Leggett & Platt(US:LEG)2025-10-28 13:30Financial Data and Key Metrics Changes - Third quarter sales were just over $1 billion, down 6% year over year, primarily due to soft demand in residential end markets and sales attrition from the divestiture of the aerospace business [9][12] - Third quarter EBIT was $171 million, and adjusted EBIT was $73 million, a $3 million decrease year over year [12] - Third quarter earnings per share were $0.91, with adjusted EPS at $0.29, a $0.03 decrease year over year [12] - Operating cash flow for the third quarter was $126 million, an increase of $30 million compared to the third quarter of 2023 [12] - Total debt was reduced by $296 million in the third quarter, bringing total debt reduction for the year to $367 million [12][13] Business Line Data and Key Metrics Changes - Bedding product sales decreased 10% year over year but improved 3% sequentially compared to the second quarter [9] - Specialized product sales declined 7%, while furniture, flooring, and textile product sales were flat year over year [9] - U.S. mattress industry production improved sequentially but remained negative year over year, with total market consumption expected to decline low single digits for the full year [10][11] Market Data and Key Metrics Changes - The domestic mattress production volume remained negative year over year, with expectations for a slowdown in the fourth quarter due to normal seasonality [10] - The automotive supply chain risks, including availability of aluminum and semiconductors, have begun impacting the industry, although no material impact has been experienced to date [11] Company Strategy and Development Direction - The company is reaffirming the midpoint of its full-year sales and adjusted EPS guidance, with sales expected to be $4.0 to $4.1 billion, down 6% to 9% versus 2024 [14][15] - The restructuring plan is nearing completion, with expected annualized EBIT benefits of $60 to $70 million [13][14] - The company aims to prioritize debt reduction while considering small strategic acquisitions and share repurchases in the future [16][51] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about tariffs potentially driving inflation and impacting consumer confidence and demand [6] - The company remains focused on providing high-quality, innovative products and improving operational execution despite a challenging consumer environment [8][17] - Management noted that the innovation pipeline is robust, with new products gaining traction, positioning the company for long-term profitable growth opportunities [17][48] Other Important Information - The company completed the divestiture of its aerospace business to optimize its portfolio [4][5] - Total liquidity at the end of the quarter was $974 million, comprised of $461 million in cash and $513 million in capacity remaining under the revolving credit facility [13] Q&A Session Summary Question: Benefits from cost actions and restructuring - Management highlighted that the restructuring plan is nearly complete, with no customer disruptions and expected annualized EBIT benefits of $60 to $70 million [22][25] Question: Demand environment in bedding - The bedding market is characterized as more stable, with sequential improvement observed, although challenges remain due to macroeconomic factors [27][30] Question: Capital expenditure plans for 2026 - Management indicated that normalized CapEx is expected to be around $100 million, with ongoing funding for growth initiatives [32] Question: Segment margins for the year - Bedding segment margins are expected to be up 200 basis points, while specialized segment margins should increase by 50 basis points [33] Question: Growth opportunities post-restructuring - Long-term growth opportunities are seen in finished bedding and private label work, with a focus on innovation and product development [46][48]