Leggett & Platt ((LEG)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In its latest earnings call, Leggett & Platt presented a mixed outlook. The company highlighted significant progress in restructuring and product innovation. However, it continues to face challenges from weak demand across key segments, a significant decrease in earnings, and ongoing macroeconomic pressures. Additionally, the company is grappling with the impact of imported products, which have further complicated the bedding market.
Restructuring Success
The company announced a major success in its restructuring efforts, realizing a total of $22 million EBIT benefit in 2024. This surpassed their initial expectation of $10 million to $15 million. The company closed several facilities and completed phase one of restructuring initiatives across various segments, positioning itself for potential future growth.
Innovative Product Development
Leggett & Platt continued to innovate with its product development. The company experienced increased OEM adoption of its semi-finished products in the bedding segment. It also partnered with mattress OEMs for product line refreshes and launched branded carpet cushion products in collaboration with the Make-A-Wish Foundation.
Progress in Aerospace and Textiles
The aerospace business at Leggett & Platt saw robust project pipeline growth, while the fabric converting business achieved modest growth in areas like filtration, building products, and hospitality. This progress underscores the company’s efforts to diversify its revenue streams.
Weak Demand Across Segments
Leggett & Platt reported a 5% decline in fourth-quarter sales compared to 2023, with noticeable drops in bedding products (6%), specialized products (5%), and furniture, flooring, and textiles (4%). For the full year, sales decreased by 7% to $4.4 billion, reflecting the broader market challenges.
Significant Earnings Decrease
The company’s earnings took a hit, with fourth-quarter earnings per share dropping by 19% from $0.26 to $0.10. Full-year adjusted EPS also saw a 24% decrease, falling from $1.39 in 2023 to $1.05 in 2024.
Macroeconomic Challenges
Leggett & Platt anticipates continued demand pressure in 2025, driven by low existing home sales, consumer affordability issues, and uncertainty in the automotive and hydraulic cylinder markets. These macroeconomic challenges are expected to persist, affecting the company’s performance.
Impact of Imported Products
The mattress market faced significant pressure due to high-volume, cheap imports that dominated online sales. These imports have put considerable pressure on domestic OEMs, complicating the competitive landscape for Leggett & Platt.
Forward-Looking Guidance
Looking ahead to 2025, Leggett & Platt projects sales to range between $4.0 billion and $4.3 billion, indicating a potential decline of 2% to 9% from 2024. The company expects volumes to decrease by low to mid-single digits across segments. The anticipated earnings per share range is $0.83 to $1.24, with an adjusted EPS forecast between $1.00 to $1.20. The company aims for an EBIT margin between 6.4% and 6.8% and operating cash flow of $275 million to $325 million. This guidance reflects the ongoing challenges and the company’s focus on operational efficiencies and strategic initiatives.
In summary, while Leggett & Platt has made commendable strides in restructuring and product innovation, it faces substantial hurdles from weak demand, declining earnings, and macroeconomic pressures. The impact of imported products in the bedding market remains a significant challenge. Looking forward, the company is focusing on strategic initiatives and operational efficiencies to navigate these difficulties and support long-term growth.
