Release Date: February 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you discuss the dynamics between imports and US production in the bedding market and what it could mean for Leggett as demand returns? A: Karl Glassman, CEO, explained that imported innersprings, primarily sold on marketplaces like Amazon and Wayfair, are significant, approaching 50% of units. This has created a bifurcation in the market, with low-end products priced around $250 at Queen and a gap to mid-price points. Tyson Hagale, President of Bedding Products, added that as the market recovers, consumers may shift back to higher-quality products, which could benefit Leggett.
Q: What is driving the increased expectations for EBIT benefit from restructuring, and is there potential for further upside? A: Karl Glassman, CEO, credited the execution of restructuring activities, which have been challenging but successful. He noted that if more volume can be run through the now more efficient assets, there could be further upside, particularly in the US Spring segment.
Q: How are you thinking about segment margins for 2025, and what should we expect regarding seasonality and leverage? A: Benjamin Burns, CFO, stated that despite expected volume declines, margins in Bedding Products should improve by 150 basis points, remain flat in Specialized Products, and decrease by 50 basis points in Furniture, Flooring, and Textile Products. He noted typical seasonality with lower sales and earnings in Q1 and Q4, and an uptick in leverage early in the year due to lower earnings and working capital investments.
Q: Can you elaborate on the impact of tariffs on your steel operations and downstream products? A: Tyson Hagale, President of Bedding Products, explained that while tariffs could positively impact US steel pricing, they might widen the price gap between US and foreign steel, potentially increasing pressure on global pricing for downstream products. This could offset any benefits from higher steel prices at Leggett's Sterling steel mill.
Q: What are the trends in the Specialized Products segment, particularly in automotive and aerospace? A: Sam Smith, President of Specialized Products, noted that aerospace volumes were up in 2024 and are expected to continue growing. However, hydraulic cylinders faced industry-wide demand declines after a high in 2023. In automotive, Chinese EV manufacturers' growth and multinational OEM challenges have impacted demand, with a shift from internal combustion engines to EVs adding uncertainty.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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