Leggett & Platt, Incorporated

Greetings, and welcome to the Leggett & Platt's fourth quarter 2020 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. 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, Ms. McCoy. You may begin.

Good morning, and thank you for taking part in Leggett & Platt's fourth 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 in 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 and address our outlook for 2021. This call is being recorded for Leggett and Platt in this copyrighted material. The 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 discuss on this 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, thank you to our employees for your dedication, ingenuity, and tenacity in what was a very challenging year as a result of the COVID-19 pandemic. In 2020, our employees came together across our corporate functions and businesses to develop highly effective protocols to manage the crisis. committed to not only keeping each other safe and healthy while serving our customers but also found many ways to give back and help their communities redesigned the way that they work while maintaining and even increasing productivity amended the financial covenant in our revolving credit facility to provide additional liquidity all while having a sharp focus on managing working capital and reducing capital expenditure investments, continuing our deleveraging efforts, and delivering our 49th consecutive annual dividend increase. I am extremely proud of all that the team has accomplished. We finished 2020 as a stronger company as a result of their extraordinary efforts. As we reported yesterday, fourth quarter sales were $1.182 billion, up 3% versus the fourth quarter of 2019. Continued strong demand in residential and markets and growth in automotive was partially offset by continued weakness in aerospace and work furniture. Fourth quarter EBIT was $150 million. EBIT increased $15 million in the quarter versus fourth quarter of 2019, primarily due to lower fixed costs and the non-recurrence of 2019's restructuring-related charges partially offset by a change in LIFO impact. EBIT margin increased 90 basis points to 12.7%, and increased 50 basis points versus adjusted fourth quarter 2019 EBIT margin of 12.2%. Fourth quarter EBITDA margin was 16.8% compared to 2019's fourth quarter adjusted EBITDA margin of 16.4%. Earnings per share were a fourth quarter record 76 cents. Fourth quarter 2019 EPS was 64 cents and included 4 cents per share of restructuring-related charges. Excluding those charges, fourth quarter EPS increased 8 cents, or 12%, versus fourth quarter 2019 adjusted EPS of 68 cents. For the full year, 2020 sales decreased 10%, $4.28 billion, primarily from COVID-related demand declines across most of our businesses. EBIT decreased $113 million, and adjusted EBIT decreased $83 million to $446 million, primarily from the impacts of lower sales and the change in LIFO, partially offset by fixed cost reductions. Full year EPS was $1.82 and adjusted EPS was $2.13, a 17% decrease from 2019 adjusted EPS of $2.57. In addition, we generated operating cash flow of $603 million. During 2020, we divested two businesses in our bedding segment, a small specialty wire operation in our drawn wire business with annual sales of $30 million, and a small operation in our former fashion bed business with annual sales of $15 million. We also reported yesterday that our board of directors declared a $0.40 per share first quarter dividend. At Friday's closing price of $43.02, the current yield is 3.7%, which is one of the higher yields among the S&P 500 dividend aristocrats. We remain committed to our position as a dividend aristocrat. Our enduring fundamentals gives us confidence in our ability to create long-term value for our shareholders. We are 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. We continue to invest in businesses with sustainable competitive advantages in large addressable markets with opportunities to grow and add value over time. Consistent with that objective, on January 30th, 2021, we acquired an aerospace business located in the UK that specializes in metallic ducting systems, flexible joints, and components for space, military, and commercial applications for $27 million. Annual sales of approximately $17 million. This acquisition expands our aerospace product offering to include key components such as flexible hoses and bellows that are frequently used in fluid conveyance systems. I'll now turn the call over to Mitch.