Weaker-than-expected demand led to a 6% drop in sales and a 15% decline in earnings during the third quarter at Leggett & Platt.
The Carthage, Missouri-based company said sales declines were recorded in all three of its major business segments — Bedding Products; Specialty Products; and Furniture, Flooring and Textile Products — and said it expects weak demand to continue into the fourth quarter.
For the quarter that ended Sept. 30, companywide sales totaled $1.1 billion, down from $1.17 billion in last year’s third quarter. Net income was $44.9 million or 33 cents per share, down from $52.8 million or 39 cents per share, in the same period last year.
Sales in the Bedding Products segment totaled $445.5 million — an 8% drop from last year’s third quarter — amid continuing weak demand the U.S. and European bedding markets.
Sales in the Furniture, Flooring and Textiles segment fell 4% to $356.3 million, while sales in the Specialized Products segment were off 6% to $299.9 million.
“We expect weak demand in our residential end markets to persist into the fourth quarter due to a more challenging macro environment and softening in consumer spending,” said Karl Glassman, president and CEO. “Additionally, our Automotive business continues to face headwinds from varying impacts of the transition to electric vehicles, consumer affordability issues and economic softness in Europe.”
Glassman noted, however, that the company is continuing to make “solid progress” on a restructuring plan announced earlier this year and was able to pay down $124 million in debt in the third quarter.
He said the restructuring generated a gain of $6 million in EBIT (earnings before interest and taxes) during the quarter and should boost the total or all of 2024 to $10 million to $15 million.
When the plan is fully implemented by late 2025, he said the company will see an annualized EBIT benefit of $50 million to $60 million. That’s up from an earlier estimate of $40 million to $50 million.
Due to the current weak demand, Leggett & Platt trimmed its sales and earnings estimates for 2024. Companywide sales are now projected at $4.3 billion to $4.4 billion, down from a July estimate of $4.3 billion to $4.5 billion.
Adjusted earnings per share, which doesn’t include impairment charges, restructuring costs and other one-time charges, are now projected at $1 to $1.10. That’s down from a July estimate of $1.10 to $1.25 per share.
For the first nine months of 2024, companywide sales were down 8% to $3.33 billion. Due largely to restructuring and impairment charges, the company recorded a nine-month net loss of $525.7 million or $3.83 per share.
Read Leggett & Platt’s previous quarter report: L&P Experiences Sales Drop, Net Loss.