Leggett & Platt (LEG) 27 Apr 182018 Q1 Earnings call transcript

Company Profile

Participants

Susan McCoy	Vice President of Investor Relations
Karl Glassman	President and Chief Executive Officer
Matt Flanigan	Executive Vice President and Chief Financial Officer
Perry Davis	Executive Vice President, President of Residential and Industrial Segment
Mitch Dolloff	Executive Vice President, President of Furniture and Specialized Segments
Dave DeSonier	Senior Vice President, Strategy and Investor Relations
Wendy Watson	Director of Investor Relations
Susan Maklari	Credit Suisse
Budd Bugatch	Raymond James
Keith Hughes	SunTrust Robinson Humphrey
Daniel Moore	CJS Securities
Peter Keith	Piper Jaffray
Spencer Joyce	Hilliard Lyons
John Baugh	Stifel
Herb Hardt	Monness Crespi Hardt
Justin Bergner	Gabelli & Company

Call transcript

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Operator

Greetings, and welcome to the Leggett & Platt Incorporated First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer-session will follow the formal presentation [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Susan McCoy, Vice President of Investor Relations. Ms. you, Thank begin. may McCoy, you

Susan McCoy

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

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

Karl Glassman

call. morning. you Good thank And in for first quarter our participating

service begin his thank prepared Dave want I conference our call. last for remarks, to years my and Before investors. DeSonier is I of to This Leggett Dave’s

has retirement, and joined his transparency. Dave Thank winds you, he call year-end Leggett organized on almost our outstanding done exclusively investor He communication of job Dave Dave. first an down As facilitating our investor strategic in be focusing through XXXX. early relations planning. will and

are We start to our XXXX. very pleased with

in billion. growth, we partially material As through Automotive to first positive year impact. strength other and primarily X% grew to increased prior grew X% businesses. soft Volume demand divestitures. X% increases sales X% Bed yesterday, by added currency and Organic $X.XXX in raw related quarter sales Acquisitions offset offset Adjustable largely also sales several with by price reported

in billion billion more inflation detail to down EBIT pricing our we $X.XX, $X.XX are $X.X To discuss our higher and raw margin guidance guidance with costs. the were to reflect to lag $X.XX raising declined in Matt sales first this call. to primarily the continued last will steel to share full-year $X.X per inflation. EPS quarter later we lowering commodity $X.XX. XXXX and guidance from the year earnings passing quarter experienced along First X% material from due in EBIT

consumer outperform strongly as in the In mattresses our XXXX continued Core encouraged perimeter continue growth as market the direct factors gains of to both to innerspring are content of Furniture our our to total traditional units producers, Quantum over Quantum percentage quarter making adding benefiting units more units Core in contribute the in collaborative first share we of from Bedding their increased to is remainder customers of and more Comfort included In XX% Comfort several and seating Work are We mattress and customers should soft of about gains a with growth and and their business. produce. Automotive markets. XXXX Edge. springs to innersprings. Bed Edge the impressive US, Adjustable are

mattresses in adjustable as customers. continue Edge production consumers, to and for streamline Quantum are and growth preferred this by expect beds with Comfort Core better We articulate our

from As declined again XXXX quarter and in first continuing in late margins expected date inflation. increased costs to here the have to up steel in further Steel are accelerated May. go expected,

these onto to lag our We pass approximate our customers in increases are of able businesses. after the majority an XX-day

now continued has into we the inflation quarter. second margin compression since expect However,

margins the in stabilize second half year. should costs improve of Assuming the

duties Furniture our for and in up On seeing rod the most at varying the the product, Flat of our sheet our US. product inflation of businesses, XX% about of two-thirds into the which but of of internally tariffs degrees industry purchase rod we mills type steel, produce. to consume and use of in input, and where are products term end are since other for we steel we our are businesses of majority the XXX and Long produce wire cold steel is Home are product, our industrial rod XX% of several in frequently wire, and in subject steel The since end the wire on our steel steel XXXX. flow steel are up how the XX% announced the on other Section through long affecting rolled the costs heavily we which segment is products we asked we steel, XXXX. our recently operations. Depending

along steel pass these the subject to cost able increases pricing customers are our we mentioned, I to As lag. to

in fully business, to as inflation ability are in competitors furniture especially steel China, costs less our their steel have through produce where lower. our home products pass we However,

responding in structure and steel the US cost by production the we our cost. cost are increases in to Chinese lower the of advantage our flat input Given take moving additional reducing to operations recent

As the last segment am no since longer those slide quarter's I in call deck a conference results giving reminder, from release on detailed narrative the and press website. we yesterday's post investor relations are

Q&A We the the you discuss end now happy will the call relating Matt. have of questions to the be call. the I during segments turn will to to at over any

Matt Flanigan

our expect is morning ended supporting was working good operations seasonality Cash with Thanks million first in-line in reflects increased investment normal sales and and quarter the from with Karl, inflation. about We of XX%. $XXX for $XX working the higher percentage of capital the capital should and $XXX to quarter, everyone. which million. as cash adjusted We year. should approximate expenditures dividends approximate our sales cash operating annualized million and full-year a require $XXX Capital at now million

organic Our top priorities acquisitions. available priorities, use these cash of and funding growth, remain to still is if dividends, for we cash there After repurchase stock. intend strategic generally

investment, acquisition our of and to very XX% with XX% capital of remains net strong. activity. debt net base financial repurchases entered working the increased targeted to first long-standing range capital within reflecting We XX.X% quarter stock quarter Our

EBITDA. and debt months the quarter times debt-to-EBITDA also trailing We monitor with at X.X entered adjusted our XX

XX% billion $X.X to raising XXXX. mentioned we billion, full-year are to $X.X guidance sales to Karl versus X% our up As

PHC unit mid The Bedding, from to Work Components. add to single-digit material and We in and January acquisition Bed, our also related X% new Adjustable expected strength Furniture, cylinders sales is should expect add growth Geo business growth. sales increases growth. to in in volume in impact increases Raw hydraulic Aerospace price Automotive, currency completed

EBIT However, due lowering to steel $X.XX $X.XX nickel a cost XX.X% the approximate guidance to XX%. share, Based this margin XX% to between tax This our full be largely XXXX range, are a our share range we year impact per of assumes full we of per guidance rate. inflation. upon full-year earnings anticipate an guidance to also to ongoing year

earnings, January retrospective first turn back comments, not we With do any standard to XXX, revenue expect X sales, our impact materially standard call ongoing we results year recognition flows. This it the over sheet new to did Susan. of will cash new the those this quarter on Lastly, modified net impact method. balance adopted accounting and our not ASC using I the on have material or

Susan McCoy

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

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

Operator

Please Suisse. [Operator first Maklari your question question. from Susan Credit Our of the Instructions] line proceed with comes with

Susan Maklari

you. Good morning, everyone. Thank

Susan McCoy

Hi, Susan.

Karl Glassman

Hi, Susan.

Susan Maklari

give are businesses, some third to that through we upcoming to given where sort and increases, of some through sense pricing, idea is year you of quarter question to we the of just last just this started but us the know first think about of around different price the put that should inflation of and started expect terms across how in that of My flow maybe we you you the I can some as that in quarters? see, the

Karl Glassman

steel you a through weigh that year, year. a what XQ and first last product some inflation in we this November related at October swing our But that then were take at in was relatively basically understand in XQ swing. in in why we of we Karl. last Perry to That and we it specific going Steel on call significant saw XQ. will I Susan. correct and on are is is high-level saw Hi, folks a Mitch weakness to to will This take February off, the ask spike have of in passed categories. guided I margin is flat in and December. happened

the the anyway, that talk detail, experienced since every inflation in timing the experienced them that scrap-based of the virtually heeded and guidance advice; on didn't that April, inflation when business. and will that successfully but Mitch run we have didn't. anticipate Home analysts Furniture has full-year of gave some we to passed What into in was significant product. February But some into March steel we is in we ultimately about of we in through XQ recovered. Some have

of inflation. May. inflation. place by July have latest. another scrap expect XX in passing of Right about we be expect now to don't that in in that some will we round that trade at through as steel are assuming is we That stability sideways We It process its the

seen stabilize. We selling and prices flat the have long

but seeing are rod, in amount continued some slowing. of We increases are increase the

up So that our we strong good to current steel, finally thing That forecast us forecast we half. would be guidance why for July. is showing based in catch are are stability which back that in seeing is some on in a a very really the

it do, we some we increase forecast. is probability will round. another there If fact see Now our will LIFO in

We will have significant FIFO gains.

steel inflation compliment listening this Our does And in Passing of extremely going is type environment. to well that this difficult. are I'm mill employees through to our call.

that really been it. historically. really, anybody are has And good people Our that at proven doubts wrong

So Dolloff A - either add? But you should we just our either a Furniture. cost stability structure. some need Maybe bit had one around Perry of little or to Mitch, anything comment in Mitch Okay. I Home

I don't think really we have contractual dynamic slightly we pass where to the a than different is on price basis have increases it along. a the Bedding side,

but the of have experience through recovered. year, falling So, due in progress last of whole This prices have we steel didn't increases, lot to through pushing with the we made passing in the end that price luck some have not year inflation fully did at Asia. a we but situation

in as footprint in unprofitable we business. can global assets manage labor we That know We and and China, we that US in pursue things will will where in the to the aggressively costs being to can some we both do are price the the you effectively and we to working said long in - steel, necessary optimize term not probably run. increases to manufacturing those have and ourselves, all transportation hard China US both help the over long continue are our maintain there and

now, as expect circumstances in flexing production China products But we US right capacity be producing these in that us vary. more factors overtime the shift towards So, will our China. and

we’re that, Beyond at aggressively and overhead our to and approach operating reduce also costs. looking structure

the will the we us things that in the year that puts We half or for are that so. That think as half. of we’ll of will position profitability in a be also some making we if more home from good progress there the think furniture grant standpoint when first back the us stronger have experience

Perry Davis

the case, in increases If nearing Susan, rate further I’ll is Karl increase regards early with the we of the for is wire just I’ll general, May. July. comment be there. Karl’s echo anticipate programmatic do to rod pricing expect appears industry may this echo, Perry. inflection our those increases; in by that we that just as with slowing, But caught is have said up we the and to and formulae both inflation point that it

Susan Maklari

very helpful. soft, Core a the It on gain share get with are you. to overall just to wanted more little Edge. a but maybe that’s some I the you’re sounds Okay, color the Thank And, little then units continuing Comfort like bedding definitely bit Quantum product and side.

can the know been maybe moment that just what end of going us lot just give there what’s some So, you a sense sense in of has markets means I a and there, you? of on for then

Perry Davis

in changing a there the the right, terrible weather those areas it’s kind of first of hampered continued and on of And, started the lines, conditions shopping some and product part in February. that the seen Karl probably to had we are US definitely. now extremely April, Yes, the year out have I at three factors January off a look through and of weeks, we slow as lot certain you’re are part did yesterday But we X%. And, if latter we’ve up you complete and first the to and through business checking weeks quarter. then pickup about the three some -

have to don’t seen don’t some trends their customers in why floor market any had I market. see and a there if been I ever we US our think after now. is and a be time So, traditionally strong it a to holds bedding not wouldn’t to that any able But January April the month lengths where seems products this reason quicker.

of years. season. to to ahead traditional looked floors that But well it’s lot in of others. some compared have be to a they those curve all there’s place a on Day, selling do in important work Memorial past the by So, already set, components the And, still kind they in

course about Quantum with I category I those other as for past this content Edge. our as generically Quantum looking increase Core Comfort call we are continue one with nano will the Karl with penetrated the remarks, year, And, along run the innersprings it through we suspect in XX% and in pleased opening with Core are we upholstery produced XX% gains. products. that to We suspect at go area, Those said let’s Comfort that in will Edge. of the then layers, we gains

great there are year-on-year seeing products XX%. and penetration up about are We those

kind So, be other of coils comfort would in we are filling the in of seeing that increased or interest visco that mattresses. layer exotic using used whether or types in place are of elastic latex other components of products

while is So, about meaningful too. rate relatively become to for we small, begin still That excited product growth and of category, are that outstanding. the us will

Karl Glassman

had statistics, a little Perry an we same when To there the those you just extra on day day, so April. in follow bit that April gave shipping were

the delta growth that quarter. neutralized based on that that unit in the same first so we he’s day out, So, saw

we at content tribute X% we inflation. up to innerspring three just a dollars gains to in innerspring in were we if the dollars, and had So, units look down

inflation So, with will even XX%, roughly XX% that significant. maybe in X% units probably dollars, look so something like growth it’s in continued XX%,

Susan Maklari

third And, that one against as we you’re through quarter time that the last Okay. you changes going some of second the then and of up this given in comps come go remind to sort can us year? just the space bedding of happened of just

Karl Glassman

of disruption Perry. X%, XQ it of the most That I’ve [temper over significant year XQ down Firm Innerspring last Mattress Yes, was the units in got right X%. XQ down down market issue], were X%. whole here time

convinced easy. us I’m absolutely in So, positive from see year. will you this units admittedly the the quarter second relatively comps

Susan Maklari

chance. one then someone then question give And, and else Okay. I’ll last the

of and As all can us to what you more sort products, on broadly your level some of give some terms things? different your relative and of in you’re the about seeing look end across markets products high of touch Leggett think the industrial of you you are sense consumer in, you of that touch you just sort that maybe

Karl Glassman

I for when exceeded think that the the the first analysts is missed first have quarter, to back apologize, Yes, that we we the - actually. written I all that to beg look a this take few first answer at going know seconds differ, But quarter, Susan, we And, minutes question. quarter. thanks I I

didn’t X% had As internal we so We pricing growth. your X.X% about a but somewhat we remarkable matter where $X.XX we unit a had of our you benefit in of environment that XQ $X.XX testimony and question our only fact, that’s $X.XX EPS. forecast $X.XX it’s an if first admittedly route And, plus on that the last of tax had we I $X.XX. the off, was LIFO, reported XQ expect think aggregate neutralized have we didn’t volume expect, of of power That’s growth. year, to

in I Some XQ, And, we significant softness said, of weather related saw home soft. atypical. construction related really into Perry Adjustable furniture and environment. softness businesses, carpet certainly and in foreign our better would we Components, XX%, have in believe and saw then on bed cushion products been probably January was business saw different residential sells was which Perry’s weather Geo commentary a products, soft, furniture, bedding, growth bedding some related the that softness in is were at issue than businesses, significant in fabric was that that’s home demand consumer our a

the sale first So, were in statistics and admittedly quarter. the the retail fed they softened released

what we back much, year have on it. last better. worst of prediction digit really and believe we comfortable much that single all we is the what saw growth, are is seen our So, comfortable we that that X% around think April, half guidance in unit mid the were with based business I on through we’re of

all home every to product can’t their kind around it to make that an those them bit goes where only return. frankly transition doing would a and from lack weakness of as and we this go of strength categories, one So, in acceptable our we of perspective. of unit business furniture in be spoke Mitch The

the short that to answer, very of with is I and optimistic shorter appropriately I sorry that. We’re Susan. all I’m what with take comment But had for said final that opening

Susan Maklari

to. that’s what was and going no, I exactly incredibly No, helpful that’s

So, color. And, good luck. thank you very for much the

Karl Glassman

you. Thank Yes.

Operator

you. Thank

next Our Bugatch James. from question question. Please your with proceed comes Budd Raymond with

Budd Bugatch

Budd is it call. Good morning, this on Bobby for

Karl Glassman

go we Happy wish before everybody Budd Birthday. you Hey to any wants the in room a further

Birthday, Happy Budd. So,

Budd Bugatch

can’t been. very, much. are I there remember how you very Thank many or have

Karl Glassman

It’s quarter significantly first than a big number. been our It’s ahead. larger but EPS go

Budd Bugatch

that. down bedding I I want the to appreciate market of are the defining you I want I paragraph in release the April, sentence to and XXXX second progresses. regarding market improvement know where you on first couple to you read expect about, And, the of barriers improve go why drill a Karl, how the are us “market”? you gave I how - of said as as market part to the but defining the would overall some and you the

Karl Glassman

is investors the which market, that are most domestic most in of market The meant the to be sense sensitive to.

Mattress both We April bedding what are manufacturing it at the it’s are issue. we continued will we and of have from expect lack customers at seeing so hearing Firm and and temper in domestic it’s the really strength market globally. that from disruption But robust the retail, OEM our is what

are Susan’s to the question, easy. relatively answer comps So, the

new both and Perry product hearing around there and enthusiasm products the be it’s retailers. advertising So, a from made the much what this, the the placement launches, robust spend, it’s those expect manufacturers placement that of we are will we reference more to

feeling are things, do you…? about just Perry we So, generally better but

Perry Davis

category. have the the mean, the may is mind box part I market, bed but other too in of Yes, you

relatively to there players having additional with. the lines categories to and got, variety build with looking instances, that in But they in regards switches We’re they we and product for lot have large really other that Comfort maintaining are reasons. hybrid are we want conversations but folks of are current in optimistic their we strongly that Core lines market to of innersprings, who their adding with those making offerings players are a some over marketplace,

although of huge for a area doesn’t important it’s is market an us. part it an that’s market, So, where a represent obviously that as still portion the growing and

market folks The that to first the there like we in is innerspring. And, now mirror where seeing people. market preference general begin foam were play more or a to there are primarily for closely look the

the excited for think for those we custom-made want So, will demonstrable products the and consumer. obviously and type benefit market. feature player that a that type about It’s we come edge significantly a big overtime edge the consumer, to are enhanced packaging that where the they in so to out that is is and change of be Edge something of that. and product, true we it’s Quantum

Budd Bugatch

but domestic was the do the have something you trying as or and the look did the different I domestic defined market whether are - that? market, to overall and looking at you to market by in mind I maybe as markets that how referring you’re looking see how Espoo at

Karl Glassman

Budd. market total It’s

Budd Bugatch

is that So, the about market? think million units, that XX be the way would we

Karl Glassman

now think of a mattresses box, units, domestic The total we’re point. million to in million, share difficult greater number, and I the good XX XX, data so on real aggregate that’s XX that XX. to the at It’s probably continuing data market mattresses. than Yes, on define gain No imported together units. XX% imported in everything better bed this good

Budd Bugatch

that Okay. you strong. strong And, worry and as have they automotive talked last coming, a about still we adjustable consistently may also beds down how you when that are there the be Are me trend get case? from have that some always that’s some and comfort do just we continued has areas not been as performing

Mitch Dolloff

automotive on comment is first. Hi Budd, this Mitch. To

in comment we the X,XXX quarter-to-quarter. sort very X% good our which overall at look above we up on quarter about points and goal our term goal basis long is the the to first market feel were while want of of really when year-over-year we So, market, don’t

actually the for see has X% or production I down market the whole markets for look at bit and think X%. major the you overall a maybe market, a first the you quarter if

strong recall in have about on is visibility X% like also know based we you’ll feel years good we that So, very out programs. that really the and we our our sales

we $XXX to there. in programs won very year, So, be new last over million continue strong

years basis the both outlook and X,XXX target. for the for above year can tells make points that this our us market our we to So, continue coming

So, that’s feel we QX on great. automotive, just there. QX. bed in strong still has QX, year, last strong Really Adjustable the continued going been

business Our them year. remainder and customer be strong continues in major capacity with ramping the first up our are quarter we the the to serve to help for us of

see headwinds there either. we don’t So, negative

So, going those we really feel both good of about businesses forward.

Budd Bugatch

you thank much. very Okay,

Operator

Thank you.

comes question with next Our from with Robinson Hughes question. proceed Please Keith your SunTrust Humphrey.

Keith Hughes

mid questions A assumes you. Thank single that does of guidance growth, include volume PHC organic acquisition? on digits, from couple your

Susan McCoy

that keep separate. No,

Keith Hughes

That’s organic.

you first. So, did X%

you is ramp, and going kind to businesses do think accelerate to order, in you know get are you’re to I to adjustables, magnitude? bullish pretty to So, what order will can have rank start auto big estimate, a pickup of what this other of this if

Karl Glassman

spring growth quarter continued in little bit really, couple strong after really had years. bedding of a domestic Certainly last first international a soft of

we perspective in disruption from we quarter, was little markets, expect soft those different that and unit the with growth America We going first that than the single digits. Latin weather see XXXX the fundamentally significantly bedding there mean, more don’t business since really has most at that even XXXX of are that GEO than been was greater XXXX, in not reversed. in growing a X% anything to components events. expect is we of Though We had we experienced in Yes, I had in of resurgence bit certainly Carpet softness in unit cushion saw have robustness growth just industry. in we regrowing. it’s

Keith Hughes

last back just Okay. the mentioned, in going better looks word you quick, switching to steel that real like the scrap and been the they down out? running little how think it’s winding they or couple has down sort is month I the last flat maybe so. kind spreads scrap, widening, normal, are at next And then looks of of of like in months, month the are How are

Perry Davis

so They’re were lot the of play widening, last that early latter put Keith, to on increase part long year in the some And, regards good right constrained of products. tariffs importation have pick up of this to that been their that a some this there of is a domestic Perry. those enabled put its demand there, has is producers with productive environment constraints, of of has there capacity marketplace the products. some for now the the and slack year factors part and

first now the are the in plan dollar of right pricing we’ve briefly the of So, power just said Components and demand as so of growing a shift but Karl is fact is hefty strong business has would pretty demand relatively the improved be number which is so add - the marketplace that obviously Keith and a holding increase throughout some that year, since seen for they’re unit for XX%. that as that Geo in so back weather products guys rod around I running volume, just will now the are their half weather there. the are saw that go that we situation the sustained rough January on our forward, to and our the all up February truly resolute rollout. we And, for to backlog strategic picked and we volume of tremendously is much that’s going some a really volumes March products go in projects We - its us business up obviously, a and get had all in there so year business we conviction that we that but out that into vision to our not through improvement, as it’s And, our business that we seasonal, with is plans good able programs, kind attained. delayed that due pent-up programs weather have dependent. backlogs, really We believe door. those with going

Keith Hughes

compression And, be there say if and there you quarter so in be the first? is company-wide the you look less compression. margins to and versus second in less will Do going think the second of at you standard

Susan McCoy

get the would in Similar indicate quarter. And, third the implements meaningful about, to to Keith. that year and both fourth full back

Keith Hughes

there’s understand that last somewhat why, the urgent? So, on rolling the so going any it surprised of I’m at pricing, in but wouldn’t going is margin of little things compression, the much second, I is second kind there into

Susan McCoy

of comment maybe can and and the is there’s you a bit no, that range No, improvement, a too answer. no apply that to similar little an

Keith Hughes

Thank you. right. all Okay,

Operator

Thank you.

Our Securities. question. Moore Daniel your with CJS question with proceed next from comes Please

Daniel Moore

PHC a to talk wanted Thank maybe organic you synergies morning. and is expected? since you’re your or seeing and revenue the I little on and good touch bit bit the about acquisition, cost just outlook for the close what growth a what little

Mitch Dolloff

Daniel, Mitch. this is

PHC has are up the that in strong really we demand we’ve the in really performed sales well had year-over-year. current Northern in So, American And, both Europe see in of and Their them. months coming couple period.

help add and that’s about see And, our material China So, perhaps an think product, organic we looking also good then we’re out opportunity very lots with. in - large help for particularly that acquisitions primary we continued our where looking in that capabilities. the produce We can handling, place on footprint very of would that. in also growth customers opportunities our in market so them active in we feel reductive to capacity get

could that will PCH so our the PCH the adjacent focused get the side, a stronger mentioned, in we in markets today construction I think position. we As on around we is where opportunities stronger strongly there’s participate - application, handling material

couple good that in feel we very about acquisition. months of So, a

Daniel Moore

XX% today potentially, And, Comfort going switching the Quantum term? where do gears Core that That’s of to Edge, units going helpful. you XX% see the longer

Karl Glassman

good we would XX%. didn’t I a is see this Daniel, ever question. at one time Yes, think

But to keep it plans I believe XXs lot for encasement. that their the wrong the much in product less could next that them capital to that totally range, our term firm maybe asking with it perspectives optimistic, a within year of to working all and a firm, customers, not we probably a of SKUs simplified you’re have for different when fewer guy. see somewhere so it’s from the in deal requires build, they mid sure. So, just little Longer sense makes I’m

are good standpoint customers. for holistically a from economic the our So,

So, from own if get is probably year. on has continue know will I I his XXs the but there think through see attainable. or he to opinion this And, mid XXs I it in build we’ll upper don’t there, ever that of right think not,

Daniel Moore

where return, more a be good obviously for little that’s to share being on very investment maybe there? to seemed as term Thanks. and helpful. in track an of allocation pulling being any the it one Capital on outperforming would of repurchases, given bit Got based terms your lever remained stronger me. a the S&P, it, balanced, that TSR stock aggressive be as thoughts committed is Last the longer record

Matt Flanigan

Yes Matt. Daniel, this is

expect too million PHC related X about do now in we As between protocol distant you buy are in trading know we to won year, that’s right X the where in not what a mindful X expectation or And, opportunities shares our equities by But we Mitch a million certainly that the that our future, is put of the in the talk and don’t appear as we between release yesterday million first year know. we just the we X and of we pipeline is this of mentioned will know and it represented and certainly and priorities the certainly the looking release live prudently. you press don’t vacuum. too for the during quarter with part might rest M&A during cash. that quite like

Daniel Moore

Okay.

Operator

Thank you.

the Jaffray. from with comes question. line of Please question your Peter Piper next Keith with Our proceed

Peter Keith

everyone. morning, Good thanks. Hey,

for cash taken question more reduction? some us margin down on give in overall another And, cause you flow takes is little I Could and noticed the XX%. about detail what on sales. Just puts that Matt, by

Matt Flanigan

we largely difficult bit that a question. tied story, quarter invested capital cash as good is investment the first capital relationship of our working that in the profile to Peter, know. Really certainly had it’s growth part inflation really more kind you working And, of predict to flow sales well. Yes, the most has as

the dedicated in so pieces than first that we’re considered to at phenomenon the all inflation $XXX that thought second in the estimate things of normal point and sense the we neighborhood So, working all will the moved better operating were million. full XX% you as of for investment, the But for about to better XX% this better that tell we working we trading and In year. I the do at at have capital into bringing up certainly versus working roll the all year to estimate cash for full back $XXX this puzzle. anticipate quarter reflect a that end XX% quarter capital $XXX the might it investment cycle just we million. million But we that year, will at assumption a us made time was as

Peter Keith

helpful. if credit on Firm, seemed just of having or other be wondering update insurance you. receivable, their relationship not just an nervous that helpful? just you the place provide Mattress suppliers be on would about situation. And, status Firm tight Thank of Mattress My that of is second topic on terms our There you’ve that right industry in increasingly you any I could been firm That question the update cash was are conversations. would the do Okay. have so on if from now

Matt Flanigan

had Matt relationship. they is would customer insurance don’t to trying certainly long, to we’re long to that where Certainly, what had monitor them this in that have compete their they whether with as also that conversations practices their payment in situation, you positioned but for we imagine just and we’ve and enjoyed other aware things specifically considered very with would we we relative comment related you and well - make account we’re we feel are they credit Pete, we’re the profile payment and very of a and excellent credit aware their that I of tell interaction should all again. consideration, the spaces well or are as time be of supportive our trends, happen

Karl Glassman

would Firm of but And, we Peter a conversation vendors. lot their with one is, of their that every had other know the of suppliers, add obvious nothing being current only Mattress with thing we I

every current taken today mean and believe Leggett only of your invoices doesn’t that So, every current one And, phenomenon. on tomorrow, but a available is their we paid that not they discount. time have absolutely

Peter Keith

luck the and rest very Okay, so of year. the much good with guys. good Thanks

Karl Glassman

Thank you.

Susan McCoy

you. Thank

Operator

Thank you.

with next Please Our from proceed Spencer the Hilliard of Lyons. with your line Joyce question question. comes

Spencer Joyce

taking morning. Hey, call. Thanks the good for

Susan McCoy

Hi Spencer.

Spencer Joyce

Many of been my things have addressed.

here. pointed fairly be to try I’ll So,

sell Ford just but was maybe it’s sedans. too to of And, wondering this any contract perhaps components Ford your you you that there some would some if those with through are potential if benefit their to matter, do week in direct but the cars, or there be clarity announced discontinuing of aren’t I they any was companies do is impact there from a work Euros and small them nice? for

Mitch Dolloff

a Okay. Mitch. that’s think question. great Hi Spencer, I this is Yes,

world just but announcement and I only the been not think in what’s crossovers sort echoes America, industry the America, and declining car North we production in smaller trucks everything see SUVs happening accelerating. that around anyway but North of especially as in

So, we categories product would OEMs. be in well all across those represented major all of

SUV to but have larger continue to we the one recent been So, they’ll the a bit just a might more forward. so us gain on production influence truck and little where going in lose as history more and be those or on positive shift for much that’s we car side, vehicles are content, going to

changed. at or sure place. some won’t we not this sure, of vehicles point those that take interruption have disruption For as I’m will But that how

and those many I significant investment maybe they’re is think run programs then whether that platforms. current out doing refreshing and

either see believe of production from shift think that But we we’ll don’t a stop way more larger benefit, I to we sudden So, platform. there.

Karl Glassman

facility follow you that nameplate. on GM GM add SUVs announced a shift earlier this Hill, would seen that produces that their Cadillac have week to that bit third Spring both also a in and Spencer, they’re going Tennessee probably in little And, to the

bigger, are vehicles for to good content Mitch what augment just it’s us. So, more is saying getting that

Spencer Joyce

working previous Matt above you we were but perhaps quarter. might of I than, one Perhaps call account And helpful. maybe Can this drivers have the one little about bit, capital implied specific I historically. two exiting kind quarter? talked expected receivables specifically That’s here, account what discuss been receivable of a for first think higher or

Matt Flanigan

payment our year, ongoing either certainly payables natural of collection They that payable now we’re inventory the more the compared all them. the go XX%, the we even see are at bit or good seen activities you there XX% red working table DSL used to we again around inventory don’t be but trend flashy relative know Spencer than I end the don’t get do X% on particularly slide facilitate to working the But signals is what a more certainly stable question. at and focused to capital, of the that we pieces. There of any kind being DIO, phenomenon as believe, efforts management call are sure that, really to pieces us we you investment But really really that, an believe our receivables isn’t as and right of to I a higher DSL inflation there making heavy if activity, all optimizing cash should at a rest of on of three are end day, unwinding and year. as key above the three and price out now of And, activity element days environment the of there the through had believe at Yes, our three and well. were as up capital. are is

specific have anticipate first we really to just two that investment or as XX% the than that’s don’t a to you hold point entered XX% quarter. things I should So, to or us capital try is the should accountable it three very know working to you closer model

Spencer Joyce

the any looking about there is referenced final even of perhaps you expect here, something a for some helpful. special a if [indiscernible]? those or think call operating, That’s charges should couple we or that it’s that line times CapEx shifts, all versus me on of or line the should for be an we would from would one China operating be And,

Mitch Dolloff

smaller personal, facilities have be those what that we are again. know point, at anything. investment, don’t probably I are looking consolidation, think we capital everything, anything we is don’t but some this it’s material are looking at may I we looking we are Mitch if and have so at at some facilities, we did This may

from can think at that investment, a don’t China, the a not have we we analysis, company place anything a don’t happen would of because little shift that significant but point, perspective plan this of still we and material. doing but that part I bit whole maybe be So, have in Again good specific inventory little bit with make already in of capital. tooling capacity maybe see

Spencer Joyce

And, bought this a that’s couch Okay, I helpful. actually quarter.

my is] So, out [peer there.

Perry Davis

support. appreciate We your

Spencer Joyce

a was good it quarter. thought the And, for I right, thanks All questions.

Karl Glassman

you. Thank

Operator

of Baugh line Instructions] with you. next [Operator Stifel. your the comes with Thank from proceed John question question. Our Please

John Baugh

one morning. DeSonier, role know team I in that congrats as And, Leggett Dave instrumental IR on Corporate America, of congratulations. Thank best your good the establishing you,

Karl Glassman

to do pretty All had was I easy. Susan. hire It’s

John Baugh

soft. asked. But of I did want two questions bedding things make on Most have my was to little been to touch sure, just international

You out. called that

on the globe, around bullish all in your weakening, Steinhoff business the seen on year. Karl that’s or You’re pretty is you Have no, track? anything it much

Karl Glassman

either. really No, in haven’t we

just to their operating to perspective We I have and seen. are we corporate a progress, haven’t more future that furniture. exposure think back this an from of them they issues From one bedding basis, in banking continue kind office

Perry Davis

with are kind basically, plans sure of haven’t thing disruption. in run UK there. do that. some They any seen and some disruption no same in holdings business Primarily Australia future Australia, Europe retail have and in what there very usual assets But obviously as the we their little, not

John Baugh

auto, the to auto. beat Okay, horse I great. don’t cover not dead so then And, on

without quarters could So, in basis I a that when around the X,XXX quarters what for projections, forecast future? guess maybe ‘XX, that program is, so know lumpy, million to are question see the points give in X,XXX I is, rolling was I I wins. three you. ‘XX, the view. share on comfort I get color $XXX sense of points last comment a don’t quarters build, know that the where commented guess can you that be ‘XX maybe compare. you think off. But basis QX even to look in tough X% And, I then getting no and still we Mitch last X% obviously and we roughly at some have you were you the Thank how year auto going really the on year-over-year what’s

Mitch Dolloff

Okay, great John.

‘XX versus year in look what strong happened bit little significantly or ‘XX first quarter quarter you the So, at particularly third slide second and half started then then in North in and started to really and America. the the of in for off fourth a sure if the ‘XX

and that and think for in as mentioned does So, we you creates us gets that QX, better comps QX tough pretty in QX QX.

kind X%. South lower on If at forecast, developing little it based Korea, ’XX The lower X%, America, over and little global of markets, major around in of for a globe, major me the it maybe stronger call unit long markets bit so growth faster North content. would the also volume, China, much you markets volume to look distinction a Japan, have the outlook, ‘XX ‘XX, call market at X.X%, higher X.X%. term the see a we And, Europe, CAGR for the you larger for much content,

was we is in So, developing the markets bigger at markets, see disruption for the around a X%, we up IHS kind in major it for of ‘XX eventually look a year, for going growth forward. really volumes X.X% look and that’s trend to X.X% we forecast from major was impact us. have And, that forecast, the production markets, at unit up last bit significant sure from little bothers benefit the North America what but

are on talk XX% XX% about something over X,XXX long market, like to we average the the about So, basis at term. looking we points a

the win that have last term about same time of you’re of six confident programs then we’re to and So, two prediction. programs in make significantly have off, rate wins we kind of visibility, off look years. the rate long or years the at falling that’s technically I starts at around this so what production to and program, our generally award programs winning falling right remember when we other the but we exceeds our drives program our good after mention that, survives

coming build shows several that for And, we coming think what’s this. it good business to run surprises and series that been have of the about we think the and how I track as last on what’s we that’s of So, visibility, deliver able sort we’ve years. - been that the curves record occasionally off our those

John Baugh

there think assemblies, is at more status And, My just I’m about going quarter-to-quarter thinking right say then we going business. of margin of and depending margin. about there though aerospace in [indiscernible] I’m upon bit that of you complex would pick steam is pretty sort more the is are and I’m ups up now pretty thanks we’re But automotive softness levels, margin, question getting what profile. program forward X quo? for there the all through both mix. margin significant delta have status point, a But in point going to are on that in - doing margin before content, Ford of close had a that specifics little I any know overall our may those this whether where similar had where a in quo, categories, both about some major across that automotive we cash color. downs, Dolloff A I thinking product interested aerospace bit Mitch forward last I profile to mentioned the so or impact would there that have at little the segments

of But cases. happened high really and the declined really business close and get we up comfortable that straight fabrication have to are. more couple we of say we has market we’re where years, in coming of think I pricing of in those capture sort we grow most of been some that more aerospace, the they So, pretty we’ve think out to moving to business. reasonable some will last the were and where volume that margin seen continue of In to our that side

So, rest that’s as outlook of there our looks pretty think year, profile at I look our the as steady for well. margin what there the all well. see in that all I if And, I

John Baugh

the to that And, have complexity in just were as referring is in because products way you to that words think the the margin, looks there the with the reference slide was but to be winning similar, is in maybe has look other guess you - I you’re simply right overtime that margin is you in that happened at tooling Mitch impacting volumes to was CapEx been clear, think question about auto it? there there a it you so good, some I to are deck what profile, your growth do up

Mitch Dolloff

the John. we this and I right I investments support exactly term of When long budget up, sometimes product. program, investments are ramps programs. both But have sometimes entered lumpy making capital capacity, overhead time also that’s sort and first that’s overhead Again, required to is win the sort those the about thinking in part, on we Yes, was of productive this. to but those manage but in before it both we there this some

talking we about there. So, we starting we profitability. when technologies are or programs new little of that’s up exactly bit a that new in lumpiness we what get occasionally have significantly where get And,

John Baugh

luck. good and you Thank

Karl Glassman

Thanks John.

Operator

Thank you.

Our next Hardt your with with Crespi Herb proceed from comes question. Please Monness question Hardt.

Herb Hardt

Good morning.

Karl Glassman

Good morning, Herb.

Herb Hardt

on or acquisition, bit year? question given you detail Wishing give in in other of successful a the of you later last parts you two well, all next One some up quarters? always more two. footnote expect kind strength residential is would furniture, is the my into pick housing, we’ve a the in to home And, year can making aerospace, pretty been become it’s one

Karl Glassman

strength dump the usually Yes, has housing, the one. last I’ll of the a Mitch, easy in Yes, a the take the on first housing bit and lag. that’s

through moves it homes. and the historically So,

flooring picks generally the front then we through it products when house to from and up, back. housing Geo, carpet So, earliest or generally see it moves

home are our front see well. household not So, then you very will in see good and is bedding generally in strength formations housing as Housing, moves strength but housing for business, instantaneous. room you some furniture, will it

Mitch Dolloff

platform. are organic are it where working actively are to which spend But Mitch. not that. On committed time we new I good to calls. it happening $XXX we business million very as programs more coming that these Herb, standpoint the and and see big so of it, think we don’t from still sales, at And, of about feel part this positive on engaged growth still a are footnote all Aerospace, why $XXX it’s you is things both that on a a not is an hear our we we aircraft about engines lot up, We there. us, some of winning million,

in we continue so. haven’t to finalization, that been to We in looking we’ve also are and active active able been really bring very add on opportunities to one acquisition, but do

hopefully, we’ll So, the in to keep the We home, one future. get not-too-distant swinging back. bring

Karl Glassman

really are we they have manage comfortable Apollo, our there, business. and quality the team management of capacity a At complex more to more; with do it’s

we So, substantive. need Mitch’s the more make just point, to to business

Herb Hardt

Okay. Well, thank you and luck. good very much

Karl Glassman

Thanks Herb.

Operator

Thank you.

from your with Our final Bergner question question. proceed comes Gabelli with Justin Company. & Please

Justin Bergner

end to sort latter for that the range, of that through to of range low volume frame you or high the Thanks end guys, and and question still volume the and of pretty correspond because first correspond My regards could figure in the what out, because maybe raw EPS of what volume of the mainly is I’m I is in me trying more the mean, is if to range? putting range your material pass wide the to range morning. good

Susan McCoy

can as is are predominantly recognized some towards cover to volume related, have think a create a best want we it because of unfold about, - we steel we little to for those I cost as and on upside what out time it’s commodity them the we’ll around this try first and to quarter just routinely the range usually opportunities volatility yet years doing. extra Justin see coming bit but pretty wide downside still and

accordingly. as $X.XX that to the of it terrifically of of digit, might X% growth, a incremental X%. we is or volume leverage high the then factor our together our to of low think and explained be is attributable say of would I bulk with that value the EPS more end X% end ultimately range how mid through We’ll the single you width year think the EBIT volume or flow the and comes side, As the good range, that is see benefit earnings then

Justin Bergner

Okay.

with of or above the of So, range? end high high the volume end X% range corresponded at

Susan McCoy

I in X% No, X% say something to range. would the

Justin Bergner

Okay.

Susan McCoy

I mid would price would X%, you think X%, single think X% the We interpret that digit, higher a X%, over and can a change about, maybe and as using end. little reasonable the bit say ballpark in lower that X% be maybe end something but in X% the to

Justin Bergner

giving to specific to Core, that you stats quickly were X% then really date? Comfort just the on helpful. that’s about Okay, growth, And, month April was very

Karl Glassman

with It’s year environment question. overall. it’s a sheet January depressed with good a We came this pretty growth, at basically out no

when So, up X% and February being the of you think tells we Core saw Comfort pace in you that accelerated March. year-on-year

so running So, given at end to had X% is percent, strong. well the the we above start quarter a

Justin Bergner

great. Okay,

shipments disjoint said little Core numbers And, were my there. XX% think then that Comfort then above was now, is last I what think unit bit in of I your you quarter? the

Karl Glassman

XX% of or total Comfort Quantum perspective a Edge right of for of value pieces and us. those Comfort represents Quantum in Core a From it’s Core add about volume Core, are US terms higher XX% products pieces Obviously is Edge - XX. -- obviously at with because represent Comfort revenue dollar they that

Justin Bergner

wrap Okay. it I questions. Thank up here. you. appreciate the I’ll

Operator

Thank I closing turn you. time. are back for over this would no like at the There McCoy further to questions any floor to Ms. remarks.

Susan McCoy

today. Okay. we’ll you talk Well, us And to thanks for joining quarter. next

Operator

This you. Thank concludes today’s teleconference.

your wonderful day. and disconnect for Thank you a have this at lines participation may You time.

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