Leggett & Platt, Incorporated

Greetings and welcome to the Leggett and Platt First Quarter 2021 Earnings Call-In Webcast. At this time, all participants are on 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, Ms. Susan McCoy, Senior Vice President of Investor Relations. Thank you, Ms. McCoy. You may begin.

Thanks, Donna. Good morning, and thank you for taking part in Ligon Platt's first 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 Flashman, Chairman and CEO, Mitch Dollis, President and COO, Jeff Tate, Executive Vice President and CFO, Steve Henderson, EVP and President of the Specialized Products and Furniture, Flooring, and Textile Product 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 and comment on some recent activities. Mitch will discuss operating results and demand trends. and Jeff will cover financial details and address our updated outlook for 2021. This conference call is being recorded for Leggett & Platt and is copyrighted material. This call may not be transcribed, recorded, or broadcast without our express permission. A reply is available from the IR portion of Leggett's website. We posted to the IR 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. As we reported yesterday, we changed the accounting methodology used for valuing our domestic steel-related inventories from LIFO to FIFO. The effects of the change in accounting methodology have been retrospectively applied to all prior periods presented in the press release and PowerPoint slides. Recast financial information for prior periods can be found in the Form 8K we filed yesterday. 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 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. We had a very strong start to 2021. Yesterday, we reported first quarter sales increased 10% to $1.15 billion. Organic sales grew 11% from a combination of raw material-related price increases, higher volume, and currency benefits. Volume grew 4% with continued strong demand in residential end markets, growth in automotive, and modest recovery in hydraulic cylinders, partially offset by sales declines in aerospace. The vestiture's net of acquisitions reduced sales 1%. EBIT was a first quarter record of $128 million. EBIT increased $49 million in the in the quarter versus first quarter of 2020, primarily due to volume growth, lower fixed costs, and the non-recurrence of 2020's $8 million impairment charge related to a note receivable and a $4 million charge to write-off stock associated with a prior year divestiture. Event margin increased 360 basis points to 11.1%, and increased 240 basis points versus adjusted first quarter 2020 EBIT margin of 8.7%. First quarter EBITDA margin was 15.1% compared to 2020's first quarter adjusted EBITDA margin of 13.2%. Earnings per share were a first quarter record of 64 cents. First quarter 2020 EPS was $0.33 including a $0.07 per share reduction from the non-recurring items mentioned. Excluding these charges, first quarter EPS increased $0.24 or 60% versus first quarter 2020 adjusted EPS of $0.40. These improvements occurred versus a first quarter of 2020 that was heavily impacted in the final two weeks by the effects of the COVID-19 pandemic. Compared to first quarter 2019, sales were down slightly, but EBIT margin and EPS improved significantly. We also reported yesterday that our board of directors increased our second quarter dividend to 42 cents per share, a two cent per share or 5% increase versus the first quarter of 2020. This marks our 50th year of consecutive annual dividend increases and places us among 31 other companies with at least 50 years of consecutive annual dividend increases known as dividend kings. At Friday's closing price of $49.67, the current yield is 3.2%, which is one of the higher yields among the S&P 500 dividend aristocrats. I also wanted to update you on some recent activities. In mid-April, we issued our inaugural sustainability report. We believe that reporting on environmental, social, and governance issues is critical for our stakeholders' growing need for information, and we are pleased to begin this vital initiative. We strive to advance sustainable solutions for our customers to achieve the highest standards of ethical conduct. to demonstrate strong environmental stewardship and safety performance, to enable a culture of inclusion, diversity, and equity, and employee development at all levels of the company, and to embrace our supply chain responsibilities. In late April, the U.S. Mattress Industry's anti-dumping petition on imported mattresses from seven countries and countervailing duty petition on Chinese imported mattresses came to a successful conclusion with the International Trade Commission making an affirmative final determination that the U.S. mattress industry has been materially injured by these imported mattresses sold at prices that violate U.S. trade laws. With that, I'll turn the call over to Mitch.