Leggett & Platt(US:LEG)2025-05-07 19:24Part I - Financial Information Financial Statements Presents Q1 2025 unaudited condensed consolidated financial statements, including balance sheet, income, cash flows, and key notes Consolidated Financial Statements Overview Summarizes the company's Q1 2025 financial performance, balance sheet, and cash flow activities Q1 2025 Key Financial Results | Financial Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | | :--- | :--- | :--- | | Net Trade Sales | $1,022.1 Million | $1,096.9 Million | | Gross Profit | $190.0 Million | $186.4 Million | | EBIT | $62.9 Million | $63.0 Million | | Net Earnings | $30.6 Million | $31.6 Million | | Diluted EPS | $0.22 | $0.23 | Balance Sheet Summary (as of March 31, 2025) | Account | Amount (Millions) | | :--- | :--- | | Total Current Assets | $1,784.1 | | Total Assets | $3,748.9 | | Total Current Liabilities | $810.4 | | Total Liabilities | $3,001.3 | | Total Equity | $747.6 | Cash Flow Summary (Three Months Ended March 31, 2025) | Cash Flow Activity | Amount (Millions) | | :--- | :--- | | Net Cash from Operating Activities | $6.8 | | Net Cash Used for Investing Activities | ($6.1) | | Net Cash Provided by Financing Activities | $60.0 | | Increase in Cash and Cash Equivalents | $62.4 | Note B: Revenue Details the company's revenue disaggregation by product family for Q1 2025 and Q1 2024 Revenue by Product Family (Three Months Ended March 31) | Product Family | 2025 (Millions) | 2024 (Millions) | | :--- | :--- | :--- | | Bedding Products | $390.7 | $448.0 | | Specialized Products | $300.1 | $315.9 | | Automotive Group | $197.2 | $210.9 | | Aerospace Products Group | $53.0 | $45.6 | | Hydraulic Cylinders Group | $49.9 | $59.4 | | Furniture, Flooring & Textile Products | $331.3 | $333.0 | | Total | $1,022.1 | $1,096.9 | Note C: Segment Information Outlines the company's operating segments and their financial performance - The company operates and reports across three segments: Bedding Products, Specialized Products, and Furniture, Flooring & Textile Products3739 Segment EBIT (Three Months Ended March 31) | Segment | 2025 EBIT (Millions) | 2024 EBIT (Millions) | | :--- | :--- | :--- | | Bedding Products | $9.6 | $15.7 | | Specialized Products | $28.4 | $23.7 | | Furniture, Flooring & Textile Products | $24.8 | $23.6 | | Total Segment EBIT | $62.8 | $63.0 | Note E: Restructuring and Related Activities Details the ongoing 2024 Restructuring Plan, its scope, expected completion, and associated costs - The company is executing a 2024 Restructuring Plan, primarily in the Bedding Products segment, which involves consolidating 15 to 20 production and distribution facilities. The plan is expected to be substantially complete by the end of 20254546 2024 Restructuring Plan Costs | Cost Type | Expected Total (Millions) | Incurred to Date (Millions) | Incurred Q1 2025 (Millions) | | :--- | :--- | :--- | :--- | | Net Restructuring & Related | $60.0 - $70.0 | $48.8 | $5.2 | | Goodwill & Asset Impairment | ~$20.0 | $4.5 | $0.3 | | Total | $80.0 - $90.0 | $53.3 | $5.5 | - Additional restructuring costs of $1.4 Million were incurred in Q1 2025 related to the pending sale of the Aerospace business48 Note L: Assets Held For Sale and Divestitures Details the planned divestiture of the Aerospace Products Group, including sale terms and assets held for sale - On April 2, 2025, the company signed an agreement to sell its Aerospace Products Group for a cash price of $285.0 Million, subject to adjustments. The group was classified as held for sale at March 31, 202570 Net Assets Held for Sale (as of March 31, 2025) | Category | Amount (Millions) | | :--- | :--- | | Total assets held for sale | $229.0 | | Total liabilities held for sale | $41.7 | | Net assets held for sale | $187.3 | - The Aerospace Products Group generated external sales of $53.0 Million and pretax earnings of $7.2 Million in Q1 202572 Management's Discussion and Analysis (MD&A) Management discusses Q1 2025 financial results, key business factors, segment performance, liquidity, and capital structure Q1 2025 Highlights Summarizes key financial and operational highlights for Q1 2025, including sales, EPS, divestiture, and dividend - Q1 2025 trade sales were $1.022 Billion, a 7% decrease YoY78 - EPS was $0.22, compared to $0.23 in Q1 2024, including a $0.04 restructuring charge and a $0.02 real estate sale gain in Q1 202578 - An agreement was reached to sell the Aerospace Products Group for $285 Million, with expected after-tax proceeds of approximately $240 Million8097 - The quarterly dividend was declared at $0.05 per share, a significant reduction from $0.46 in the prior year's first quarter82 Major Factors Impacting Business Discusses key factors impacting the business, including restructuring, market demand, competition, and goodwill impairment risks - The 2024 Restructuring Plan is progressing, with an expected annualized EBIT benefit of $60–$70 Million and annual sales attrition of ~$80 Million once fully implemented111112 - Market demand is expected to be down in 2025 from 2024 levels due to a dynamic macroeconomic environment, particularly weak residential end markets and automotive industry volatility119121 - The company faces pressure from foreign competitors but maintains competitiveness through efficiency, vertical integration, and logistics, supported by extended antidumping duties on mattresses and innersprings131134 - Goodwill impairment testing in Q2 2024 resulted in significant write-downs, with a sustained lower stock price potentially leading to further material impairment in Q2 2025101103 Results of Operations Analyzes Q1 2025 operational results, detailing changes in trade sales, EBIT, and segment performance drivers - Q1 2025 trade sales decreased 7% YoY to $1,022.1 Million, driven by 5% volume decline, 1% raw material price decreases, and 1% currency impact140 - EBIT was flat YoY at $63 Million, with restructuring and cost management benefits offset by lower volume, metal margin compression, and reduced asset sale gains141 Segment Performance (Q1 2025 vs Q1 2024) | Segment | Sales Change | EBIT Change (Millions) | Key Drivers | | :--- | :--- | :--- | :--- | | Bedding Products | -13% | -$6.1 Million | Lower volume, metal margin compression, partially offset by restructuring benefits. | | Specialized Products | -5% | +$4.7 Million | Cost management and efficiency improvements offset lower volume. | | Furniture, Flooring & Textile | -1% | +$1.2 Million | Gain on real estate sale and higher volume offset by pricing adjustments. | Liquidity and Capitalization Assesses the company's liquidity and capital structure, including cash, operating cash flow, debt, and capital allocation - Cash and cash equivalents were $413 Million at quarter-end, with most funds held by foreign operations, incurring approximately $22 Million in withholding taxes upon repatriation156157 - Operating cash flow was $7 Million, an increase of $13 Million YoY, primarily due to a smaller use of working capital82158 Working Capital Metrics (Days) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | DSO | 46 | 44 | 48 | | DIO | 73 | 77 | 81 | | DPO | 52 | 52 | 50 | - Total debt stands at $1.9 Billion. The company has a $1.2 Billion commercial paper program, with $440 Million outstanding and $404 Million available borrowing capacity as of March 31, 2025175184188 - Near-term cash use priority is to deleverage the balance sheet, while long-term priorities include growth and shareholder returns, with minimal share repurchases expected for the remainder of 2025176181 Part II - Other Information Legal Proceedings Details ongoing legal matters, primarily focusing on antidumping and countervailing duty petitions related to mattresses - Antidumping duty orders on mattresses from China were extended, with duties up to 1,731% remaining in place218 - In July 2023, petitions were filed alleging mattress dumping from 12 additional countries, leading to preliminary injury determinations by the ITC and preliminary duties by the DOC220221 Risk Factors Updates key business risks, including restructuring plan failure, credit rating impact, goodwill impairment, and debt covenant non-compliance - Restructuring Risk: The 2024 Restructuring Plan may not achieve intended outcomes, with potential changes to cost, benefit, and asset sale estimates impacting financial results227234 - Financial Risk: Recent credit rating downgrades could adversely affect capital market access and increase borrowing costs, potentially forcing reliance on the credit facility at higher rates238 - Impairment Risk: Significant goodwill and long-lived assets exist on the balance sheet, with a sustained low stock price potentially leading to a material goodwill impairment charge in Q2 2025241245246 - Covenant Risk: Reduced earnings could limit borrowing capacity under the credit facility's leverage ratio covenant, with a breach potentially triggering default, accelerating debt, and severely impacting liquidity247250252 Issuer Purchases of Equity Securities Reports on issuer purchases of equity securities, noting no repurchases in Q1 2025 despite a standing Board authorization - No shares of the company's common stock were repurchased during the three months ended March 31, 2025270 - The Board has a standing authorization to repurchase up to 10 Million shares each calendar year, in place since 2004 and including 2025272