Leggett & Platt, Incorporated (NYSE:LEG) Q3 2017 Earnings Conference Call Transcript
Oct 27, 2017 • 08:30 am ET
Greetings, and welcome to Leggett & Platt Incorporated Third Quarter 2017 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.
I will like to turn the conference over to your host, Dave DeSonier. Thank you. You may begin.
Good morning, and thank you for taking part in Leggett & Platt's third quarter conference call. With me this morning are the following: Karl Glassman, who is President and CEO; Matt Flanigan, EVP and CFO; Perry Davis, EVP and President of both the Residential Products and Industrial Products segments; Mitch Dolloff, EVP and President of both the Furniture Products and Specialized Products segment; Susan McCoy, our VP of IR; and Wendy Watson, our Director of IR.
The agenda for our call this morning is as follows: Karl will start with a summary of the major statements we made in yesterday's press release and provide segment highlights. Matt will discuss financial details and address our outlook for the remainder of the year; and finally the Group will answer any questions that you have.
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 replay is available from the IR portion of Leggett's website. We posted to the IR 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.
(Forward-Looking Cautionary Statements)
I'll now turn the call over to Karl Glassman.
Good morning, and thank you for participating in our third quarter call. Yesterday, we reported strong quarterly sales growth. Third quarter sales increased 6% to $1.01 billion, organic sales also grew 6% from strength in Automotive, Adjustable Bed and several other businesses, along with raw material related price inflation and currency impact.
Acquisitions added 2% to sales growth, but were offset by divestitures, which reduced sales by 2% in the quarter. Third quarter earnings per share from continuing operations were $0.61, down 9% versus $0.67 in third quarter of 2016. As expected, the benefit from stronger sales was more than offset by higher steel cost, including LIFO expense and the timing lag associated with passing along those higher cost.
In the third quarter last year, we were still benefiting from steel deflation. As a result, adjusted EBIT decreased in the quarter versus third quarter last year and adjusted EBIT margin declined 210 basis points to 11.6%. We have implemented price increases to recover most of this recent steel cost increases, but are experiencing the typical 90-day pricing lag. Assuming steel cost stabilize, market should improve early next year.
During the quarter, we divested the last remaining business within our commercial vehicle products group. From this transaction, we will recognize a total $0.06 per share tax benefit, of which $0.04 was