LEG - Earnings call transcript Q3 2018 | Leggett & Platt, Incorporated

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Operator

Greetings, and welcome to the Leggett & Platt, Incorporated Third Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Wendy Watson, Director of Investor Relations. Thank you Ms. Watson.

begin. may You

Wendy Watson

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

summary entitled For the please to to Karl Forward-Looking I'll and a additional and risk and XX-K these call the yesterday's XX-Qs now Risk refer and of in factors information, Statements release our section turn press Factors. Glassman. over

Karl Glassman

$X.XX other sales Good participating call. third X% of you to X%. morning. sales Sales and partially Rod increases, added Automotive, grew Raw by X% Acquisitions, we X% volume most divestitures, currency with growth by for Work our Adjustable added growth soft also businesses. in offset billion. demand quarter third impact strong Yesterday Bed, U.S. selling thank in offset Organic Furniture quarter And of X%. reported price material-related net Spring, sales to Aerospace, growth. partially was in of Steel

certain partially offset growing our to and where increased by year. volume. from our up quarter per catch wire few consuming less margin the has in million grew these last our charges was relatively Earnings businesses $X and loss, Spring Rod in of Steel divestiture fully utilized transportation material which impairment reduced rod and is expanded scrap $X.XX, up Third benefit. benefited share by tax charge our businesses. by metal year's we businesses. $X.XX businesses, Earnings cost also Earnings and a of costs higher price and offset but in from months, several including been raw of in non-reoccurrence of selling allowing the U.S. Steel $X cost, were last input stable recent were in $X.XX third last startup quarter overhead inventory million primarily business increases primary from in non-reoccurrence growth the year’s recovery earnings divestiture-related

a EBIT in from the to XX% sequentially third second XX.X% in quarter. quarter the margins improved result, As

However, EBIT EBIT margin XX.X%. adjusted decreased slightly compared to year's third the of prior margin quarter

that major this we home particularly of and Adjustable found performance moderated, in several supplying Components. retailers. entered Furniture, X% in foundation of have million, and Asia. a %, European primarily increases retail earnings of which acquired units Europe gains. the expectations quarter September, now Components Spring grew market in still pipeline XX are and cost Bedding as turn to growth including I'll springs and material as continue Core production confident XX% Automotive Flooring vehicle With had agreement headwind Comfort we presence their business, impacted are our provides We solid reduced sales to call Home slowed, facilities. this $XX a of In overhead supply demand distributor strong businesses, and in into growing long-term our annualized manufacturer in in to quarter several programs, we they future Geo in promotional garden our by over – a inner Spring negatively with in We with awarded of Products. to the raw business products our continue a up With however, strong market on Geo moderated most absorption Simmons inventory. were In recently Bed, Matt. U.S. from in While of another for to can a activity share our business. be acquisition and retail innerspring lower be long-term our sales

Matt Flanigan

Good increase ended as the quarter capital We million Karl. million third year. with $XXX to Thanks XX%, at the third of everyone. is. end Cash our full that now operating last quarter year annualized approximate cash adjusted sales from We million. an of percentage working $XX the operations $XXX a was versus year flow of expect morning in the of quarter,

cash and for uses capital should dividends require expenditures $XXX million. Regarding year, $XXX about approximate full of should the million

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

Our cash cash quarter, year. slightly total offshore approximately total financial net of the We the in $XX our to was X.X investment flexibility We We target when of our range million. and third our debt year-to-date above gives this decisions. And and XX with net full million capital us expect repatriate XX% base $XXX million XX%. for debt to currently ended making to the trailing EBITDA. XX.X%, remains of quarter strong of considerable repatriated $XXX times months adjusted capital bringing to

recovery increase represents billion our billion billion, XXXX. $X.XX sales overhead guidance $X.XX guidance As Adjustable Guidance lower full share. continued This be upon $X.XX is per rage lower $X.XX $X.XX this and we $X.XX decrease we raw be Full $X.XX EPS earnings is of guidance XXXX now EBIT activity to year XX.X% yesterday, year weakness full Furniture approximate in to share our material previously to This promotional sales tax in Spring, $X.XX Products year pricing and per Spring, billion. in assumes than Based lowering low announced our to prior our to a primarily expected X% European are and Automotive, prior of rate. and in expect and Home and XX% of our reported XX.X%. versus range due of approximately range Fabric, now an lag the guidance full end Flooring should an year increases in versus volume Bed. between on margin European sales

material-related volume expect also increases We sales sales low-single-digit growth. add are growth net selling to to Acquisitions, price in expected growth. add raw divestitures, should to of X%

may are Fashion our two discussed, Home of previously conducting Bed, in result expenses. are we And and analysis restructuring businesses we which not in-depth Furniture some our expectations. As meeting an

completed over Wendy. We expect have turn quarter. the to comments, in now With this fourth I'll call the analysis back to those

Wendy Watson

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

If questions, will Michelle, questions answer ready well. you to queue begin have we as re-enter Q&A please those the we're Session. additional the and

Operator

questions. Instructions] please, we [Operator you. for moment Thank poll One while

Mcclary Suisse. with proceed Credit Our first from with Please line your of the question. question comes Susan

Susan Maklari

Good morning everyone.

Karl Glassman

Good morning Susan.

Matt Flanigan

Hi Susan.

Susan Maklari

U.S.? in of the your even the and versus non-consumer look My sort Europe, perspective trends on a us is that question there maybe about was that some it in were products businesses consumer and around you of And of you a like end geographies? more quarter Asia, maybe markets. basis give you Can have in end all all local given as markets of sense just came just this terms weakness that what these just different guys first thinking across different some products, sounds globally

Karl Glassman

It's a Susan. good holistic question. Yes,

are. but really structurally overall, that there was some long-term premise about softness, where optimistic we is some in basic in globally feel we businesses, Your correct and spotty

slowing patch, in soft the and recent a a you In that should is is Europe in details Europe in little into We’re in spot, The get in European a say. Asia malaise. Automotive. there just general bit. in I embedded of Spring softness asked, and Mitch will pretty

We change. haven't seen structurally anything

should analyze, Some Matt and Home continue Fashion we specifically products I as and say Bed consumer businesses that to Furniture, said.

was wouldn't weakness continue margins our in margins feel We that not because strong. specific backing sake. volume parts volume, for the really quarter sub about said we some purely that we're acceptable U.S. out are we're acceptable. associated going away So business wear just to where much assets, volume of from that market to on positioned that of attribute there Betting, I do aren't second as as we’ll sectors. there. And us those good If call, as with

we good about tough summarize, term long tough, third But quarter. to admittedly really term, things. feel and So long fourth

Susan Maklari

I side terms the that's Okay. of That's short an of that's certainly of then helpful. events. industry never things, And guess bedding in

down seeing third more go obviously, held talk we as Mattress events should some these the As you've it to seems there? think with of about that what quarter you up, recent out but just of this forward like news some through? think how about been came we quarter Firm, I come can the mean,

Matt Flanigan

Perry handle to do you this? want

Perry Davis

all, – being the think areas Susan is a Davis. helps good to Mattress thing. lot enhance them of in in in their with and industry. Firm other shed generate a Yes and of good we some able to ability the And promotion That with stability we cost a Mattress obviously market. view We and domestic is that's We Firm to developments, regards that believe cash, positively. that the this Perry strong first very very

interesting you finished a that of Not would conditions. against say factors Going products mattress from the lot times of as which I of least Leggett business because the influencing ongoing know, there's be outside case macro China. forward, antidumping are it's would

but at, be, of evidence from dumping. along, of the As look That bedding certainly that at that supply we will invigorate side, where positive, the we a we're only retail. it believe if think plenty should certainly also folks to begins and progresses not finished and side there's

fact look positive that may so if while as that the little ways, – at to as And road look development we it but a in a comes a it be at we fruition. down

to to and we'll a relatively industry. this quarter, head good slow what As it's difficult say fourth time now, in point. to yes, at demand, and like. next in up Generally, We pretty the we're looks our third held the the year, have wait see right in

usually year. and and of weaker the are but see a the take You hopefully, the those months, can And April for. pickup that's two October through we'll planned of remainder

last going few good end and strength of some the relatively November into the December. we've Over seen years, into

Susan Maklari

much. Thank Okay very Good luck. you guys.

Matt Flanigan

Thanks Susan.

Operator

you. Thank

Financial. question. James comes Raymond question your the of with proceed next Bobby from Our Please with line Griffin

Bobby Griffin

Good taking morning And thank everybody. you questions. my for

Matt Flanigan

Bob. morning Good

Karl Glassman

Bobby. Hi

Bobby Griffin

issues We Or always kind of Was points X,XXX First, in terms high that of guys about? the that? on over have rate single-digit quarter. you base about there decelerate of caused growth I plus wanted the that business. digit how basis the saw that was kind from Automotive production mid-single should think timing we growth to to some touch talked business in

Mitch Dolloff

good Bobby. is This Mitch. morning Okay

Our very continues long-term not well perform really has and outlook to outlet Automotive business changed. has really – our

basis points. to quarterly our to us vehicle that exceeding going by have you're of the it up that than overall X%, have strong won, long-term growth goal stand give confidence at the major to volatility, decline in about markets. compared future programs as Again, continues meeting But we year-over-year We're right? X% in higher us. a past. that's that that talked business the goal, a in quarter, pipeline We production target of of that still look we've X,XXX by We're market third an our including the about probably, we for about right. something if In we've currency

in decline had So versus strong, a we really it of you double-digit mixed market. North slight was very the America as was go kind the bag there growth around globe.

us, Asia concerns I was then the lower of down in slowdown and that for of in the to called there addition slightly pretty was than issues the And bit – based in Light economic there, in talked emission general mentioned. new sales normal the China Karl down for the with testing think that of – disruption that onset with Procedures. market us digits line mid-single on was Harmonized a economic issue standards specific and versus for Brexit Test some actually close to in Vehicle of concerns the OEMs sort the the the Europe and Karl just at And Worldwide sort market. the

the some actually production are stop to OEMs So is models until on having slow or testing complete.

of further bit back And supply quite chain. the in so has that disruption created a

Bobby Griffin

I that’s Okay, detail. helpful. appreciate that

quarter, that growth we kind quarter you Or again? – close of two of I somewhat saw your guess, fourth third is what kind for of term expectation in negative thoughts the is what for near So production is do production? the the to that

Mitch Dolloff

year-over-year I X% the for the fourth about I and now slightly don't forecast number the full year, – global a than market negative major is for the market. have quarter. for down see markets for XXXX for less so which X.X% is it the

production forecast down, the forecast. So the has come

So X.X globally. about from million July, vehicles it's down or about X.X%

been pretty we It's time talked. rapid So a it's about shift.

Bobby Griffin

Okay.

Matt Flanigan

– okay ahead. on guess I then And go

Mitch Dolloff

for I similar we say, just now quarter. I'd to wanted third see to the us for pretty are where us, probably

Karl Glassman

of Automotive XQ more expectation. Bobby. follow-on, our significant downshift would that Global to on say most news Just our to that's I the contributor, recent

Mitch Dolloff

Yes. we hasn't for – business fundamentally have It's us. changed – our

volatility We haven't the seeing entity. lost we're program, that of just

Bobby Griffin

Okay. we be maybe term activity lower the down surprised step with I which the those type kind of fourth the do this promotional just estimates? you shorter level frame nature more Understand the here is when are quarter, our XXXX at don't of – headwinds or in in want And you of of this chance to one then provide auto, guess have verse But a the high until term quarter. what in some nature us in longer question. help that overhead, the to guys you to guidance look

Karl Glassman

question? about don't question, why you answer I answer opportunity promotional the as Adjustable whole first before Bobby's it Yes, activity the of the Mitch, to and talk to take relates the to part

Mitch Dolloff

really unit Adjustable a continues be Bed to alright. I’ll do glad to that. Okay, on business be strong basis.

first the quarter, third in We in quarter have XX% the XX% in second the quarter. XX% and

we that we that As last the mentioned too even on were were time stronger, in though, call forecast we are hindsight. getting strong

left that product a work – agreed And line. so retailers with to the access of reduce promotions inventory. We to the on and some retail move to – refresh customers one to facilitate inventory with us major our

So help cut inventory. we unit agreed sales. a also to And to rebate we significantly reduce production on the

even The our cost the were than higher So bad is since promotional of QX. inventory production XX% good expected. and that news worked, news down it that is the loss is the over we

third rebate reduce we But up impacts our more extending baked production and the ended course, those the we of forecast for severely into the inventory. quarter. to had curtailing So

But think during start in we see overhead So headwinds and promotional continuity to absorption to increase XXXX. we'll the first production into of expect – the some quarter see continued cost some from QX. lower

to progress, got we're ways we but making So go. still

Karl Glassman

was expected XXXX guidance. that we're expectation, that than we've we we that And But has issues is We industry on than basis with believe question, want and XQ XQ comfortable transitory. you're most an Bobby of feel company in have do visibility rebound. X,XXX most very put with, of that pricing of caveat that place. the to dealt are dealt which the growth the it, and giving a really based the pass-through But higher to level on our have with on that and right, is not greater build. the points your today, issues call to answer I taking we Automotive the the

hangover I As little said wire mostly XQ, chain. $XX that early that we're a from in Scrap October, in through to U.S. That or rod, $XX. of prepared a my there jumped a a we're said comments, little we bit up bit Spring, was in past. value

big is catch November. the kind lag the But Forecast in slightly of it'll in up. picture, and jump will up insignificant that's

other that increases. material pricing a The enacted inflation. called we've points spring, Usually European pass-through inflation raw we of is about behind U.S. out, European quarter

uncertainty, they're early We increases not be there Fabric, more promotional the products, increase has XX% the products, cost And – scrap So Furniture but in been through, from very passing Europe difficult perspective. we're place, the in They are raising same be the inflation price macro there. a was consumers will the year. will third like passing with They there to feels a being in might those prices, is the some a in in mentioned XQ, challenged. be mix future economy. going that. probably become soft bedding smaller, pricing foam as it healthier of but attractive in place. be flooring double-digit that we're next consumer in continue they'll businesses situation, healthier. be put quarter through and play

should a structurally, thing the guidance well, macro steel – dealing putting that it again, foreseeable we're other level mill, future. I interject, metal want with the and in continue this one margin at for supply not on chain, to the that So

XXXX. some year, the with obviously, we're is that But we're put now, really on that. We'll So assuming what really optimistic believe February dealing next numbers economy we're outliers. around we macro about X, do right reasonable

Bobby Griffin

luck detail. I quarter of XXXX. into in best the the first and And appreciate

Mitch Dolloff

Bobby. Thanks,

Operator

Thank you.

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

Daniel Moore

the always. morning. Thanks Good as for questions taking

low correct. my further bit a organic single-digit Your math implies growth, QX slowdown of if guide to the little is

you sense auto, lot down by of better the a that near-term slowdowns? on little a can break better where very segments? kind give biggest of just Maybe of You you're us a expecting helpful. little And color bit – gave

Mitch Dolloff

why don’t you. Cassie

Cassie Branscum

the high Yes, we teens. digits for low will be And Furniture be Products digits year. our biggest up in teens. up half furniture impact be Industrial year. But the sort be single up for see the low you'll sales, single despite second slowdown segment should in will QX. this of will Specialized

Daniel Moore

You year or mean QX? to the say For special.

Wendy Watson

the up be will year. teens low for Specialized

For the quarter..

Daniel Moore

the For right. year,

Wendy Watson

low probably be Yes quarter, they, digit. fourth they'll Those – the for up still double

Karl Glassman

Yes.

should Some of grow. that

Wendy Watson

acquisition. that's And

Karl Glassman

organic The Cylinders having Right. acquisition. the growth through Hydraulic not lapped

Daniel Moore

other it. yes, Appreciate quick then go helpful. Very And ahead. one, one

Wendy Watson

be auto same That growth just obviously, about XQ to the repetitive, just is repetitive. in to and Specialized. to XQ, in Sorry, be it expected guidance big that in swinger be a is was as which

Daniel Moore

you. when prices quick I me obviously kind but you is do That's where being price catching but stayed nothing foam cost Thank it if today of materials, ever materials? one raw caught input if would where if stays up the raw again. trends fully look did, they just Last or Thanks, close you to increases with think QX, they overall caught on today, Indeed. fully mentioned perfect. is, and they for in at were up, with be up up

Karl Glassman

of caught the it's is out end everything to which quarter. end by the yes, That, but we forecast, if through today called the should on think Dan, we be up I questions I those of questionable businesses agree If way way. they thanks stayed for fully of all be the – by quarter. the by we'll the are the

Daniel Moore

Got Thank it. Helpful. you.

Operator

you. Thank

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

Keith Hughes

EBIT time, out of for and material what big Thank But sort been relationship some called because on industrial, decline Residential raw that talk Can Residential and spreads the numbers. Furniture, have the the in hit Furniture of is In year-over-year. about negative, and a just as of going And specifically saw to you influence in with there? you've some that happening material both talking saw you. still about raw them? we what's

Karl Glassman

The supply ask Other was, Residential raw products. the and think, chain. That rod, Mitch you commentary take the has than, wire to don't I the case. Yes, assume want Keith, that bedding, to around do not Residential is and material these really respectively. I'll to it's those ancillary to easy commentary other Perry with

So inflation it caught was more to up. I the recent But spoke and room we're pass-through. bedding

answer will So, but anyway, Perry it.

Perry Davis

Yes.

saw believe year of really the like material But increase that of some foam other group in part April as is our we came double we in But earlier which increase said, think, in primarily. I on I on Keith, of MDI was second kind in Flooring two it The Products it of some And and like about things scrap year. really Karl tranche raw and also was on that. in quick. tranches this significant the Residential, the saw price that input chemicals scrap September foam of

reacted guess. we've a And next double bit so increases, price about increases quickly, basically we price have into digit week going effect I

we'll And expect, caught said, fairly quickly. Karl so we there up as be

some our area catch Geotextile other saw a influences by a the of The was, groups, rest pursuing, real we've Hanes it, had both Hanes most Fabric of significant bit got have polypropylene mid-November. of up we increases there, and where we'll it been we've so we've which Converting and

complicating other that in business that products lot is imported. of The factor

the intend And business. and that. up the We comes to been we we've to year the to any It's XX% at it can don't our we're to fact Asia tariffs. of acceptance and a tariffs cost in up absorb avoid and of some certainly of dealing passed-through of not we've it if if fully to in have to talking immediately, see with. prepared But it good that But that act those got customers we're anybody lot initial a goes the end that be. have from – waiting with

good passed-through. right as and macro those the mainland for kind Europe of in the and those a not the very still It Karl still downdraft far yes, in for thing on the most bedding and the So, getting is increases the moment. little material And later at environment part experienced then other as but Europe. said, raw the then is we've is in getting as UK

to year a all going difficult we're kind get part kind always But you're get up the too. before may it's we And the So whenever on into of depressed a in caught of linger that recovered working fully there. then, that up environment. first of

Mitch Dolloff

This Mitch. costs to Furniture, the in impact were were we still In the in able were there about, Furniture inflation. quarter recover business. first in is about are up closer is the XX% of second Yes. and XX% And to quarter. Home the one-third biggest total the about But material only

So really adversely impacted results. our

as lower low So we transferring Chinese take operations accounts. cost, of margin to input our to advantage we're said, production and shedding we're also

third So to XX%. was about to in the we quarter, and for recovery steel our XX% year-over-year up XX% us cost improved about ratio

So, made some progress there.

to expect continue the to get close fourth in We probably to XX%. quarter that gap closer

not we'll year-end, we So close. might by there completely pretty be be but

Keith Hughes

And that's right? flat Okay. steel,

Mitch Dolloff

It's flat steel. Yes.

Keith Hughes

volumes right. the fourth then, you businesses – your the impression, see talked slow just get going a slower gave growth about, guidance the and in in as of based All I quarter I to large the in look this we And fourth? a to But on guess more you are kind you number think Automotive. of guidance

Karl Glassman

environment. a good it's forecast to this difficult darn That's in question,

we're remainder in about have Certainly, forecast, visibility right We our that outperforming confident growth of content in market the of Bedding and consumer is bedding continue. producer it Spring side is Automotive. perspective. forecast We've the we But of question without talked share The US will from the like yes, is position. gains gains to European majority would but some be no it, any always it some softness. there. it a products. I'm and the Automotive good pretty virtually market Home and difficult change Furniture domestic continued The the does

really businesses. four So it's those

Keith Hughes

Okay.

Matt Flanigan

exactly and Karl Matt, what add is would just this Keith, Yes. I complete said.

quarter sales quarter a keynote you as versus hear fourth European and be key see about a still meaningful Automotive But we in Company. the as about So or being X%-ish bit this many of when sales there Karl Company, those will softer a year's just take. bit coming that's dissipate as bedding the give when in said, bit a those that and softer, up EPS opposed mix just fourth sales, shift last elsewhere two to not parts impact a is,

Keith Hughes

Okay. Thank you.

Wendy Watson

the pile to to in be Furniture probably I would contraction only mean, we see on, just Products. year-over-year where Keith expect And QX segment would

Operator

Thank you.

Our your proceed of from next Stifel. John question. line with the with Baugh question comes Please

John Baugh

let's producers future on got kind given in that a morning and assumptions. of Karl, touch your I But I'm and I chime say you think as or needed. duty, the springs would assigned, look that in we, industry, try the there that there's you, don't the made say, get question market least assume from on I kind trying Good those if sense, a Leggett, steel in to a the thank you. curious domestic of then see the share sort basis, with guess is, meaningful and a know as a to spread in or rate I'm expect spring of and you things. That, Perry can springs we content meaningful growth out share next I'm the out you've sub-$X,XXX – – to end let's inflation leave rebounded year then some we is dumping degree. quarter? industry growth at growth meaningful of other what gains, some of to the X% something reported in assuming saw gains the share gains unit referenced, low simple among Simmons comment

Karl Glassman

I good give a should question, Why that's to it John. Perry? Well

Perry Davis

$XX start around believe that million. somewhere I – by saying domestic that is We market the mattress guess I'd US off

Karl Glassman

metric. Total units. in That's

Matt Flanigan

China million, business Yes. I'm maybe of as The units, In $X part the is million $X.X sorry. much as that.

would would most of action that, elsewhere, if the dumping if go be them of those but effort repatriated, some there's on So likely got repatriated. successful

uplift, that effect market. You're the more of talking and believe promotional about would, a end significant the I

innerspring As the part you that and of market. could be said, foam both the

manufacturers. So think beyond I'll stay I it'll that this uplift at as from away provide that And growth, percentage as US meaningful for a far point.

Karl Glassman

John, back. to signs early And it we're some tough starting confident it's back. business really comes see that, forecast of to when coming we're and that

we and hard it's understand It That's back brick-and-mortar. hybrid greater come why And there it foam of So and answer e-commerce, than the low would that's of can. we're balance hybrid? it as as is left forecast be end foam the a as back, probably as percentage that channel come question. would more come of difficult it difficult positive But to it it confident than But It to to back? distribution what's comes best or left to innerspring trying know. or uplift. then it's going your will percentage higher comes today, probably as so innerspring. a We back is back will when it that possibly brick-and-mortar don't a likely

John Baugh

question? this is the look in what If just about Springs to trade did do what books, think versus overall? US units the your in you we QX, business How did which

Karl Glassman

up X% has reason expect yet. X%. X%. to to ISPA that said any that's And But they were gains published were that and were XQ domestic units changed. units not down I We inflation. tribute and up see dollars our don't content a

Perry Davis

quarter lower height used a and to third are little generally then during things talked compared in with shift the content quarter, which color some in a year. And to Comfort Edge just about two we talk gains looking XX% at Quantum we've just on that gains about and are more products the these the regards Quantum last Yes. the But John, the up content layers. little Comfort gains share Core. upholstery Edge of over And Core year-on-year, is

So good. little the then lower Comfort part over that's upholstery a XX%. up the were height units Core And terrifically with equation of the

product in at started as relatively So low quite upper-end mid lines. to become a basis, that, while manufacturers those meaningful utilized products beginning that to

Karl Glassman

US third to of relates September XX%; XXXX, XX%; to XXXX the as John it's was give was innersprings, Core's sphere And total it quarter our granular, XX%. Comfort was XX%; XX%; more year-to-date, even it

So of that taking trend admittedly Quantum of And up. continues Edge a increasing story business and continues is to the Simmons hold from that to facilitate Perry's story some as we value to perspective, put Comfort expand an a around Core point mattress that per helped wonderful that. number

John Baugh

But I auto of expecting or back spread. that I quarters and I builds say Okay. a we can, future, to and in and still annually eight X,XXX points guess stuff. X,XXX – because as and markets Mitch this has maybe don't that lower you in track Automotive, best quarters past basis off. last know if you're cover major lumpy, are quarters even are you look, forward, the in doing bit you or I that that little question maybe the And doing then know as major up? but seems still I It the market And been global several I don't in on all I'm for holding eight the that talked to and which basis look points certainly don't quarterly spread is then about, a the quarters, me is the space global?

Mitch Dolloff

really there, I Again quarters. think it's last several goal. we the down the been up metric, set of didn't and long it but more over out quarterly a term

visibility been have continuing here, we the maintain over years, to think last we really out able goal. to see hitting we into good and remember overall the we've future, that and several that be I it us when look

I scale about the couple reasons, the of versus about markets markets vehicles major at So, developing quite of today one, million the is about for versus markets markets just major kind XX different. a million. developing are talk The XX

right, not surprisingly developed growth markets markets. the major is they're because So lower,

the long growth a a at XX X.X% In look million vehicles, but the higher than is markets, call rate So XXXX term much it's it that the base million you about if on developing a XX through on at shown rate. contrast, you lower major for look a little when that's growth Still units. lower good CAGR, markets at X%. less the XXXX

So, level certainly content that major markets, the in vehicles. are have one, couple more we the think a in higher important is, ways, distinction of I

the than developing future term have developing are markets, We but markets less the our long opportunity.

continue that we'll end content to term. as way over in We the someplace economies see develop, up playing long a and bigger gains that

John Baugh

Good Thanks that for luck. color. Appreciate Okay. it.

Karl Glassman

Thanks, John.

Operator

your next Thank question. from you. proceed with Jaffray. with [Operator Our Piper comes Peter Instructions] Keith question line Please the of

Peter Keith

Adjustable dynamics now? in morning, just wasn't quite for all that on is out I Hi. broader there in Bed activity? Thanks Or I clear, the the business was the starting industry self-induced side. promotional play everyone. Thanks. promo to detail. back wanted right activity circle promo to the Good

Mitch Dolloff

program we customers. No, Mitch, is one of Peter. a retail that our This conjunction participate in it's with

Karl Glassman

forecasted had their actually of than out wind existing robust a on, to it's so had sales And Really they line. we delivered product excess more candid, they be completely inventory.

wind working it's an to together new inventory that selling working as that, recovery we're because discount earlier Mitch said is from instead problem monetization product and a been of the production down them us we hurt to with it's and out are good program existing inventory. overhead We perspective. that of it's really of that are The

Peter Keith

color. That's Okay. helpful Thank you.

Carpet a there future overall a lot price about it, to to doesn't in how digit of Flooring we the me unit double price is pretty right volume hard dynamics business that elasticity moving it's category? that attention, surface play guess to in and Or how don't I Could have Flooring and steady. out impact increase context history of Is should going any on increase. from think that of lot Cushion and any demand? I the certainly, usually your on Lastly now get growth?

Perry Davis

Yes. used business, few over a enough last been to and to that much of lot Peter, the volatility in too see fortunate years. not we have we've

luxury and you're ceramic share such growth years also than a vinyl chemicals few away believe we've overall things from have, hard than So industry tile But significant it foam right, flooring, or has players last a raw most and tile some There that scrap few while. other carpet. ago. We used soft the taken share in today business to surface over has discipline in away this taken a as pricing moves hard particularly better and there flooring. surface surface of and in the from fewer both that seen has is were are the hardwoods material the years

flat. and sound that's a So with We're participate unit increases, holding carpet, year a business growing about rubber this acoustical product growing well, little good vinyl and our a for product, pretty business a unit. overall part volume very a some with incidentally, luxury that's tile, deadening in synthetic significantly. or but own underlay is we that's our in of healthy And our like of unexpected had I a challenge bit we've said,

Peter Keith

Okay.

Thank guys. luck. Good you. good, Sounds

Karl Glassman

Peter. Thanks,

Operator

you. Thank

question proceed Please Crespi, line the of Herb Hardt. from comes Hardt Monness, next question. Our with with your

Herb Hardt

Good morning.

Karl Glassman

Herb. morning, Good

Herb Hardt

stability, comment to speak spending going that term used is on what's and there long on you it release. anything, could improve growth. these about military it? given the more was I One, up one see much the questions. aerospace days especially But with Two outlook XX% the in

Mitch Dolloff

Dolloff. about talk is think good I aerospace, This Mitch didn't because Herb. quarter. lot this Hi, it was a generally we Yes, news,

I perform think that very business to continues well.

We are improving winning profitability. We're new the awards.

anything We we continue standpoint, strong although a have an to haven't flow deals together. M&A put from of

So we well. enthusiastic very performing to about continue the it's and business be

Herb Hardt

Thank you.

you which the pretty carpet raw other were I The be doubling said seems believe to question close material of back pass to some cost rough underlay, to to is, through. you in places

about talked in there You've Or term several that? doing pretty this delay you it this bring morning, general quickly? is on in times able longer a but are to

Perry Davis

Yes. Herb, is Perry. this

reacted have quickly. We

but days reacted somewhat the increase has year, As this immediately. unexpectedly I said, this there's been XX last over happened been, upon last quickly, we kind two tranches us, came and of

action feel. the into is but And increases We when not increases we your mid-end that. said have those wall, bumps affected nobody to and we’ve lead impossible to pass this, we quickly I absorb, the way, sometimes largest November, that's like expect the by with by products led recover, business we to like so the simply this seen. the something the in what of just nose are and And we've there you magnitude those are fully way taken provider with of through, of the

Herb Hardt

you much. very Thank Okay.

Karl Glassman

Thanks, Herb.

Operator

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

Wendy Watson

today. we'll you for to quarter. talk you, everybody participating next Thank And

Operator

today's concludes This teleconference. you. Thank

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

Leggett & Platt (LEG) 26 Oct 182018 Q3 Earnings call transcript