Leggett & Platt (NYSE: LEG) reported Q2 EPS of $0.64, $0.01 worse than the analyst estimate of $0.65. Revenue for the quarter came in at $989 million versus the consensus estimate of $1 billion.

• 2Q sales were $989 million, a 3% increase versus 2Q 2016; same location sales grew 4%
• 2Q EPS was $.64
• 2017 sales guidance reduced 1% to $3.9-4.0 billion; EPS guidance narrowed to $2.55 to $2.65

2017 Sales and EPS Guidance Modified

For 2017, EPS guidance is narrowed to a range of $2.55 to $2.65 versus the prior expectation of $2.55 to $2.75. The $.05 reduction to the midpoint of EPS guidance primarily reflects lower sales guidance. Sales are now anticipated to be $3.9-4.0 billion, which equates to growth of 4%-7%; this is a $50 million reduction versus the April sales guidance range. Unit volume growth is expected to be in the low-to-mid-single digits, from strength in Automotive, Adjustable Bed, International Spring, Work Furniture, and Geo Components. Raw material-related price increases should also contribute to sales growth. Based upon this guidance, 2017 EBIT margin should be approximately 12.5% to 13.0%.

Cash from operations is expected to approximate $450 million in 2017, with working capital increases from sales growth and inflation being a significant use of cash. Capital expenditures should be roughly $160 million, and dividend payments are expected to approximate $185 million. Dividend payout is targeted to be 50‑60% of adjusted earnings.

GUIDANCE:

Leggett & Platt sees FY2017 EPS of $2.55-$2.65, versus the consensus of $2.64. Leggett & Platt sees FY2017 revenue of $3.9-4 billion, versus the consensus of $3.97 billion.

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