Leggett & Platt Report Second Quarter Financial Results

August 1, 2024  by Karen Parrish in Business Strategy, Industry   

"Demand in our residential end markets remains weak as consumers continue to delay big-ticket, discretionary purchases. Additionally, the global automotive market remains volatile due to a slower than expected shift to electric vehicles and disruption from new Chinese market entrants. Due to these factors and continued deflationary pressure, we are lowering our full year sales guidance. We are also narrowing our adjusted EPS guidance, with a slightly lower mid-point. This revision reflects the impacts of lower volume, increased inventory write-downs/reserves, and higher bad debt reserves, partially offset by continued strong execution of our restructuring plan, operational efficiency improvements, and pricing discipline.

"We are currently conducting a strategic review of our diverse portfolio, assessing how each business fits into our long-term vision. This review, in addition to our restructuring plan and operational improvement initiatives, is leading to a clearer vision of the opportunities ahead. We fully expect the future Leggett & Platt to be more focused and more profitable."

SECOND QUARTER RESULTS

Second quarter sales were $1.1 billion, an 8% decrease versus second quarter last year

• Organic sales² were down 8%
  • Volume was down 4%, primarily from continued weak demand in residential end markets and the earlier than expected loss of a customer in Specialty Foam
  • Raw material-related selling price decreases and currency impact reduced sales 4%

Second quarter EBIT was a loss of $614 million, down $710 million from second quarter 2023 EBIT.

• EBIT decreased primarily from a $675 million non-cash goodwill impairment charge. In connection with the preparation of the second quarter 2024 financial statements, the Company performed an impairment analysis and concluded that an impairment existed as a result of the significant decline in stock price and current market conditions.

Adjusted¹ EBIT was $71 million, a $21 million decrease from second quarter 2023 adjusted¹ EBIT.

• Adjusted¹ EBIT decreased primarily from lower volume, increased inventory write-downs/reserves, raw material-related pricing adjustments, metal margin compression, and higher bad debt reserves partially offset by lower amortization expense, operational efficiency improvements, and restructuring benefit.

EBIT margin was (54.4%), down from 7.8% in the second quarter of 2023 and adjusted¹ EBIT margin was 6.3%, down from 7.5%.

RESTRUCTURING PLAN UPDATE

The restructuring plan in our Bedding Products segment and in our Furniture, Flooring & Textile Products segment is progressing as planned. Additionally, we initiated a small restructuring opportunity in our Specialized Products segment during second quarter 2024.

• Annualized EBIT benefit of $40–$50 million expected to be realized after initiatives are fully implemented in late 2025
  • Realized $3 million in second quarter 2024 and now expect approximately $10–$15 million of EBIT benefit to be realized in 2024 versus our initial estimate of $5–$10 million
• We now anticipate approximately $80 million of annual sales attrition after initiatives are fully implemented in late 2025 versus our initial estimate of $100 million
  • Realized $3 million of sales attrition in second quarter 2024 and now expect approximately $25 million in 2024 versus our initial estimate of $40 million
• Also expect to receive cash from the sale of real estate associated with the plan, with transactions largely complete by the end of 2025
  • 2024 expectations are now $15–$25 million versus $0–$10 million as real estate sales are anticipated to be realized sooner than initially expected
• Majority of cash restructuring and restructuring-related costs expected to be incurred in 2024

FOR MORE INFORMATION: Visit Leggett's website at www.leggett.com.