LEG - Earnings call transcript Q3 2017 | Leggett & Platt, Incorporated

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to Leggett & Platt Incorporated Third Quarter 2017 Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I will like to turn the conference over to your host, Dave DeSonier. you. Thank

begin. may You

David DeSonier

objectives, Executive CFO; CEO; Mitch thank of quarter taking this segments; conference both Karl President may of and to the and statements. the and & undertakes and concerning uncertainties morning in documents risks a to events, Products segment; strategies, VP due obligation Executive and contain Platt’s these you recorded Products following: VP call, that forward-looking being non-GAAP Susan conference details or yesterday’s VP to and is available need that release to Director who third materially is the summary may for highlights. Actual including both with differ VP made call. Industrial results and be the Products expectations, supplement with the our call Residential agenda website. Furniture no and President of outlook financial Glassman, without release Flanigan, recorded, press of you is McCoy, of Davis, of remind results you Perry This permission. start morning, & Products provide copyrighted Dolloff, Wendy revise or and Investor Executive the express information year; Leggett part of company we for Leggett morning This A yesterday’s Watson, the slides call the our this remainder of are on have. not in transcribed, and or Matt is or We today statements President Good call for of remarks With of Relations; broadcast portion reconciliations. information statements. questions Specialized our major the finally material. answer segment press Leggett’s replay as this from the address update events The will and the trends, along the will details. IR Group summary and follows: our Karl Investor we discuss Platt any and Those posted Relations. discuss that constitute is I website portion financial and segment set a IR and future Matt number will our PowerPoint for a me

and For a Risk our section summary Karl in and forward-looking please the to to over and entitled of turn release XX-Q’s these yesterday’s information, Factors press Glassman. refer additional I’ll XX-K now call statements. the

Karl Glassman

we growth. participating Good morning, you Yesterday, strong quarterly third call. thank and sales for quarter reported in our

sales quarter added in grew reduced businesses, which and to organic billion, along X% other currency X% growth, and quarter. X% divestitures, Bed were sales raw to impact. offset also Acquisitions $X.XX inflation by but Third related by increased in sales X% Automotive, material strength the with price sales several from Adjustable

earnings down in versus quarter third continuing share quarter $X.XX Third per X% XXXX. from operations were of $X.XX,

last timing along expected, sales steel year, from passing cost. As we quarter the In including higher by than deflation. offset associated LIFO more still benefit with steel higher was the expense and those the from third were benefiting stronger lag cost,

adjusted result, As year quarter declined points to basis margin versus EBIT a decreased adjusted XX.X%. and quarter third EBIT the last XXX in

steel We most lag. cost to have this experiencing pricing XX-day recover of the implemented price recent but increases typical increases, are

should market stabilize, cost steel next improve early Assuming year.

quarter group. the quarter recognize by tax offset the the last benefit, was will third of transaction, was the This remaining From within vehicle a we recognized share During benefit in business the quarter, products which recognized this and $X.XX quarter. tax per total will fourth our be in remainder commercial $X.XX we the divested our third producer loss and footprint the Cushion divestiture impairment small charge quarter underlay of We share related revenue to acquired with capacity a related share a during annual the approximately to and geographic business. adds $XX a million. business Carpet another This rebond per CVP $X.XX production business. per to $X.XX of carpet of

will flat X%, X% were increased decrease Products, on passing in were expense. X% steel very up growth decline segment’s the declines a sales due last including A the we Furniture a the X%, total associated dollar Bed. primarily operation. increase content X%. LIFO with be small related the and quarter. and sales In the Now XXXX increased Segment the quarter X% Home sales offsetting benefit by EBIT EBIT businesses In Spring from sales lower third organic year In pass-through offset margin from X%. was quarter X% Adjustable innerspring decreased a currency the units higher XX% from benefit. Comfort sales Specialized quarter. strength Furniture. in Spring and further with improved, this partially a a In and sales quarter expense Products quarter X% International Products to CVP in to Core than strong, in EBIT The Industrial a XX% EBIT U.S. third be Adjustable units. currency quarter sales In total $X from added Bed beds. units quarters. price in grew to lag by the small in to deflation continued quarter year, X%. Work boxspring segment. a steel products by next Products few over from Raw on total benefiting inflation and inflation, more and were increase dollars Work sales price Furniture with reduction in earlier cost in adjustable Bed and and in X% headwind sales third volume sales with Organic in in sales segments. the X% Automotive Residential EBIT completed third sales. growth the flat, X% organic with and still decreased sales acquisitions. sales due third from growth. increases. of timing Volume acquisition component to increased segment, increased segments, most the by The third in continue decrease growth Bed in higher Segment million the increased a increased sales a segment, sales. growth The primarily margin steel organic Volume increases, the from with Industrial offset decreased total and along anniversary began to related divestiture divestitures steel in reduced sales higher of sales Furniture Adjustable impact wire impairment lower EBIT offset third and including completed material costs, We LIFO sales X% margin by Adjustable X% in X%, decreased

margin CVP sales Excluding by loss on the over now remaining the sale decreased The the grew last higher the sales EBIT offset turn and with segment’s quarter. currency, costs, our Automotive EBIT benefit $X growth-related of currency adjustments business. from X% call and million in Matt. a I’ll to

Matt Flanigan

Karl. from Cash with a million quarter, versus And third working $XX Thanks, was the at everyone. as percentage XX.X%. a capital of quarter of We million adjusted of operations morning, good sales ended the decrease in last quarter the $XXX year. third

operating cash to year full approximate our expect million. We $XXX

$XX.XX, we is current the closing full among growth. million our versus to one highest yield the The earnings, $X.XX require by yesterday’s X.X% as adjusted expect and growth At XXXX. of dividends comprise year, the to August, Dividend the and of our increased share, quarter yields increase million. range In expenditures the dividend to quarterly companies percentage earnings $XXX should XX% per a near about of future price $X.XX capital third a S&P within targeted XX%, uses we cash Regarding should X%, continue dividend of of is is that for the which XXX XX payout, be to $XXX dividend Aristocrats. a approximate of

about During shares the repurchased third stock shares. issued and we approximately our quarter, XXX,XXX of XXX,XXX

and XXXX, of primarily we X.X first million, the plans. For benefit issued shares three repurchased million X.X employee for have quarters

As early stock use top or we funding strategic growth, priorities, After always, if repurchase priorities there’s intend cash. and our acquisitions. cash to cash rather of are than still stockpiling generally these available, repay debt organic for dividends

a standing to authorization million from have year. each to the repurchase up We XX board shares

timetable However, established. repurchase those or has commitment been specific

the Our long XX%, target with to We end our standing XX%, near and quarter higher the financial of ended capital reflecting acquisitions. net debt XX% to of base remains repurchases of range very third net stock working strong. investment, capital

companies ended and debt-to-EBITDA assess on our to of monitor at return X.X rolling basis. trailing a XX comparing quarter that also with shareholder our times three-year peer EBITDA. adjusted the by our total We debt overall We months performance

TSR target Our an over the XXX one-third per top year. term, require TSR believe the in of of we the achieve XX% to XX% will long S&P average which is to

of TSR places the we on the end the that For S&P so XXXX, compound and that will of per three-year far us have generated annual December period performance year in middle XXX. XX, X%

earnings sales sales raised to announced yesterday, or we As and to X% to X% anticipated guidance. our the Full end we last year billion over are year. $X.XX low $X billion be up now the of

XXXX and over small impairment adjusted continuing charge, a in I’ll guidance EBIT share the share the divestiture, gain $X.XX. a Adjustable single-digit by Raw Based call Divestitures the loss include adjusted benefit and related per approximate tax Spring, turn Full will earnings Work real is of $X.XX David. $X.XX several from from to those pension recognized Full Automotive, items, strength largely quarter. growth. is be $X.XX with a earnings to growth Geo benefit be mid this should Bed, now estate to also guidance material year With year from in guidance which $X.XX. acquisitions. net settlement divestiture along CVP including should we back margin and International expect an increases fourth full both operations charge, offset These for from a now now range, a per anticipated year CVP anticipate Components. to We EPS the Furniture volume upon price add sales comments, to XX%.

David DeSonier

your to give one and That ask allow to the remarks. participate, we you prepared then and thank for our to everyone you we opportunity will order an participant. to In will answer request it next concludes glad attention questions. be your We only question that

begin have answer you additional questions, we queue will those welcomed to Sherry, well. and If ready the Q&A. the we reenter are as you’re questions to

Operator

Please will with this we question-and-answer you. Suisse. conducting state question Susan be first from your is Our Maklari Credit question. [Operator time, a Instructions] Thank At session.

Susan Maklari

Good morning.

Karl Glassman

morning. Good

Susan Maklari

been you bit I realized? in guess, that the first that some there’s performance producers little out auto nice what’s the of to there just and you’ve growth a bit and seeing you’re talk market. around know what U.S. of really in had concern you been a that little is some on question Can going in I

Mitch Dolloff

X% about see in Mitch think change continue we off This see the for today production season. changes Yes. having in the and those quarter. Sure. few shutdowns North where there years. real third But over Definitely, some North the we We the plant of last is is question. America America didn’t those Dolloff. summer in Thanks for the was some

I down the long as to that’s a think production the balance in at vehicle dealerships. positive ramped probably inventories effort in an OEMs run, the thing

that data year-over-year. the production fourth quarter – effective, the see August. And we vehicle down America are, about then from shows down North that see the think forecast we’re coming – I X% for that I seeing to indeed, see been forecast latest has be inventories we

more unit then, somewhere But that the definitely the year see quarter forward. forecast third than And paying So longer year-over-year around X.X%. X.X%, full term going in relatively we the down is flat. production puts

but forecast shows probably number – longer a latest that But X% that’s the XXXX, so, remember at increase, that, but flat. the term, of out unit high really vehicles. the relatively during So

million global at a very in produced we’re vehicles with a we’re that. happy remember, America, business. So then year And you much if North XX.X

I So Asia healthy. still as look a as very See the industry good in if Europe, we well. across remains performance whole, think it in

think major I and to our the determined And So X.X% were around pledge long-term market. CAGR again, that what pretty consider would we to continue are looks for we solid. developed in markets, outperform

increased from and content so, but participating different product we’re We only gains categories not continue unit vehicle growth, do in. that to

Susan Maklari

terms into in what volume out could more comes looking some these there? of sounds the all that just could That’s those you steel appliances guys little be storms, prices, cars of a very you following like to And on for have and maybe what XXXX? of sort there Okay. as we seen scrap then you And talk Can helpful. bit it and you��ve that get in to pricing market. mean what that

Perry Davis

Yes. Davis. Susan, this is Perry

in coming. go in And back And considerably the of probably reversed. there through rod totally days were side period, settlement within increases business. along were in If prices the scrap, we the fact, the in part the three quarter, of saw latter end you hearing the September, towards a rolling of of scrap already chatter higher we around decreases but lot some some announced

compared the So of the year, to scrap to actually through the stable looks for right the relatively now, market most this be remainder part, year.

I always, a put change caveat can on as quickly. that, However, that things

Susan Maklari

seen have you as…. well Okay. rod today Rod And elevated? as

Karl Glassman

has – I Rod, October. did up go like said, in

marketplace off as stayed I down. are seeing some the have scrap that We said, rumblings coming in stable prices, like back of to

Susan Maklari

guys. Okay. Perfect, thank you

Operator

Our question with next Please question. from your is Raymond state Budd Bugatch James.

Unidentified Analyst

guys. actually Hi, maybe looks What half. will customers a first little my starting indication, This it thank performed were exactly Units filling you taking like for saw end of for of touch this question. well. on market’s as stabilize but Hope than the I from just Bedding. quarter, any bit? your I everybody’s is wanted are kind first still Bobby, we Budd. of for they kind you And doing better that to finally type to hearing what in down

Karl Glassman

seems little a Generally, the the Yes. quarter. better category. year-to-year went like of We our on we see business did as through Bedding comps strengthening in mood

of about on were the we last slightly and then August June, bit all in not business still better, was improvement And As I although September and just a to began call, from at good July. see in talked down year. considerably last little

opposed that cost, cost. that lot Edge could a dealing customers, they content a customers XX%, for our the some springs some doing gains foam for increased to input One will year, of that, XX% and with that as many serve because us with just our cost, seeing But in increased we’re of of simply issues be the of the are Quantum a is to with And heard, right other rising it things of can’t foam foam. we’ve we’re way, the layers absorb. regards with chemical big help our out increases upholstery to to of of of now are see to interesting made those lot the by there, cost and

some retail. So through to I those see be to costs would expect passed of

Unidentified Analyst

through does foam Appreciate was the uptake second would Edge, if actually The the that. part come my Quantum we higher see of that in January question. that be And prices because Vegas probably of that something the Las is they to way. adopting manufacturers on that product as and terms move the year? In do like the market? the the moving more of basically towards say, rest something Or can of fly, we

Karl Glassman

Yes.

of times January. those For it lead the it larger producers, would Those probably, be with tougher going fly. than on rollouts of to set, at would say they’re introductions longer what kind do They’re be in I for to are the this.

escalating. for is However, some foam they’ve known pricing time that

because seeing about category. overall of So the the time. July market call, were those at content expect I to Bedding out was in penetration hard we we but were poor so in conditions them to Quantum that back continued the remember of gains, on see Edge the pull were talking fact we it that the macro

quarter, benefit to Now associated we the from began side on third with gains in Quantum content see really our Edge. the

Unidentified Analyst

And quarter the then Thank and out? expect modeling and adjustable have base into about us towards growth, timing you new how me, of maybe fourth kind programs the for sales the more me on the think lastly can on XXXX through of rolling of update programs? you help new to growth? the we Or Are rod just do been programs end of that kind you.

Mitch Dolloff

ramp roll to think Mitch. that Bobby, this up. those some select continue the continue programs out business as I to Yes, of is see programs we’ll

I So something for us. that still dynamic think, is it’s

Unidentified Analyst

programs, or independent adding the way new that I about based you non-select retailers? is to of doors SKUs it on the is retail growth Okay, in kind How ex-select do specialty – think that, driving?

Mitch Dolloff

through that continued manufacture them it’s then and some the growth and XX penetration, I program. bed think, accounts kind major we think import the I of of some below at them are also and that of service retailers specialty ourselves group, are Well, programs of some at patch top we our additional

board. try have right across of So it’s We and kind the the retailer’s solution for really need. different the

Unidentified Analyst

on I queue. appreciate Okay. the detail. and the jump Congratulations I the back will result, all in

Operator

Hughes question question. SunTrust is with state & Keith Humphrey. your next from Robinson Our Please

Keith Hughes

you. Thank

had the revenue business, there the question in quarter. First still growth, some Furniture you on issues nice some steel

move steel you lag? furniture of the into be still this As you positive a margins fourth, kind think you do will do see there’s turn revenue in gain, or year-over-year

Mitch Dolloff

different dynamics the have Mitch a Work we business. of again. couple Yes, think in Furniture I

very We’re pleased there.

was continue quarter X%, was by and were then drag improved steel about costs. impacted volumes and unit real see profitability. We higher to Furniture the off more The Home volume in where on that gains

we’re pass of through steel So some the starting to costs.

that to that into the So continue and recovery we will improve see quarter expect XXXX. fourth through

back that be in So territory that the mentioned the go we’ll you we’re further cost optimistic of XXXX. we as into

Keith Hughes

picture a just of big demand. And in Okay. question terms

into As across third saw the doing is guidance fourth mean, to quarter? you than expect that something better your you the or I look accelerate in we businesses quarter, better… your

Karl Glassman

Keith, actually that good And expectation going fourth of basis. of to see I sequential through. is the that pricing dollars sales you’re making in rolling bit from stronger is quarter what recognition the reference a a think, to we’re the

impact be spectacular headwind say one should not But going have content as we’ll, growth. a in said, gains, of because we challenges. that. the But Auto this of little unit there’s stronger continue. we is Mitch there’s North So won’t business we’ll catch-up the American to that have

Give that us much Bedding the goodness, get from across going continued my and pretty is the really top the easier well. company benefit the a with better. of the Admittedly, it inflation growth all forward. gets a little But pass-through We’re pleased of comps performing Leggett. U.S. line

Keith Hughes

Okay.

to That’s – you it’s So expect, price. accelerate? price

Karl Glassman

Yes.

Keith Hughes

you Thank Okay.

Karl Glassman

welcome. You’re

Operator

Pets Please question. is [ph] your with question take next from Paul Stifel. Our

Unidentified Analyst

taking for color thanks appreciate the question. my industry and Automotive your outlook. Hi, the on I

mean could business? the double-digit – mentioned term X%, growing about does think guys You CAGR be you growing this that that long still

Mitch Dolloff

is we’ve Mitch than seen that, Yes, our stand faster statement market. that grow run, basis be and again. long In by capable the doing we’ll This we determined we’re We that. X,XXX we to of do. points to still believe continue the

Karl Glassman

on the XXXX have recently and confident awards that that on historically that have we based the programs received. visibility based taken we’re through We’ve awarded position we

global basis of or over points, would, XX well good XXXX. I think long-term really to The basis thing Mitch through committing now, good visibility. that Mitch have sorry, at Automotive is we continue X,XXX I’m least I’m points build

Unidentified Analyst

trying Great. the much. Is down volumes And then mentioned customer your base? customers wonder tracking? an back if gaining could what to Spring industry that as maybe You provide industry I’m in your market. you little are is the more the way there, if share versus to just Bedding are a improvement or market weren’t Or customers doing? you a is color lot. that

Karl Glassman

that. to think the I more lift two of sides to bit Well, In market. an – overall I’d the just U.S. it’s there’s a a say a function of

If South our increasing gaining as made in business, particularly at share far strides in and and you in have America, business international as geographies. Europe some our there of look we those both

Unidentified Analyst

Okay. all Thank That’s you. me. from

Operator

Yes.

Our Gabelli & with Bergner from next take Please your is question. Justin question Company.

Justin Bergner

on in I taking Good Bedding. of To morning and questions. the issue market Thank just you. wanted share my start, touch appreciate to

of and and you’re trend? mentioned South how you do in the sort you U.S. the changes the in of market in also America. towards share question measure some You in were share last sort of box given on think dynamic share Do you Europe that gaining the that that gaining and

Karl Glassman

we Maybe quite who September, lot on Bedding are marketplace They’re has our Comfort talk of those the and label continues is we’re to legacy and for is U.S. talk products and bedding that make Core. time, specifications There Producers that talking innerspring, look quickly. to to that of XX.X% for our year-on-year. Core believe look there Comfort simply our manufacturers them. But we that business, about with the deeper, a at we business. obviously that And a growing brand their in us in to the produced obviously, but some accounting of digital stable. Justin, five-week is five-week quite units up you OEM we generally lot been if in of participate products regards sell market position growing for over put the for grow don’t degree who relatively about those primarily share and Comfort month alternative was make you of the a and do the producers. share, but in not specifically we’re Core. that, system. A a specific producers we standard the is category period a about while if But us, quarter, our are, little in

Core which XX% of just of share an in continued ramped innerspring with Curious by that growth to for selling Comfort represent of and higher is Our the me up the good average prices. about the indication is us. category,

Justin Bergner

it. got Okay,

seems making it that and suggesting whatever, – that is what you’re off be like alternative the bed-in-the-box, So from you’re might created guess, making of share gaining headwinds actually channel. I up you’re outside – for

Karl Glassman

the Yes. layer. we’re I It’s other configuration, produced to in for was not gain of but conversation traditional gaining the Quantum at content accelerate. hybrid environment, difficult Edge in reference definitely the to the earlier, us to, the significant are share bed-in-the-box in gaining made that Bobby to top because bedding that but with, U.S. Perry per expect than that content. in And conversion inflation, we the we micro-coils absolute only think this foam bed, it on domestic based And

Justin Bergner

Okay.

Okay. Switching gears.

quarter. that made, You couple ago, this acquisitions, you that two little made provide us detail? a quarter just one bit or small mentioned Could more a you a think one you I

Karl Glassman

program North U.S. the Carolina large a XXX%. pick are running regional to large fortunate enough very one we in at recent were a cushion Yes. that We from of The near most were carpet was capacity one retailers. – acquisition up

techniques some in were needed we in that some there fill innovative industry well. able and to So capacity manufacturing pick as up

the a that company been acquisition Work decorative tubing in has that Furniture was into pleased very exposed based produces acquisition. performing we’re office That have acquisition So made Michigan The earlier very, well. year business. really to

them to So we’re Leggett as of of family. the pleased part both have

Justin Bergner

like Okay. on end That’s side, Work there market well trends you’re that, behind there’s current quarter’s as helpful. that any meaningful there Furniture otherwise? inorganic some the Obviously, in seems numbers. or been deceleration And then be it business. it lastly, Is factors including on some the driver

Mitch Dolloff

This is don’t I Mitch around again. more so. mean, think really bit X%. I is forecast

have We continue think, to, growth, I seating on finished or side. particularly the collaborative strong goods

So business the we that remain optimistic longer term. in about

Justin Bergner

forecast And you X%, of is the that or is for growth that sort market? of the

Mitch Dolloff

market. the That’s

Justin Bergner

Thanks for questions. my Okay. taking

Karl Glassman

Thank you.

Operator

question Our Hilliard question. Please next is from Joyce Lyons. your take with Spencer

Spencer Joyce

Good morning, for thanks call. taking the

Karl Glassman

Good morning.

Spencer Joyce

quarter covered so items years. slides, at from A margin that seen, I’ll mentioned EBITDA so the I second. to if some least value I’m for know couple And hit products my some looks one-off mid-QX for specialty the specialized perhaps have wondering about want And brief we to third QX and be lot try by there you I has the the and into on a past the of QX? Adjusted read if at growth-related far, segment spending like we’ve through some us for model, there. were XX.X% you. lowest last or XX.X%, or cost talk growth-oriented some

Mitch Dolloff

so much this fixed again. mainly and people. include Those that right. making third related us you’re equipment, have morning. are talking to Those tooling about year-over-year. growth that we’ve We been in growth investments our future impacted Mitch buildings, This we’re in support did Yes, is the costs overhead that quarter

China, new a an in new one have in under we up have Mexico way a example, ramping For Canada. in plant or expansion we

we’ve those All of are things new programs won. support that to

production ramp and time. We have up programs over ahead those of those then full start programs hit volume and ramp to capacity up that of of the

some little So time. a it does get choppy

think volumes I up than it expect as that bit third yes, little start that to lower improve was a been and to fill ramp see that historically and capacity. quarter those So the margin we has

Spencer Joyce

Okay.

confluence items been few investments of you’ve So guess, kind of some fair making over I similar to maybe is the just that say hit a there was it obviously, years. past QX?

Mitch Dolloff

right. that’s absolutely Yes,

Spencer Joyce

on like of It most Okay. bit kind then kind you importance if look the the And a that really has trends over about far in segment. specifically goes, follow-up the here piece the segment qualitatively, next just and that of of seems more I’m years? on seeing for dominating can kind over been and and of out year call Automotive wondering conversation this a of Specialized the strategic that bit as either handful a side, we for Leggett, you’re talk little then little as aerospace saving as is this there

Mitch Dolloff

question. Great Okay.

So, no.

lot of year to us for – right a bigger, right? I industry this to the size spot good the that the business that small see performing think that Automotive the finding the for work the I in around couple there we do much program especially we’re and of are strategy of I that – are grow some a and and really Aerospace to coming so out we future over small just those more that we a with organic wins talk think going about that feel well, seeing we are and is because a side. on today, relatively few good continue time. programs remains us acquisitions We’ve done years think fabricated and you’ll And we’re over we’ve I on done about. business us starting last but more hope really acquisitions forward the in particularly

very remain positive business. we aerospace So on the

Spencer Joyce

and the on had. Okay. congrats Thanks the a nice all quarter for calls That’s here. I comments after

Operator

your with Please Monness, & take Hardt Co. Herbert Our Hardt from next question Crespi, question. is

Herbert Hardt

aerospace. have question also on I morning. Good a

deal point? a still a expansion few focus You along folks believe, that since on at acquisitions time, spent for more, the five, great if I way. of a And not and least have made at is this

Mitch Dolloff

build-out This will think a that expansion for pursuing in focus that us. competitive and Mitch is that the we participate some this – again. as can definitely in we is we’re have our Yes, in attractive areas market, advantage for it We speak. acquisitions we

Herbert Hardt

Great. Thank you.

Operator

question Peter question. with is from Please take Piper your next Jaffray. Our Keith

Peter Keith

Hi, you. for of questions good Couple morning everyone.

your of the hurricane hurricane the impacts segments, trends the some quarter. of before those kind First and during on after maybe saw hurricane progressed any U.S. events? off, and disruption during dynamics on or if you how Curious

Karl Glassman

time, and in Florida impact. disruption. retailers first, a points try it quantify There was no to minimal Texas in, then literally Peter, weren’t large to functioning for there probably effort The some few were hurricane probably days. bedding We’ve a pick made part term, see Carpet not up picks you’ll seen we side promotional a in We of of on which industry bit premium have saw little up little yet the generally, longer the the Cushion. Bedding that of bit a up. pick

impacted almost our sure, and impossible and our customers’ to So customers quantify. disruptive people our for people,

Peter Keith

like Okay. Fair – looking back your Bedding we’re Domestic looking unit challenge a through of you a segments enough. where in then price you specifically customers? Or passing And full do Are you you’re getting inflation, difficulty increases? any from bit any are perspective from of have Furniture. continued push a position and the having at as a and your we’re U.S. been some couple have

Karl Glassman

U.S. deflation connected from in – the not inflation to hard program-specific a is In steel Home a pricing industry do always Yes. been Furniture not little Bedding, so different the at perspective. timing pass-through or not to a bit are we there’s challenge is conversation, the of there additional those never all there’s is – time that say inflation have that in a demand soft that because difficulty but a dynamic there’s China inflation. in it’s – recovering of deflation or that an And has little

passing had inflation. operations in Asian So hard we in spike as a time certainly the through Mitch said earlier, a

time. back the somewhat two-month regress and that that same makes steel pricing XX% have U.S. that of steel to it inflation seen if steel U.S. has August. July of less steel increase we’ve Now started perspective. that there period ability some some pull over We been been flat we in a inflation. is now recover from has China an in saw steel at flatter, a movement of sense, Chinese there’s Yet where than to in a in

Peter Keith

points, put a on the mix-wise of just to year And the Or there that just getting follow function question that’s picture you picture you’re business, margin of some big XXX something at declining Karl. inflation we’re is basis the last were pressure top guess, to and, Thanks, the starting Okay. it is margins if on I margins looking structure? from overall big down EBIT so down of on is, on maybe wise, inflation?

Matt Flanigan

recovered. that the level I in deflation received through margins extremely deflationary XQ company XQ XXXX, high yet inverse and because think that our at in to where fully the we’ve a were not the have we situation were inflation the a getting inflation answer absolute and we not having have past versus customers deflation XXXX yet environment it’s of our benefit

point just really issue. it’s time in a So delta

Peter Keith

XX% Fair tax year implying maybe XX%. Okay. kind On your question, of like rate we One XX%. enough. Matt. math, my for looks for you’re to now last had It at the full

guess, to it So lower of from there. questions Did for I the the the year? two step down end And tax guidance as back half exits the of the rate? the race high only will

Matt Flanigan

are income the from stepping coming Well, generally, down and a is associated function that. what the with where again tax impacts of it’s once a bit largely

fourth some a the it’s course, that this help. tax quarter the the activity a of And for might noisy, benefit and in quarter. happened So prospectively be in little third bit bit of of

be currently as the around about thinking for to look rate tax next XXXX, our tax sit you we’re XXXX we’re estimating we’re here happens something today, Who knows XX%. what reform, with but months. XX As XX% what will to as we ballparking that’s

Susan McCoy

the quarter second September, Peter, that would I’m look. we to two The last our assumption, rate the XX%. steel add that couple know steel more more the you full confident kind little a is what year progression. and volatile of upper tax would been bit XX%, early allow we rate, the also about reassessment one-off be put for the might at tax the tax from going onto our the kind the table guidance quarter tax We a of and you think, of that on when confidence adjusted what range from given it’s I for rate in and on we’ve quarter the to if sit third the things volume. months change And I in months right about that down we press our getting that to in moved when of a I have of XX%. we release for now, can. of extent market in not the tell adjusted fourth kind can half confidence next volume to a was us it’s change based – XX% have announced It’s perspective assumed it’s would we that where rate September of release around a that how an back

Karl Glassman

agree X in but we in thing And September said, a Perry to what on but soften volume, to Yes, we Susan very X do. different XXth, which on reference we that assumptions we dynamics to forecast it had to that But release. significant on what over is scrap the big – – was our going September were expecting to when scrap completely is pile steel made is to inflation the by with it’s experienced me we’ve and her, for that steel knew made versus the usually, October. I experienced September that print we ability By some. inflation very, softness no understand,

do. global So difficult That demand forecast. it up to the really decides is what is China industry and is manufacturer, to U.S. what looks very, very steel to steel like a

Peter Keith

Okay. to luck the Thanks color guys the year. to good rest and the of all

Karl Glassman

Peter. Thanks

Operator

[Operator your of & Instructions] Keith take We SunTrust have Humphrey. a follow-up question. Robinson question Hughes from Please

Keith Hughes

trend the you’ve of just spring with about for and bed-in-the-box. what kind you’re doing can Yes, you a growth work box, mattresses seeing. know in to of just out back there in you done are some turning folk I talk where

Mitch Dolloff

kind we’ve the couple where players Keith, of longer in areas Well, yes, got term of market. a established

interest to in seeing We’re – diversifying see product lines. continuing a

one lines. on, the are bed that coming of Some now you out people multiple had with as know, early

are also some of any those for sellers. be have Other that, of an are mattresses products Internet customers. type sales and that of market participate the add-on We that foundation OEM seeing for developed UPS want products folks in the can an increase the all of in those it’s specifically of as to also and shipped, number purveyors to large consumer that it, and both manufacturers a heavily Amazon, into Core. products of to time. large, direct products going innerspring you earlier, BXB, those We’ve some been on the for boxed heavily, period got and I manufacturers said for case that’s producing And Comfort large – name anywhere skews from boxed and

Keith Hughes

you. Thank

Operator

Okay. have remarks. back will to turn management the the Ladies for [Operator session. call question-and-answer of closing and end Instructions] the like to over we gentlemen, reached I

Karl Glassman

I and on do it’s your will the New time again appreciate Year. very We X, think February this you after we much. Thank

Operator

Thank you. today’s conference. concludes This

You may disconnect thank your for lines and participation. at your this you time,

Leggett & Platt (LEG) 27 Oct 172017 Q3 Earnings call transcript