LEGGETT & PLATT INC Q3 FY2024 earnings call

• Karl mentioned weaker than anticipated demand in residential end markets and headwinds in Automotive, Hydraulic Cylinders, and Geo Components. - Restructuring plan on track: Exit Mexican innerspring operation by year end, close operations in Specialty Foam, adjust adjustable bed location, and restructuring in other segments. - Strategic review of portfolio underway, exploring potential sale of aerospace business. - Focus on strengthening balance sheet, improving operating efficiency and margins.

Bedding Products segment: Volume down high single digits (excluding higher trade rod sales, down low double digits). Specialized Products: Sales declined 6% year-over-year. Furniture, Flooring & Textile Products: Sales down 4% year-over-year. Revenue contribution details not explicitly given in the transcript for each segment's percentage.

• 2024 sales expected to be $4.3 billion to $4.4 billion (down 7% to 9% vs 2023). - Full year adjusted earnings per share expected to be $1 to $1.10 (down from prior $1.10 to $1.25). - 2024 full year adjusted EBIT margin range expected to be 6.0% to 6.4% (down from prior 6.5% to 6.9%).

• Macro backdrop challenges impacting demand in residential, automotive, and Geo Components. - Volatility in automotive market across geographies. - Weakness in Geo Components business continuing into fourth quarter. - Potential impact of retail bankruptcies on home furniture segment.

Q: Regarding unfavorable mix shift and its implication for profitability in forward quarters?

A: Tyson Hagale explained mix of trade rod and other products offset declines, but higher mix of trade rod and wire tons with lower margins. Longer term, volume remains key headwind.

Q: On auto programs shift and specific efforts?

A: Sam Smith said new programs delayed due to ICE to EV transition, etc. Efforts include sizing headcount, using automation, moving programs closer to customers, etc.

Q: On CapEx guide for fourth quarter?

A: Ben Burns said $40 million more spend in fourth quarter for rod mill maintenance, new programs, and automotive new programs.

Q: On bedding consumption and imports?

A: Tyson Hagale said imports slowed, but had overhang from end of last year, with e-com activity in third quarter.

Q: On segment margins expectations?

A: Sam Smith said bedding margins down ~200 basis points, specialized products slightly down, furniture flooring and textile flat.

Q: On home furniture backdrop and steel rod business?

A: Sam Smith said home furniture impacted by retail bankruptcies and comp issues. Tyson Hagale said steel rod mill is efficient, not a pricing strategy change.

Q: On automotive volume visibility?

A: Sam Smith said expect pickup before Chinese New Year, but magnitude still to be determined.

Q: On mattress component sales and ComfortCore?

A: Tyson Hagale said domestic market down more than overall consumption due to imports, and ComfortCore has performed in line or better than industry trends.