LEGGETT & PLATT INC Q2 FY2024 earnings call

• Karl's priorities include transparent communication, finding quick wins for profitability, empowering teams, ensuring timelines and accountability, and building a strong team. - Restructuring plan is on track: Bedding Products' US spring restructuring activities expected to be complete by year-end, Specialty Foam restructuring well underway; Furniture, Flooring & Textile Products' restructuring initiatives on track. - Long-term investment in key businesses like Bedding, Automotive, and Geo Components. - Demand trends: Residential end markets weak, mattress imports harm domestic manufacturers; global automotive market volatile; Geo Components business faces sluggish project releases and weaker retail sales.

In the second quarter, sales in the Bedding Products segment decreased 13%. Specialized products had flat year-over-year sales, and sales in the Furniture, Flooring & Textile Products segment were down 6%. Excluding certain items, adjusted EBIT in Bedding Products segment was down, Specialized Products segment was flat, and Furniture, Flooring & Textile Products segment was down. Bedding Products segment's volume is expected to be down high-single-digits in 2024, Specialized Products segment is flat, and Furniture, Flooring & Textile Products segment is down low-single-digits. Deflation and currency combined are expected to reduce sales low-single-digits.

• 2024 sales expected to be $4.3 billion to $4.5 billion, down 5% to 9% vs 2023. - 2024 earnings per share expected to be a loss of $3.43 to $3.58, full year adjusted EPS expected to be $1.10 to $1.25. - 2024 full year adjusted EBIT margin range expected to be 6.5% to 6.9%.

• Macro economic uncertainties like consumer purchasing power and Fed interest rate policies. - Industry competition such as mattress imports dumping into the US market. - Product mix changes and their impact on sales and margins.

Q: Susan Maklari asked about Bedding's new products and efforts to regain share with existing customers and mix shift.

A: Karl handed off to Tyson Hagale who mentioned development teams working on innovation projects with customers, use of efficient projects like Eco-Base and Automated Foam, and progress in working with customers despite tough market.

Q: Bobby Griffin asked about Auto business dynamics and Leggett's positioning, metal margin compression, and portfolio optimization.

A: Karl and Tyson Hagale discussed Auto business with different EV adoption regions, metal margin compression as normalization, and portfolio optimization with focus on fit, growth potential, and execution.

Q: Keith Hughes asked about portfolio moves timing, price dynamics in Furniture, Flooring & Textiles.

A: Karl said portfolio moves likely in first half of next year, price dynamics related to commodity cost reductions and some businesses' ability to pass through costs.

Q: Peter Keith asked about biggest challenges at Leggett, Bedding demand in Q2 and Q3, metal margin impact, and Automotive challenges.

A: Karl talked about transparency, urgency, and tough Bedding industry environment; Bedding demand sequentially same, industry in tough spot; metal margin impact not significant decompartmentalized; Automotive with structural challenges due to Chinese entrants and affordability issues.

Q: Susan Maklari asked about consumer health and macro uncertainty impact, and macro tailwind for business with Fed rate move.

A: Karl said consumer health week, Fed rate adjustment needed; macro tailwind would bring volume which is good for the business.

Q: Susan Maklari asked about working capital improvement and operating cash flow guide maintenance.

A: Benjamin Burns talked about working capital improvement from inventory reduction, and operating cash flow guide maintained due to restructuring benefits and focus on working capital.