Leggett & Platt : Company Update August 2020

Company Update

August 2020

LEG (NYSE)

www.leggett.com

Forward-Looking Statements

Statements in this presentation that are not historical in nature are "forward-looking." These statements are identified either by their context or by use of words such as "anticipate," "believe," "estimate," "expect," "forecasted," "intend," "may," "plan," "should," "guidance" or the like. All such forward-looking statements are expressly qualified by the cautionary statements described in this provision. We do not have, and do not undertake, any duty to update any forward-looking statement. Forward-looking statements should not be relied upon as a prediction of actual future events or results. Any forward-looking statement reflects only the beliefs of Leggett at the time the statement is made. All forward-looking statements are subject to risks and uncertainties which might cause actual events or results to differ materially from the forward-looking statements. Some of these risks and uncertainties include: the adverse impact caused by the COVID-19 pandemic upon (i) the demand for our products, (ii) our manufacturing facilities' ability to remain open and produce at historical utilization rates, obtain necessary raw materials and parts, maintain appropriate labor levels and ship finished products to customers, (iii) operating costs related to pay and benefits for our terminated employees, (iv) our ability to collect receivables in accordance with their terms due to customer bankruptcy, financial difficulties or insolvency, (v) impairment of goodwill and long-lived assets, (vi) restructuring-related charges and (vii) our ability to access the commercial paper market or borrow under our credit facility, including our inability to comply with the restrictive covenants in our credit facility; our ability to reduce fixed costs; our ability to achieve our operating targets; projections of Company sales, earnings, EBIT margin, depreciation and amortization, capital expenditures, dividends, cash from operations, net interest expense, tax rate and diluted shares; price and product competition; cost and availability of raw materials and labor, fuel and energy costs, climate change regulations, environmental, social and governance risks, foreign currency fluctuation, cash repatriation, litigation risks and other risk factors in Leggett's most recent Form 10-K and subsequent Form 8-Ks and Form 10-Qs.

Market and Industry Data

Unless we indicate otherwise, we base the information concerning our markets/industry contained herein on our general knowledge of and expectations concerning those markets/industry, on data from various industry analyses, on our internal research, and on adjustments and assumptions that we believe to be reasonable.

However, we have not independently verified data from market/industry analyses and cannot guarantee their 2 accuracy or completeness.

Leggett Distinctives

Strong balance sheet and cash flow

Disciplined use of cash

~4% dividend yield; 49 consecutive annual increases Leader in most markets; few large competitors

Opportunities for long-termgrowth

 Internal initiatives + market growth + acquisitions  Large addressable markets

Management has "skin in the game"

 Significant stock owners; forego comp in exchange for shares  Incentive comp aligned with TSR focus

3

Our Markets

Macro Market Exposure		Product Mix
Automotive
			(based on 2019 net trade sales)
20%
					Automotive
			Consumer		18%
			Durables
			55%		Aerospace
Commercial/					3%
Industrial
25%				Bedding	Hydraulic Cylinders
				2%
				46%
Geographic Split			Work Furniture
		7%
(based on production)
	Mexico Others			Home Furniture
	5%	2%
Canada					7%
7%
China					Flooring & Textiles
				17%
9%
Europe
11%			U.S.
			66%

4

% of 2019 net trade sales

Specialized

Bedding

23%

Segments

46%Furniture,

Flooring & Textile

31%

Bedding Products

Bedding

 Mattress springs

 Private-label finished mattresses, mattress toppers, pillows

 Specialty bedding foams  Foundations

Wire

 Drawn steel wire  Steel rod

Adjustable Bed

 Adjustable beds

Machinery

 Quilting & sewing machinery for bedding mfg.

 Mattress packaging and glue-drying equipment

Specialized Products

Automotive

 Auto seat support & lumbar systems

 Motors, actuators & cables

Aerospace

 Tubing

 Tube assemblies

Hydraulic Cylinders

 Hydraulic cylinders primarily for material handling, transportation & construction equipment

Furniture, Flooring &

Textile Products

Home Furniture

 Recliner mechanisms

 Seating and sofa sleeper components

Work Furniture

 Chair controls, bases, frames  Private-label finished seating

Flooring & Textiles

 Flooring underlayment  Textile converting

 Geo components

5

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Current Topics

COVID-19 Update

Prioritizing Employee Health & Safety

• Developed a layered approach to manage the impact of the COVID-19 pandemic in order to effectively reach all levels of the company
• • Focused on four primary workstreams: safety and social distancing; communications, training and visual management; manufacturing layout; and governance and compliance

Managing Costs

• Continue to closely monitor costs as demand returns
• Bringing back variable costs and some fixed costs in businesses where demand is recovering more quickly
• Expect fixed cost reductions of ~$100 million in 2020
  • Q2 savings were ~$35-$40 million

Optimizing Cash Flow

• Closely monitoring working capital, including customer collections and inventory levels as demand improves
• Expect capital expenditures to be ~$60 million (~60% lower than 2019)

8

Responding to Demand

• Sales improved throughout 2nd quarter from low in early April
• Aligning production and staffing levels to demand

Trade Sales ($ millions)

Weekly Sales

140

120

1. Total Company

60 Bedding Products

40	Furniture, Flooring &
	Textile Products
20

• week of July 4th had 4 shipping days

0

Specialized Products

9

Liquidity Profile (as of 6/30/20)

Liquidity

• $1.3 billion of liquidity
• • $209 million cash on hand
  • $1.1 billion available under our revolving credit facility

Debt Structure

• Total debt of $2.1 billion
• • $102 million commercial paper with a weighted average interest rate of 0.4% and weighted average maturity of 6 days
  • $437 million 5-year Tranche A term loan at a 3% rate (bears a variable interest rate)
  • $1.6 billion in bonds at a weighted average coupon of 3.8%

Maturities

• No significant maturities until August 2022

Primary Financial Covenant

• $1.2 billion unsecured revolving credit facility agreement amended 5/6/20
• • ≤ 4.75x net debt to trailing 12-months adjusted EBITDA through 3/31/21

  • Ratio reduced 0.5x every quarter until 3.25x (at 12/31/21 and thereafter)

  • $1.2 billion maximum borrowing capacity

10

Q2 2020 Highlights

• Sales decreased 30%, to $845 million
• • Volume was down 29%
  • • 2% attributable to exited business
  • Raw material-related price decreases and currency impact reduced sales 2%
  • Acquisitions added 1%
• Adj. EPS ¹ of $.16, down $.48 vs. adj. EPS ¹ of $.64 in Q2-19
• Adj. EBIT ¹ of $51 million, down $85 million vs. Q2-19
• Adj. EBIT ¹ margin down 520 bps, to 6.0%, vs. 11.2% in Q2-19
• 2020 guidance suspended, as previously announced April 2nd

1 See appendix for non-GAAP reconciliations	11

Q3 2020 Priorities

• Keeping our employees safe
• Increasing production to meet bedding demand
• Tackling wide-spread labor shortages
• Managing supply chain issues:
• • Global shortage of non-woven fabrics due to surge in demand for medical PPE applications
  • Ongoing government restrictions on production in Mexico and India
• Monitoring changes in demand signals and responding rapidly to control costs
• Optimizing cash flow

12

Macro Indicators

Consumer confidence

 More crucial than home sales since majority (~2/3rds) of bedding/furniture purchases are replacement of existing product

 "Large ticket" purchases that are deferrable

Total housing turnover

 Combination of new and existing homes sales

Employment levels

Consumer discretionary spending

Interest rate levels

13

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Longer Term

Value Creation

TSR in Top Third of S&P 500

SOURCES

Revenue	Margin	Dividend	Stock
Growth	Improvement	Yield	Buybacks
Target:	Growth in attractive	Payout target:	With available cash
6-9% annually	markets, product	~50% of earnings
	development, cost
	savings, efficiency
	improvements

Total Shareholder Return = (∆ Stock Price + Dividends) / Initial Price

16

Growth Framework
	1			2		3
6-9%	Increasing	Expanding	Identifying
Average Annual	Content	Addressable		New
and New	Markets		Growth
Revenue Growth
Programs			Platforms
Organic + Acquisition
						17
U.S. Bedding Market Overview
Finished Mattresses &			$8B	$1B		$1B
Foundations at Wholesale	APPROXIMATE
Addressable Market	MARKET SIZE
~$10B	SEGMENT	MATTRESSES	ADJUSTABLE	STATIC
FOUNDATIONS	FOUNDATIONS
				COMPETITORS
		Innerspring maker-users and foam component suppliers
			Importers of innersprings, finished mattresses
				and adjustable foundations
			Private-label mattress manufacturers,
				primarily all foam
Source: ISPA; Furniture Today; internal analysis						18

Bedding Market Disruption and Trends

Consumers accept online purchasing and compressed mattresses  Changed traditional mattress route-to-market,number of brands

and product types

 Growth of hybrid mattresses

 Compressed mattresses expected to be half of the market by 2026

Non-traditional retail channels likely gain share, employing direct-to-consumer (DTC) brands and compressed mattresses

Traditional mattress retail channels remain and private label product offering grows

Effects of COVID-19 accelerate growth of online purchasing and compressed mattresses

19

L&P Bedding Value Chain

Raw		Finished	Distribution	Brands/
Components	Mattresses &
Materials	& Fulfillment	Retail
	Foundations
Steel rod		Co-design and	B2B	Traditional
and wire	Innovation leader	produce private	Direct-to-
	in innersprings	label foam and		Consumer
	hybrid
Specialty foam	and specialty
mattresses and		Brick & Mortar
chemicals and	foam	finished	B2B2C
additives		foundations		eCommerce

Supporting our customers from components to finished goods and fulfillment

20

Vertical Integration in Bedding Products

21

L&P Positioned to Win in Omni-Channel Environment

• Innovation and low-cost production advantage from integrated rod-wire-machinery-innerspring value chain
• Innovation advantage from ECS chemical-specialty foam value chain
• Innovation and value engineering advantage in private-label finished mattress production, particularly innerspring and foam hybrids
• Pair with adjustable and static ready-to-assemble foundations
• Build out B2B2C distribution and fulfillment capability

22

Global Automotive Market Overview

Cabin Comfort & Convenience	APPROXIMATE	$1B	$2B	$3B	$4B	$10B
Addressable Market	MARKET SIZE

~$20B	SEGMENT	COMFORT	CABLES	MOTORS		ADJACENT
	ACTUATORS	ELECTRONICS/
						SOFTWARE
	COMPETITORS	Few, single-	Many;	Many;	Many;	Many;
	functionality
	product focus	fragmented	make vs. buy	make vs. buy
				vs. cost
	CAGR	5%	2%	5%	5%	9%

~6% CAGR

outpacing vehicle production

23

Market Trends

Consumer demands for additional comfort, convenience and connectivity

Increasing global programs and platform sharing

OEM directed sourcing

Stricter standards drive innovation in lightweighting, efficiency, noise, and sustainability

Large share of the value chain is shifting to C.A.S.E.

Technological advances will have significant consumer and industry impacts over next

5-10 years - industry is transforming to our space in comfort and convenience

24

Trends Play to our Strengths

	C		A	S		E
	CONNECTED	AUTONOMOUS	SHARED	ELECTRIFICATION
	Advantages Are Rooted In Our Deep Industry Knowledge And Customer Engagement
Brand Reputation in	Vertical Integration	Intellectual Property/		Flexible Global
Comfort Products	Trade Secrets		Manufacturing
			The Results
	Long-term	Share leader	Share leader	Positioned for growth	The most
	in convenience and
growth above	in	in fast growing	complete seat
adjacent
	industry	targeted	SUV and CUV		comfort subsystem
	electronics/software
	production	segments	segments	supplier
	applications

25

Long-Term Sources of Margin Improvement

Portfolio management

Product innovation

Continuous improvement

26

Long-Term Disciplined Use of Cash

1	Fund organic growth in attractive businesses
2	Pay dividends
	49 year history of dividend increases
	S&P 500 Dividend Aristocrat
			Payout target is ~50% of earnings

3

4

Fund strategic acquisitions

Repurchase stock with available cash

27

Key Take-Aways

Near-term focus on COVID-19issues

 Prioritizing employee health & safety

 Increasing production to meet demand growth

 Monitoring changes in demand signals and responding rapidly to control costs

 Managing supply chain and labor shortage issues  Optimizing cash flow

$ $ Opportunities for long-termprofitable growth

Maintaining capital discipline

28

FOR ADDITIONAL INFORMATION

Ticker:	LEG (NYSE)
Website:	www.leggett.com
Email:	[e-mail]
Phone:	[phone]
Find our Fact Bookat www.leggett.com
Susan McCoy	Senior Vice President, Investor Relations
Cassie Branscum	Senior Director, Investor Relations
Tarah Sherwood	Director, Investor Relations

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Additional Information

Cost Structure


Costs are roughly 75% variable, 25% fixed
		Incremental/decremental volume
	25ꟷ35% contribution margin
		Cost of Goods Soldcomposition (approximate):
		60% Materials, composed of:
			• Steel ~25% of RMs
			• Chemicals ~15% of RMs
			• Woven & non-woven fabrics ~10% of RMs
			• Foam scrap, fibers ~3% of RMs
			• Titanium, nickel, stainless ~2% of RMs
			• Others, including sub-assemblies, hardware, components,
			finished products purchased for resale, etc. ~45% of RMs
	 20% Labor (includes all burden and overhead)
	 20% Other, composed of:
			• Depreciation, utilities, maintenance, supplies - each ~3% of COGS
			• Shipping/transportation ~10% of COGS
			• Other also includes rent, insurance, property tax, etc.	32

Steel Impact

• Primary commodity exposure is steel; ~25% of RM's
• Main categories are scrap, rod, and flat-rolled
• • Many grades of scrap - market data is generally available
  • Limited credible data to track moves in other types of steel
• Impact from inflation/deflation
• • Typically pass through; lag is ~90 days
• LIFO accelerates inflation/deflation into COGS
• Changes in metal margin (mkt price for rod - mkt price for scrap) also impact earnings
• • Our scrap cost and rod pricing moves with the market; large swings cause Industrial Products segment earnings volatility

33

Customers Include

In North America:
Adient	Home Depot	MCF	Tesla
Ashley Furniture	JLG (Oshkosh)	Purple	Toyota Boshoku
Best Home Furniture	Knoll	Rooms-to-Go	Toyota Industrial Equip
Berkshire Hathaway	La-Z-Boy	Sanyo	Tuft & Needle
Casper	Lear	Serta	United Technologies
Eaton	Lincoln Electric	Simmons	Walmart
Haworth	Lowe's	Sleep Number	Wayfair
Herman Miller	Magna	Steelcase
HNI	Mattress Firm	Tempur Sealy
In Europe and Asia:
Dreams	Hay	Kuka	Silentnight Beds
Eurasia	Hilding Anders	Natuzzi	Steinhoff
Faurecia	Himolla	Nestledown	Volkswagen
Fritz Hansen	Howe	Profim

Diverse Customer Base - Low Concentration

34

L&P's Style of Competition: Critical Components

			Dimension	Characteristic
		Product /	1. Role in value chain	Translate RM or components into critical component
		2. Functional role	Functionally essential to end product
		Service /
		Solution
	Where we	3. % of finished COGS	<25% of finished COGS
	Industry	4. Customer set	Concentrated in few large customers
	compete
	5. Competitive set	Small private companies w/ single focus
		Structure
		Economics	6. Gross margin	Earns attractive returns at ~20-30% GM
		7. Asset intensity	Light manufacturing ~2x asset turns
			8. Deep customer	Deep understanding of customer design, production
			engagements	pain points, long-term relationships
			9. Collaborative design	Co-design products/components for better functionality
	How we compete		and lower	total cost
	10. Flexible mfg	Long-runSKUs that can be adjusted to deliver custom
				specs w/ minimal additional capital
			11. Continuous cost	Continuous cost improvement throughout life of long
			improvement	run-length SKUs

35

Strong Peer Group

				Diversified Manufacturers
			w/ Ticker & Fortune 1000 Ranking (May 2020)
					Leggett Ranking = 569
CSL	Carlisle	563	ITW	Illinois Tool Works	229
DHR	Danaher	161	IR	Ingersoll Rand	n/a
DOV	Dover	433	MAS	Masco	384
ETN	Eaton Corp		n/a	PNR	Pentair	n/a
EMR	Emerson	176	PPG	PPG Industries	209
	Characteristics of the Group
	Multiple Business Segments			Primarily Manufacturers
	Sell Mainly to Other Manufacturers			In "Old Economy" Markets
	Low Customer Concentration			Complex; Hard to Grasp
	Stamp, Cast & Machine Materials			Old, Established Firms
	Moderate Labor & Capital Intensity			Diverse Products	36

Governance/Directors

August 2020

• 9 Non-Management Directors (out of 11 total)
• Only Non-Mgmt Directors on Key Board Committees

Non-Management			Age	Joined	Position	Firm
Mark Blinn
		58		2019		Retired President & CEO	Flowserve
Robert Brunner		62		2009		Retired EVP	ITW
Mary Campbell		53		2019		Chief Merchandising Officer/	Qurate Retail Group/
Manuel Fernandez							Chief Commerce Officer	QVC U.S.
	74		2014		Managing Director	SI Ventures
Joe McClanathan		68		2005		Retired President & CEO	Energizer Household Products
Judy Odom 		67		2002		Retired Chair & CEO	Software Spectrum
Srikanth Padmanabhan		56		2018		Vice President	Cummins Inc.
Jai Shah		54		2019		Group President	Masco
Phoebe Wood		67		2005		Principal	CompaniesWood
Management
Karl Glassman ‡		61		2002		Chairman & CEO	Leggett & Platt
Mitch Dolloff		54		2020		President & COO	Leggett & Platt

• Lead Director
• Chairman of the Board

Committees:  Audit	 Compensation	 Nominating & Corporate Governance	37

Compensation Rewards Strong Performance

• Annual Incentive
• • Based on current year ROCE, free cash flow, and individual goals
• Performance Stock Units
• • Long-termequity-based, significant portion of total comp for execs
  • Three-yearperformance period with two equal measures
  • • Relative TSR performance (vs. peer group of ~300 companies)
    • Company or segment EBIT CAGR
• Deferred Comp Program
• • Opportunity (in December) to forego a portion of next year's cash salary and bonus to buy stock units

38

Financial Information

Sales and EBIT

Net Trade Sales

EBIT

$5,000

(million $'s)

$600

(million $'s)

+11%

$4,500

$500

+8%

$4,000

+4%

-4%

+5%

$400

$3,500

$300

$3,000

$200

$2,500

$100

'14

'15

'16

'17

'18

'19

'14

'15

'16

'17

'18

'19

 Amounts are from continuing operations and exclude unusual items. See appendix for non-GAAP reconciliations.

40

$1.25

$1.00 '14

$2.75 $2.50 $2.25 $2.00 $1.75 $1.50

Net Earnings and EPS

$400

Net Earnings

(million $'s)

EPS

($'s per share)

$350

$300

$250

$200

+32%

+6% -1% +1%

+4%

$150 $100



'14 '15 '16 '17 '18 '19'15 '16 '17 '18 '19 Amounts are from continuing operations and exclude unusual items. See appendix for non-GAAP reconciliations.

41

Returns and TSR

		Return on Invested Capital										3-Year Avg TSR
25%			30%									(at year end)
20%								25%
							20%
15%
							15%
10%								10%
							5%
5%
							0%
0%								-5%
'14	'15	'16	'17	'18	'19	'14	'15	'16	'17		'18	'19
															Leggett				S&P 500

• See appendix for return calculation
• TSR assuming dividends continually reinvested

42

Segment EBIT Margins

20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%	'15	'16	'17	'18	'19
	Bedding	Specialized	Furniture, Flooring & Textile	Total

• Amounts exclude unusual items. See appendix for non-GAAP reconciliations.

43

Uses of Cash Flow

million $'s								1,265
$700
$600
							108
$500
				193	155
		128	183
$400					109
					39
$300		70			30
			177	186	194	205
$200
	168	172
$100
	94	103	124	159	160	143
$0
	'14	'15	'16	'17	'18	'19
		Cap-ex		Dividends	Acquisitions		Share Repurchases	Cash from Ops

Operating Cash > Capital Expenditures + Dividends for over 30 years

44

Cash Flow Details
	$'s in millions		2014	2015	2016	2017	2018	2019
	Net Income		101	329	286	293	306	334
	Deprec & Amort		118	113	115	126	136	192
	Def Income Taxes		(40)	24	18	16	(3)	8
	Impairment & Other		124	19	15	11	32	20
	Working Capital		54	(171)	15	(80)	(46)	80
	Other Non-Cash1		25	45	4	78	15	34
	Cash from Operations	382	359	553	444	440	668
	Uses of Cash
	Capital Expenditures	(94)	(103)	(124)	(159)	(160)	(143)
	Dividends		(168)	(172)	(177)	(186)	(194)	(205)
	Acquisitions		(70)	(11)	(30)	(39)	(109)	(1,265)
	Share Repurchases		(128)	(183)	(193)	(155)	(108)	(7)
	1 2017 Other Non-Cash includes $67 million in deemed repatriation taxes as a result of the Tax Cuts and Jobs Act
											45
Debt Issued and Retired
million $'s						$993
$600
$500
$400
$300
$200
$100
$0	'14	'15	'16	'17	'18	'19	'20	'21	'22	'23
				Issued	Retired	Cash
	 Excludes commercial paper borrowings and operating lease liabilities
											46

Financial Metrics Defined

• TSR: Total Shareholder Return
• • Total benefit investor realizes from owning our stock
  • (∆ stock price + dividends) / initial stock price
• EBIT CAGR: Compound Annual Growth Rate of EBIT
• ROCE: Return on Capital Employed
• • Drives ~60-70% of annual bonus at operating level and corporate
  • EBIT / (working capital (ex cash & current debt) + net PP&E)
• FCF: Free Cash Flow
• • Drives ~20-30% of annual bonus at operating level and corporate
  • EBITDA - capex +/- ∆ working capital (ex cash & current debt)

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Appendix

Non-GAAP Reconciliations

Q2 Non-GAAP Adjustments

($ millions, except EPS)

Non-GAAPAdjustments ($'s)1Goodwill impairment 2 Restructuring-related charges 3 Note impairment 4

Stock write-off for prior year divestiture 5 ECS transaction costs 6

Non-GAAP adjustments (pre-tax $'s) Income tax impact

Non-GAAP adjustments (after tax $'s) Diluted shares outstanding

EPS impact of non-GAAP adjustments

Q2-20	Q2-19	YTD	YTD
2020	2019
$25	$-	$25	$-
3	-	3	6
-	-	8	-
-	-	4	-
-	-	-	1
28	-	40	7
-	-	(3)	(2)
28	-	37	5
135.7	135.2	135.7	135.1
$.21	$-	$.28	$.04

1. Calculations impacted by rounding
2. Goodwill impairment affected the following line item on the income statement: Q2-20/YTD 2020: Other Expense $25
3. Restructuring-relatedcharges affected the following line items on the income statement: Q2-20/YTD 2020: COGS $1,
   Other Expense $2; YTD 2019: COGS $2, Other Expense $4
4. Note impairment affected the following line item on the income statement: YTD 2020: SG&A $8
5. Stock write-off affected the following line item on the income statement: YTD 2020: Other Expense $4
6. ECS transaction costs affected the following line item on the income statement: YTD 2019: SG&A $1

50

Non-GAAP Adjustments

		($ millions, except EPS)	2014	2015	2016	2017	2018	2019	2020
	Non-GAAP Adjustments ($'s)1
		Impairment charges	-	6	4	5	-	-	25
		Note impairment	-	-	-	-	16	-	8
		Stock write-off from 2008 divestiture	-	-	-	-	-	-	4
		Restructuring-related charges	-	-	-	-	16	15	3
		ECS transaction costs2	-	-	-	-	7	1	-
		Gain from real estate sale	-	-	-	(23)	-	-	-
		Litigation accruals	54	6	-	-	-	-	-
		Pension settlement charge	-	12	-	15	-	-	-
		Gain/loss from sale of business	-	-	(27)	3	-	-	-
		Litigation settlement gain	-	-	(7)	-	-	-	-
	Non-GAAP adjustments (pre-tax $'s)	54	23	(30)	-	39	16	40
		Income tax impact	(21)	(9)	12	-	(7)	(2)	(3)
		TCJA impact3	-	-	-	50	(2)	-	-
		Unusual tax items	-	-	-	(8)	-	-	-
	Non-GAAP adjustments (after tax $'s)	33	15	(18)	42	30	14	37
	Diluted shares outstanding	143.2	142.9	140.0	137.3	135.2	135.4	135.7
	EPS impact of non-GAAP adjustments	$.23	$.09	($.13)	$.32	$.22	$.10	$.28
1	Calculations impacted by rounding
2	2018 includes $4 million in SG&A charges and $3 million of financing-related charges in interest expense
3	Tax Cuts and Jobs Act of 2017							51

Reconciliation of Adj EBIT, Adj EBIT Margin,

Adj EBITDA, and Adj EBITDA Margin

($ millions, except EPS)	2014	2015	2016	2017	2018	2019
Net trade sales	$3,782	$3,917	$3,750	$3,944	$4,270	$4,753
EBIT (continuing operations)	$332	$487	$522	$468	$437	$513
Non-GAAP adjustments, pre-tax1	54	23	(30)	-	36	16
Adjusted EBIT (cont. operations)	$386	$510	$492	$468	$473	$529
Adjusted EBIT margin	10.2%	13.0%	13.1%	11.9%	11.1%	11.1%
Adjusted EBIT (cont. operations)	$386	$510	$492	$468	$473	$529
Depreciation & amortization	118	113	115	126	136	192
Adjusted EBITDA (cont. operations)	$504	$623	$607	$594	$609	$721
Adjusted EBITDA margin	13.3%	15.9%	16.2%	15.1%	14.3%	15.2%

1 See slide 50 for adjustment details

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Reconciliation of Adj Earnings and Adj EPS

($ millions, except EPS)	2014	2015	2016	2017	2018	2019
Earnings (continuing operations)	$225	$328	$367	$294	$306	$334
Non-GAAP adjustments, after tax1	33	15	(18)	42	30	14
Adjusted Earnings (cont. operations)	$258	$343	$349	$336	$336	$347
Diluted EPS (continuing operations)	$1.55	$2.27	$2.62	$2.14	$2.26	$2.47
EPS impact from non-GAAP adjs1	.23	.09	(.13)	.32	.22	.10
Adjusted EPS (cont. operations)	$1.78	$2.36	$2.49	$2.46	$2.48	$2.57

1 See slide 50 for adjustment details

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Calculation of Return on Invested Capital

	2014	2015	2016	2017	2018	2019
Adjusted EBIT (cont. operations)1	$386	$510	$492	$468	$473	$529
Tax rate	26.0%	27.7%	23.7%	22.2%	20.7%	22.1%
Net Operating Profit After Tax (NOPAT)2	285	369	375	364	375	412
Total debt (long-term + current)	$964	$945	$960	$1,252	$1,169	$2,118
Operating lease liabilities3	-	-	-	-	-	161
Equity	1,155	1,098	1,094	1,191	1,158	1,312
Less: Cash & Cash equivalents	(333)	(253)	(282)	(526)	(268)	(248)
Invested Capital	$1,786	$1,790	$1,772	$1,917	$2,059	$3,343
Average Invested Capital	$1,891	$1,788	$1,781	$1,844	$1,988	$2,701
Return on Invested Capital (ROIC)	15.1%	20.6%	21.1%	19.7%	18.9%	15.3%

1. See slide 50 for adjustment details
2. NOPAT = Adjusted EBIT x (1 - tax rate)
3. New lease accounting rules adopted January 1, 2019. Prior year data is not available.

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Calculation of Dividend Payout % of Adjusted EPS

Diluted EPS from cont. operations EPS impact from non-GAAPadjs1

Adjusted EPS from cont. operations Annual dividend per share

Dividend payout % of diluted EPS from continuing operations

Dividend payout % of adjusted EPS

1 See slide 50 for adjustment details

2016	2017	2018	2019
$2.62	$2.14	$2.26	$2.47
(.13)	.32	.22	.10
$2.49	$2.46	$2.48	$2.57
$1.34	$1.42	$1.50	$1.58
51%	66%	66%	64%
54%	58%	60%	61%

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Non-GAAP Financial Measures

While we report financial results in accordance with accounting principles generally accepted in the U.S. ("GAAP"), this presentation includes non-GAAP measures. These include adjusted EBIT, adjusted EBIT margin, adjusted EBITDA, adjusted EBITDA margin, adjusted earnings, and adjusted EPS. We believe these non-GAAP measures are useful to investors in that they assist investors' understanding of underlying operational profitability. Management uses these non-GAAP measures as supplemental information to assess the company's operational performance.

We believe the presentation of return on invested capital (ROIC) provides investors a useful way to assess how efficiently the Company uses investors' funds to generate income. Management uses this ratio as supplemental information to assess how effectively its invested capital is utilized.

The above non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered a substitute for, or more meaningful than, their GAAP counterparts.

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