Leggett & Platt(LEG) - 2025 Q2 - Quarterly Results

Leggett & Platt 2Q 2025 Results Overview Management Commentary CEO Karl Glassman highlighted another quarter of improved profitability and a strengthened balance sheet through debt reduction and a favorable credit facility amendment, reaffirming full-year guidance despite macroeconomic headwinds - Management is pleased with profitability improvement and balance sheet strengthening via debt reduction and an amended revolving credit facility[2] - The company remains on track to complete the sale of its Aerospace business within the year[2] - Despite macroeconomic headwinds, the company reaffirmed its full-year guidance for both sales and adjusted EPS, citing business resilience and a diversified portfolio[3] Second Quarter 2025 Financial Highlights In Q2 2025, Leggett & Platt reported sales of $1.1 billion, a 6% decrease year-over-year, with adjusted EPS slightly increasing to $0.30, while significantly strengthening its balance sheet by reducing debt by $143 million and improving its net debt to adjusted EBITDA ratio to 3.5x Q2 2025 Key Financial Metrics | Metric | Q2 2025 Value | Change vs Q2 2024 | | :--- | :--- | :--- | | Sales | $1.1 billion | -6% | | EPS | $0.38 | Up from -$4.39 | | Adjusted EPS | $0.30 | +$0.01 | | Debt Reduction | $143 million | N/A | | Net Debt / Adj. EBITDA | 3.5x | Improved | - Organic sales decreased by 6%, driven by a 7% volume decline, primarily from soft demand in residential end markets, Automotive, and Hydraulic Cylinders[6] - The company amended its credit facility, extending the maturity to July 2030 and decreasing the facility size from $1.2 billion to $1.0 billion[5][10] Financial Performance and Position Detailed Second Quarter Results Second quarter sales fell 6% to $1.1 billion due to a 7% volume decline, partially offset by a 1% benefit from pricing and currency, with reported EBIT turning around to $90 million from a prior-year loss, and adjusted EBIT rising by $4 million to $76 million, improving the adjusted EBIT margin to 7.1% Q2 2025 vs Q2 2024 EBIT & EPS | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | EBIT | $90 million | -$614.3 million | | Adjusted EBIT | $76 million | $72 million (recalculated) | | EBIT Margin | 8.5% | (54.4)% | | Adjusted EBIT Margin | 7.1% | 6.3% | | EPS | $0.38 | -$4.39 | | Adjusted EPS | $0.30 | $0.29 | - The increase in adjusted EBIT was primarily due to metal margin expansion, benefits from restructuring, and disciplined cost management, which were partially offset by lower sales volume[6] - Q2 2025 results included a $18 million gain from real estate sales and $4 million in restructuring charges, while Q2 2024 results were heavily impacted by a $675 million non-cash goodwill impairment[6] Debt, Cash Flow, and Liquidity The company significantly improved its financial position in Q2, reducing total debt by $143 million to $1.8 billion and improving the net debt to trailing 12-month adjusted EBITDA ratio to 3.5x, while maintaining its dividend and ending the quarter with strong total liquidity of $878 million Liquidity and Cash Flow Summary (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Total Liquidity | $878 million | | Cash on Hand | $369 million | | Revolver Capacity | $509 million | | Q2 Operating Cash Flow | $84 million | | Q2 Capital Expenditures | $9 million | | Q2 Dividends Paid | $7 million | - Debt was reduced by $143 million in the second quarter, bringing total debt to $1.8 billion[10] - The quarterly dividend was declared at $0.05 per share, consistent with the prior year's second quarter dividend[10] Strategic Initiatives and Outlook Restructuring Plan Update The company has updated its restructuring plan estimates, now expecting an annualized EBIT benefit of $60–$70 million upon full implementation, with total costs reduced to $65–$75 million and real estate proceeds revised to $70–$80 million, though the timing of some cash proceeds is pushed to 2026 Updated Restructuring Plan Estimates (Total Plan) | Metric | Previous Estimate | Current Estimate | | :--- | :--- | :--- | | Annualized EBIT Benefit | N/A | $60–$70 million | | Annual Sales Attrition | $80 million | ~$65 million | | Real Estate Proceeds | $60–$80 million | $70–$80 million | | Total Costs | $80–$90 million | $65–$75 million | - The company realized a $13 million incremental EBIT benefit from restructuring in Q2 2025[13] - The timing for the remaining $30–$40 million in cash proceeds from real estate sales has shifted, with only $0–$10 million expected in H2 2025 and the balance in 2026[13] 2025 Guidance Leggett & Platt reaffirmed its full-year 2025 sales guidance of $4.0–$4.3 billion and adjusted EPS of $1.00–$1.20, but revised its GAAP EPS forecast to $0.88–$1.17 to account for restructuring costs and a pension settlement charge, while also updating volume expectations for the Bedding Products segment and adjusting other financial expectations Full-Year 2025 Guidance | Metric | 2025 Guidance | | :--- | :--- | | Sales | $4.0–$4.3 billion (unchanged) | | Adjusted EPS | $1.00–$1.20 (unchanged) | | EPS (GAAP) | $0.88–$1.17 (revised) | | Volume | Down low single to low double digits | | Operating Cash Flow | $275–$325 million | | Capital Expenditures | $80–$90 million (revised down) | - Volume expectations at the midpoint were revised lower for the Bedding Products segment (down mid-teens vs prior down low double digits)[14] - The effective tax rate expectation was increased to 26% from 25%[18] Segment Results Bedding Products The Bedding Products segment experienced an 11% decrease in trade sales, driven by a 12% volume decline due to soft demand and retailer merchandising changes, yet adjusted EBIT increased by $12 million primarily from metal margin expansion and restructuring benefits Bedding Products Q2 2025 Performance | Metric | Change vs Q2 2024 | | :--- | :--- | | Trade Sales | -11% | | Volume | -12% | | Adjusted EBIT | +$12 million | Specialized Products Trade sales in the Specialized Products segment decreased by 5%, with a 6% volume decline from weakness in Automotive and Hydraulic Cylinders, partially offset by Aerospace growth, while adjusted EBIT increased by $2 million due to cost management, restructuring benefits, and lower depreciation Specialized Products Q2 2025 Performance | Metric | Change vs Q2 2024 | | :--- | :--- | | Trade Sales | -5% | | Volume | -6% | | Adjusted EBIT | +$2 million | Furniture, Flooring & Textile Products This segment experienced a 2% decrease in trade sales, with a slight 1% volume decline as softness in Home Furniture and Flooring was partly offset by growth in Textiles and Work Furniture, leading to a $10 million decrease in adjusted EBIT primarily due to pricing adjustments Furniture, Flooring & Textile Products Q2 2025 Performance | Metric | Change vs Q2 2024 | | :--- | :--- | | Trade Sales | -2% | | Volume | -1% | | Adjusted EBIT | -$10 million | Financial Statements and Reconciliations Condensed Financial Statements The condensed financial statements show a 6% decline in Q2 trade sales to $1.058 billion, with net earnings attributable to L&P at $52.5 million, a significant recovery from the prior-year loss, and total assets of $3.70 billion as of June 30, 2025 Q2 2025 Selected Financial Data (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Trade Sales | $1,058.0 | $1,128.6 | | Gross Profit | $192.6 | $186.5 | | EBIT | $90.4 | $(614.3) | | Net Earnings (L&P) | $52.5 | $(602.2) | | Net Cash from Ops | $84.0 | $94.0 | Financial Position (in millions, as of June 30, 2025) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,703.7 | $3,661.6 | | Long-Term Debt | $1,792.2 | $1,862.8 | | Equity | $855.8 | $690.2 | Non-GAAP Reconciliations The company provides reconciliations from GAAP to non-GAAP measures to offer supplemental information on operational performance, with Q2 2025 reported EBIT of $90.4 million adjusted to $75.6 million and reported EPS of $0.38 adjusted to $0.30, after accounting for items like real estate gains and restructuring charges Q2 2025 GAAP to Non-GAAP Reconciliation (in millions) | Metric | Reported (GAAP) | Adjustments | Adjusted (Non-GAAP) | | :--- | :--- | :--- | | EBIT | $90.4 | $(14.8) | $75.6 | | Diluted EPS | $0.38 | $(0.08) | $0.30 | - Major non-GAAP adjustments in Q2 2025 included a $18.4 million gain on the sale of real estate and $3.6 million in restructuring-related charges[29] - The Net Debt to 12-month Adjusted EBITDA ratio improved sequentially from 3.77x in Q1 2025 to 3.51x in Q2 2025[29]