LEG - Earnings call transcript Q2 2022 | Leggett & Platt, Incorporated

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Operator

Greetings, and welcome to the Leggett & Platt's Second Quarter 2022 Webcast and Earnings Conference Call. At this time, all participants are on 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, Senior Vice President of Investor Relations for Leggett & Platt. ahead. go Please

Susan McCoy

thank Platt's and taking in part Good quarter you conference & second call. Leggett morning for

Investor website This not obligation a and or slides website. expressed our remind risks morning you results On The the trends, documents from Hagale, portion statements. set and materially be today our Henderson, Director call or Jeff yesterday's update today answer Textile uncertainties, information we number details. to Bedding start Specialized without our the you remarks are is broadcast have. is replay or Mitch contain to the Dolloff, Platt address the Actual Products; call A forward-looking cover is Flooring any Furniture, President, agenda that questions discuss the and release on with undertakes financial of non-GAAP permission. the Those the is Vice that main IR constitute company points supplement and of and may or Investor call will these statement. follows. need & this and may Mitch Leggett material. of call President Products to President the future of differ IR, posted will no and & and with and as will and outlook results summary Tate, segments; I summary this for President Senior we objectives, portion of press President result operating segment Jeff conference CFO; for Vice Vice to expectations, Cassie Steve details Tyson of of the and including for due Branscum, Executive call Products We made This President revise recorded Relations the yesterday's concerning transcribed, events events, Leggett's discuss along Senior Executive press XXXX; strategies, reconciliations. recorded, trends; copyrighted and in CEO; of and PowerPoint Relations demand financial being group release the a available information

these recent in a subsequent refer release and I'll please For Risk XX-Q press most Statements. sections our call and and entitled risk additional turn of information, XX-K the to now to Forward-Looking over factors and summary the Mitch. yesterday's Factors

Mitch Dolloff

Susan. our second call. Thanks for in thanks, and Good morning participating everybody, quarter

versus associated real adjusted EPS gain metal offset last quarter absorption versus lower fashion Flooring Furniture, margins and Steel decrease Textiles XX% down was inflation quarter earnings second versus EBIT our was continued $X.XX, a demand, mostly EBIT were These a bedding. and and declines meet versus and year's and increase year's X% our our operations successful the market second employees versus strong adjusted end continuing exited business. in million decreases drive in largely of per expanded and despite a significant by macroeconomic, to from was included of versus EPS. quarter quarters, challenges. slightly to were reduced volume second quarter pricing ongoing and quarterly in Last was the Our XX% business EBIT, were in $XX were results bed levels second XXXX, geopolitical, $X.XX. XXXX quarter XXXX, volume of decreased share production estate from quarter and reflecting partially XXXX currency and several by from $XXX Sales inventory million, adjusted X% segment. EBIT. discipline billion, EBIT impact. over Sales record the in pass-through adjusted primarily Rod sale offset $X.XX various a decreased EBIT up of past second year's lower slightly as last with our Products overhead quarter the

guidance year uncertainties, continuing of inflation, full including year. through our back monetary impacts demand and to half lowering tightening the softening the are of reflect consumer policy macroeconomic We

in expect end partially our automotive We demand industrial markets consumer and solid to markets. offset softer

consumption Sequentially, inflation fourth edge slow Now, addition segment up and quarter selling the quarter Raw and impacted on activity, leading in of last was declines has making our quarter. made spending quarter demand difficult. energy, second and have Other first consumer bedding and our historically price quarter. versus slightly general early Products to by energy down costs the I'll in continued year high were only stabilized, began last the European increases, second year, strong the inputs, from demand higher Commodity were levels. manufacturing increase remained Kayfoam in of to at Mattress demand segments. by of acquisition of quarter drawn negatively and seem XXXX. offset the although been consistent. the Bedding X% to Market the steel from was the volume relatively Sales then but move costs of demand in largely soft trade markets. wire in rod year-over-year material-related in during on comparisons including to US

Inventory closely, and fourth are Within the remains stable, monitor service down chain businesses, customer business to well impact maintaining these in will disruptions. against supply we them future we protected and costs year. our trended began to inventory that bedding and carefully while of cost the and to ability have our our since We managing We manufacturing the are adjust customers. and levels quarter time, requirements. to our continue production, last

The levels expect macroeconomic whether the well of respond We further lower backdrop, X% margin back XXXX major changes, quarter and versus or volume no the our These volume from demand segment partially seen offset metal margins absorption were businesses. in Products EBITDA our are expanded by second quickly down, steel automotive under margins, major versus to inventory year low the global half rod offset segment positioned were in XXXX adjusted production X% in vehicle strong second to this in first The in levels. the has primarily remained half current and record Sales demand Provided the year. by strong in with segment responsibly. the industry inventory markets the will as EBITDA April. just lower demand and since all for volumes production mostly we stabilized for demand, at address three remains growth year. in consistent up changes the growth overhead reduced of Consumer meet lower were business. to remain adjusted anticipates currency forecast in forecast gains quarter increased and levels Specialized and impact. from

XXXX. and business, demand duct recovery for see we recovery As to at continue assemblies supply chains pre-pandemic for our production continue the levels, products. several forecasts see continuing years. In improving remains tube Aerospace fabricated through for stabilize, industry seamless should Industry the next demand welded now to and modest indicate

order continued cylinders demand are the industry and XXXX, is expect strong, to in recovery in at in levels. We is the return End anticipated market demand industry hydraulic in record to and XXXX XXXX. backlogs levels

However, backlogs labor late availability the but seeing industry OEM constraints up production. some before ramp and or hampered could it of improvement to global chain We're be have ability longer customers normalize. in XXXX supply our these areas,

through labor Furniture, and primarily & Flooring sales up increases. XX% selling strong partially segment EBITDA should from continue increases our this in Home Products production costs, volume point and work volume inefficiencies level versus higher mid impact, to offset the quarter price in quarter declined to Textile volume. were Home Furniture, lower Flooring. as raw second currency customer price offset Furniture, relatively and OEM material-related transportation We remain by segment partially from due and in margins primarily higher the to Textiles recovery in expect raw our by material grow business XXXX, in upper In Sales furniture, and third backlogs.

lockdowns at macroeconomic price soften, shifts points in to negatively has continued market consumer the during quarter. was second our China. backlogs also Demand The However, down lower coming uncertainties. are impacting by due impacted Chinese business demand and to COVID-related

to to work contract expect invest footprints office from space. companies market, demand as grow sales in their improving in and the We redesigned continue furniture

Geo demand across use civil demand improved retail both we in softening. to Flooring for pre-pandemic grow In and However, EBITDA the hospitality In pricing for in lower has construction XXXX, from by is primarily improvement residential lower levels. demand remains softened segment offset quarter margins sold and volume. second home products activity residential as partially Textiles, with strong the demand products, versus discipline, remains XXXX, expect markets. well Components below

the I quarterly Jeff, strong Before call turn I'd thank results. our over like again once to to employees delivering for

navigate over to collective Your dynamic effort environment. I'll you. ingenuity, us commitment it operating hand to allows Jeff, and effectively this

Jeff Tate

in morning, reflecting restocking of use million, $XX Thank $XX everyone. $XX a more efforts from of to cash million compared last to of working to quarter as and smaller quarter, extent increased XXXX, operations we Working the good capital cash significantly you, inventory capital. In generated year increased reflective second a we demand. second year to in as Mitch, due to lesser up return for XXXX, depletion inventory much million levels the this following continue current but

expect of the to percentage year's $XXX inventory annualized as sales last capital significant we inflationary XX.X%. $XXX in and as from We balance impact cash adjusted ended of with million XXXX, We working a operations of million to continue stabilized, second levels. quarter

one We price share. as and vary or deleveraging The share, $X.XX, to quarter have increased quarter cash adjusted per for cash. million. few on opportunities were In second among an dividend. of price, indicated of accomplished with We This is Our X of $XX repurchases repurchased in priorities dividend returned $XX quarterly last the year's share EBITDA attractive With million the Capital of quarter the dividends, Total Friday's will Board use paying order depending XX-month shares trailing to dividend we one to net debt considerations, May, the funding to based X.X with strategic of share shares, million annual repurchases including over of our at of than closing per an cash. of priority, brings the alternative of $XX the took during unchanged. the of for average million. available and for higher times. level dividend acquisitions share the the the kings. or advantage an repurchases highest cash repurchase an use They quarter the Directors and yield repurchases shares include price past growth, X% $X.XX the years, our were are lower funding upon organic price. $X.XX second ended second million. expenditures quarter at repurchases At $XX.XX uses X.X% of second various priorities X.XX year-to-date

in remained strong positions near our organically and Our decisions. deploying and acquisitions. to balance and strength when on both focused generation, sheet that financial balanced capture us We capital and investment us cash base opportunities, making strategic long-term capital disciplined flexibility through and a while gives maintaining manner growth

Now guidance. moving to

The Products primarily sales range and metal acquisitions the both segment depreciation $X.X to of framework, XXXX for earnings roughly end guidance XXXX inflationary automotive those $X.X as tax continued share offset diluted we mid strength in year full and share year interest expected in XXXX XX.X%. the XX.X% up divestitures. X% XX% now this low Based our approximate now reflects volume million, should guidance reflects be add will approximately fully markets versus also per & guidance are as lowering billion and to are Rod should X% growth, of $X.XX $XXX per of guidance guidance share. assumes margin full amortization increases, continuing earnings digits, material-related prior upon range low our Textile rate year double and business. net raw Flooring volume XXXX. billion sales $XXX partially in our Steel Guidance margin Earnings shares to decrease offset assumes are as expense implemented price be mostly Bedding guidance of in a markets Specialized be to EBIT be reflects over million flat. single-digits, negative full including well and we earlier, Products expected with to The move per $XX to Furniture, XXXX effective consumer stated digits small expected by and impact $X.XX. million. X% The primarily through segment to but down by expansion and low in Products to impact lower from currency industrial to down double up Mitch As sales XXXX. or

financially, year capital full expect approximate well to and end In closing, expenditures approximately and remains both growth markets. million, should dividends XXXX, on positioned, For long-term million. our Leggett in opportunities $XXX $XXX competitively various of the capitalize we

Susan. now enduring turn With our us Our fundamentals over creating I'll in ability for continue the give long-term back confidence to to comments, call our those value shareholders.

Susan McCoy

That questions. Jeff. begin for we're prepared ready we'll your We be Q&A the our concludes to Operator, Thanks, your attention, remarks. session. to and glad thank answer you

Operator

you. Thank

[Operator first be line proceed of Please question question-and-answer We comes with with James. question. Instructions] Raymond session. a conducting Bobby the will now from Our Griffin your

Bobby Griffin

Good taking morning, everybody. you for question. my Thank

I one, up we Specialized the Mitch, first Products full start for really saw notably mean, question. off first, segment I to guys a So want pretty pick volumes on two-part in year. you the

margin need there something lower that to be return areas bit mid-teens what's we're kind more changed than margins to markets? going of that the So there business secondly, the what's are in that to a going little maybe for And of back is to expected just the seeing? a path used Is what and pathway within in little business bit stronger then business kind of detail segment those structurally going on or in forward? that end unpack -- just what's to a on coming back it's

Mitch Dolloff

Yes. Good appreciate participating Bobby. good for question. Thanks the morning, I today.

So, of your here. I I'll think take in a order. questions things couple

and more seen automotive months. First, improvement last And the getting more are the have the it there, by three businesses. confidence significant the and why? they're of navigate chip seen needed cylinders, increased stable. of chips aerospace over the impacted production still to in but all across ability has become in that production guidance several then we volume in hydraulic as just really enhance while improvement production similar although up that's where those I of to well, all not actual think from it's We've OEM's the somewhat labor prior issues,

And dynamic were way less are last so that probably production schedules than they year.

continue see we so, there. to And some improvement

the markets about for I half think versus production first the projection second up in the major is automotive, half. XX%

And confidence holding guidance what your the the kind questions of all us then to really around are good So, one. there. increase margins is the things our up gave those a around of volume also

a path those think mid-teens of do kind I have margins that So, again. we forward to

I things, few in there. think a play dynamics are

at old as now. declined those as that traction. three in I significantly. is news, they're different those impacted times, And industries the of all saw First, businesses there to regain volumes said, I starting we the most knows to struggle XXXX, been right? just it's and for just very, But think this the were pandemic very a hit really but their Everybody

of significant lower said, impacts lower So, production And then from inefficiencies schedules, we as certainly have the the volume, overhead the as are recovery. which some just is I so dynamic.

or last critical, steel if significantly The we the other and products that home quarter more is inflation. talked element of us call about furniture about that that. a commodity the business is of you less impact impact It's started on the commodity like than embedding automotive to it or things this in think

in with the is Aerospace. to downs businesses, in program. starting quarter. would to thing continue industry say, than there So, transportation of relatively made resins year. through second it's a of I life or normally similar been materials, raw automotive not business. cost we had different to or the around built the about works as course year the very we issue. One up, have an whether other last But recovery talked any to quarter just much expect impacts our pricing note significant overtime, go that very, we've fixed maybe and two, over of But And And for in generally cost is other progress, it the inflationary of last I that sequentially had become the dynamic that, it's really the on that or pricing material over that impacts steel built would up this

go program, typically of significant up the a prices unless is down over don't like event, last there and really we've seen throughout the years, really of life the some couple year. So, last

takes time through build sort are it changes. forced chain the pressure price to so And the OEMs that concede to enough then for of supply

not It's pricing to were the these predict exactly of to So it's kind fluctuations. simple tough as industries timing. have as built

to that seen debt and the half timing, number start starting could significant the So, we make the Again, items, year. exactly in to and over price the continue. to be And expect to results do form predict one-off actual benefits a It tough progress second actual ball to take recovery do be build It that continue cost now. will tangible to that quarter. be the delay second some could it that the of we changes have see could we of downs. or but We're rolling momentum even changes. but in of feel confident of engineering is see payments, the

plant. we've that facilities quick. our we also more there substantial talked excess Inventory premium work going talked about that labor we're positions one issues US. progress. – that just real do, Not premium going The the of resulting – in are second but still one down, time, progress area some made We've about improved. Last our down. in operational is making freight The probably thing to in done, having costs are and

Bobby Griffin

good. That Mitch. the side you, then maybe steel I guess, Thank or Very as just details. appreciate a business. the secondly, on was that helpful. of commodity very I And follow-up

reduction the at to steel the margins will deflation the kind of products years to used you since deflation been Leggett seeing to in steel the steel of do started think has couple some have metal that the see with similar or How been over. when last respond we're potential recent steel deflation? a business indexes? of history we've the very have seen inflation. We the all they to time it's commodities changed spread in the Has with – And some roll kind see of long of recently of

Mitch Dolloff

well, the over the we're easy steel hand products and we also teams between Furniture, and and on input managing the the seen about pricing. A managing reduction there. managing then and Bobby, our part in separation – some on side, our Tyson. using flat it are rod But very, question, very with other on inventory have increased there, Great think Yeah. to costs different Home take side the that I'll where bit little

it So on Tyson, I'll one. to over you that hand

Tyson Hagale

little quite But some But started strong to of seen has it you're started we've it. on complicated general all will way some bit. the large relatively Bobby. steel of it – of but think, much than pricing, see energy, that been some go recently, it conversion have a extent we start a do have And helped to to rod seen contractual. is but Yeah. I that's the lesser I Even story. then scrap, it, have stabilize is But I get remained monitoring Sure. and softening of we industrial a and pricing. notice. down usage, in pretty come a some right, as even for have also products business that the closely at hint in as things substantially, don't have just utility decrease. And part changes to of just higher that consumables demand steel-based also, costs general the up, that same We've think that we and a also start think But our into some to increased support bit also

see through as So things those pass necessary. we'll obviously

Bobby Griffin

Thank half. Best you. the of in appreciate I here the luck details. second

Mitch Dolloff

Bobby. you, Thank

Operator

Thank you.

of with Please comes your Maklari proceed next Sachs. Goldman Susan from question. the line Our with question

Susan Maklari

the everyone. perhaps. consumer morning, My Good little bit question you. is a first about Thank talking

your Mitch, that have in demand stabilize bedding You quarter. comments, seen in you mentioned

the as that price customers? you offset that health hold the consumer to general commentary put expect you're state the Can on elasticity about you're seeing bedding, pressures. perhaps in in those You with hearing it just of in especially of any to inflationary your you're of And continuing from consumer, demand the flat. the that, to talk

Mitch Dolloff

I'll take the that, sure. a Thanks question. Yes, Susan. morning, at good shot and good for

there. good the tightening policy are I seen think probably the pretty this it's right? in other environment out It's tough fact I economic tough type stable disorders demand predict, we've monetary thing, a of to with think that but and of inflationary being is all that

in this our inventory managing gets we off if closely think led planning the we and last respond is just of step I that quickly move there cycle, shape. starts to I pretty stabilize, a softer if certainly so be are what see see will uncertainty a to are avoid costs it then all think that costs down. and our decent able gently year to and starting consumer make if that we're forward, least really good it starting to sure we swiftly. But be a levels, I kind starting see businesses down. we're And see in bit for upon pickup. think of step variable to If that, come But take and able dropping in can inflation that little our to us But So I should for at we very really that recessionary ready going super our we hold managing happens very control then to I able been way. really think either if we've that to stabilize to levels. back to it don't that at to or to be able we're production depending

right, happen the there. that's what that with you that's consumer relatively But the the demand So are really to Tyson, out optimistic is world, question there for with any going seeing. I’m think inflation -- we're what's out trends I But big and hearing?

Tyson Hagale

step areas gives than lot of we but when as travel points, Very other some of and also, We've fourth shifting started felt of some of sentiment but things, move as over from impacts services, be at second we but points in consumers last or year. that is been the seen it's levels, Both, us be downs on think we the we've move price earlier And months as of just slowing the spending the higher said, as other the last even some low through we've the then so, especially what I course watching consistent, watch not some through quarter. that thing of nine happening the Mitch One closely, watched continued even react part think, a just especially mid this to from we consumers early activity some get prices lower-end to some or But the some extent, and similar, of feel at lesser a end retail think the the that, inflation of first, pretty staying high like I on inflation they it Mitch. consistency back like quarter the price into also just of moved the and we year. in even the half is, how lower consumer overall, it slowdown the confidence we'll I into we year. really confident and as as to others shared levels.

Mitch Dolloff

low example, impacted side, the -- couple will if years, on more at return more maybe home been maybe really cycle see bit, to that housing trends, Furniture Home even the Home that, softening of would side, add, of think the multi-year bedding don't a think little longer in if outside I historically our business, something market people that we the about right, over norm happened places impact even negative repurchasing that in say last see we I'll of there. less I has the particularly we've of the with see. for traffic in -- term, downward Furniture be even Tyson, all recently. probably And consumer end like this some the that's what sentiment and

Susan Maklari

go macro? things to deteriorate macro what we There's shift in all obviously, weaker business of more at? landscape. debate a are And quarter. has in Okay. following sort to very do the broader as see to the up, lot watching where how preparing are macro determine to the you needs shifted that What That's there. you we is order to about in the a the from you environment think are what a protect you'll the perspective But for than And happen color. playbook it currently where we if about helpful are business, in Mitch, of a

Mitch Dolloff

the Thank kind pandemic. And of the Susan. through guess the we've Great a question, XXXX of in been we downturn you. similar I onset circumstance of with after were before type

that But would seeing we've off, our So demand diversity, portfolio from some first right? automotive learned more haven't I consumer-facing up businesses. then. new hold I that we'll expect think We're and forgotten businesses in our skills that compared I benefit our industrial we certainly stronger say, to

continue able our I that be variable also hold and demand. continue aligning to regardless to But inventories we So do will up. costs to that, our think

we're other circumstances. the businesses. scrambling environment, In talk -- positioned, we're It's basis I regular happening since think of last we as mentioned already up macroeconomic businesses. call good of something, quarter about been our in we've all the since we're little in fourth the on news well on in to frankly, across I a that this there, as a doing started as slowing first that our catch demand we this not see what's bit the to Bedding, well with year across

strong flow. drive to continue We cash free

strong really have liquidity. We

take never be that about was overhead to to continue would we'll future. think us our million allow And cash we costs liquidity benefit In that able as out and mainly I of diversity did have costs. XXXX, I cost, those So things we it $XX those that. But that make investments as them bring back. would and strong as for and we that well. thought would make from to investments. And will that flow been we our I doing our we something cut temporary think about about those And portfolio

more we'll stronger we'll those that, than is demand those advantage capacity activities the to then and implement So take invest cycle. the the to as worse really when recovery slower really to think conditions of from actions, those future that take be demand and improved more have cutting. to come cost we go we'll improve. out if benefit efficiencies, our in capabilities I If well from able we'll to the and radical But we're of back positioned ready it's and benefit be

Susan Maklari

color. else. Thank it great, Mitch. you and over to I’ll turn re-queue for That's someone the

Mitch Dolloff

Thanks, Right. Susan.

Susan Maklari

Yes.

Operator

with Hughes Instructions] comes Our Thank Securities. of question. you. question Keith Truist with from your next [Operator line Please proceed the

Keith Hughes

Thank you.

the ticking And those have margins, heard are of First I bit one down kind what margins? you make they and think, half right. question of assumed comments of that on second year metal about a particularly I sure little you talked the for earlier the guidance on the we in

Mitch Dolloff

Tyson, that one? do take want to you

Tyson Hagale

rod the just In -- we're that take Sure. beyond metal that quick actually, there we've caught think seeing clear that scrap the pricing to for of what us trying impact some had the in overall, a scrap scramble and quarter, to back. it maybe our drivers but input, on a and little I And bit fine But demand bit Ukraine supply. some which the a up second was an seen as drove I surprise, step up, that expectations suggesting were an was expanded around Keith, Beijing, softening people margins pricing. by of actually kind scrap,

in up off. sharp then for of start some But supply we're being quarter, to in soften year, margins expecting a and as overall into generally, fourth saw seen relatively point, compression full to right predict, also But this things still steel we we we quarter still those metal metal would third put we've the year-over-year. some as and well margin consistent quarter all as demand. think with be a the third but We tough higher would costs the we'd still rods energy now, get see modest just in overall In some have the and at bit, just then to increase scrap demand, general second expansion quarter. the backed it's

Keith Hughes

different like Okay. you And right prepared flooring, textiles in it and kind seems talked in you now. of about the directions made comments,

about you kind Can those percentage as just a talk of FFT together of what the in relative segment. how two XX-K. represent Just the those side, lump

Mitch Dolloff

see that-- me it here. If think about could Let I

Keith Hughes

Just roughly on our main--.

Mitch Dolloff

Yes.

Steve, you chime Okay. And that have in, if handy.

that think about about or I the -- the is Steve? -- XX% of that right, is segment textiles of business so

Steve Henderson

textile probably Yes, flooring, about XX%. XX%, is about

Mitch Dolloff

XX%. About Yes.

Steve Henderson

XX%.

Keith Hughes

Okay. was That’s what looking I at.

final guess, I then, question. And Okay.

that compression quarters, the You the couple some narrow price? that to pricing had in on start compression similar earlier to of call, on guidance there. Would next will of margin you see the discussed kind you for specialized the least as lag on types continue more your revenue at based or we get of

Mitch Dolloff

expect passing here. as Yes. I the that we impacts progress the -- margins move of the But inflationary year. specialized there. in us Automotive and of on through and see half said, through we've back in some in the in to as chime Great I increase think sequential made question will help improvement Steve We and we volume the

a hit in half. expect a the had improvement from impacting meaningful of have margins, but back to do bit exchange rates see we We

Keith Hughes

Okay. Thank you.

Mitch Dolloff

thank Yes, you, Keith.

Operator

you. Thank

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

Peter Keith

guess are I Hey, XX% morning volumes want everyone. bedding the to bedding steady just looking down calculation My thanks. a trends morning the business. focus basis. And I'm the about three-year this declines. Good that I volume with on did on at

really headwinds for abate when we're know to happens. I that so And macro anyone's and waiting to it's guess

share? to So, wanted what to initiatives the get of put a volumes in and be market I really betting the to taking ask strategic position yourself going to are sort

Mitch Dolloff

question. great that one. Peter, Tyson, Yes, you let I'll see

Tyson Hagale

Peter. Hi thing. Sure

half So, short, and a high but levels put it's we've chain, buckets it a been on that with, of hard are supply And and medium teams out are our been I'll can some working and our demand, In where can slow you. years for our long-term makes low two with near-term even a dealing some customers. do What we in what and to -- really we evaluating chaotic environment think that customers. with short-term, opportunities things customers, value provide we there the sense. into there

are look risk back year. the we and expect of through those of also to even benefits the those. carefully at of economics we But see half We the balancing start now the to and do kind some of opportunities of the economics as

those standpoint we're VA/VE we do working even to new some have we gain and a but will differentiation, opportunities So, and from a there for now. customers the market. take But a customers to time on some some developments, and time both we tough the the gain are this, do In interested steam right have product just improvement term, things in see actually short foothold in that do run. new it's with that in medium

with been to also specific the you good position public our We're although, addressable medium-term increase be our heading, about we in we're partner, And as to term, in So the content investing to ECS, business. can And been a chain there initiative. size. investments Bed about supply we in also gives place pretty market investments feel been bedding where of well. our our where We've Kayfoam, kind our in invest in of as that segments longer we've our areas our would see as customers pretty Adjustable ability more a increase within our supply components business. continued core well. of and opportunities us over we've at still We've also in our a market like

listing investing the long being a been place better as ourselves through to the in even we've through grow and gone again. of run downturn So we've

Peter Keith

for housing. seem guidance then, the housing and the here. segments. Good. seems some to that further – but impact on getting guess, it your for a Flooring, its Okay. or area bit impact And I future It sales your slowing on on various I like about an weak have Furniture as Thanks be understand views talk weaker home a Bedding the we and to does quite is your economy, could summary. negative And want are foreseeable

that as months? you're over the to you next months So is that something X out contemplating XX look

Mitch Dolloff

Yeah, I think so.

guidance that on and really in and we impact factors Peter, housing think we’ve take out likely market there I housing think is consumer bigger and that's our understanding helps mean, We that, period that, – uncertainty think there. but But us this predict it's the to movement some as including have time. the with tough a there's impact, the I exactly last that there, anticipate factored some have the I what to least we've at macroeconomic as said impact. other even and of over sentiment was

Peter Keith

good. Very so Thanks much. Okay.

Mitch Dolloff

you. Thank

Operator

Thank you.

with with line your is Maklari Our of a from Please next the follow-up proceed question Goldman Sachs. question. Susan

Susan Maklari

Are Aerospace, bit shipping one we've through flowing you start coming XXXX? coming increase there, of is cylinders? question My approval can hydraulic about in of are big half some in it that about in back the I margin got the obviously, thinking the to little But you a in through? or that about as improvements relates and how that Hello, you. seeing just improvements talked talk mean, again. well Arrow you is, to the and lot first auto improvement Thank products. some a supply improvements, their as you're as contributing within chains And about in the specialized. that, thinking to OEMs into there production and one how are

Mitch Dolloff

outlook Steve, great that Yeah, question, Susan. think one, us. it's a take let positive I'll you. Thank you for but I

Steve Henderson

Yes.

expected morning, at Good recover. hit are demand Aircraft, said, as levels For tracking we backlogs Susan. as will that and sure. to continues Yeah, XXXX the as is industry about much And growth pretty Aerospace point. their XXXX. levels near peak this Mitch the

So the demand We volume saw QX. growth there. in year-on-year is sequential

We expect forward. going continue that to

also lead side see delivery the demand taking norms. the extended we As things being expedited quite And tubing becoming that business. short the business also starting we're starting for same is into see we're Automotive, to materials, now our and assembly starting that orders saw industry quickly. in pulled Mitch mentioned, assembly – recovered returns the the as lead to We're times the consideration. to to see raw of of times some some that And forward, for has happen

with the XX goes of in backlog. The the sitting in the that We're backtrack North think don't really good about remains strong, Hydraulics, market situation America, is end half also of production months we capabilities. positions seeing year. our which reflected their business OEMs well for the job second orders, on dealing is team a our that forward. for So that particularly doing market as it forklifts of

Susan Maklari

Okay.

Just…

Mitch Dolloff

of to Steve, ramp-up little the that say up, we ramps just and in you both as when but Susan. place in half. likely I'm improving the going a in taking to go businesses, confident we hiccups much those are really see back production as of Sorry, bit more say, production

Steve Henderson

Yes, certainly.

Susan Maklari

those the is pressures inflation go the is that things to can the of, talk ECS, two, back seeing And availability want cost are But to on oil, I you those inflationary helpful. that you in very lot there. of That's go what talked more margins. question. you're of inputs? terms And side? chains in One, We the perhaps a of Okay. key what the lot metal of supply about seeing other back terms what sort input the a thing to to in

Mitch Dolloff

Yes.

one? that do Tyson, question. great Another you to want take

Tyson Hagale

Yes, Sure. Susan.

storage to if even some give some place beyond And taken typical point, there actions supply never clear that it. all chain us standpoint supply there market but for tanks this the allow supply terms would constraint. to us that while things good. and of a we've been was gotten in are about in things insurance back we've stable gives short-term and problem, supply a our good even options and at a really say us a up We've to stay from just So covered hesitant and with a feel

we but terms energy our feel an of had stable. where been impact, They've been costs. right, costs you're In relatively or have pricing, like have prices

softened, things think, of as to it's seen. more similar some market energy I has the so, other stable. probably in some we've chemical costs pricing kept the the overall And have demand But

have increasing that more trend been an overall seen chemical haven't with prices We stable.

Susan Maklari

Okay.

one I sort in or us That's the terms a going of one How for anything if remiss Okay. be of And like you're decision? $XX to forward. didn't the more that, drove the you'd bit squeeze overall Jeff. about I'm you here. you to mention capital to quarter, this that of maybe more million that the And this share buybacks with helpful. about can to is little stock thinking in the target willingness did for structure back what going just leverage a I'd with perhaps, business? buy continue that talk of

Jeff Tate

$XX morning, there. of Great. Good Susan, thank million the you noticing for repurchases and

think it's past with team our deleveraging since acquisition, important around really the our the about start strategy. the as us we overall has positioned has think efforts over well, made I because capital think allocation few that to the years ECS that I progress tremendous

share dividend. our And and funding supporting around if But deleveraging million because active growth from the remain we've shares But opportunities that well look about the now second M&A much ourselves the progress, repurchased in quarter, in around you allocate strategic positioned be made as Our maintaining we more to our regard. repurchase still saw we our a growth, we've $XX priorities that flexibility share aggressive where perspective. we year-to-date, million more period. were price during of, and organic X.X

our time, repurchases towards monitoring the Susan, opportunities, other while context in to we're at we flow to share our the of evaluate going same As cash the operations. look our future, continue from investment

that So as it's we investments. quarter about to think and each compare opportunities other things every one it and have evaluate we'll our we of those

strategic it's that In which our ideal there things. your a that to target, view think we growth opportunities. an allows to think, we net that capital important to the terms leverage us question structure to for to second us One debt EBITDA, do pursue is range around of I about around of target maintain a feel have couple is for

can a then And profile. Another is that around maintain we solid thirdly, our returning investment-grade cash shareholders. to ensuring

And leverage again and metric. on in publicly If XXXX, well a as total times to debt maximum basis a May net a you stated of with rewind X.X EBITDA. our a last metric covenant net back X.X target XXXX of amended the covenant from total from to we facility our September the to revolving a standpoint then facility of of credit time successfully forward XXXX, amended retained ECS debt we was we the to that of from a Fast go our the debt in a standpoint debt leverage to times. time acquisition, at

debt it's haven't But be well a a X.X forward. it will moving of to we is target we something net -- Now Susan, basis. updated times below assume, that below what leverage formally feel safe

Susan Maklari

today color the all half. appreciate I Great. second and with good luck the Okay.

Jeff Tate

you. Thank

Mitch Dolloff

much, Thank you Susan. very

Operator

McCoy to I'll Ms. Thank you. comments. Ladies and our gentlemen, back final question-and-answer the any this concludes for session. floor turn

Susan McCoy

again third today. for when us results. Thank joining speak to we report you November We'll you quarter Xst, on

As release. always, Hope in the Thanks. us press if yesterday's has day. a contact you everybody using have questions, good please information

Operator

This you. conference. Thank concludes today's

participation. disconnect your time. you this your for Thank at may lines You

Leggett & Platt (LEG) 2 Aug 222022 Q2 Earnings call transcript