Company News
February 12, 2026
Urethane Highlights from L&P Investors Call
Leggett & Platt, Incorporated (LEG) Q4 2025 Earnings Call Transcript
Feb. 12, 2026 4:54 PM ETLeggett & Platt, Incorporated (LEG) Stock
Q4: 2026-02-11 Earnings Summary
EPS of $0.22 misses by $0.01
| Revenue of $938.60M (-11.15% Y/Y) misses by $136.50K
Leggett & Platt, Incorporated (LEG) Q4 2025 Earnings Call February 12, 2026 8:30 AM EST
Company Participants
Ryan Kleiboeker – Executive VP & Chief Strategic Planning Officer
Karl Glassman – President, CEO & Executive Chairman
Benjamin Burns – Executive VP & CFO
J. Hagale – Executive VP & President of Bedding Products
R. Smith – EVP, President of the Furniture, Flooring & Textile Products and President of Specialized Products
Karl Glassman
President, CEO & Executive Chairman
Thank you, Ryan, and good morning, everyone. Early last year, we shared our 2025 priorities, which included strengthening the balance sheet, improving operational efficiency and margins and positioning Leggett & Platt for profitable long-term growth. Thanks to the tremendous efforts by our teams, we delivered on those priorities and made significant progress to position the business to accelerate when residential end markets turn. We have substantially completed the restructuring plan we launched in early 2024, reflecting strong execution and disciplined follow-through. The actions taken over the past 2 years delivered greater EBIT benefit at lower cost than originally expected. These improvements are sustainable, and we expect they will contribute to improved profitability and cash flow generation, which will allow us to reinvest in growth and return capital to our shareholders. Although the 2024 restructuring plan is essentially complete, we continue to identify opportunities to improve our cost structure and enhance profitability across our businesses. We also took meaningful steps in 2025 to simplify our portfolio and ensure focus on our core operations. Notably, we divested our Aerospace business in the third quarter. After-tax proceeds from that transaction were used to retire our outstanding commercial paper and accelerate our deleveraging efforts, moving us meaningfully closer to our long-term leverage target of 2x.
Our teams also did outstanding work in 2025 to further strengthen our foundation for long-term profitable growth. A few highlights include the continued growth of our semi-finished products, particularly Eco-Base and pre-foam-encased ComfortCore and bedding products. We also made significant progress on filling key roles to expand our competencies, especially in Specialty Foam, where we are working to diversify and expand the customer base. Automotive made progress in building our innovation pipeline and establishing greater intimacy with our OEM and Tier 1 customers to strengthen our position in seating comfort and in-car motion systems.
Our Home Furniture team opened a facility in Vietnam to better serve our customers who have relocated to this growing region of furniture production, and in Textiles, we have continued to penetrate new specialty markets such as medical nonwovens, where we are poised to introduce additional new products in 2026.
Our Geo Components team saw growth in our retail business, where we continue to gain share at major home improvement retailers.
As we turn to demand trends and expectations for 2026, our residential markets, which account for roughly half of the company’s revenue, remain in a multiyear depression with demand well below average cycle levels. While we cannot predict the timing of demand recovery, we are confident that we are well positioned to capitalize on the incremental volume when it materializes.
In Bedding, trade rod and wire sales benefited from metal margin expansion and strong domestic demand last year, while our mattress-related businesses faced another year of soft demand in addition to specific customer challenges. We believe the U.S. mattress market was down low single digits in 2025. Domestic production was down high single digits, but second half performance improved after a tough start to the year.
Demand in our Bedding Products segment is expected to be down low single digits in 2026 due to volume declines in Adjustable Bed and Specialty Foam as we lap customer program changes that began in 2025. However, U.S. Spring is anticipated to perform in line with the U.S. mattress market and domestic production, which we expect to both be flat to up low single digits in 2026.
In the Specialized segment, we expect automotive volume in 2026 to reflect the impacts of a challenging industry backdrop. In North America, demand faces inflationary pressures as automakers seek to recoup a portion of tariff-related costs. Exports from China are expected to continue pressure multinational OEMs in Europe, especially as the Chinese EV manufacturers face near-term demand headwinds in their domestic market. Overall, these dynamics support our expectation to perform in line with broader market trends from down 1% to 2% as we balance regional pressures with disciplined execution across the business.
Excluding Aerospace, our 2026 Specialized Products segment comparable sales are expected to be flat to slightly above 2025. Anticipated currency benefits are expected to offset the effects of lower volume and pricing year-over-year in both automotive and hydraulic cylinders.
In our Furniture, Flooring and Textile Products segment, we saw continued soft demand in our residential-focused businesses, Home Furniture and Flooring, while Work Furniture and Textile saw modest growth year-over-year. We anticipate further demand uncertainty in our residential markets, but expect to see growth in textiles, both in our Geo Components business and nonresidential markets in Fabric Converting.
As we move through 2026, we will continue to prioritize balance sheet strength, operational efficiency and margin improvement and build on the progress we’ve made over the last couple of years to position the company for profitable long-term growth. In Bedding, we will focus on diversifying our customer base in Specialty Foam, further integrating our foam and innerspring capabilities while growing component content and improving our ability to support the omnichannel needs of our bedding customers.
Benjamin Burns
Executive VP & CFO
Thank you, Karl, and good morning, everyone. Fourth quarter sales were $939 million, down 11% versus the fourth quarter of 2024, resulting from sales weakness at a certain customer and retailer merchandising changes in Adjustable Bed and Specialty Foam as well as continued soft demand in residential end markets, customer supply chain disruptions in Automotive and lower demand in Hydraulic Cylinders. Growth in Textiles and Work Furniture, along with higher trade wire and rod sales partially offset demand declines.
Looking at sales by segment, Bedding products decreased 11% compared to the fourth quarter of 2024. Additionally, Specialized Products declined 21%, mostly due to the Aerospace divestiture and sales in Furniture, Flooring and Textile products were down 3%.
As Karl mentioned earlier, we have substantially completed the restructuring plan in 2025 and significantly exceeded our original expectations. We expect a full run rate of approximately $70 million of EBIT benefit and total cost of $80 million, half of which were noncash costs. We also expect cash proceeds from real estate sales of $70 million to $80 million, $48 million of which have already been realized with the remaining balance expected in 2026.
Moving to guidance. 2026 sales are expected to be $3.8 billion to $4.0 billion or down 1% to 6% versus 2025. 2025 divestitures are expected to reduce sales 3%. Volume is expected to be flat to down low single digits with volume at the midpoint, down low single digits in Bedding Products, down low single digits in Specialized Products and flat in Furniture, Flooring and Textile Products.
Inflation and currency benefit combined are expected to increase sales low single digits. 2026 earnings per share are expected to be $0.92 to $1.38, including approximately $0.02 to $0.11 per share impact from restructuring costs, primarily related to cost improvement and footprint optimization opportunities identified across the company that are currently being evaluated. $0.05 to $0.08 per share impact from costs associated with the unsolicited offer from Somnigroup and $0.11 to $0.25 per share gain from sales of real estate.
Karl Glassman
President, CEO & Executive Chairman
Thank you, Ben. In closing, I want to thank our employees around the globe for your efforts in transforming the company in 2025. Together, we executed our restructuring plan, strengthened our balance sheet and positioned Leggett & Platt for long-term success. While near-term demand uncertainty remains, we are confident in our ability to execute our strategic priorities and create long-term shareholder value.
Before we begin Q&A, I want to acknowledge the current discussions between Leggett & Platt and Somnigroup. As we announced in January, we have entered into a customary nondisclosure agreement and 6-month standstill. We do not intend to make any further public comments and will not be answering any questions related to these discussions on this call.
With that, operator, we’re ready for Q&A.
Susan Maklari
Goldman Sachs Group, Inc., Research Division
Okay. All right. That’s helpful color. And then turning to Bedding and the outlook there. You mentioned that you expect springs to be flat to up low single digits, it sounds like, for this year. Just generally speaking, as you think about the Bedding market and the demand there, how much of a recovery do you think we can see if we don’t have housing that really starts to come back? How important is that? And what does it mean in terms of the near-term potential path for the industry versus where we could be longer term?
Karl Glassman
President, CEO & Executive Chairman
Yes, Susan, great questions. I’ll ask Tyson to answer all of that. I do want to remind you and the rest of the investors that there is no expectation of macro market recovery in our 2026 forecast. We’d like to see it. We’ve been guilty as have some others of forecasting a strong back half. We’re not doing that. So to the degree that, that impact takes place, it would be upside to the midpoint of our guidance. But Tyson, why don’t you unravel that?
J. Hagale
Executive VP & President of Bedding Products
Sure. Good morning, Susan. I agree with Karl. We’ve definitely been tired of just hoping that a recovery is coming. And you mentioned one of the big macro factors being housing and the continued headwind that we face there. But that’s a big one, obviously. It’s not the only one. Generally, consumer confidence and how people are feeling about discretionary purchases is a big deal. And then just general affordability, which goes into housing for sure, but also across the board, whether people are spending the money on insurance, gas, food, all of those things are a big deal. And just seeing where things stand today, that’s why we don’t feel good about building any type of recovery into guidance. Essentially, what we thought about in the bedding market for 2026 is a continuation of what we really saw in the back half of the year. The first half of 2025 was pretty tough. And so really just a more seasonal pattern in 2026 is really carrying off the back half of 2025. And that’s where we get to a flat to up low single digits is really just lapping the early struggles that the market had in 2025. Relative to our business, and you mentioned U.S. Springs, that’s where we have the tightest correlation to the market. And we’ve had some ups and downs through 2025 and in prior years relative to our performance against the market. And I think we talked about this in the third quarter, but it’s true for us and our customer base, performance is mixed across the industry, and we still see a lot of choppiness. We were impacted in the fourth quarter. And we’ve had some other periods where this has happened as well, where we’ve had some consolidations happen, and we had one at the beginning of the fourth quarter that was related to some financial distress with one of our partners. And that was the biggest impact that we had in the U.S. Spring versus the market. But generally, and we saw this in the second and third quarter, we’ve closed the gap and have been performing pretty close to market. And we feel good about in 2026, where we’ve had some content gains and have some more coming as we’ve had more products introduced in some of our comfort products and comfort layers, and we think that helps us manage our business along with the rest of the market.
Keith Hughes
Truist Securities, Inc., Research Division
Okay. And then I guess a question for Karl as a little historical perspective on mattress sales. The last 3 or 4 years have been just so difficult for the industry. Have you ever seen anything like this in your career or anything approached like this in your career? And I think you’ve talked about affordability, but what do you think is the issue for the entire industry in terms of getting these sales going?
Karl Glassman
President, CEO & Executive Chairman
Keith, you know you’ve been around a long time when you get asked the question from a historical perspective.
Keith Hughes
Truist Securities, Inc., Research Division
I am old, but I didn’t want to say that.
Karl Glassman
President, CEO & Executive Chairman
As a matter of fact, once again, you’re accurate. No, I’ve never seen anything like this. There’s — interestingly enough, when we track data back to the early ’70s, and I was not in the industry — well, I guess I was — anyway, no, that typically, in any kind of macroeconomic step down, Bedding goes into the cycle first and comes out of it earliest. So if there’s — even in the Great Recession, so you had their 2.5 years of softness, you saw real strength coming back out of it, and it was a leading indicator of recovery. So we’ve never seen anything of this duration, this magnitude, probably overused phrase of pent-up demand, but it feels like it’s building. We think that normal consumption — normalized consumption in the U.S. should be in the 34 million to 35 million mattress range. We’re probably just sub 30 million on an annualized basis and have been there for a while. So it feels good once the consumer becomes confident and Housing is unleashed, but we just have no ability to predict when that happens. So in the interim, Tyson and the team are doing an outstanding job. First, the restructuring effort was really important, getting that successfully completed and behind us. And then now working with customers on innovation, product development and the opportunities are significant. We feel pretty good about the year. But Keith, to your point, I have been around a long time. We’re manufacturing, a manufacturer that is unit sensitive. When additional volume goes through these assets, that are now rightsized via restructuring, it will get really good, really quick through a value chain that starts at a steel mill, walks through a wire mill and then into a spring plant. So the volume will be fantastic. It will be on the high side of our contribution margins. We just can’t make a call as to when it happens.
Alexia Morgan
Piper Sandler & Co., Research Division
Okay. And then lastly, can you discuss your view on mattress industry trends for Q1, like any early reads you have quarter-to-date? And then looking longer term, can you elaborate on growth drivers for the Bedding segment specifically, and when you expect those to start to contribute?
J. Hagale
Executive VP & President of Bedding Products
Sure. I’ll jump in on the first part. The big weather events that we’ve had over the last several weeks have certainly been impactful. We’ve heard that from our customers and just seeing between retail activity and what we’ve heard with foot traffic, but also facility closures and impacts there. So we expect there will be a catch-up, and we’ll all be looking to President’s Day and see what the activity is like there. But the weather impacts certainly have had some impact on the business early in the quarter. And we talked about it, I think the big drivers being housing, consumer confidence and general affordability are the big factors that we’re watching to point to a recovery.
February 4, 2026
Henkel to Acquire Stahl
Henkel to buy specialty coatings company Stahl in €2.1B deal
Feb. 04, 2026 7:02 AM By: Carl Surran, SA News Editor
Henkel said Wednesday it agreed to acquire Netherlands-based specialty coatings company Stahl Holdings for €2.1B (~$2.48B) including debt from private equity firm Wendel.
The German consumer goods company said the acquisition will help drive growth in its adhesive technologies business.
Minority shareholders BASF and Clariant, which together control more than 30% of Stahl, also will sell their stakes, Wendel (WNDLF) said.
Henkel’s deal for Stahl comes after the company recently said it would acquire ATP Adhesive Systems.
Executives have predicted a wave of consolidation in the chemicals industry, as companies struggle with weak demand, rising energy costs, tariffs and intense competition.
February 2, 2026
Epoxy Highlights from Olin Investors Call
Olin Corporation (OLN) Q4 2025 Earnings Call Transcript
Jan. 30, 2026 2:50 PM ETOlin Corporation (OLN) Stock
Q4: 2026-01-29 Earnings Summary
EPS of -$0.64 misses by $0.01
| Revenue of $1.67B (-0.37% Y/Y) beats by $121.30M
Olin Corporation (OLN) Q4 2025 Earnings Call January 30, 2026 9:00 AM EST
Company Participants
Steve Keenan – Director of Investor Relations
Kenneth Lane – President, CEO & Director
Todd Slater – Senior VP & CFO
Kenneth Lane
President, CEO & Director
Thanks, Steve, and thank you to everyone for joining us today. Let’s start with Slide 3 and review our fourth quarter highlights. As we previously announced, our fourth quarter came in significantly below our expectations.
In December, we experienced operational issues related to an extended turnaround of our Freeport, Texas chlorinated organics asset and third-party raw material supply constraints, both of which impacted our chlor-alkali assets. At the same time, we also experienced a sharp decline in chlorine pipeline demand in an already seasonally weaker quarter.
During the quarter, we were able to preserve our ECU values by staying disciplined with our value-first commercial approach, and we also announced the long-term EDC supply agreement with Braskem, which provides a higher value to both parties by integrating the low-cost producer of EDC with the leader in PVC in Brazil.
In addition, we’ve expanded our infrastructure footprint in Brazil, which enables us to grow our caustic sales there in 2026. In our Epoxy business, we were able to contract for significant growth in our European business, which we’ll begin to benefit from in the first quarter of 2026.
This is a result of our commercial team’s successful strategy to position Olin as the last integrated supplier of Epoxy in Europe, providing reliable, secure supply to local customers in the face of continued headwinds from subsidized Asian producers.
Let’s turn to Slide 4 for a closer look at our chlor-alkali products and Vinyls results. Macro conditions remain challenging. Merchant chlorine demand remains under pressure through this extended trough as subsidized Asian chlorine derivatives flood export markets. Since 2019, China exports of titanium dioxide, urethanes, epoxies, crop protection chemicals and PVC have grown 300% to 600% placing significant pressure on U.S. chlorine derivative customers.
As you would expect in a trough environment, we are already seeing chlor-alkali capacity rationalization in Europe, Latin America and the U.S., which should accelerate operating rates as demand recovers. Olin has done a great job of preserving our ECU values and remains committed to our value-first approach, and we are well positioned when markets recover from the trough.
As we look ahead to the first quarter, we’ll continue to face headwinds related to power and raw materials. As a result of winter storm Fern, we proactively shut down several of our Gulf Coast assets, which will increase our first quarter costs. In addition, we’ll see higher turnaround costs as we begin our VCM turnaround at our Freeport, Texas site. This is the single largest turnaround that Olin executes and occurs every 3 years.
In the near term, Olin faces stranded costs of approximately $70 million, resulting from Dow’s recent closure of their Freeport propylene oxide plant. This cost burden will be offset by our Beyond 250 structural cost reductions, which I’ll discuss shortly.
Now let’s turn to Slide 5 for a look at our Epoxy results. Our fourth quarter Epoxy results sequentially increased due to improved product mix, allylics and aromatics margins, partially offset by higher turnaround and seasonally lower demand. As we look ahead to the first quarter, we do expect our Epoxy business to return to profitability, although at a low level. This will be realized through actions we have taken by growing our participation in the European market realizing lower costs at our Stade, Germany site and lower turnaround costs.
As we look out further, structural changes in our cost position, recent European epoxy chain plant closures and continued growth in our formulated solutions portfolio will support a return to profitability for 2026 as well.
Over the past 3 years, Olin’s Epoxy business has remained focused on cost reductions. In that time, we’ve reduced our global epoxy cash costs by about 19%. Our most recent action was this month’s closure of our Guarujá, Brazil epoxy plant. This shutdown is expected to deliver $10 million of annual structural savings.
Also in 2025, we continue to deliver on our formulated solutions sales growth. These solutions enable AI chips to better manage heat and conductivity that allow lightweight wind blades to exceed 500 feet in length and that serves as adhesives in some of the most challenging environments and application. We will continue to benefit from that growth in 2026.
As mentioned earlier, Dow’s closure of its Freeport propylene oxide plant has created a $70 million stranded cost headwind for Olin. By optimizing our power supply, we’ve already managed to offset approximately $20 million of that stranded cost. Earlier this month, we announced the closure of our Epoxy production plant in Brazil. We’ll be able to more cost-effectively serve our customers there with supply from either Freeport or Stade, both of which are vertically integrated with better cost structures. As a result of this action, we expect to realize a $10 million annual benefit.
Frank Mitsch
Fermium Research, LLC
I may have missed this in the past, but I wanted to ask about this $70 million stranded costs for the PO-related closure. Dow announced this back in May of 2023. And so I — obviously, you’ve known about it for a long time and could plan for it, et cetera, that $70 million sounds like a very large number. Can you help explain that to us, to me, in particular?
Kenneth Lane
President, CEO & Director
Thanks for your question. listen, yes, we have known about this for a long time, and we’ve been planning it, and we talked about this at our Investor Day, we knew that this was coming — but you don’t take the costs out until you shut the assets. And so those assets are being closed and wound down as we speak.
So as we go through the year, we’re going to have to find ways to be able to offset that. And that’s — that was the basis for us creating Beyond250 is that we’ve got to find ways to be able to take those costs out. The way that we were talking about this, I think previously as well is that asset and the sales from that asset didn’t generate any margin for us. It was sort of a net zero effect for us in terms of the P&L. But that doesn’t mean that there would not be stranded costs with that. We were aware of that we’ve got to get after that. That is a very clear focus for us to be able to do that as we wind those assets down, but that is going to be something that happens over time. It doesn’t happen like flipping a switch.
Matthew DeYoe
BofA Securities, Research Division
I feel like the prior kind of commentary for 2026 epoxies, I think, we were expecting something around $80 million in cost savings, of which over half was supposed to come from just the Dow contract lapse Stade.
Clearly, you’re talking about modest profitability. Now, this wouldn’t be the first case, productivity is lost through the cycle, but I’m just trying to clarify if that’s what’s happening here or if we should expect those savings to be more ratable in ’27. I’ll let you expand from there.
Kenneth Lane
President, CEO & Director
Listen, so what we had said back at Investor Day, that $80 million, remember that was our cost-out target for 2028. So that — you’re going to realize a very big chunk of that $40 million to $50 million is going to be realized in 2026. So you are going to see Epoxy last year, $50-ish million EBITDA negative.
We’re going to be positive this year. I mean, I do expect that that’s going to be the result in 2026. So you’re going to see a meaningful improvement in our earnings. Most of that are things that we’re doing to help ourselves in cost reduction and efficiency improvements. Just to be clear, we’re not seeing any significant improvement in the Epoxy market. Demand is still subdued. Margins are still weak. That environment has not changed.
So all of this improvement that you’re seeing is a result of what we’ve done. And so it’s not getting lost anywhere. You’re going to see that positive impact coming through in 2026.
February 2, 2026
Covestro Expands TDI in China
Covestro expands TDI production capacity in Shanghai to 370,000 tons, strengthening competitiveness amid global supply tightening.
2026-02-02 14:03:09Source:ChemNet中文
On January 30, Covestro announced the completion of a major capacity expansion and upgrade of the toluene diisocyanate (TDI) production facility at its Shanghai integrated site. The annual TDI production capacity increased from 310,000 tons to 370,000 tons, a nearly 20% increase, further strengthening its supply capabilities in the Asia-Pacific region.
Covestro’s Shanghai integrated site is located in the Shanghai Chemical Industry Park and is the company’s largest production base globally. This expansion did not involve building new production lines but was achieved by optimizing existing production processes and infrastructure, resulting in significant output growth without additional land or major equipment investments.
Covestro Continues to Enhance Competitiveness in the TDI Sector
In March 2025, its largest TDI plant in Europe, located in Dormagen, Germany, completed a modernization upgrade. With an annual capacity of 300,000 tons, the core of the upgrade focused on energy recycling, reducing energy consumption by 80% compared to traditional processes and cutting annual CO2 emissions by 22,000 tons. This not only strengthened its competitiveness in high-energy-cost markets but also provided customers with TDI products with a lower carbon footprint.
In early 2026, the global TDI market experienced a concentrated contraction in supply. In January, global TDI plant shutdowns for maintenance totaled 860,000 tons, accounting for 24% of global production capacity. This included temporary shutdowns at Hanwha in South Korea and Wanhua’s Xinjiang facility, compounded by previous maintenance and abnormal fluctuations at major plants such as Covestro Shanghai and Wanhua Fujian, leading to a widening global supply gap.
Tight Supply in the TDI Market
From January 12 to 22, Wanhua Chemical’s TDI distributor price was set at 15,200 RMB/ton. Due to the ongoing shutdown of the Northwest plant, there was no supply from Northwest sources during this period. A major Shanghai manufacturer adjusted its TDI price to 14,400 RMB/ton, with tight supply and limited quantities available.
China’s TDI Exports Hit a Record High in 2025
Import and export data show that China’s TDI exports reached a historic high in 2025, with total annual exports reaching 556,500 tons and cumulative imports of only 3,400 tons. In December, exports were 50,200 tons, with imports of 140 tons; in November, exports reached 56,500 tons, setting a record for monthly exports, while imports were 460 tons. China’s TDI supply is highly self-sufficient, with exports playing a dominant role.
February 1, 2026
Class Action Update
2 Foreign Cos. Escape Pa. Polyurethane Price-Fixing MDL
By Lauren Berg · Listen to article
Law360(January 29, 2026, 8:23 PM EST)– A Pennsylvania federal judge on Thursday unsealed his opinion from earlier this month dismissing two parent companies in Germany and China from multidistrict antitrust litigation that accuses several companies of conspiring to manipulate the prices of two chemicals used to make polyurethane, saying the court doesn’t have jurisdiction.
After the parties agreed it could be unsealed, U.S. District Judge W. Scott Hardy made public his Jan. 8 opinion granting renewed motions to dismiss by Covestro AG, headquartered in Leverkusen, Germany, and Wanhua Chemical Group Co. Ltd., headquartered in Yantai, China, agreeing that his court “is unable to exercise general or specific personal jurisdiction over” the foreign parent companies.
“In the court’s estimation, plaintiffs fail to establish that Covestro AG and Wanhua China had sufficient minimum contacts evidencing they do business in the United States to be ‘found’ here, nor do they establish that these defendants availed themselves of the privileges of American law or otherwise reasonably could anticipate being involved in litigation in the United States,” the judge said.
Judge Hardy dismissed the claims against Covestro AG and Wanhua China with prejudice, but the companies’ domestic subsidiaries, Covestro LLC and Wanhua Chemical America Co. Ltd., remain in the case.
The Pittsburgh-based multidistrict litigation accuses several companies — including BASF Corp., The Dow Chemical Co. and Huntsman Corp. — of using plant closures and limited supplies to drive up the prices of methylene diphenyl diisocyanate and toluene diisocyanate.
The class action generally alleges that the chemical companies reacted to a period of low MDI and TDI prices in 2014 and 2015 by limiting production and artificially inflating the prices for manufacturers of polyurethane plastic products, including plaintiffs such as Rhino Linings Corp. and Elliott Co. of Indianapolis.
According to the complaints, the defendant companies conspired through trade groups and took advantage of the difficulty that competitors would face when entering the market for the chemicals, known as diisocyanates and isocyanates, along with their control over most of the supply and the fact that the chemicals can’t be replaced with substitutes.
In March 2020, U.S. District Judge Donetta Ambrose denied the defendants’ joint motion to dismiss the case, finding the allegations in the complaint were sufficiently supported to move the case ahead. She also denied a motion to dismiss for lack of jurisdiction brought by foreign-based corporations BASF SE, Covestro AG, Mitsui Chemicals, MCNS and Wanhua China.
But following jurisdictional discovery, Covestro AG in July 2022 and Wanhua China in February 2023 renewed their motions to dismiss for lack of jurisdiction, and Judge Hardy granted both on Jan. 8, according to the docket.
In his opinion, unsealed Thursday, Judge Hardy first determined that the “foreign corporations with a headquarters and a principal place of business in other countries are not ‘at home’ in the United States,” meaning his court cannot exercise general personal jurisdiction over the companies.
The court also doesn’t have specific personal jurisdiction over Covestro AG and Wanhua China under both the traditional three-step analysis known as the “minimum contacts” test or under the “Calder effects test” laid out in the 1984 U.S. Supreme Court case Calder v. Jones , which can be used when an intentional tort is alleged, the order said.
“As to both Covestro AG and Wanhua China, the record makes clear that personal jurisdiction does not lie under the traditional test because neither foreign defendant ‘purposefully availed itself of the privilege of conducting activities’ in the United States,” Judge Hardy said, noting that neither company has manufactured or sold MDI or TDI in the U.S.
Turning to the Calder test, Judge Hardy determined that the plaintiffs have not alleged the crucial third factor — that Covestro AG and Wanhua China “expressly aimed tortious conduct at the United States such that it can be said to be the focal point of the tortious activity,” according to the order.
“Given that Covestro AG is a German holding company which does not manufacture or sell MDI or TDI, or otherwise perform any operational functions … it strains credulity that it expressly aimed the tortious conduct at issue here at the United States,” Judge Hardy said.
As for Wanhua China, the plaintiffs “inaccurately contend” that the company is involved in setting a floor price for sales of MDI through its American subsidiary and that it controlled the subsidiary by having Wanhua China members on the subsidiary’s board of directors, the order states.
The judge also rejected the plaintiffs’ argument that Wanhua China’s announcement and subsequent cancellation of an MDI plant in the U.S. “would have constrained the market by boosting supply expectations and then not delivering,” according to the order.
“Plaintiffs’ purely speculative argument on this point is wholly insufficient to establish Calder’s express aiming prong,” Judge Hardy said, likewise rejecting the plaintiffs’ “contention that Wanhua China engaged directly with United States customers by attending meetings, hosting visits at its plant in China, or engaging with them on technical issues and providing updates on research and development” would establish that it expressly aimed tortious conduct at the U.S.
The judge also rejected the plaintiffs’ argument for express aiming based on their claim that Wanhua China shipped diisocyanates into the U.S., saying in the opinion that this argument “obscures the fact that although the vast majority of the MDI that [Wanhua Chemical America Co.] sells in the United States comes from Wanhua China, WCA, not Wanhua China, sells MDI and TDI” to U.S. customers.
“Even in instances where WCA offered ‘China Direct’ shipping for customers to save on overall supply chain logistics and costs, customers contracted and interacted with WCA, not Wanhua China,” the judge said.
Craig Seebald of Vinson & Elkins LLP, an attorney for Wanhua, told Law360 Thursday, “We are pleased with the court’s decision and its thorough consideration of the jurisdictional record. With the jurisdictional motion decided, we can move forward with the litigation and look forward to filing our summary judgment motion.”
Counsel for the plaintiffs and Covestro did not immediately respond to requests for comment.
The plaintiffs’ interim co-lead counsel are Megan E. Jones of Hausfeld LLP and Jason S. Hartley of Hartley LLP, and their interim liaison counsel is William Pietragallo II of Pietragallo Gordon Alfano Bosick & Raspanti LLP.
Wanhua is represented by Craig P. Seebald, Adam Hudes, Brian Schnapp, Charles L. Wesley and Nicole Castle of Vinson & Elkins LLP.
Covestro is represented by John F. Terzaken, Abram J. Ellis and Avia Gridi of Simpson Thacher & Bartlett LLP.
The case is In re: Diisocyanates Antitrust Litigation, case number 2:18-mc-01001, in the U.S. District Court for the Western District of Pennsylvania.
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