Leggett & Platt Third Quarter Earnings Report

Leggett & Platt Incorporated (NYSE: LEG), a diversified manufacturer of engineered products, reported lower-than-expected sales and earnings for the third quarter of 2024, attributing this to sluggish demand across several market segments. The company's third-quarter sales fell to $1.1 billion, a 6% decrease from the previous year, while adjusted earnings per share dropped 11% to $0.32.

Revised Guidance

The revised full-year sales guidance now stands at $4.3 billion to $4.4 billion, reflecting a 7% to 9% decrease compared to 2023. Despite the downturn, Leggett & Platt's restructuring plan is on track to achieve annual cost savings between $50 million and $60 million by late 2025, and the company has successfully reduced its total debt by $124 million to $1.9 billion. Cash from operations for 2024 is projected to be around $300 million.

Key Takeaways

• Third-quarter sales dropped by 6% year-over-year to $1.1 billion.
• Adjusted earnings per share decreased by 11% to $0.32.
• Full-year sales guidance revised to $4.3 billion to $4.4 billion, reflecting a 7% to 9% decline from 2023.
• Cost savings from restructuring expected to reach $50 million to $60 million annually by late 2025.
• Total debt reduced by $124 million to $1.9 billion.
• Projected cash from operations for 2024 is around $300 million.
• Real estate sales generated $17 million in cash in Q3 as part of the restructuring plan.

Company Outlook

• Adjusted EPS forecast revised to $1 to $1.10, down from $1.10 to $1.25.
• Adjusted EBIT margin expected to range from 6.0% to 6.4%.
• Weak demand anticipated, particularly in Specialized Products and Furniture, Flooring & Textile Products segments.
• Automotive sector facing delays in new program launches.

Bearish and Bullish Highlights

• Bearish: High single-digit volume decline in the Bedding Products segment; declines expected in Specialized Products and Furniture, Flooring & Textile Products.
• Bullish: Steel rod business sales surged; ComfortCore product outperforming slightly.

Misses

• Sales and earnings for the third quarter were weaker than expected; home furniture segment faced notable declines due to industry-wide disruptions.

Q&A Highlights

The company will not change its pricing strategy but is optimizing mill operations based on market conditions. Metal margins are expected to normalize but are currently a headwind. The mattress component sales are down, with domestic production expected to decline.

InvestingPro Insights

Leggett & Platt's recent financial performance aligns with insights from InvestingPro. The company's market capitalization stands at $1.66 billion, and despite current challenges, it has maintained dividend payments for 54 consecutive years. The company's revenue for the last twelve months as of Q3 2024 was $4.44 billion, and gross profit margin is at 17.41%.

Full Transcript

Operator: Greetings and welcome to Leggett & Platt Third Quarter 2024 Webcast and Earnings Conference Call…

Cassie Branscum: Good morning and welcome to Leggett & Platt third quarter 2024 earnings call…

Karl Glassman: Good morning, and thank you for joining our call today…

Ben Burns: Thank you, Karl and good morning, everyone…

Q&A Session: The conference proceeded with a Q&A session, addressing various inquiries from participants.

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