Earnings call transcript Q2 2023

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

Operator

Greetings, and welcome to the LEG 2Q 2023 Webcast and Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Susan McCoy, SVP, Investor Relations. Thank you.

begin. may You

Susan McCoy

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

Talbert, On IR; the Tyson Bedding Steve Branscum, call Ben today and of the are Mitch Dolloff, the Furniture, and Vice and Vice President President Director Manager Flooring and Senior President Specialized Vice President Products Burns, Products of President Cassie President CFO; Executive IR. Executive Products and segments; Kolina segment; Henderson, Textile and of of Hagale, Executive and CEO; and

our agenda answer outlook follows: Ben in trends. operating The XXXX, for questions points of morning Mitch discuss will call group demand our have. you made for this the will and the is cover start yesterday’s we any summary and and as press financial release with will details a results address main and

A conference Platt is our not transcribed, & recorded This or call We the Leggett’s and website. is permission. to the is recorded Leggett without may being material. this reconciliations. This the segment press IR portion Those be replay set call supplement broadcast of and the along available discuss from we that for website copyrighted PowerPoint non-GAAP financial details. of the slides IR release of with contain documents yesterday’s call, summary posted including on information portion information expressed

a revise or to constitute to update statements. due Actual obligation forward-looking I need events these the of to objectives, differ company remind statements. you uncertainties, that and materially remarks results no events, strategies, results today concerning risks or future trends undertakes expectations, may and or number

most XX-K Risk to yesterday’s factors and sections and risk subsequent forward-looking information, press in Factors summary statements. and refer the entitled of please a these For XX-Q release in recent our additional

Mitch. now I’ll the call to over turn

Mitch Dolloff

Good morning second participating call. thank our and in quarter for you

has department as deep led our and to support years to led strong knowledge and Platt. welcome our capabilities of internal our stepped benefit financial will functions, audit most and recently company business benefited with June logistics including role that ability to CFO continue effective like into procurement, a served & business, XX. Leggett our has would XX and who Burns, an brings services previously the been drive Ben change Ben Ben the risk. I and First, for Treasurer

turning aerospace was and versus in cylinders. in Now raw results. quarter to quarter Sales residential sales. and quarter Acquisitions hydraulic the growth to driven partially down second by demand decreases. continued added price lower by from automotive, softness offset volume were end in X% decline volume material-related The X% XXXX second markets,

were quarter from million the of tornado insurance and earnings $X.XX. Bedding from proceeds or share April $X.XX Second share per a shared net Home $X Furniture at This manufacturing facility. damage gain included per

volume primarily lower in Excluding Earnings share end adjusted in metal were and rod $X.XX. per item, decreased from lower this residential margin steel markets our earnings business.

operations up million, $XXX of versus Cash $XX million flow from was quarter second XXXX.

of our year macroeconomic lowering in and to volatility continued end low reflect are We markets. visibility several in guidance full our environment

the year. end a in second of in guidance modest anticipated previous residential the Our half improvement markets

have see by in recovery to trajectory are but an encouraged We industrial the residential businesses, the continued our in upward markets. yet

the of flat Bedding with our second the be outlook. improvement year. to our back previously versus and in on of volume were XXXX. market results down Products Moving segment half XXXX XX% segment to Sales expected quarter modest business in We

seasonal May quarter improved from market the second expected. than sequentially April, June lows and Although the weaker in was in

optimistic in less In and market customers from earlier year. addition, than the broad signals are the

XX% results mattress and of high in the full XXXX. down XXXX. year This to digits to volume digits, XXXX single down to from We at back peak now expect comparable levels. will demand versus be and mid-single XX% at be or slightly levels the in consumption the year estimate below suggests remain current This consumption will down half

specific volume but through is until there our the quarter, within declined the year. some was rod variability of Trade market, generally with first was industrial the last Steel third the rod overall categories. year-over-year plans. quarter the half and production product initial strong as of In demand consistent tracked wire volume year

previous now However, historical versus align XX% be full current expected historical year with production below approximately is XX% demand levels. below to levels to of our expectations

but in tracked second the which we market. market open of Spring trends. innersprings indicative quarter. coil positive volumes to believe versus last U.S. the down XX% ComfortCore in overall Lower near declined wire was is Volume priced unit declined broader more, or and foundations year,

Successful Volume mattress up and as toppers. in in customer to finished growth led was base specialty units our such accessories X%. foam efforts diversify to mattress

expected, metal down first to versus and anticipate the of we margin year, narrowed half the metal mid-teens As in still margin XXXX. be

be headwind Market margin. earnings and volume impact continues to to the greatest and

challenging our continue shifted strategically market teams attractive recent our customers the and environment. However, at the internal and we’ve to bring improve focus product our years, work despite capabilities value points. by price Bedding expanding In to content capabilities to growing in

has content towards to each points higher within business mid price moved unit. components innerspring Our end more and greater

to high business for to the produce an additional specialty increase for partners. grow, to providing content. products approach enables allows differentiated us foam branded and quality our our foam strategic components interest innovate adjustable Consumer to products in improve for specialty opportunity customers us us beds consumer. end and Our finished This continues with comfort

our on market We three profitability areas. increase key and grow by share focusing to intend

customers. pursue our our by opportunities First, costs we offering proposition to continue product value total reducing to differentiation and for will production enhance OEM mattress

combines perimeter our that sleeping airflow. minimizes example, a pocket column and improves partner create foam new and motion edge disturbance fabric-encased to foam innerspring specialty a from For innerspring and combination

allows lighter commodity new based a environmental another unit. lower that ComfortCore process, product their replacing reduce manufacturing under and Eco-Base with customers non-woven to is our impact material a polyester foam by streamline cost,

specialty is to second area Our of improving focus continuing performance and costs. foam’s improve

area operations maintaining is flexibility opportunities inventory. our will of drive And development innerspring for foam of manufacturing our focus product and production appropriate and our levels and of integration savings Continued third ensuring gains.

flexible polyols and customers additives and chain. position value and in vertical efficient integration is to anywhere competitive the our specialty steel Our products From and machine service unique. innovative of technology that our wire, rod

is bring end positioned value our business and to Bedding Our well consumers. to customers

shows the and X.X% than increased in in global is anticipated second Products in Specialized XXXX, quarter as major July markets last XXXX, earlier recovery forecast in growth Sales XX% driven inventory for businesses. of year automotive Hydraulic three in the stronger segment industry seeing of versus completed production recovery August our by year. acquisition in The production the and the continued Cylinders all restocking

industry progress and supply and in regions. half our business second different macroeconomic we remains through the recovery expect dynamic year. chain volatility bring geopolitical automotive Cost impacts automotive to we of While the move further as production improving make across continuing is and

heavy Strong moderate in-market the demand levels, as have and material allowing backlogs handling in Hydraulic labor and Order in improved, Cylinders supply production of year. through chain equipment increase segments them the is started elevated remain the remainder our at market customer issues construction expected to levels. it but to

chain of Aerospace OEM the build business, fluctuate industry however, second half remain recovery the backlogs we as on In year rates availability. expect strong, supply demand based continues. strong in our

price quarter Sales XXXX. versus volume in also were down point during The Furniture and our second fabric demand Products XX% impacted Home demand Furniture, Flooring softening. of Textile segment with converting. the slow remains lower & high-end quarter

improve, continue demand the across for the improvement through While market inventory fourth in quarter. to levels third the expect to potential quarter soft some we remain the with

quarters. remained previous low demand use end levels consistent for both with products furniture Work at contract and residential

demand expect year. continue to We levels the at the for rest these of

softened below what in in than In pandemic stronger we In anticipated. seasonally remains improvement Flooring geo remains quarter, activity. slower typically and civil products, continues construction retail back residential slower demand improve improves levels. components, slow to expect due softer is Hospitality but to home as sequentially is the largely half year but demand of demand the remodeling pre a has

are We businesses. effects impacts our on areas within the addressing macroeconomic on of emphasis and our our control the maintaining proactively improving

which have have our job done demonstrated we driving new cash as employees in which Foam segment product with engaging driving in as of year-to-date earlier mentioned $XXX we our capital and of excellent improvement American operating North and progress continues in as flow working strong customers facility million. our done Bedding automotive efficiency improving cash these a an management opportunities, on by operating efforts, commentary, Our some in include Specialty

and focused Leggett Our enduring execution & long-term success. fundamentals Platt for position

I’ll now turn the call over to Ben.

Ben Burns

million you, working capital $XXX than second This operations improvements, Thank In quarter, in of million the and generated earnings. lower good the higher partially we everyone. we Mitch, second from offset morning, reflects $XX million, by increase cash XXXX. generated $XX of quarter

operations XXXX. as annualized is with a million elements of working capital. sales to to XX.X%. ended expected Cash of million from closely working in all be continue adjusted to the of $XXX percentage capital $XXX We control still quarter We

ratio ended outstanding at and The requirements and billion, quarter maturities declined adjusted to paper of debt including no X.X million but debt debt maintain quarter times XX-month with has commercial XXXX. significant our recent EBITDA second to expect liquidity. trailing increased comfortably until Net We continue to has we in as end. total quarters, was November covenant EBITDA $X meet sufficient of $XXX

debt will down investment-grade on improve We increase time excess pay we over and as ratio cash earnings debt. focused ratings are to this expect maintaining to use and

quarter the facility. consecutive million one than $X.XX of price, in and June higher under kings. capacity X.X% of to indicated dividend hand At of dividend. $XXX of XXnd marks dividend was revolving per of X.X% or $XXX the highest yield the last year’s This credit $X.XX Board quarter at remaining million Friday’s year an increased Directors yields annual In increases. share, May, of our the annual based upon liquidity Total closing our million XX, our of comprised cash among $X.XX, $XXX year on dividend second second

in We disciplined a and deploy to our continue manner. cash balanced

prioritize $XXX For acquisitions we $XXX and million, of share repurchases we near approximately $XXX the minimal the for in million spending approximately expenditures of million term. full to expect debt year and reduction as XXXX, dividends capital

They cash Our uses available funding include shares long-term growth, unchanged. order priority paying acquisitions of organic cash. in dividends, and strategic repurchasing of priorities for with remain funding

we XXXX. yesterday, year are earnings announced X% billion are to $X.XX billion our or down sales and X% be full expected sales to to guidance. As versus now XXXX lowering $X.XX

and guidance and Products digits. with mid-to-high the digits Products down Flooring mid-single Textile products single down reflects specialized single high up digits, digits Furniture, mid-to-high volumes midpoint single at Bedding The down

$X.XX guidance expected per insurance currency acquisitions of the digits assumes The X% approximately completed approximately should of sales range now $X.XX to reduce share the $X.XX, XXXX the including share XXXX. for per gain we XXXX are to of expect in year. to recognize combined add from also proceeds be sales in and net in to is deflation expected earnings mid-single and impact

prior of versus $XXX adjusted primarily year guidance, markets. net expected of Full decrease earnings end are to assumes rate of of to expected year be with now $X.XX, million. share guidance and approximately million, residential amortization interest fully XX%, tax in expense diluted EPS and a per shares reflecting million $X.XX approximately $XXX $XX full lower effective the depreciation volume

to year higher we operational expected guidance margins X.X%. this inflationary several adjusted upon the margin pressured be framework, margin primarily with Based input to our raised impact Foam is being X.X% markets, Specialty range be costs. volume prices by to percentages EBIT recover lower factors end the inefficiencies to our and selling full as and continue in on largest residential EBIT

expect forward develop will we of innovation differentiated as volume, our margins cost Longer higher pricing efficiency to drive improvement we products. closely material continued our fluctuate. costs stronger going work discipline and drivers to margin raw customers with and term, improvements Important as be

capture to us committed and discipline This opportunities. employees strength. along long-term to navigate tenacity the our our allows financial are uncertain We dedication of and times long-held maintaining with

the back to I’ll comments, call turn those With Susan. over

Susan McCoy

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

Operator

Maklari first Please The Thank Susan Goldman Sachs. Instructions] you. go ahead. from of [Operator question is

Susan Maklari

you. everyone. Good Thank morning

Mitch Dolloff

Good morning, Susan.

Susan Maklari

question that first is some and business. on out. of encouraging innovation is some My you the about It’s hear the the to Bedding coming products of talk new

And new those should about about that in business, cycles the might in? bit think play? be you you there? how their how those the of a life role thinking – As can potential the stage what about products And that recovery are talk ramp we

Mitch Dolloff

Tyson, that. asking take for one. that Thanks question. good you Very let I’ll Yes.

Tyson Hagale

products his comments Thanks. on covered a Susan, for Sure. Mitch we’ve morning, working are that the thanks Good Those while. question. in for opening been and that

products. there customers talked of I in heavy our from past calls chain new the on some that was our stable, as get pandemic, And more of supply. focus started the on working this think about supply to then some we’ve we conference heavy, a had during more interest on

still now are but commercialized. those both been so our in for pipeline early being life are And while, cycle They’ve products. they a

will the early market. those for selling interest stage. customer them – grow, still them products. good so but they’re in time are It to strong It will there’s into We take

of But we really as we’re ramp also out. want very to support those as our well, that them mindful up we customers we roll

improvement, a time. gradual the types of we’ve for I’d say a they’re but worked examples So, good innovation on long that of

If where then perimeter and growth now adding then we’ve continuation combination just you to differentiation help more we but them more reduce of ComfortCore think consumers, either comfort products our of content, historically, also manufacture. additional a or with ComfortCore cost and not value back it’s add end for can where make where it, but to for OEM products it pocket and easy or eco-based, labor content we’re the edge, to like been adds customers,

we’ve I those products So, types and continue to long a hedging pipeline. time, continuation been where into it’s of for of add think we our a

I is to that Mitch I’d didn’t area Another from mention, specialty business innovation think as our foam but like add well.

some with of sustainability. have the products weight pipeline then there help both foam and in specialty products also We that good the

form that are and in way we either our integration our are for apply to through pretty all these specialty into And things product all a foam. products because are also customers. products complicated provide good manufacturing the through machine the all to we those to finished our of back have way our machine they business that add technology technical with or So pretty can well goes component

Susan Maklari

color. segment. Tyson. you, Specialized Okay. maybe And That’s thinking then a and about bit gears switching the Thank great

production You a nice like auto did there. coming sounds surely but see recovery back. It is slowly,

global see And as any a of leading of there sort about it of perhaps perhaps in you versus are are the you to areas move can stages are how where auto, the thinking trajectory As nice further that? think you as lift and the to different about along? different geographies the are lagging – macros that relates continue things

Mitch Dolloff

while it’s It Susan. that and improvement, Thanks, stable across that really now. bit America where I’d Yes. more different has and and continued a dynamic volatile. the are and a right see for a China Europe been we Asia bit little most little now, been say the case it’s regions been North probably in

year-over-year back little for now very still in bit disruption. China up seen that EVs from up to created You’ve X.X% outlook production to some April little But the change of we when this is based has about the the shift were especially of is there. a over IHS year strong. in that’s X% The on data, and

some So I chain you as occasionally, And getting seen, that of there’s does that still better. think dynamics that some right? also inefficiencies it we’ve indicates the supply But said, and create is issues. some

and is X%, opportunities continue frankly, years longer-term the CAGR outlook think the or efficiency stability I too. next out I so a so stay four to increase will there there just think of operational under over is us be continued to and and maybe, there growth for

production million about in vehicles in indicates And forecast XX total XXXX. markets. the there the XXXX, we was major latest get in So

have still we improve. room So some to

Susan Maklari

you perhaps more I’m be congrats Okay. the anything will role. you the sneak to That’s you can new perfect. stay more will welcome then Perhaps what Ben as same? in, you’re which And on CFO, come your position? and on And this on different? going new tell is of role focused us take What as one that into

Ben Burns

CFO. to Yes. just Thanks, opportunity to this and comments. excited serve I’d step very as have the and morning role thanks the Susan. Good Yes, our to for into appreciate say

community. integrity, our Really, Some more with or high of access for values level the very same. I’m Leggett’s and things aligned the Clearly, personal will transparency I think that values. investment stay

being are to of and will focus really uses Also So that a flow consistent. cash me. have value, will cash on really focused strong a driving see very those to shareholder not that strong Also, improvements. margin important you’ll commitment our on be driving so disciplined change, I

and in leaders results. I businesses. and driving some some and think developing it I come really with partnering our As about about I with developed have businesses, very partnership I think our can in this relationships drive serve with help close thinking the how some strong role value, business I’ve a into connection roles best and how just look years and that just leaders their forward really those with collaborating prior can them over them to about

spend our efficiencies, technology looking and I’ll then thinking how and focused that finance function to make so those on also and be just process. we teams working how routine creation value really drive we better about that do how we our modernize add drive use can we thinking time, and over thinking and more of about about that and optimizing time with

So we as don’t quite time on them. spend much

question. get excited So in to and work, I to appreciate really and jump the

Susan Maklari

Yes.

Okay. I’ll for And color. Thank you that re-queue.

Mitch Dolloff

Thank you, Susan.

Operator

is from Bobby go Please James. ahead. The next question Griffin Raymond of

Bobby Griffin

Good morning. Thanks my taking for questions.

Mitch Dolloff

Hi, Bobby.

Bobby Griffin

for me, I volume more a of back wanted there. First margin go significant of pretty kind well on. just and a two Products little know lower I to segment going bit as year-over-year as margins We decline. basically aspects metal had of the the some Bedding to little understand kind maybe up there’s bit drivers

it at from some the maybe around you So, color some in impact get help quarter, when one-third just trying is context compression biggest the it metal Just you volume even really business the related? volume or provide EBIT in two-thirds the on declines. can margins volume that driver? the in Was more and the margins look to

Tyson Hagale

Sure. Hey Bobby, this Tyson. is

margin, what towards inverse the out. of heavily more metal it’s probably year-over-year, you threw So weighted

the So remaining volume. probably metal the approaching two-thirds majority being of are margin, one-third

Bobby Griffin

is about is of my guess metal two-thirds, the off think I we versus historical then protect – question margin moving pretty how we backwards. when I one-third impact. mean, of towards more that standard Tyson maybe next elevated pretty historical I back do guess Okay. of if we sizable mean because margins our was that a little way still when a are that, because And bit standard we, the a

Tyson Hagale

this the about well. past And point, in Sure. this we’ve as talked at

it’s last At the We the decline versus our scrap. that dynamics of pricing, increased remainder industry have the shared it’s rod other and in by costs, beginning point, being at seen to pretty utilities, just margins is demand supply to change driven levels. somewhere see general just expectation be the at labor, steel around U.S. a is which we around we’ll consumables, some thought probably see in we pretty of our year, of start inflation is year. by mirrored metal close well that the of – and When conversion the to then Part that down steady pretty just the year this mid-teens, products in environment

still The a one we hit half improving see the we things longer to the But there. think we’ve some have of margins. lot while, So consistency far hard talked really around have margins. it’s year, we’re on working by through that profitability But term, but and and of predict. volume. we number biggest profits around it, we That’s know about that And driver. a this been and the for last I

this but ECS, too, also area covered work. some another big we’ve improvements before for Additionally, in operational

around our Spring improves. the even of those, business our and market even taken some our costs. cost has think diversifying actions specialty in of some started phone so lot A as progress we We’ve will volume base. fixed of customer lot our as stick semi-variable We reducing material also and a both U.S. been been busy business, making has far soft;

feel we’re benefit short getting that like in things start are those to the some So from. going run, we even

but as still at support reduce we well ECS impair opportunities We us small facility salaried of we’re operational customers, working a And some hard ability and costs. help had would nothing some reductions just as lot our have manage consolidations, have our on. to through that that headcount improvements

costs through ECS. and development in then different and of root Our both through just additional synergies and finding to some really Spring reduce cost teams working U.S. are ways savings our and causes

levels we’re So, we’ll those to we confident we’re on things had things, in back and a past. us have we’ve working get with that the lot help of profitability the to

Bobby Griffin

there might uniqueness quarter – appreciate more is pretty think volume this is kind second was stay us be on really to it with the ECS. standpoint a from growth is that inefficiencies of cost? And X%. surprised is I actually – at that that. me might a some Okay. read I question, X% valuable number? nice was is maybe too But Was the this on my Tyson operational volume not as probably quarter Or for you, there true because

Tyson Hagale

No.

volume are We improvements. seeing

our business is As important. the of about, we’ve talked customer diversification

customers the across we aligned As we’re the was decline market even more digitally native with an severe even where rest. customers, it greater bedding, ECS, saw the on market the for overall softened more our had than just in that

lot we of recover grow some partner trying slow we are really take that. though And material So we things even customers, offsets has our where the just a some new also to business. as to have costs, our And market to efforts are the some a given for allowed making improvements to seeing but specifically on with we in while have us going most to been. softness, improvements, volume from it’s

long some we long equipment short and onetime impacting we think obviously the up go through some new off some run. in will in taking and so but are at us We’re start facility costs programs looking pay we run, They’re also as the run, on the changes.

Mitch Dolloff

D&B side, right? that’s both declining, the that as accessories, talked as the go volume finished On to mattresses programs, about, well make an a It’s right, that’s volume to in we new up still as have but ways you opportunity.

Tyson Hagale

right. That’s

Bobby Griffin

for Thank guess I the lastly you. is me just balance And on sheet.

with the the flows Or add year. type any bit of net you times get have the cash three possible for Is you’re to back EBITDA. back missed the of year? to about near-term of under want a ticked it see there? the any remarks, type Do corresponding you target? by commentary You of the some leverage here of end for prepared kind leverage up the guys guiding in But tiny half

Mitch Dolloff

covenant let on you our that right? one I’ll calculation too, a little too bit that’s take Ben, and is that leverage different, note Yes,

Ben Burns

Yes. question. It’s great a

by a We’d ratio Mitch And improve near we our And expect improve our to a XXXX. just publicly debt in what potential we’re as say third into but then we’d to for different quarter, modestly continue the go little maybe and leverage, range. to up yes. So, similar think, in the the of begin peak to really that mentioned, covenant the more is and year bit report end a calculation just bit we and a favorable us. of than

So X.X there’s headroom than a would more indicate. little bit there the times measure

So, net but right $X.X to a means don’t having in investment-grade specific target under a debt a range. have the our company, now, view, to but strong in in million EBITDA are long-term being perspective committed we we which, from

Bobby Griffin

I in of best the appreciate details here all luck quarter. transparency, the and the third Okay.

Mitch Dolloff

Bobby. you, Thank

Operator

The Truist Securities. next of go question Hughes ahead. is Please from Keith

Keith Hughes

Thank Bedding you. Products is question in My as well.

are half. we see first of steel In my expecting guess than declines to in what out? we’re for is, terms to half how pricing the year, going the the similar saw of you I question second play

Tyson Hagale

this Good Tyson. Keith, morning, Yes. is

continuation just what covered probably Bobby, of in where metal terms margin. some been with like So we’ve still we of

As seen mirrored we through cost that see in we’ve innersprings, deflation costs in to scrap. passed some rod

of margin. more trend see a we continuation around our of So, metal

kind versus tends of through costs, in teens being be see that low passed the deflation there to supplemental At that overall as in You see can seen year. chemical are we this down point, the well. pretty pricing we’ve stable. Many last reps slides,

majority there, indexes our steel be were manage contracts our portion the a have down to as aren’t, from going would going of for of business large up. us covered where fair cost that and we we’ll pricing, we those impacts Pricing by

Keith Hughes

to decline. this I to figure haven’t you anniversaried I’m so zero. down is going guess when trend towards [ph], just Dolloff out trying the

Mitch Dolloff

we right above, rod that think pricing kind way, have Hagale? chemical way. say pricing, that a both I’d think, I long are still of I mean, levels, pre-pandemic way still I on is

Tyson Hagale

steel until just And last were really right. sure, pricing fourth metal increasing overall declines about see the if margins, market the third we rod That’s seeing still quarter didn’t think and year, cost quarter. this you in start and happen for on to late time

Mitch Dolloff

guess we’re if – guess deflation, moves. radical seeing like some we I And to Yes. have modest it would say seems I but that not

quarter; most business, see going first rolled the be hot down. second of in it’s come a it example down for then things And up in quite good we lot bit. quarter, For it much. part We as example, and went up A would in steel. Furniture not use our some back a Home the quite

So, would I little have chemicals bit. little but a see to I things ways. volatile, probably more than to we’d move be continue tend normalized They specialty bit that really think down say a in up, a not radical little bit but

Keith Hughes

Furniture, Okay. the question, Products, Furniture, in number flat stays if different other in year moving And half but directions. two Textiles, versus Textiles commentary Flooring your pretty one Bedding at it unusual I are is that digit weak. like a is and look categories for and single It decline or does still look Bedding low towards Flooring in those the seems trending second

what difference So do between number one, you is that correct And them is? think directionally? the

Mitch Dolloff

think here let Yes. But our with more well. bit you it’s I do portfolio. a to as in Steve, little I’ll jump

pretty portfolio a FF&T. We in have diverse

the So also market. to pretty Home Furniture, is much bedding I office-based bit residential, products. little market, It Work but some residential think, close very is end different. furniture a moving is some

to it But our are a low. coming different. and back it’s textiles last it’s quite pretty and flooring fell year, businesses life, bit probably after then so down is down And

think, I bit stronger. flooring’s, so little And a

almost a things civil seasonally, of is that some would of Textiles industrial the we like holding seeing more see up. increase better. construction, that. We be private components portion it’s that big see construction, We’re normally is other that kind same the not to but for areas facing, geo so there

I what drives think the So change. probably of most that’s

Keith Hughes

Thank All Okay. right. you.

Operator

is Peter The Piper question of from ahead. Please go next Keith Sandler.

Peter Keith

morning everyone. Good you. thank Hi,

at Bedding through any at the looked it maybe pretty a that’s volume trends what like the Just looks curious pretty there QX, hold to the segments kind Furniture quarter? looking similar weakness guide down, quarter resulting the and improvement Did it the was the of in level? progressed? Or as the in came in consistent but like trends

Mitch Dolloff

take you don’t why Tyson, that?

Tyson Hagale

the Good jump first. that you. Thank morning, Peter, Sure. on in of I’ll bedding part

market. we then reported on which quarter. more improvement we in as probably the about broadly we was. I the conference But went saw being through and even seasonally call, what was Actually, expectation what’s think April, our is did see down, it sequential been we our talked last

to So back April quarter towards from the last that more the and And year. November October, of third in improved more that May was saw that levels in the point quarter then and seen, first probably year. we both last down June we’ve of levels

So levels the in it steady back while. didn’t the been in that that out just offset a more state we’ve the peak softness but to of sort April, for at

Mitch Dolloff

I Steve, think there end very of home on in be market a add might some the demand would furniture little but changes bedding, bit furniture? be anything like consumer different. similar the and And to you’d

Steve Henderson

I of the been bottom bouncing quarter, just starting there. but the when the hanging quarter, I course to lower the end say. the to probably saw end had start low the started, And Yes. in the for of that say over [ph] would mid-end low we’re feel the increase was then end we to quarter months, like, a decline around as And would and of seeing well little probably bit through at market. just in high recently

we getting stronger. demand. the stronger in third and of then that’s a the in started depleted. to end quarter to out it that’s think being channel weak inventory was little a into little little But that now primarily terms the So due a I got

Mitch Dolloff

Yes.

out much. while. end I would too backlogs think I as are I think, benefit for a – we And Steve, now worn thing had add the of the those particularly the pretty at higher is other quite

what to that – deliveries evaporated. that is I so And tailwind our to customers think sales us,

Peter Keith

I furniture Yes, home was going about the ask Okay. to decline.

you’ve So addressed I think that.

to So I the bedding seem to volume the on does pivot in has maybe the XX%, declines. like Spring QX. to even and I’ll and spring industry basis. QX volume the with maybe better a QX U.S. better gotten guess continue down get pretty It here down similar

why up help Can trends a just Is mix volumes issue are volume holding trending frame some there of the Is towards steady. Your within share loss? kind negative? there customer less aren’t you springs? us

Tyson Hagale

here, I’ll Sure. in back jump Peter.

we pretty way it things the are look consistent. at So is

think we is market been getting kind with Looking the talked trending, that broadly The our across been for of the of less similar we’ve year. pretty in the about half optimistic where from back April signals market overall, would the see customers things we’ve I the weakness.

I think this would were entering that the improvement last year, part the there we early year where seeing was we the kind from at part of optimism of last of year. least some start and modest

lot in July standpoint customer in a that and volume more to Mitch mix there’s back of a just opening But But in think change adversely don’t but Memorial no, grids from especially the business, comments, improvement for the of within are coil open dampen than expectations with our half. the Xth I within products. a covered our modest Day his ComfortCore. impacted seemed

think and I the consumer on both end pressure market. that’s lowest preference the of just some consumer also and

customer of issue is So mix. any I than product the think of an mix our type more within probably categories

Peter Keith

you right you on And Okay. you’re pandemic sales that Do far the inventory know now, and about on below I last cash are potential and but a pretty pre I levels. of opportunities. was reduction the just the low question have turns inventory some inventory base maybe thinking ahead just levels it of flow – your have had kind

of bringing So wondering and that about down? think you inventory what the status

Mitch Dolloff

Good question, Peter.

share always something we mind on focused on that’s that’s very think there. Ben, as our thoughts I but your management, I’ll let cash focus you

Ben Burns

a past been perspective, this to inventory balances little down last start years we of levels the then in for bit and we’ve over inventory ability that of very Peter. have half customers in years. as as Thanks, couple supply gone our challenges, so thanks. think up And while chain demand still I levels, our inventory work back a some we’ve the great year into last had have maintaining Yes, Yes, continue from by volatility an demand and the to to few serve our year, taper those teams us dynamic way. saw had down, good work

also have bit a but for is of opportunity down believe worked that sequentially we little there a So now, quarters we more left it number there.

continue working elements cash of all and We to also So can we some on pay to we’ll through we the capital. it. attention think drive that focus

AR think our I now. shape right So in really is [ph] good

the of job a disciplined a Accounts and done on stay but that volumes, are our mainly little it’s then at to as cash. good and to use with continue something of uses really Our just lower way that teams keeping due cash cash payable bit, have current. a to we’ll down focus to look drive that

share company. then near on supports our spend excess investment a paying what And So cash acquisitions we’ll debt. see really commitment term. organic to But growth, that being grade and in that prioritize use minimal you’ll the the funding is strong to purchases down and dividends,

Peter Keith

Okay. Very much. good. Thanks so

Mitch Dolloff

you. Thank

Operator

Thank you.

go We question have Sachs. Maklari Goldman Susan a from Please ahead. of follow-up

Susan Maklari

sort sort think more recently do to segment. go the out that to through in Thank the double-digit think role of this segment, of margins go eventual you that see you. about about that and to with the are you to that those of the the did and back think the is margin perhaps How improvement within wanted things you been that back the you the changes target done of over you’ve of and the about I where have Specialized what range, of that acquisitions look changing business. come profile time? where relative past? changing And in that the in we’ve – will profile of some some the When you quarter just low specifically

Mitch Dolloff

you Thanks, in Susan. too. And Steve I’ll here let chime

talked we back get term. improve sequential different. and know struggles was when have impact. huge, But had growth to huge in drag every volume automotive But time, of we’ll the difference and saw I continue we you’re margins big then be that those we’ll the acquisitions that so been Certainly, downturn aerospace low, gets some right some was inefficiencies Specialized long think about. the some that believe you EBITDA that I look so the We perfectly But better. depreciation of within quarter do while portfolio had we particularly in over this may the to don’t see a think that that pattern. the really the improving. add not a in amortization, EBIT automotive and peaks that we does more

continue before. the that to part and we’ll but somewhere for of any the at wealth But segment businesses. get not still it’s hopefully over also think operational same continued as by opportunities add to I efficiency far, the businesses part, have But share there? to three both opportunities we but I long-term making into this largest continue think those not least. all up you the back that anything movement And the positions see it growth had point, largest prediction the teams we improve strategically, Steve, to for in do grow at would

Steve Henderson

margins patterns to that think volumes I improve And our just, lack things some see There’s and go away. to should those associated there’s as line driving continue also to – still we those No, the costs increase. and are operations. of us those other for out, expect with into opportunities consistency as costs order those

term. Hydraulics product So expansion margin longer over some in there, new particularly some as the developments, well as

Susan Maklari

Okay.

end that call. in of seeing Okay. thinking a differences in across consumer lot to relative And industrial touched just about the or you’re That’s helpful. business. on maybe the pieces residential then, this But ways markets we’ve this of the

it entice of within And cover rate them. as from promotional categories they’re to of other do consumer to help to promotions you’re that or hearing a sort sort customers related interesting are of that is we dynamics we’ve fairly low. traffic your state help Any consumer of the drive and the to looking thoughts to broader perhaps them element have that anything on relates what bit? still that is that of seen the we of the and One normalized Bedding, that that – the especially in some

guess seeing Or think and that potential recovery you as the and industrial, any in move about to think puts highlight? do you takes both also anything they’ll there would And forward? that consumer continue for I you’re broadly you that of sort track longer-term then, are

Mitch Dolloff

Susan. hey Yes,

some issues portfolio. question promotional some and let think because little that of Tyson I’ll you a come there. of diversification back on I our of it a activity the it’s So highlights the so to But broader comment – great bit the

more this see lower businesses really we and get facing mode while long. before into have in growth I done our consumer And hopefully not we too activity and well recovery the just think So improving. markets, back durables mode they’re industrial

emphasize is they key management. a that So to element want portfolio of our

it’s think interesting secondly, then I question. And an

consumables remaining at is point inflation of spending remains than I market and this as durable on If about you think focus the strong wages we’ve on fairly on but and strong health the consumer, consumer is improving, and the think seen other easing really services job it’s goods.

becoming a Furniture, that of more recession And even is I’d really at that’s maybe narrative, the case, Flooring residential to into But I long. that’s this residential think before end back too if difficult seeing markets drag say on broader achieving our Bedding we’re still and hopefully consumer in the a really the likely. markets. soft the predict the possibility more And and landing spending out it’s avoiding timeline end point. there comes

that that I think Tyson? I What would hasn’t the not, very – promotions effective lower think is on it, seen agree I think I’m we have and you it. just I think do that take been my

Tyson Hagale

everybody remove a about back to bit what’s potential probably though go consumer of promotions. talked Mitch and some to of But at the It the typical promotional like there’s get soft optimism you back promotions sentiment question to already on home necessary a a the at types buying some is more little landing, back period things just the everything goods. I room more And us huge low spend weren’t I’ve the half even our a confidence. going of of said, It’s the for improving time when but shifted the talked with agree for sentiment, to some feel consumers us guess all And to seasonal levels. give about does home related and maybe little periods, a mean, focused year. relatively want it quickly. to spending back still at on things I least I Mitch, then the of where we’re was it that dollars consumer of through we where their is to for still industry. sort caused that went Yes, the more sort

been has feel spending probably probably the tailwind any the pent-up type the pickup and I neutralizing shift market. in Bedding are more rather market, getting of spending I creating act of things it some even point to that And like think But and on back this mean, on back pull as pent-up for we typically because a tailwind now. customers us forward like do waiting real demand services, point, extinguished. into are travel, this more see creating housing I it’s home both a stability things our at Some than from at those and demand, are that

Mitch Dolloff

Yes, good point.

Susan Maklari

Yes.

Okay. with Thanks for the color and everything. good luck

Mitch Dolloff

Susan. you, Thank

Operator

ahead, are floor There turn no go over this to comments. like questions further back I closing to McCoy Please ma’am. at the time. Susan for would

Susan McCoy

for you next talk Thank us today. to again you We’ll quarter. joining

If yesterday’s you have press questions, the information please in contact us using Thanks. release.

Operator

us. joining concludes conference. you That for today’s Thank

disconnect You lines. now your may

Leggett & Platt (LEG) 1 Aug 232023 Q2 Earnings call transcript