Leggett & Platt (LEG): This Diversified Manufacturer's Resilience is Put to the Test

Published on March 13, 2025 | Ticker: LEG

Business Overview

Leggett & Platt, Incorporated (LEG) is a 142-year-old diversified manufacturer that designs and produces a broad variety of engineered components and products found in many homes and automobiles. The company operates through three main segments: Bedding Products, Specialized Products, and Furniture, Flooring & Textile Products.

Leggett & Platt was founded in 1883 in Carthage, Missouri as a pioneer of the steel coil bedspring. Over its long history, the company has expanded beyond its original focus on bedsprings to become a leading supplier of bedding components, automotive comfort systems, home and work furniture components, flooring underlayment, and hydraulic cylinders. The company operates 119 manufacturing facilities across 18 countries, with the majority located in North America.

In its early years, Leggett & Platt concentrated on manufacturing steel coil bedsprings. As the company grew, it diversified its product offerings to include a variety of components and machinery used by bedding manufacturers. The company also vertically integrated its operations by producing specialty foam, steel rod, and drawn steel wire. This strategy has enabled Leggett & Platt to become one of the largest U.S.-based manufacturers in many of its product categories.

During the 1990s and 2000s, Leggett & Platt further expanded its reach by acquiring businesses that supplied components for the automotive, furniture, flooring, and aerospace industries. This diversification broadened the company's customer base beyond its traditional bedding market. Notable acquisitions include a global manufacturer of hydraulic cylinders in 2022 and several Canadian distributors of geo components in 2022.

Throughout its history, Leggett & Platt has demonstrated resilience in the face of various challenges, including competition from foreign manufacturers, volatility in raw material costs, and industry consolidation. The company has responded to these challenges by investing in product innovation, improving operational efficiency, and adjusting its manufacturing footprint as needed.

In the Bedding Products segment, which accounted for 40% of 2024 sales, Leggett & Platt manufactures innersprings, specialty foam, adjustable beds, and other bedding components that it sells to major mattress brands and retailers. The Specialized Products segment (28% of 2024 sales) supplies automotive comfort systems, aerospace tubing, and hydraulic cylinders. The Furniture, Flooring & Textile Products segment (32% of 2024 sales) produces components for residential and office furniture as well as flooring underlayment and geo components.

Leggett & Platt has a long history of innovation, holding over 1,280 patents across its product portfolio. The company's focus on product development has allowed it to remain a market leader in many of its core product categories. For example, the company's ComfortCore fabric-encased innerspring coils represented 70% of its U.S. innerspring unit sales in 2024.

Financials

2024 Financial Performance

In 2024, Leggett & Platt reported total revenue of $4.38 billion, a 7% decline from the prior year. This decrease was primarily driven by continued weak demand in residential end markets, the expected exit of a specialty foam customer, and softening in the automotive and hydraulic cylinders markets. The company's Bedding Products segment saw a 10.8% organic sales decline, while Specialized Products was down 3.2% organically and Furniture, Flooring & Textile Products fell 5.9% organically.

The company's 2024 earnings were significantly impacted by $676 million in non-cash goodwill impairment charges related to its Bedding, Work Furniture, and Hydraulic Cylinders reporting units. Adjusting for this and other one-time items, Leggett & Platt's 2024 adjusted earnings per share was $1.05, down 24% from 2023's $1.39.

Net income for 2024 was -$511.5 million, reflecting the impact of the goodwill impairment charges. Operating cash flow was $306 million, down from $497 million in 2023. Free cash flow for the year was $224.1 million.

In the fourth quarter of 2024, Leggett & Platt reported revenue of $1.06 billion, a 5.3% decrease year-over-year. Net income for Q4 was $14.2 million, down 80% compared to Q4 2023.

Liquidity

Despite the challenging macroeconomic environment, Leggett & Platt maintained a strong liquidity position. The company ended 2024 with $350.2 million in cash and cash equivalents and $443 million of available capacity under its $1.2 billion revolving credit facility. The company's debt-to-equity ratio stood at 2.97, while its current ratio was 2.00 and quick ratio was 1.14, indicating strong short-term liquidity.

Segment Performance

The Bedding Products segment generated $1.75 billion in trade sales in 2024, representing 40% of the company's total trade sales. This segment reported EBIT of $549 million, reflecting a 31.3% EBIT margin.

The Specialized Products segment contributed $1.24 billion in trade sales, or 28% of the total. This segment achieved EBIT of $64.4 million, representing a 5.2% EBIT margin.

The Furniture, Flooring & Textile Products segment accounted for $1.39 billion in trade sales, or 32% of the total. The segment's EBIT was $58.2 million, yielding a 4.2% EBIT margin.

Geographic Performance

Leggett & Platt maintains a global presence, with approximately 35-40% of trade sales coming from products manufactured outside the United States over the past three years. The company's manufacturing facilities are spread across 18 countries, primarily located in North America, Europe, and Asia.

Restructuring Initiatives

In early 2024, Leggett & Platt announced a comprehensive restructuring plan focused primarily on its Bedding Products segment, with smaller actions in Furniture, Flooring & Textile Products and Specialized Products. The goal of the 2024 Restructuring Plan was to consolidate facilities, improve operational efficiency, and optimize the company's manufacturing footprint.

Over the course of 2024, Leggett & Platt made significant progress on this plan, consolidating 14 production and distribution facilities in Bedding Products, closing one facility each in Home Furniture and Flooring Products, and launching restructuring activities in its Hydraulic Cylinders business. The company incurred $48 million in restructuring costs during the year but realized $22 million in EBIT benefit, exceeding their initial expectation of $10 million to $15 million. Sales attrition was $15 million, in line with their latest expectations and well below their initial estimate of $40 million. The company also realized $20 million of cash proceeds from restructuring-related real estate sales, in line with their latest expectations but above their initial estimate of $0 to $10 million.

Looking ahead to 2025, Leggett & Platt expects to incur approximately $30 million in restructuring costs, with the total program ultimately costing $80-$90 million, up from the prior estimate of $65-$85 million. The company anticipates incremental EBIT benefit of approximately $35-$40 million in 2025, with an additional $5-$10 million of benefit in 2026. Once fully implemented in late 2025, the restructuring is expected to generate $60-$70 million in annualized EBIT benefit, an increase from the prior estimate of $50-$60 million.

2025 Guidance and Outlook

For 2025, Leggett & Platt is guiding for revenue of $4.0-$4.3 billion, representing a 2-9% decline from 2024 levels. The company expects volume to be down low-to-mid single digits across its segments, with volume at the midpoint down mid-single digits in Bedding Products, down mid-single digits in Specialized Products, and down low single digits in Furniture, Flooring & Textile Products. Deflation and currency combined are expected to reduce sales by low single digits.

Adjusted EPS is projected in the range of $1.00-$1.20, including $0.16-$0.22 per share of negative impact from restructuring costs and $0.05-$0.20 per share of gains from real estate sales. The company expects an adjusted EBIT margin range of 6.4% to 6.8% and cash from operations of $275-$325 million.

The macroeconomic environment remains challenged, with the company anticipating continued softness in residential end markets, ongoing affordability issues impacting the automotive industry, and uncertain demand for hydraulic cylinders. However, Leggett & Platt believes its restructuring initiatives and focus on operational efficiency improvements will help mitigate these headwinds to some degree.

Industry Trends

The bedding and furniture industries that Leggett & Platt serves have faced macroeconomic headwinds, with weak consumer demand, low housing turnover, and inflationary pressures. The automotive industry has also experienced volatility related to the growth of Chinese EV manufacturers and multinational OEM market share challenges. These trends have put pressure on Leggett & Platt's end markets.

Risks and Uncertainties

Leggett & Platt faces a number of risks that could impact its financial performance, including:

Volatility in raw material costs, particularly steel and chemicals, which can pressure margins if not passed through to customers

Continued weakness in residential housing and automotive markets, which account for a substantial portion of its business
Supply chain disruptions and port congestion that could disrupt manufacturing and distribution
Competition from lower-cost foreign manufacturers, especially in the bedding and furniture industries
Potential trade actions and tariffs that could increase the cost of imported inputs or finished products
Cybersecurity threats that could disrupt operations or compromise sensitive data

Despite these challenges, Leggett & Platt's diversified business model, vertical integration, and history of operational excellence have enabled the company to navigate difficult environments in the past. The success of its ongoing restructuring efforts will be critical in determining the company's ability to weather the current storm and position itself for long-term growth.

Conclusion

Leggett & Platt is a well-established diversified manufacturer facing significant near-term headwinds due to macroeconomic pressures across its end markets. The company's 2024 financial results were impacted by goodwill impairments and continued weak demand, leading to a 24% decline in adjusted EPS.

However, Leggett & Platt is taking proactive steps to streamline its operations and improve efficiency through a comprehensive restructuring plan. While the road ahead may remain turbulent, the company's long history of innovation, diverse product portfolio, and strong market positions suggest it has the resilience to navigate the current challenges. Investors will want to monitor the execution of Leggett & Platt's restructuring initiatives and the company's ability to capitalize on any recovery in its core end markets in the years ahead.

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