities located in 18 countries.
|Total Shareholder Return (TSR)||2014||2013||2012||2011||2010|
|Leggett TSR rank among S&P 500
for trailing 3 years (1% is best)
|Our goal is to rank within the top third of the S&P 500 over rolling 3-year periods.
|Leggett & Platt - annual TSR||43%||18%||24%||6%||17%|
|S&P 500 Index - annual TSR||14%||32%||16%||2%||15%|
|Year-end L&P stock price||$42.61||$30.94||$27.22||$23.04||$22.76|
|TSR = (Change in Stock Price + Dividends) / Beginning Stock Price; values assume dividends are reinvested.|
|Financial Results||2014||2013||2014 vs. 2013|
|(Dollar amounts in millions, except per share data)|
|Gross profit margin||20.9%||20.4%|
|Adjusted EBIT margin1 (earnings before interest and taxes)||10.2%||9.6%|
|Net cash provided by operating activities||382||417||(8)%|
|EPS (earnings per diluted share)||0.68||1.34|
|Adjusted EPS from continuing operations1||1.78||1.50||19%|
|Cash dividends declared per share||1.22||1.18|
|Dividend yield (on start-of-year stock price)||3.9%||4.3%|
|End-of-year shares outstanding (millions)||137.8||139.4||(1)%|
|Net debt to net capital 1||31.5%||27.3%|
Leggett & Platt, Incorporated
(Dollar amounts in millions, except per share data)
|Total Shareholder Return, or TSR(1)|
|L&P 3-year TSR Rank among S&P 500 (1% is best)||25%||48%||37%||38%||8%||—|
|Leggett & Platt – annual TSR||43%||18%||24%||6%||17%||43%|
|S&P 500 Index – annual TSR||14%||32%||16%||2%||15%||26%|
|Summary of Continuing Operations|
|EBIT (earnings before interest and taxes)||332||275||324||266||279||208|
|Adjusted EBIT margin(2)||10.2%||9.6%||9.5%||8.5%||9.4%||8.5%|
|Interest expense, net||36||37||37||31||33||32|
|Summary of Earnings|
|Net earnings from continuing operations||225||186||231||173||177||107|
|Net earnings attributable to L&P||98||197||248||153||177||112|
|EPS (earnings per diluted share) from continuing operations||1.55||1.25||1.57||1.15||1.11||0.65|
|Adjusted EPS from continuing operations(3)||1.78||1.50||1.39||1.22||1.11||0.77|
|EPS (including discontinued operations)||0.68||1.34||1.70||1.04||1.15||0.70|
|Common Stock Data|
|Cash dividends declared per share||1.22||1.18||1.14||1.10||1.06||1.02|
|Dividend yield (based on stock price at start of year)||3.9%||4.3%||4.9%||4.8%||5.2%||6.7%|
|Dividend payout ratio (4)||179%||88%||67%||106%||92%||146%|
|Stock price – High||43.15||34.28||27.89||26.95||25.15||21.44|
|End of year||42.61||30.94||27.22||23.04||22.76||20.40|
|End-of-year shares outstanding (millions)||137.8||139.4||142.1||139.4||146.2||148.8|
|Percent change in shares outstanding||(1.1)%||(1.9)%||1.9%||(4.7)%||(1.7)%||(4.5)%|
|Average diluted shares outstanding (millions)||143.2||147.2||146.0||147.0||153.3||160.0|
|Year-End Financial Position|
|Cash and cash equivalents||$333||$273||$359||$236||$245||$261|
|Long-term debt + current debt maturities||968||870||1,056||836||764||799|
|Net debt to net capital(6)||31.5%||27.3%||29.4%||28.6%||23.3%||23.7%|
|Return on average equity(7)||7.7%||13.9%||18.0%||10.8%||11.4%||6.9%|
|Adjusted return on average equity(7, 8)||19.3%||16.4%||16.1%||11.4%||11.4%||8.1%|
|Cash Flow Components|
|Net cash provided by operating activities||$382||$417||$450||$329||$363||$565|
|Debt repayment (additions), net||(87)||180||(202)||(65)||46||64|
|Acquisitions, net of cash acquired||70||28||212||7||5||3|
|Stock repurchases, net||128||133||(6)||205||106||188|
The following graph and data table show the cumulative total shareholder return for five years (ending December 31, 2014) for Leggett & Platt, the S&P 500 Composite Index and our Peer Group. These figures assume dividends are reinvested, and are based on initial investments of $100 on December 31, 2009. The Peer Group consists of manufacturing companies that, though involved in different industries, resemble Leggett & Platt in diversification, strategy, growth objectives, acquisitiveness, customer breadth, and geographic extent. The group includes:
The Company targets dividend payout (over the long term) of approximately 50-60% of net earnings, though payout will likely be higher in the near term. Leggett & Platt believes in consistently paying dividends, is proud of its dividend growth record, and intends to extend that record into the future. Quarterly dividends are usually declared in February, May, August, and November, and paid about two weeks after the start of the following quarter. For 2015, the Company’s anticipated payment dates are April 15, July 15, October 15, and January 15 (of 2016).
Dividends have been paid on the Company’s common stock each year since 1939. With $1.22 per share of declared dividends, 2014 was our 43rd consecutive year of dividend growth. Over this period dividends have doubled nearly every 5 years, yielding a compound average growth rate of 13%. We know of only one other S&P 500 firm that has achieved as long a string of consecutive dividend increases at the growth rate we have sustained.
|David S. Haffner||Board Chair, CEO|
|Karl G. Glassman||President, COO|
|Matthew C. Flanigan||Executive Vice President, CFO|
|David M. DeSonier||Sr. VP, Strategy and Investor Relations|
|Scott S. Douglas||Sr. VP, General Counsel|
|Russell J. Iorio||Sr. VP, Mergers and Acquisitions|
|John G. Moore||Sr. VP, Chief Legal & HR Officer|
|Sheri L. Mossbeck||Sr. VP, Treasurer|
|Kenneth W. Purser||Sr. VP, Chief Tax Officer|
|William S. Weil||Sr. VP, Controller, Chief Accounting Officer|
|Jack D. Crusa||Specialized Products and Industrial Materials|
|Perry E. Davis||Residential Furnishings|
|Dennis S. Park||Commercial Products|
|Lance G. Beshore||Public Affairs and Government Relations|
|Michael W. Blinzler||Information Technology|
|Benjamin M. Burns||Internal Audit and Due Diligence|
|Susan R. McCoy||Investor Relations|
|W. Robert McKinzie||Operations Services|
|Niels S. Mossbeck||Business Development|
|William A. Avise||Drawn Wire|
|J. Mitchell Dolloff||Automotive|
|Randall M. Ford||Home Furnishings Components|
|J. Anthony Garrett||Machinery|
|Jerry W. Greene, Jr.||Fabric and Geo Components|
|Charles A. Kallil, Sr.||Aerospace and Tubing|
|Vincent S. Lyons||Engineering & Technology|
|J. Eric Rhea||Bedding Components|
|Kyle S. Williams||Work Furniture|
Leggett & Platt, Incorporated
P.O. Box 757
Carthage, MO 64836-0757
May 5, 2015, at 10:00 a.m. (local time), at the Company’s Wright Conference Center, 1 Leggett Road, Carthage, Missouri.
Inquiries regarding dividend payments, lost dividend checks, stock transfers, address or name changes, duplicate mailings, lost stock certificates, or Form 1099 information should be directed to the Transfer Agent.
The Company strongly encourages shareholders to have dividends deposited directly to their checking account, as this reduces expenses. Please contact the Transfer Agent for more information.
Wells Fargo Shareowner Services
Attn: Leggett & Platt, Incorporated
P.O. Box 64854
St. Paul, MN 55164-0854
Phone: (800) 468-9716
Press releases, Forms 10-K and 10-Q, the Annual Report, corporate governance information, and a variety of other items are available on the Investor Relations portion of the Company’s website.
The Company’s Form 10-K is contained within this document. The exhibits to the Form 10-K are available on Leggett & Platt’s web site, or may be obtained from Investor Relations for a reasonable fee.
St. Louis, Missouri
The New York Stock Exchange
(ticker = LEG)
Monness Crespi Hardt
SunTrust Robinson Humphrey
Individuals may email the Board at firstname.lastname@example.org or write to:
L&P Lead Director
P.O. Box 637
Carthage MO 64836.
Mr. Fisher, the Lead Director, will receive all relevant communications.
Should you become aware of any questionable accounting, internal controls or auditing matters, you may report your concerns confidentially and anonymously to the Company’s Audit Committee. You may request written acknowledgment of your written concern.
Call: (888) 401-0536
Write: L&P Audit Committee
Attn: Ben Burns
P.O. Box 757
Carthage, MO 64836
S&P 500 diversified manufacturer that conceives, designs and produces a wide range of engineered components and products that can be found in most homes, offices, and automobiles, and in many commercial aircraft. Leading U.S. manufacturer of a variety of products including:
1883: Partnership founded in Carthage, Missouri
1901: Leggett & Platt was incorporated
1967: Company went public; revenues of $13 million
1979: Listed on New York Stock Exchange (LEG)
1990: Revenues exceed $1 billion
1998: Included in the FORTUNE 500
1999: Added to the S&P 500 index
2006: Haffner / Glassman / Flanigan team takes helm
2007: Announced major changes to strategy
2008: Implemented bonus based on 3-year TSR relative to peers
2012: Acquired Western Pneumatic Tube
Ten large, diversified manufacturing peers.
|CSL||3.2||Carlisle Companies (construction materials, transportation)|
|DHR||19.9||Danaher Corporation (instrumentation, tools, components)|
|DOV||7.8||Dover Corporation (industrial products, mfg. equipment)|
|ETN||22.6||Eaton Corporation (hydraulic, electrical, truck)|
|EMR||24.5||Emerson Electric Company (electrical, electronics)|
|ITW||14.5||Illinois Tool Works (fluids, tooling, measurement)|
|IR||12.9||Ingersoll-Rand (refrigeration, security, pneumatics)|
|MAS||8.5||Masco Corporation (home and building products)|
|PNR||7.0||Pentair Inc. (enclosures, tools, water products)|
|PPG||15.4||PPG Industries (chemicals, glass, coatings)|