Leggett & Platt(US:LEG)2025-04-29 17:27Financial Data and Key Metrics Changes - First quarter sales were $1 billion, down 7% compared to the first quarter of 2024, attributed to weak demand in residential markets and automotive [21][22] - First quarter EBIT was $63 million, with adjusted EBIT at $67 million, up $3 million from the previous year due to restructuring benefits and operational efficiency [23][24] - First quarter earnings per share (EPS) was $0.22, with adjusted EPS at $0.24, a 4% increase from the previous year [23][24] - Total debt at the end of the quarter was $1.9 billion, with total liquidity of $817 million [25][26] Business Line Data and Key Metrics Changes - Sales in the bedding products segment decreased by 13%, while specialized products declined by 5%, and furniture, flooring, and textile products were down 1% [21][22] - U.S. mattress production was down low double digits, with total mattress consumption also down high single to low double digits [22] - The geo components business experienced better-than-expected growth in the civil construction sector [22] Market Data and Key Metrics Changes - Approximately 60% of trade revenues are produced and consumed in the U.S., with another 8% produced abroad and consumed in the U.S. [8][9] - Tariffs are expected to have both positive and negative impacts across businesses, but are likely a net positive overall [9][10] - The automotive business is expected to face indirect tariff exposure, with potential disruptions in the supply chain due to tariffs on auto components [15][16] Company Strategy and Development Direction - The company is focused on strengthening its balance sheet, improving profitability, and operational efficiency while positioning for long-term growth [18][19] - A strategic business review is ongoing, with plans to divest non-core businesses, including the aerospace segment [7][18] - The company aims to reduce leverage and prioritize debt reduction and funding organic growth in the near term [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties and demand volatility, with expectations for a demand recovery in the markets served [31][37] - The company anticipates lower volume in the domestic bedding business due to softer U.S. mattress production, but expects increased pricing due to steel-related tariff benefits [27][29] - The outlook for 2025 sales is projected to be between $4 billion and $4.3 billion, down 2% to 9% from 2024 [27][29] Other Important Information - The company expects restructuring activity to be substantially complete by year-end [6][18] - Cash from operations is expected to be between $275 million and $325 million in 2025 [29] - The company is committed to returning cash to shareholders through dividends and share repurchases in the long term [26][29] Q&A Session Summary Question: Can you talk about the restructuring benefits expected for this year? - Management indicated that restructuring benefits will continue to roll through the year, with an annualized EBIT benefit of approximately $55 million to $60 million expected for 2025 [36][38] Question: Did you see any pull forward in consumer demand due to tariffs? - Management could not identify significant pull forward in demand, although some customers may have sold products out of inventory in anticipation of tariffs [41][42] Question: What is the expected profile of the aerospace segment post-divestiture? - Specific guidance on the aerospace segment will not be provided until after the sale closes, but first quarter sales were $53 million with EBIT of $7 million [45][46] Question: How are you thinking about margins for each segment this year? - Margins are expected to improve by approximately 150 basis points for bedding, 50 basis points for specialized products, and decrease by about 50 basis points for furniture, flooring, and textiles [49][50] Question: What is the impact of tariffs on the sub-$500 mattress market? - Management noted that the lowest end of the market is still supported by online marketplaces and imported finished mattresses, but the future remains uncertain due to potential reciprocal tariffs [76][78]