Leggett & Platt, Incorporated

Greetings and welcome to the Leggett & Platt Third Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Susan McCoy, Senior Vice President of Investor Relations. Thank you. You may begin.

Good morning, and thank you for taking part in Leggett and Platt's third quarter conference call. We are conducting the call from different locations again this quarter. Please bear with us if you experience minor delays or mixed audio quality. On the call today are Carl Glassman, Chairman and CEO, Mitch Dulles, President and COO, Jeff Tate, Executive Vice President and CFO, Steve Henderson, EVP and President of the Specialized Products and Furniture Flooring and Textile Products segments, Cassie Branscombe, Senior Director of IR, and Tara Sherwood, Director of IR. The agenda for our call this morning is as follows. Carl will start with a summary of the main points we made in yesterday's press release. Mitch will discuss operating results, and Jeff will cover financial details. This conference call is being recorded for Leggett and Platt and is copyrighted material. This call may not be transcribed, recorded, or broadcast without our express permission. A replay is available from the IR portion of Leggett's website. We posted to the investor relations portion of the website yesterday's press release and a set of PowerPoint slides that contain summary financial information along with segment details. Those documents supplement the information we discussed on the call, including non-GAAP reconciliations. I need to remind you that remarks today concerning future expectations, events, objectives, strategies, trends, or results constitute forward-looking statements. Actual results or events may differ materially due to a number of risks and uncertainties and the company undertakes no obligation to update or revise these statements. For a summary of these risk factors and additional information, please refer to yesterday's press release and the sections in our most recent 10-K and subsequent 10-Q entitled Risk Factors and Forward-Looking Statements. I'll now turn the call over to Carl.

Good morning, and thank you for joining us today. First and foremost, I would like to thank our employees for their continued commitment to keeping each other safe and healthy while serving our customers. We are pleased to deliver strong third quarter results in these uncertain times, and this could not have happened without the dedication and hard work of our people. As we reported yesterday, third quarter earnings per share were a quarterly record of 77 cents. This included $6 million of restructuring charges incurred primarily from pandemic-related cost reductions. Third quarter 2019 EPS was $0.74 and included $0.02 per share of restructuring-related charges. Excluding these items, third quarter adjusted earnings of $0.80 were up $0.04 from adjusted 2019 third quarter earnings. Third quarter EBIT was a quarterly record $147 million. EBIT increased in the quarter versus third quarter last year primarily due to lower fixed cost partially offset by lower volume and a change in LIFO impact. EBIT margin increased 60 basis points to 12.2%, while adjusted EBIT margin increased 80 basis points to 12.7%. and adjusted EBITDA margins increased 80 basis points to 16.6%. Third quarter sales were $1.208 billion, down 3% versus third quarter of 2019. Continued strong demand in residential and markets was more than offset by weaknesses in aerospace and work furniture. Operating cash flow in the quarter was a record, $261 million. Adjusted working capital as a percent of annualized sales for the quarter improved to a notable 8.7% versus 10.7% in the third quarter of 2019. As we also reported yesterday, our Board of Directors declared a 40 cent per share fourth quarter dividend. At an annual dividend of $1.60 per share, we have increased our annual dividend for 49 consecutive years. We remain committed to our position as a dividend aristocrat. At the end of October, we received positive news related to the U.S. mattress industry's anti-dumping petition on mattress importers from seven countries, including Vietnam, Indonesia, and Cambodia. the Department of Commerce made a preliminary determination that mattresses were being sold at prices that violate the U.S. trade laws and impose preliminary duties that range from 3% to 990%. Also in the quarter, the Department of Commerce imposed preliminary countervailing duties of 98% on China. We anticipate final determinations in these investigations in 2021, likely during second quarter. This should allow domestic mattress producers to compete on a more level playing field. The company remains well positioned, both competitively and financially, to capitalize on long-term opportunities in various end markets. Our enduring long-term fundamentals give us confidence in our ability to continue to create value for our shareholders. I'll now turn the call over to Mitch.