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October 31, 2024
Leggett & Platt, Incorporated (LEG) Q3 2024 Earnings Call Transcript
Oct. 29, 2024 12:41 PM ETLeggett & Platt, Incorporated (LEG) Stock
Q3: 2024-10-28 Earnings Summary
EPS of $0.32 misses by $0.01 | Revenue of $1.10B (-6.27% Y/Y) misses by $2.12M
Leggett & Platt, Incorporated (NYSE:LEG) Q3 2024 Earnings Conference Call October 29, 2024 8:30 AM ET
Company Participants
Cassie Branscum – Vice President, Investor Relations
Karl Glassman – Chief Executive Officer
Ben Burns – Chief Financial Officer
Tyson Hagale – President, Bedding Products
Sam Smith – President, Furniture, Flooring & Textile Products
Karl Glassman
Good morning, and thank you for joining our call today. As we begin, I want to thank our employees for their continued hard work and dedication as we navigated a challenging macro backdrop. Our third quarter sales and earnings were below our expectations, largely due to weaker than anticipated demand in residential end markets in headwinds, in Automotive, Hydraulic Cylinders and Geo Components.
Sluggish demand in these businesses is expected to persist through the fourth quarter and is expected to be more impactful than previously anticipated. As a result, we are reducing full year sales and earnings guidance, which Ben will detail later in the call.
Now, I’d like to highlight a few of the current demand dynamics in our key end markets. The US bedding market continues to experience negative volume comps. Although some improvement in demand has been observed during holiday sales in between periods has been softer.
We estimate that US mattress consumption was approximately flat in the third quarter, but domestic production was likely down high single digits. Given a more challenging macro environment and softening in consumer spending, we expect the domestic market will continue to be pressured in the fourth quarter and expect 2024 domestic units to be down mid single digits versus last year.
While we are encouraged to see the Fed begin a cycle of interest rate cuts, we know a series of cuts is needed to meaningfully impact housing turnover. And there will also be a lag between improvement in housing trends and an improvement in mattress demand.
We still anticipate that our 2024 Bedding Products segment volume will be down high single digits due to company-specific factors. Excluding higher trade rod sales for non-bedding applications, segment volume would be expected to be down low double digits. However, it’s important to note that our ComfortCore and semi finished products continued to perform in line with or better than domestic mattress production trends. And we are working closely with our customers on a number of product line refreshes and value engineering opportunities.
I’m pleased to share that our restructuring plan remains on track and our teams have done an excellent job executing the plan. We will exit our Mexican innerspring operation by year end, which will conclude all innerspring related restructuring activity in the bedding products segment.
Within Specialty Foam, we have close to operations and expect one more consolidation to be complete by year end. Early in the fourth quarter, we closed one adjustable bed location and shifted production to a more cost advantage facility to reduce excess capacity and improve our cost structure. Restructuring initiatives in the furniture, flooring and textiles product segments are also on track. We successfully executed the restructuring activity in home furniture and we expect to complete phase one of our flooring products restructuring by early next year.
Bobby Griffin
Good morning everybody. Thanks for taking my questions. Talking more about — the first thing I want to chat on Karl maybe just the comments on 3Q bedding consumption being flat year over year that, I understand the mix between domestic and imports was a move those numbers around some, but I guess the overall flat surprised me a little. Do you believe that’s just a function of a flush of imports coming into the market are kind of what do you think that’s driving that? Because I guess the flat to me in today’s macro was a little bit better just from a pure consumption standpoint.
Karl Glassman
Yes, Bobby, thanks for the question. I remember it’s off a relatively easy comp in 3Q, ’23. The imports have slowed. But as we had said previously, there was a significant amount of imports that came in right before the duties were levy [ph] and read. We believe that those are underway windy. But Tyson, how else would you answer that question?
Tyson Hagale
Sure, thanks and good morning Bobby. You got the right call. We did see the significant ramp up late last year with the imports coming in ahead of the duties and then they slowed in the first and second quarter. But there was a pretty significant overhang for what came in at the end of last year. We did see some incremental growth in inflated imports into the third quarter versus second quarter, but still not nearly to the levels that we saw last year. But really Bobby, I just kind of looking at some of the channel information that we review and especially on some of the e-com channels, we did see quite a lot of activity in the third quarter. And so that’s where we get to overall flat, but much slower and softer for our domestic production and consumption.
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