Q1 2024 Leggett & Platt Inc Earnings Call

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Operator: Greetings and welcome to the Leggett & Platt First Quarter 2024 Webcast and Earnings Conference. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker Change: Greetings and welcome to the Leggett <unk> Platt first quarter 2024 webcast an earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: A question and answer session will follow the formal presentation.

Speaker Change: Sure require operator assistance during the conference. Please press star zero on your telephone keypad.

Operator: As a reminder, the conference is being recorded. It is now my pleasure to introduce your host, Cassie Branscum, Vice President, Investor Relations. Thank you, Cassie. You may begin.

Speaker Change: As a reminder, this conference is being recorded it is now my pleasure to introduce your host Cassie Branscum Vice President Investor Relations. Thank you Cathie you may begin.

Cassie Branscum: Good morning, and welcome to Leggett & Platt's first quarter 2024 earnings call. With me on the call today are Mitch Dollop, President and CEO, Ben Burns, Executive Vice President and CFO, Tyson Hagel, Executive Vice President and President of the budding product segment, Brian Kleyboker, Executive Vice President and Chief Strategic Planning Officer, and Kalina Talbert, Manager of Investor Relations. The agenda for our call this morning is as follows. Mitch will discuss our near to midterm strategy and operating results, including a summary of the main points we made in yesterday's press release. Then we'll cover capital allocation, additional financial details, and address our outlook for 2024. And the group will answer any questions you have.

Cassie Branscum: Good morning, and welcome to Leggett <unk> Platt first quarter 'twenty 'twenty four earnings call with me on the call today are Mitch Dallas, President and CEO, Ben Burns Executive Vice President and CFO, Tyson Hegel Executive Vice President and President of the bedding products segment Brian.

Cassie Branscum: Bryan Clay Bunker executive Vice President and Chief of strategic Planning Officer, and Helena Chopper manager of Investor Relations.

Cassie Branscum: Agenda for our call. This morning. It just follows Mitch will discuss our near to mid term strategy and operating results, including a summary of the main points. We made in yesterday's press release then.

Cassie Branscum: Dan will cover our capital allocation additional financial details and address our outlook for 'twenty 'twenty four and the group will answer any questions you have.

Cassie Branscum: This conference call is being recorded for Leggett & Platt and is copyrighted material. This call may not be transcribed, recorded, or broadcast without our express permission. A replay will be available on the Investor Relations section of our website. We posted yesterday's press release on the IR section of our website, along with a set of slides that contain summary financial information, along with segment details. Those documents supplement the information we discuss on this call, including our non-GAAP reconciliation.

Cassie Branscum: This conference call is being recorded for Leggett impart and is copyrighted material. This call may not be transcribed recorded or broadcast without our expressed permission a replay will be available on the investor Relations section of our website.

Cassie Branscum: We posted to the IR section of our website Yesterdays press release and a set of slides that contain summary financial information along with segment details.

Cassie Branscum: Those documents supplement the information we discuss on this call, including our non-GAAP reconciliations.

Cassie Branscum: Remarks today concerning future expectations, events, objectives, strategies, trends, or results constitute forward-looking statements. However, actual results or events may differ materially due to a number of risks and uncertainties, and the company undertakes no obligation to update or revise these statements. For a summary of these risk factors and additional information, please refer to yesterday's press release and the sections in our most recent 10-K entitled Risk Factors and Forward-Looking Statements. I'll now turn the call over to Mitch.

Cassie Branscum: Remarks today concerning future expectations events objectives strategies trends or results constitute forward looking statements actual results or events may differ materially due to a number of risks and uncertainties and the company undertakes no obligation to update or revise these statements for a summary of these risk factors.

Cassie Branscum: And additional information please refer to yesterday's press release and the sections in our most recent 10-K entitled risk factors and forward looking statements I'll now turn the call over to Mitch.

Mitch Dollop: Good morning, and thank you for joining our call today. First, I want to share that this will be Cassie's last earnings call with us, as she will be leaving the company for an exciting new opportunity later this month. Cassie has been an instrumental part of our IR team since 2018 and has been an incredible asset to the company throughout her various positions over the last 19 years.

Mitch Dallas: Good morning, and thank you for joining our call today.

Mitch Dallas: First I want to share that this will be cashed last earnings call with us and she will be leaving the company for an exciting new opportunity later this month.

Mitch Dallas: Kashi has been an instrumental part of our IR team since 2018, that's been an incredible asset to the company. If you were out her various positions over the last 19 years we.

Mitch Dollop: We wish her the best in her new role and will sincerely miss her. Before reviewing first quarter results, I'd like to spend a few minutes discussing who we are, where we stand today, and where we are going in the future. Across most of our businesses, we are positioned as a leading provider of differentiated, engineered products with opportunities to increase content over time while collaborating with our customers to provide solutions. Our core businesses have strong market positions in industries with large and attractive addressable markets.

Mitch Dallas: We wish her the best in her new role and will sincerely Miss her.

Mitch Dollop: In bedding products, our 2019 acquisition of ECS meaningfully increased our addressable bedding market, allowing us to expand into specialty foam and compressed mattresses, trends that have significantly changed the domestic bedding landscape in the last 10 years. Although the bedding market has been challenged recently, the strategic rationale for that acquisition remains intact and should enable us to drive long-term growth in product innovation. In specialized products, all three of our businesses supply technical critical components that are developed with a deep customer relationship and collaborative design. For example, our automotive business is aligned with trends of increasing comfort and convenience. Our ability to partner directly with OEMs to solve specific problems means we compete on differentiation rather than just price.

Mitch Dallas: Before reviewing first quarter results I'd like to spend a few minutes discussing who we are where we stand today and where we're going in the future.

Mitch Dallas: Across most of our businesses, we are positioned as a leading provider of differentiated engineered products with opportunities to increase content overtime, while collaborating with our customers to provide solutions.

Mitch Dallas: Our core businesses have strong market positions and industries with large and attractive addressable markets.

Mitch Dallas: Embedding products, our 2019 acquisition of ECS meaningfully increased our addressable betting market, allowing us to expand into specialty foam and compressed mattresses trends, which have significantly changed the domestic bedding landscape in the last 10 years.

Mitch Dallas: Although the bedding market has been challenged recently the strategic rationale for that acquisition remains intact and should enable us to drive long term growth and product innovation.

Mitch Dallas: And specialized products all three of our businesses supply technical critical components that are developed with the deep customer relationships and collaborative design.

Mitch Dallas: For example, our automotive business is aligned with trends of increasing comfort and convenience features our ability of partner directly with the Oems to solve specific problems means we compete on differentiation rather than just price.

Mitch Dollop: In furniture, flooring, and textile products, most of our businesses are mature and stable, with steady margins and solid cash generation. These businesses tend to compete based on high levels of customer service or product differentiation and include our home furniture, work furniture, and flooring operations. Within textiles, our geocomponents business leverages sourcing synergies from our fabric converting operations to supply fabrics for applications such as erosion control and landscaping. Geocomponents competes in a fragmented industry with sizable opportunities for growth. With that context in mind, I'll now address our near to midterm strategic priorities, which are a blueprint for ensuring the sustainable long-term success of our business. Our priorities are 1.

Mitch Dallas: In furniture flooring and textile products most of our businesses are mature and stable with steady margins and solid cash generation.

Mitch Dallas: These businesses tend to compete based on high levels of customer service or product differentiation and include our home furniture work furniture and flooring operations.

Mitch Dallas: Within textiles, our geo components business Leverages sourcing synergies from our fabric converting operations to supply fabrics for applications, such as erosion control and landscaping.

Mitch Dallas: T O components competes in a fragmented industry with sizable opportunities for growth.

Mitch Dallas: With that context in mind I'll now address our near to midterm strategic priorities, which are a blueprint for ensuring a sustainable long term success of our business.

Mitch Dollop: Strengthening our balance sheet and liquidity, 2. Improving margins by optimizing operations and our general and administrative cost structure, and 3. Positioning the company for profitable growth opportunities. We're committed to maintaining our long-held financial strength and have recently taken action to support this objective. In March, we proactively amended the agreement for our existing revolving credit facility to provide us with additional liquidity and flexibility. The leverage ratio was increased from 3.5 times to 4 times through June 30, 2025, creating a bigger cushion in a time of near-term weak demand in residential end markets. Yesterday, we announced that the Board of Directors declared a quarterly dividend of $0.05 per share.

Our priorities are one strengthening our balance sheet and liquidity to improving margins by optimizing operations and our general and administrative cost structure and.

Mitch Dallas: And three positioning the company for profitable growth opportunities.

Mitch Dallas: We're committed to maintaining our long held financial strength that have recently taken action to support this objective.

Mitch Dallas: In March we proactively amended the agreement for our existing revolving credit facility to provide us with additional liquidity and flexibility.

Mitch Dallas: The leverage ratio was increased from three five times to four times through June 32025, creating a bigger cushion in a time of near term weak demand in residential end markets.

Mitch Dallas: Yesterday, we announced that the board of directors declared a quarterly dividend of five cents per share the.

Mitch Dollop: The decision to reduce the dividend was made following a very thorough evaluation. This action will free up capital to invest in driving improvements in our business and solidify our long-held financial strength. Additionally, we continue to advance our initiatives across our business to drive operational excellence and enhance our efficiency. We expect these initiatives will allow us to drive margin improvement and continue to strengthen our financial foundation in the near to mid-term.

Mitch Dallas: The decision to reduce the dividend was made following a very thorough evaluation.

This action will free up capital to invest in driving improvements in our business and solidify our long held financial strength.

Mitch Dallas: Additionally, we continue to advance our initiatives across our business to drive operational excellence and enhance our efficiency. We expect these initiatives will allow us to drive margin improvement and continue to strengthen our financial foundation in the near to mid term.

Mitch Dollop: Domestic bedding manufacturers are facing numerous challenges, including low demand, overcapacity, and increased pressure for finished mattress imports, resulting in financial stress across the industry. The domestic mattress market has changed dramatically in a relatively short time span. The landscape has shifted from a largely domestic OEM-produced innerspring mattress market to one where innerspring, foam, and hybrid mattresses are sold at a wide range of price points through a variety of channels and produced by a mix of fewer large domestic OEMs, domestic private label producers, and import manufacturers. These changes have effectively reduced the size of the domestic innerspring mattress market by a third.

Mitch Dallas: Domestic bedding manufacturers are facing numerous challenges, including low demand overcapacity and increased pressure for finished mattress imports, resulting in financial stress across the industry.

Mitch Dallas: The domestic mattress market has changed dramatically in a relatively short time span.

Mitch Dallas: So the landscape has shifted from a largely domestic OEM produced innerspring mattress market to one way or inner spring foam in hybrid mattresses are sold at a wide range of price points through a variety of channels and produced by a mix of fewer large domestic Oems domestic private label producers and import manufacturers.

Mitch Dallas: These changes has effectively reduced the size of the domestic innerspring mattress market by a third.

Mitch Dollop: While we anticipate that imported mattresses will always have a place in the market, any volume reshored to the U.S. as a result of the ongoing anti-dumping case is beneficial for the domestic industry. In such a dynamic environment, we recognize that we must also make changes to profitably compete in the betting market today and in the future. Across our bedding product segment, we are executing on the restructuring plan announced in January to optimize our manufacturing and distribution footprint. We are making steady progress and remain on track to achieve our objective.

Speaker Change: Well, we anticipate that import mattresses will always have a place in the market any volume Richard to the U S. As a result of the ongoing anti dumping case, it's beneficial for the domestic industry.

Speaker Change: In such a dynamic environment, we recognize that we must also made changes to profitably compete in the bedding market today and in the future.

Speaker Change: Across our bedding products segment, we are executing on the restructuring plan announced in January to optimize our manufacturing and distribution footprint.

Speaker Change: We were making steady progress and remain on track to achieve our objectives.

Mitch Dollop: To date, we've closed four smaller U.S. spring distribution facilities, transitioned manufacturing out of three facilities and into our four larger remaining spring production facilities, and closed a small specialty foam operation. We still expect the consolidation activities within U.S. Spring to be completed by year-end, and we are currently downsizing our Chinese Interspring operation. Finally, two additional specialty phone facility consolidations are underway and should be complete by year-end. As previously announced, restructuring actions will be complete by the end of 2025. I want to thank our entire team for their dedication and hard work during this time of transition.

Speaker Change: To date, we've closed four smaller U S spring distribution facilities transition manufacturing out of three facilities and into our four larger remaining spring production facilities and closed a small specialty film operation.

Speaker Change: We still expect the consolidation activities within U S spring to be completed by year end and are currently downsizing, our Chinese inner spring operation.

Finally, two additional specialty foam facility consolidations are underway and should be complete by year end.

Speaker Change: As previously announced restructuring actions will be complete by the end of 2025.

Speaker Change: I want to thank our entire team for their dedication and hard work during this time of transition.

Mitch Dollop: Our rod wire and spring business continues to have healthy margins as a result of our refocus strategy, targeting higher value content combined with disciplined cost management from our operations. However, volume recovery, restructuring activities, and other operational initiatives will drive meaningful improvement. Specialty Foam is a significant drag on our company profits, but we continue to drive operational improvements and margin recovery through our 4-Wall Manufacturing Improvement. Efforts to diversify our customer base have seen initial success, but we have more work to do in the current low-demand environment where many market participants are increasingly financially constrained.

Speaker Change: Our rod wire and spring business continues to have healthy margins as a result of our refocused strategy targeting higher value content combined with disciplined cost management from our operations team.

However, volume recovery restructuring activities and other operational initiatives will drive meaningful improvement.

Speaker Change: Specialty pharma as a significant drag on our company profit, but we continue to drive operational improvements and margin recovery through our four wall manufacturing improvement plan.

Speaker Change: Efforts to diversify our customer base have seen initial success, but we have more work to do in the current low demand environment, where many market participants are increasingly financially constrained.

Mitch Dollop: In the adjustable bed market, low demand and a market shift towards lower value products have been a meaningful drag on profit. We are working hard to reduce costs and simplify the supply chain to drive profit and cash flow improvement. Our European betting business faces market conditions that are very similar to our domestic challenges.

Speaker Change: In adjustable bed low demand in a market shift towards lower value products has been a meaningful drag on profit.

Speaker Change: We are working hard to reduce costs and simplify the supply chain to drive profit and cash flow improvements.

Speaker Change: Our European bedding business faces market conditions that are very similar to our domestic challenges.

Mitch Dollop: The team continues to drive profitability in Innersprings but has opportunities to improve our Kayfoam business, where the customer base has changed meaningfully since acquisition. We remain confident that our unique positioning in the betting industry enables us to drive value for our branded customers, and we are addressing our cost structure to do so as competitively as possible. In specialized products, operational improvement activities are ongoing within each business. In automotive, the team continues to make good progress in improving profitability. We continue to evaluate efficiency enhancement opportunities and options to leverage automation and vertical integration.

Speaker Change: The team continues to drive profitability and inner springs, but has opportunities to improve our K phone business, where the customer base has changed meaningfully since acquisition.

Speaker Change: We remain confident that our unique positioning in the bedding industry enables us to drive value for our branded customers and we are addressing our cost structure to do so as competitively as possible.

Speaker Change: In specialized products operational improvement activities are ongoing within each business and automotive the team continues to make good progress improving profitability.

We continue to evaluate efficiency enhancement opportunities and options to leverage automation and vertical integration.

Mitch Dollop: In both aerospace and hydraulic cylinders, efforts to improve production efficiencies are underway. For hydraulic cylinders, we are shifting some production to our operations in India to reduce cost and improve profitability. Restructuring initiatives in the furniture, flooring, and textile product segments are also on track. We have closed a foreign products production line and redeployed the manufacturing equipment to one of our other production facilities. In Home Furniture, we closed one plant and have transferred that production to the remaining facilities. We expect to market that real estate by midsummer.

Speaker Change: In both aerospace and hydraulic cylinders efforts to improve production efficiencies are underway and hydraulic cylinders. We are shifting some production to our operations in India to reduce cost and improve profitability.

Speaker Change: Restructuring initiatives in the furniture flooring and textile products segments are also on track.

Speaker Change: We have close to falling products production line and redeployed the manufacturing equipment to one of our other production facilities.

Speaker Change: And home furniture, we closed one plant and if transferred that production to other remaining facilities, we expect to market that real estate by mid summer.

Mitch Dollop: In Work Furniture, we continue to explore opportunities to reduce costs and improve profitability. Beyond our manufacturing operations, we are evaluating our general and administrative cost structure to drive further improvements in profitability. Shifting our focus to the future, in the long term, we plan to invest in key focus areas including bedding, automotive, and geocomponents. The changes underway now in our bedding business support our future ability to drive product synergies across specialty foam and inner springs and capture greater product content through semi-finished and private label finished goods.

Speaker Change: Work furniture, and we continue to explore opportunities to reduce cost and improve profitability.

Speaker Change: Beyond our manufacturing operations, we are evaluating our general and administrative cost structure to drive further improvements in profitability.

Speaker Change: Shifting our focus to the future in the long term, we plan to invest in key focus areas, including bedding automotive and Geo components.

Speaker Change: The changes underway now and are betting business support our future ability to drive product synergies across specialty foam and inner springs and captured greater product content through semi finished in private label finished goods.

Mitch Dollop: We are committed to leveraging our capabilities in springs and foam to expand our hybrid mattress programs and drive value for our customers through product development activity. Additionally, we expect that future growth in adjustable beds will stem from higher attachment rates and innovative product designs tailored to meet consumer needs.

Speaker Change: We are committed to leveraging our capabilities in springs and film to expand our hybrid mattress programs and drive value for our customers through product development activities. Additionally.

Speaker Change: Additionally, we expect that future growth in adjustable beds will stem from higher attachment rates and innovative product designs tailored to meet consumer needs.

Mitch Dollop: In the automotive sector, we see growth potential in our convenience product offerings, such as motors and actuators, particularly as vehicle technology and electrification increase. Our geocomponents business has grown via greenfields and small bolt-on acquisitions over time, and we anticipate further growth as we continue to expand our product lines and geographic footprint. We are confident that the actions we are taking in the near to mid-term will better position us for the future and enhance shareholder value. Our current profitability does not meet our expectations, but we are taking the necessary steps to improve our performance. Moving on to the first quarter of 2024.

Speaker Change: In automotive, we see growth potential in our convenience products offerings, such as motors and actuators, particularly as vehicle technology and electrification increases.

Speaker Change: Our Geo components business has grown via Greenfields and small bolt on acquisitions over time, and we anticipate further growth as we continue to expand our product lines and geographic footprint.

Speaker Change: We are confident that the actions we are taking in the near to midterm will better position us for the future and enhance shareholder value.

Speaker Change: Our current profitability does not meet our expectations, but we are taking the necessary steps to improve our performance.

Mitch Dollop: Results were in line with our expectations at the beginning of the year. First quarter sales were $1.1 billion, down 10% versus the first quarter of 2023, due to volume declines, primarily in residential end markets, and raw material-related selling price decreases. First quarter EBIT was $63 million, down $26 million versus the first quarter of 2023. Adjusted EBIT was $64 million, down $25 million versus the first quarter of 2023. EBIT and adjusted EBIT decreased primarily from lower volume, an increased bad debt reserve, less benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition, and the non-recurrence of pandemic-related cost reimbursement. These decreases were partially offset by lower current year amortization expense. Restructuring costs during the quarter were $11 million, comprised of $6 million in cash costs and $5 million in non-cash costs.

Speaker Change: Moving onto first quarter 'twenty 'twenty four.

Speaker Change: Results were in line with our expectations at the beginning of the year.

Speaker Change: First quarter sales were $1.1 billion down 10% versus the first quarter of 2023 from volume declines primarily in residential end markets and raw material related selling price decreases.

First quarter, EBIT was $63 million down $26 million versus the first quarter of 2023, adjusted EBIT was $64 million down $25 million versus first quarter 2023.

Speaker Change: EBIT and adjusted EBIT decreased primarily from lower volume increased bad debt reserve less benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition and the non recurrence of pandemic related cost reimbursements.

These decreases were partially offset by lower current year amortization expense.

Speaker Change: Restructuring costs during the quarter were $11 million comprised of $6 million in cash cost and $5 million of noncash cost.

Mitch Dollop: The restructuring charges were mostly offset by gains from idle real estate sales and insurance proceeds of $8 million and $2 million, respectively. First quarter earnings per share and adjusted earnings per share were 23 cents, a 41% decrease from first quarter 2023 EPS of 39 cents. Moving on to segment results.

Speaker Change: The restructuring charges were mostly offset by gains from idle real estate sales and insurance proceeds of $8 million and $2 million respectively.

Speaker Change: First quarter earnings per share and adjusted earnings per share for 23 set at 41% decrease from first quarter 2023 E. P. S. F 39 sets.

Speaker Change: Moving on to segment results.

Mitch Dollop: Sales in our betting product segment decreased 15% versus first quarter 2023. Ongoing weakness in domestic and international betting markets negatively impacted volume this quarter as demand continues to bounce along the bottom. U.S. spring volume was down 15% versus first quarter 2023, driven by declines in open coil and wire grids, partially offset by growth in higher value semi-finished products such as combination pocket and ecobank.

Speaker Change: Sales in our bedding products segment decreased 15% versus first quarter 2023.

Speaker Change: Ongoing weakness in domestic and international bedding markets negatively impact volume this quarter as demand continues to bounce along the bottom.

Speaker Change: U S spring volume was down 15% versus first quarter 2023, driven by declines in open coil and wire grids, partially offset by growth in higher value semi finished products such as combination pocket and eco base.

Mitch Dollop: Domestic mattress market production was likely down high single digits, and we saw similar trends in comfort core demand. For the full year, we expect U.S. mattress consumption to be slightly down versus 2023. Sales in our specialized product segment decreased 1% compared to the first quarter of 2023. In the automotive segment, our volumes were in line with the market in the first quarter. We still expect our automotive business to outperform global automotive production in 2024, primarily due to new programs initiating production throughout the year. We continue to experience strong demand and benefit from lengthy industry backlogs in our aerospace business. First quarter volume was up 13% as industry production continues to recover from the pandemic impact.

Speaker Change: Domestic mattress market production was likely down high single digits, and we saw similar trends in comfort core demand.

Speaker Change: For the full year, we expect U S mattress consumption to be slightly down versus 2023.

Speaker Change: Sales in our specialized products segment decreased 1% compared to first quarter 2023.

Speaker Change: I would note if our volumes were in line with the market in the first quarter.

Speaker Change: We still expect our automotive business will outperform global automotive production in 2024, primarily due to new programs initiating production throughout the year.

Speaker Change: We continue to experience strong demand and benefit from lengthy industry backlogs in our aerospace business first quarter volume was up 13% as industry production continues to recover from pandemic impacts.

Mitch Dollop: In hydraulic cylinders, first quarter sales were negatively impacted by softer demand in heavy construction markets and the lag timing of index-based price changes. For the full year, we anticipate flat demand with weakness in European heavy construction markets offset by material handling backlogs in the U.S. Sales in our Furniture, Flooring, and Textile Products segment were down 9% versus first quarter 2023. Demand for home furniture continues to be soft. We have recently seen stronger performance in Asia than in the U.S. and believe this is related to consumer trade debt.

Speaker Change: In hydraulic cylinders first quarter sales were negatively impacted by softer demand in heavy construction markets and the lag timing of index based price changes.

Speaker Change: For the full year, we anticipate flat demand with weakness in European heavy construction markets offset by material handling backlogs in the U S.

Speaker Change: Yeah.

Speaker Change: Sales in our furniture flooring and textile products segment were down 9% versus first quarter of 2023.

Speaker Change: Demand in home furniture continues to be soft we have recently seen stronger performance in Asia and in the U S. And believe this is related to consumer trade down.

Mitch Dollop: Work Furniture Demand also remains low. Pockets of improvements in contract markets are offset by softness in residential markets. We expect 2024 demand to be in line with 2023. For flooring products, we anticipate another year of lower residential demand driven by lower levels of residential construction and remodeling activity. Hospitality demand has recovered slower than expected and remains well below pre-pandemic levels. Within textiles, first quarter sales were negatively impacted by weak bedding and furniture demand within our fabric converting business, partially offset by growth in US civil construction demand within our geo components.

Speaker Change: Work furniture demand also remains slow.

Speaker Change: Pockets of improvements in contract markets are offset by softness in residential markets. We expect 2020 for demand to be in line with 2023.

Speaker Change: In flooring products, we anticipate another year of lower residential demand driven by lower levels of residential construction and remodeling activity.

Speaker Change: Hospitality demand has recovered slower than expected and remains well below pre pandemic levels.

Speaker Change: Within textiles first quarter sales were negatively impacted by weak bedding and furniture demand within our fabric converting business, partially offset by growth in U S. Civil construction demand within our Geo components business.

Mitch Dollop: We expect infrastructure funding will be a tailwind later this year and anticipate full-year demand for geocomponents will be modestly higher year over year. In spite of an uncertain macroeconomic environment and challenging demand in residential end markets, our full-year sales and earnings guidance has not changed. Our ongoing initiatives, including our restructuring plan, remain on track, and the management team is executing against our near-to mid-term strategic priorities outlined earlier. I'll now turn the call over to Ben to review our updated capital allocation priorities, additional first quarter financial details, and our outlook for the year.

Speaker Change: We expect infrastructure funding will be a tailwind later this year and anticipate full year demand in geo components will be modestly higher year over year.

Speaker Change: Despite an uncertain macroeconomic environment and challenging demand in residential end markets, our full year sales and earnings guidance has not changed our ongoing initiatives, including our restructuring plan remain on track and the management team is executing against our near to midterm strategic priorities outlined earlier.

Speaker Change: I'll now turn the call over to Ben to review, our updated capital allocation priorities additional first quarter financial details and our outlook for the year.

Benjamin M. Burns: Thank you, Mitch, and good morning, everyone. As Mitch discussed in his remarks, our management team and board of directors have made the decision to reduce the quarterly dividend to five cents per share. We carefully evaluated our capital allocation priorities and determined that reallocating a large portion of cash spent on dividends to deleverage our balance sheet while continuing to invest in our business will enhance our financial position in the near term as weak demand in our residential end markets continues to pressure earnings. Additionally, cash generated from real estate sales will be used for debt reduction.

Benjamin M. Burns: Thank you Mitch and good morning, everyone as Mitch discussed in his remarks, our management team and board of Directors has made the decision to reduce the quarterly dividend to <unk> per share.

Benjamin M. Burns: We carefully evaluated our capital allocation priorities and determined that reallocating a large portion of cash spent on dividends to deleverage our balance sheet, while continuing to invest in our business will enhance our financial position in the near term as weak demand in our residential end markets continues to pressure earnings.

Benjamin M. Burns: Additionally, cash generated from real estate sales will be used for debt reduction.

Benjamin M. Burns: We are targeting a long-term leverage ratio of two times net debt to adjusted EBITDA, which we expect will allow us to maintain a solid investment-grade credit rating. In the long term, we expect to grow our business both organically and through strategic acquisitions while also returning cash to shareholders via a combination of dividends and share buybacks. In the first quarter, operating cash flow was negative $6 million, a decrease of $103 million versus the first quarter of 2023, primarily driven by lower accounts payable due to timing of purchases, reduced purchasing volumes, and deflation, as well as lower earnings.

Benjamin M. Burns: We are targeting a long term leverage ratio of two times net debt to adjusted EBITDA, which we expect will allow us to maintain a solid investment grade credit rating and the long term, we expect to grow our business, both organically and through strategic acquisitions. While also returning cash to shareholders via a combination of dividends and share.

Benjamin M. Burns: Backs.

Benjamin M. Burns: In the first quarter operating cash flow was negative $6 million, a decrease of $103 million versus the first quarter 2023, primarily driven by lower accounts payable due to timing of purchases reduced purchasing volumes and deflation as well as lower earnings we ended the quarter with adjusted working capital as.

Benjamin M. Burns: We ended the quarter with adjusted working capital as a percentage of annualized sales of 15.3% and an improvement of 50 basis points versus first quarter 2023. Cash from operations is now expected to be $300 to $350 million in 2024 versus our prior guidance of $325 to $375 million as we expect less benefit from working capital than previously anticipated. We ended the first quarter with total debt of $2.1 billion, including $279 million of commercial paper outstanding.

Benjamin M. Burns: As a percentage of annualized sales of 15.3% an improvement of 50 basis points versus first quarter 2023.

Benjamin M. Burns: Cash from operations is now expected to be $300 million to $350 million in 2024 versus our prior guidance of $325 million to $375 million as we expect less benefit from working capital than previously anticipated.

Benjamin M. Burns: We ended the first quarter with total debt of $2 1 billion, including $279 million of commercial paper outstanding.

Benjamin M. Burns: Net debt trailing 12-month adjusted EBITDA was 3.61 times at quarter end. We expect our leverage ratio to modestly increase in the second quarter before improving as we progress toward our long-term target of two times. We still expect to predominantly use our commercial paper program to repay $300 million of 3.8% 10-year notes maturing in November. Our amended credit agreement provides us with ample liquidity while we execute our current operating initiatives and navigate weak residential and market demand.

Benjamin M. Burns: Net debt to trailing 12 month adjusted EBITDA was 3.61 times at quarter end, we expect our leverage ratio to modestly increase in the second quarter before improving as we progress toward our long term target of two times.

Benjamin M. Burns: We still expect to predominantly use our commercial paper program to repay $300 million of three 8% 10 year notes maturing in November.

Benjamin M. Burns: Our amended credit agreement provides us with ample liquidity, while we execute on our current operating initiatives and navigate weak residential end market demand the leverage ratio increased from three five times to 4.0 times through June 32025, and we will revert to three five times as of September 32024.

Benjamin M. Burns: The leverage ratio increased from 3.5 times to 4.0 times through June 30, 2025, and it will revert to 3.5 times as of September 30, 2025, remaining at that level until maturity on September 30, 2026. No other material changes were made to the credit agreement.

Benjamin M. Burns: Five remaining at that level until maturity on September 30th 2026, no. Other material changes were made to the credit agreement.

Benjamin M. Burns: Total liquidity was $806 million at March 31st, comprised of $361 million cash on hand and $445 million in capacity remaining under our revolving credit facility. As Mitch stated earlier, our 2024 sales and EPS guidance range remains unchanged. 2024 sales are expected to be $4.35 billion to $4.65 billion, or down 2% to 8% versus 2023, reflecting continued weak demand in our residential end markets, partially offset by growth in the automotive and our industrial end markets.

Benjamin M. Burns: Total liquidity was 806 million at March 31 comprised of 361 million cash on hand, and $445 million in capacity remaining under our revolving credit facility.

Benjamin M. Burns: As Mitch stated earlier, our 'twenty 'twenty for sales and EPS guidance range remains unchanged 'twenty.

Benjamin M. Burns: 'twenty 'twenty four sales are expected to be 4.35 billion to $4. Six 5 billion were down 2% to 8% versus 2023, reflecting continued weak demand in our residential end markets, partially offset by growth in automotive and our industrial end markets.

Benjamin M. Burns: Volume is expected to be down low to mid-single digits, with volume at the midpoint, down high single digits in bedding products, up low single digits in specialized products, and down low single digits in furniture, flooring, and textile products. Inflation and currency combiner are expected to reduce sales by low single digits.

Benjamin M. Burns: Volume is expected to be down low to mid single digits with volume at the midpoint down high single digits and bedding products.

Benjamin M. Burns: Up low single digits in specialized products and download single digits and furniture flooring and textile products deflation and currency combined are expected to reduce sales low single digits.

Benjamin M. Burns: 2024 earnings per share are expected to be in the range of $0.95 to $1.25, including approximately $0.20 to $0.25 per share of negative impact from restructuring costs and $0.10 to $0.15 per share gain from the sale of real estate. Full-year adjusted earnings per share are expected to be $1.05 to $1.35, primarily reflecting lower volume, pricing responses related to global steel cost differentials, modest metal margin compression, and several expense items that were abnormally low in 2023 and are expected to normalize in 2024, including bad debt expense, a reduction to a contingent purchase price liability associated with a prior year acquisition, and incentive compensation. These decreases are partially offset by lower amortization from the 2023 Intangible Asset Impairment.

Benjamin M. Burns: 2024 earnings per share are expected to be in the range of 95 to $1 25, including approximately 20 to 25 per share of negative impact from restructuring costs and 10 to 15 cents per share gain from the sale of real estate.

Benjamin M. Burns: Full year adjusted earnings per share are expected to be a dollar five to $1 35, primarily reflecting lower volume.

Benjamin M. Burns: <unk> seen responses related to global steel cost differentials modest metal margin compression and several expense items that were abnormally low in 2023 and are expected to normalize in 'twenty 'twenty four including bad debt expense a reduction to a contingent purchase price liability associated with a prior year acquisition and then.

Benjamin M. Burns: Compensation.

Benjamin M. Burns: These decreases are partially offset by lower amortization from the 20th twenty-three intangible asset impairment.

Benjamin M. Burns: Based upon this guidance framework, our 2024 full-year adjusted EBIT margin range is expected to be 6.4% to 7.2%. EPS guidance assumes a full year effective tax rate of 25%, depreciation and amortization of approximately $135 million, net interest expense of approximately $85 million, and fully diluted shares of $138 million. For the full year 2024, we assume capital expenditures of $100 million to $120 million, dividends of approximately $135 million, reflecting two quarters of cash payments at $0.46 per share and two quarters at $0.05 per share, and minimal spending for acquisitions and a share of a purchase.

Benjamin M. Burns: Based upon this guidance framework, our 'twenty 'twenty four full year adjusted EBIT margin range is expected to be six 4% to seven 2%.

Benjamin M. Burns: EPS guidance assumes a full year effective tax rate of 25% depreciation and amortization of approximately $135 million net interest expense of approximately $85 million and fully diluted shares of 138 million.

Benjamin M. Burns: For the full year 'twenty 'twenty four we assume capital expenditures of 100 million to 120 million dividends of approximately $135 million, reflecting two quarters of cash payments at 46 cents per share in two quarters at five cents per share and minimal spending for acquisitions and share repurchases.

Benjamin M. Burns: Lastly, I want to reiterate that we are proactively making changes where needed to strengthen our business and better position us to capture long-term opportunities. This discipline, combined with the dedication and hard work of our employees, will pave the way for future success. With those comments, I'll turn the call back over to Cassie.

Speaker Change: Lastly, I want to reiterate that we are proactively making changes where needed to strengthen our business and better position us to capture long term opportunities. This discipline combined with the dedication and hard work of our employees will pave the way for future success.

Speaker Change: With those comments I'll turn the call back over to Kathy.

Cassie Branscum: Thank you, Ben. Operator, we're ready to begin the Q&A. Thank you. We will now be conducting

Kathy: Thank you Ben operator, we're ready to begin Q&A.

Operator: Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Kathy: Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Operator: One moment, please, while we poll for questions. Thank you. Our first question is from Susan Maklari with Goldman Sachs. Please proceed with your question.

Kathy: Information call them. The King your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing the parties one of them.

Kathy: While we poll for questions.

Kathy: Okay.

Kathy: Okay.

Kathy: Thank you. Our first question is from Susan Mcclary with Goldman Sachs. Please proceed with your question.

Unknown Attendee: Thank you. Good morning, everyone. Good morning. Good morning.

Susan R. McCoy: Thank you good morning, everyone.

Susan R. McCoy: Good morning, Mike.

Susan Marie Maklari: My first question is, I want to, I want to start on the dividend. I guess, Mitch, can you just give us a bit more perspective on how the board arrived at that five cents? And maybe even some color on what it implies for the future earnings of Leggett? How do you think about what the business can generate once you get past the restructuring and all the changes that you're implementing? Would you please give us some color on how we should be thinking about those two pieces?

Susan R. McCoy: Good morning. My first question is I want to I want to start on the dividend I guess, Nick can you just give us a bit more perspective on how the board arrived at that five sons, and maybe even some color on what it implies for the future earnings of lug. It how do you think about what the business can generate once.

Susan R. McCoy: As you get past the restructuring and all the changes that you're implementing just any color there on how we should be thinking about those two pieces.

Mitch Dollop: Sure, Susan, you know, making a change to the dividend was, of course, a decision that we took very seriously, and it was important for us to consider a variety of options in making that change as well as near and long-term impacts on our business. So the downturn in our residential end market demand has continued to pressure earnings for longer than we originally anticipated.

Nick: Sure Susan.

Nick: Make it a change to the dividend was of course the decision that we took very seriously and it was important for us to consider a variety of options and making that change as well as near and long term impacts to our business.

Nick: The downturn in our residential end market demand has continued to pressure earnings for longer than we originally anticipated.

Mitch Dollop: And, you know, as we went through this process, we shifted from considering it to be a question of how we can fund the dividend at the current level to whether we should fund the dividend at the current level. So it became harder to balance our lower earnings, the increasing leverage, and the elevated dividend payout ratio. So, you know, we've landed at 20 cents because reducing to that level allows us to deleverage our balance sheet in a reasonable time frame, and continue to invest in our business, which we've mentioned before; we hadn't been compromising CapEx or things like that. But as this went on and the payout ratio continued to be really high, it was putting us in a spot to maybe have to make some changes.

Nick: And you know.

Nick: As we went through this process, we shifted from considering it to be a question of how can we fund the dividend at the current level to whether we should fund the dividend at the current levels as it became hard to balance our lower earnings the increasing leverage and the elevated dividend payout ratio.

Nick: So you know we've landed at the 'twenty sets, because reducing does that level allows us to deleverage our balance sheet in a reasonable timeframe.

Nick: Continue to invest in our business.

Nick: Which we had mentioned before we haven't been compromising capex or things like that but as this drag on and the payout ratio continued to be really high it was putting us in a spot to maybe you have to make some changes and it also gives us the flexibility to fund our portfolio in the future. If we think that's appropriate so yeah, we remain committed to read.

Mitch Dollop: And it also gives us the flexibility to fund our portfolio in the future if we think that's appropriate. So, you know, we remain committed to returning capital to shareholders, and we're not walking away from that priority, but we'll balance that with retaining the flexibility to invest in future growth. And we'll also think about that shareholder returns both through dividends and share repurchases over time. You know, to your question about future earnings, we still feel really good about the restructuring activity that's underway and some of the additional actions that we talked about in our reporting of operational improvements and looking at our G&A cost structure, things like that.

Nick: Turning to capital to shareholders, and we're not walking away from that priority, but we'll balance that with retaining the flexibility to invest in future growth and we'll also think about that the shareholder returns both through dividends and share repurchases over time.

Nick: You know to your question about the future earnings Yeah, we still feel really good about the restructuring activity that's underway and some of the additional actions that we talked about in the in our reporting of operational improvements and looking at our G&A cost structure things like that so we feel like we still see.

Mitch Dollop: So we feel like, you know, we still see improvement in our earnings, even in this near-term low-demand environment. We continue to see improvement and growth in specialized product earnings. And, you know, demand will start to come back at some point, but it's hard to estimate when that is. It probably depends on interest rates and inflation and some things like that. So we're really focused on dealing with the situation that we have on our hands today and driving improvement in our earnings in the near-term and in the mid-term and then returning to longer-term growth, you know, when things normalize a bit.

Nick: That improvement in our earnings even in this near term low demand environment, we continue to see improvement and growth in specialized products earnings.

Nick: And you know demand will start to come back at some point, but it's hard to estimate when that is probably depends on interest rates and inflation and some things like that so we're really focused on dealing with the situation that we have on our hands today and driving improvement in our earnings are.

Nick: In the near term the midterm and then returning to longer term growth.

Nick: Things normalize a bit so we're confident in the situation we're in and the opportunities that we have but we felt like this was the appropriate action to give us the flexibility that we need to run our business for the long term.

Susan Marie Maklari: Okay, that's helpful, Culler. And then maybe digging a little deeper into one of the points that you made there, which is just the commitment to shareholder returns. I guess, is the plan to continue to raise the dividend from here? Or should we expect that we're just going to stay at $0.20 for a while and then...

Speaker Change: Okay. That's helpful color and then just maybe digging a little deeper into one of the points that you made there which is just a commitment to shareholder returns I guess it is the plan to continue to raise the dividend from here or should we expect that we're just going to stay at the 20 cents for a while and then you know sort of.

Speaker Change: Take things from there.

Mitch Dollop: Well, Susan, as we, you know, move closer to our leverage target, and that does, you know, the long-term target that's been mentioned two times is long-term. It doesn't mean that we won't do anything until we get there, but I think we'll continue to evaluate the situation. We definitely want to continue to give ourselves flexibility, and probably we'll have not as much of a, you know, only dividend focus as we've had over the last, you know, five plus years. So, we'll take advantage of the flexibility between share repurchases and the dividend, but we'll continue to evaluate that.

Speaker Change: Well.

Speaker Change: I think Susan as we move closer to our leverage target in that says you know the long term target that Ben mentioned, a few times is long term. It doesn't mean that we won't do anything until we get there, but I think we'll continue to evaluate the situation. We definitely want to continue to give ourselves the flexibility and probably will have not.

Speaker Change: As much of the only dividend focus as we've had over the last you know.

Nick: I have last year's so we'll take advantage of flexibility between share repurchases and the dividend, but we will continue to evaluate that as we make progress in our earnings and our deleveraging.

Susan Marie Maklari: Okay. All right. Thank you. I just want to get one more in, which is that it does sound like the restructuring is on track and that it's progressing. Anything, I guess, that has surprised you or that has been different as you've actually started to get a bit deeper into that process? And, you know, perhaps anything that could be changed or adjusted, given that?

Susan R. McCoy: Okay Alright. Thank you I just wanted to get one more in which is that it does sound like the restructuring is on track and that's progressing just anything I guess that has surprised you or that has been different as you've actually started to get a bit deeper into that process and you know, perhaps anything that could be changed or adjusted given that.

Mitch Dollop: You're right, it is going very well, and things, I think, remain on track, but Tyson, do you want to comment because betting is the biggest part of it? Sure thing.

Speaker Change: Youre right it is going very well and things.

Speaker Change: Remain on track, but I shouldn't do you want to comment because that is the biggest part of that sure thing Yeah, Hey, Good morning, Susan Yes. It is on track and we're doing well with the plan I'd say, we're on track from both the timing and financial estimates that we've made as part of the plan and I think maybe what's been surprising is it's a it's a.

Tyson Hagel: Good morning, Susan. Yes, it is on track. We're doing well with the plan. I'd say we're on track from both the timing and financial estimates that we've made as part of the plan. I think maybe what's been surprising is it's a heavy lift. There's a lot of activity across the segment, and all of it has been well planned out, and it's being executed really well. But in terms of maybe some things that are being a surprise, we decided we needed to move aggressively.

Susan R. McCoy: Heavy lift you know theres a lot of activity across the segment and all of it is being well planned out and it's being executed really well.

Tyson Hagel: We're adjusting to a fast-changing market and wanted to do this in an appropriate way, but I think we continue to find along the way other opportunities that we can continue to drive cost improvement as part of the plan. And I think that really gives us a lot of confidence in what Mitch said about improving the longer-term margin profile because we continue to find other opportunities to add to the restructuring plan and help us continue to drive efficiency while still supporting our customers and not jeopardizing them. Okay.

Susan R. McCoy: But in terms of maybe some things are being a surprise you know we decided we needed to move aggressively.

Susan R. McCoy: Adjusting to a fast changing market and wanted to do this in an appropriate way, but I think we continue to find along the way other opportunities that we can continue to drive cost improvement as part of the plan and I think that really gives us a lot of confidence back to what they said about improving your longer term margin profile is that we continue to find other opportunities to add to the restructuring plan and helped.

Speaker Change: <unk> continued to drive efficiency in it while still supporting our customers and not jeopardizing that.

Susan Marie Maklari: Okay, all right. Thank you all for the color. I'll get back in the queue.

Speaker Change: Okay Alright. Thank you all for the color I'll get back into queue.

Speaker Change: Alright, Thank you Susan.

Operator: Our next question is from Bobby Griffin with Raymond James. Please proceed with your question.

Speaker Change: Our next question is from Bobby Griffin with Raymond James. Please proceed with your question.

Robert Kenneth Griffin: Good morning, everybody. Thanks for taking my question. I guess first, Mitch, I wanted to talk a little bit about the betting segment itself and the performance during the quarter. When you look at kind of the delta between what you guys estimate the consumption was in the industry, I believe you mentioned down in the high single digits and then the innerspring foam volume down 15%. What is that? What is still driving that gap? I know we've talked a little bit about market share losses, but is that also from some of the restructuring initiatives where you've had to walk away from some businesses temporarily or anything? Any additional color there?

Robert Kenneth Griffin: Everybody. Thanks for taking my questions.

Robert Kenneth Griffin: Guess first maybe.

Robert Kenneth Griffin: I wanted to talk a little bit about the bedding segment itself and on the performance during the quarter. When when you look at kind of the Delta between what you guys estimate the consumption was in the industry. I believe you you mentioned down high single digits in the inner spring phone volume down 15%. What is that what is driving that gap still I know, we've talked a little bit.

Robert Kenneth Griffin: <unk> market share losses, but is there also is that also from some of the restructuring initiatives, where you've had to walk away from some business temporarily or anything any additional color there.

Robert Kenneth Griffin: Hum.

Mitch Dollop: Tyson, I'll turn it over to you. You're the expert. I'll take that one. Good morning, Bobby.

Speaker Change: I'll turn it over to you either expert Oh I'll take that one good morning Bobby.

Tyson Hagel: No, we're not walking away from anything in the first quarter. That's not been a drag. And if anything, I know we put out the sales attrition estimates early in the first quarter as part of the restructuring announcement. And to date, I think we've found that so far, it's been less than what we originally put out. We were conservative in that estimate. The big drag, and we've talked about this before, but we've really had struggles around volume and both open coiling grids. [inaudible] & & & & &

Robert Kenneth Griffin: No we're not walking away from anything in the first quarter. That's that's not been a drag and you know what if anything I know, we put out the sales attrition estimates at them early in the first quarter as part of the restructuring announcement in it today I think we've found that so far it's been less than what we originally put out we were conservative in that estimate big drags that we've talked about this before but we've really had strong.

Robert Kenneth Griffin: All those around volume and both open coil in grids and it's a combination of you know.

Robert Kenneth Griffin: Product and consumer preference moving away from some of those product categories and also extreme price competition on some of those especially on open coil and even a lower in commodity pockets and they just don't make sense for us, but those continue to be a longer term a drag on the overall.

Robert Kenneth Griffin: Volume, but we do feel like our comfort core, especially on some of the newer products are more in line with the domestic market.

Robert Kenneth Griffin: And Tyson, when you look at that, is that trend leveling out where the incremental pressure is, is, leveling out, or is that incremental pressure still growing? And if you're to unpack that further within the industry, is it, you know, you mentioned the price side, but is there just a function where there's better spring making machinery available from other countries today than there used to be five or seven years ago?

Robert Kenneth Griffin: And Python you look at that is that we've got train leveling out were like that incremental price for <unk> is leveling out or is that incremental pressure still growing.

Robert Kenneth Griffin: If we were to unpack that further within the industry is that you know you mentioned the price side, but is there just a function of where the better spring, making machinery available from other countries today than there used to be five or seven years ago.

Tyson Hagel: For sure, on the last part, Bobby, we have to recognize that we have some competitors making intersprint equipment internationally that are very capable, and they can make some good equipment, and that is a part of the market that we have to deal with at this point. We still feel good about what we can do internally and the efficiencies that we have with our spuel business, but that is a challenge and something that we have to deal with.

Speaker Change: But for sure on the last part Bobby I mean, you know that we have to recognize that but we have some competitors, making innerspring equipment internationally that are very capable and they can make some good equipment and that is a part of the market that we have to deal with at this point, we still feel good about what we can do internally and the efficiencies that we have with our fuel business.

Speaker Change: But that is a challenge and something that we have to deal with it. There is you know we have to be mindful that its a very competitive market, especially right now where there is overcapacity that exists not just in finished mattresses between components and so it makes it a very aggressive marketplace right now and we're asking to deal with that as long as we're in kind of this low demand environment, especially but we think.

Tyson Hagel: We have to be mindful that it's a very competitive market, especially right now, where there is overcapacity that exists, not just in finished mattresses but in components, and so it makes it a very aggressive marketplace right now, and we're going to have to continue to deal with that as long as we're in this low-demand environment, especially. But we think we're dealing with it well, and that's why we're also investing heavily in not just differentiated product offerings but also trying to find cost solutions for our customers that get away not just from commodity products but help them save money in their assembly processes.

Robert Kenneth Griffin: We're dealing with well and that's why we're also investing heavily in not just differentiated product offerings, but also trying to find solutions for our customers that get away not just from commodity products, but helping them save money their assembly process.

Robert Kenneth Griffin: Okay, and it may be with it. Oh, good. I'm sorry.

Robert Kenneth Griffin: Okay, Okay, and then maybe it's worth it.

Speaker Change: Glad I'm, sorry minutes, sorry, if I may I'm, just going to add you know this goes into our focus in those higher value products right. So we're not just chasing the low value products, but continuing to shift and that's having a meeting a positive impact right, that's right and come at lower units overall, especially relative to some of the legacy products, but they have to succeed.

Mitch Dollop: Sorry, Bobby, I was just going to add, you know, this goes into our focus on those higher-value products, right? So we're not just chasing the low-value products but continuing the shift, and that's having a meaning, a positive impact, right? That's right. I come at lower units overall, especially relative to some of the legacy products, but they have been successful so far, and we are seeing improvements there. Okay.

Robert Kenneth Griffin: So far and what we are seeing an improvement there.

Robert Kenneth Griffin: Okay, that's helpful. And then maybe switching gears a little just to overall raw material deflation, you know, I've covered you guys for a while, and there was a typical relationship between kind of when you get the deflation, you kind of hold on to a little bit, and you'd see it help a little on the margins, but it would hurt, obviously, the top line. Is the business still behaving that way in a deflationary environment? Or have some of these pressures that have taken place caused the prototypical relationship that we're used to on the street to be a little bit different when Leggett experiences deflation across some of its product categories?

Speaker Change: Okay. That's helpful. And then maybe switching gears a little it just the overall Walmart raw material deflation and you know I've I've covered covered you guys for a while and there was a typical relationship between kind of when you would get the deflation you kind of hold onto a little bit and you'd see it help a little on the margins, but it would hurt obviously the top line is it is the business still behaving that.

Robert Kenneth Griffin: Way in a deflationary environment or has some of these pressures that have taken place caused the prototypical relationship that were used to on the street to be a little bit different when they get experiences deflation across some of its product categories.

Mitch Dollop: Yeah, I mean, I think it's pretty similar. We just probably have a little bit different timing dynamics, like with specialty foam, the timing is a bit different than what we see in inner springs. But I think it's probably pretty similar.

Speaker Change: Yeah, I mean, I think it's pretty similar we just probably have a little bit different timing dynamics like with specialty film the timing is a bit different than what we'd see in and inner springs, but I'm I think it's probably pretty similar.

Speaker Change: Okay.

Robert Kenneth Griffin: Okay, and then I guess, Mitch, lastly, for me, it's just it's back to the steel mill. I think I talked to you guys about this last quarter as well.

Speaker Change: Okay, and then I guess just lastly for me. It's just it's back on the steel mill I think I've talked to you guys about this last quarter as well. It's just what what you know that that is part of the big vertically integrated strategy, but at the same time with it running at a less than full capacity. It does have probably a drag on the operations. It is there is that just.

Mitch Dollop: It's just What what, you know, that that is part of the big vertically integrated strategy, but at the same time, with it running at less than full capacity, it does probably have a drag on the operations. Is there something else, purely market related, that has to come back? Or is there some? Is there some external kind of salesforce thing you can do to drive that back to full capacity? Or are we just, you know, kind of at the beholden of the end market and the consumer?

Speaker Change: Clearly market related they have to come back or is there. Some is there some external kind of sales force things you can do to drive that back to full capacity or are we just you know kind of at the holdings of the the end market and the consumer.

Tyson Hagel: Yeah, I'll take that one again, Bobby. Yes, it is a drag. You know, it is, you know, a high fixed cost operation, and it is something that, you know, running it below capacity is definitely impactful on our margins. But, you know, we do see that, you know, just over time, as products have changed. Grids are an example.

Speaker Change: Yeah, I'll just tell you again Bobby.

Robert Kenneth Griffin: Yes. It is a drag and you know it is a high fixed cost operation and it is something that you're running at below capacity is it definitely impactful to our two our margins but.

Robert Kenneth Griffin: That's been historically a big use of rod tons, and we see a pretty permanent shift in the attachment rate for that long term. So it does require us to go out and diversify in some of the markets we can serve. And we are actively doing that. You know, we have seen, you know, even over the last year where some of the industrial markets were stronger, that there's been some more weakness there.

Robert Kenneth Griffin: We do see that you're just overtime is it you know as products change grids or as an example, that's been historically a big use of raw tons, and we see a pretty permanent shift in the attachment rate for that long term. So it does require us to go out and diversify and some of the markets. We can serve and we are actively doing that you know we have seen even over the last year or something.

Robert Kenneth Griffin: Industrial markets were stronger that theres been some more weakness there. So that's that's still a challenge in the near term, but we are actively looking at other end markets industrial markets that helped us offset some of that we're not just solely relying on the recovery of the interest rate market.

Robert Kenneth Griffin: So that's still a challenge in the near term, but we are actively looking at other end markets, more industrial markets that help us offset some of that. We're not just solely relying on the recovery of the industry. Very good. I appreciate the

Operator: Very good. I appreciate the details this morning. I'll jump back in the queue.

Speaker Change: Very good I appreciate the details this morning, I'll jump back in the queue.

Speaker Change: Thank you Bobby.

Robert Kenneth Griffin: Yeah.

Peter Jacob Keith: Thank you. Our next question is from Peter Keith with Piper Sandler. Please proceed with your question.

Robert Kenneth Griffin: Thank you. Our next question is from Peter Keith with Piper Sandler. Please proceed with your question.

Operator: Hi, thank you. Good morning, everyone.

Peter Jacob Keith: Hi, Thank you good morning, everyone. Thanks for taking my question I actually wanted to ask a few follow ups. So to Susan's question on capital allocation.

Peter Jacob Keith: You had mentioned maybe not as focused on the dividend are you have been in the last five years I guess that implies maybe thinking about share repurchases.

Peter Jacob Keith: Thanks for taking my question. I actually want to ask a few follow-ups. So to Susan's question on capital allocation, you mentioned maybe not being as focused on dividends like you have been the last five years; I guess it applies, maybe thinking about share purchases. The question is, are you thinking about getting the two times net leverage as that target before you contemplate acquisitions or share repurchases? or are you going to be opportunistic? I guess I'm just trying to understand the timing of when you know some of the cash return of the shareholders could be.

Peter Jacob Keith: The question is are you thinking about.

Peter Jacob Keith: Getting a two times net leverage target before you contemplate acquisitions or share repurchases.

Peter Jacob Keith: Or are you going to be opportunistic I guess I'm, just trying to understand that the timing of when.

Peter Jacob Keith: Some of the cash returned to shareholders could pick up.

Mitch Dollop: Yeah, thanks for asking that question. And we tried to comment on that. But I'm glad to clarify, you know, the two times leverage target is a long-term target, and we will try and be opportunistic along the way. It's a priority; we want to make sure we maintain our investment grade credit rating and access to commercial paper. But that doesn't mean we won't pass up opportunities, for example, small bolt-on acquisitions or things like that. Nothing is on the list right now, but we do plan to maintain some flexibility. But Ben, anything you would add there? Yeah, no; I think that's right. And

Speaker Change: Yes, thanks for asking that question I mean, we tried and tried to comment on that but I'm glad to clarify you know the two times leverage target is a long term target and we will try and be opportunistic along the way. It's a priority we want to make sure we're maintaining our investment grade credit ratings and access to commercial paper.

Speaker Change: But that doesn't mean, we will pass up opportunities for example, a small bolt on acquisitions or things like that nothing is on the list right now, but we do plan to maintain some flexibility than anything you would add there yeah.

Speaker Change: I think that's right and as we make progress on that deleveraging I think like Mitch said that gives us the flexibility to start to look at some of those other opportunities to drive growth and so again you know if we if we redirected all free available free cash flow to debt reduction it would probably take us a couple of years, but.

Benjamin M. Burns: As we make progress on that deleveraging, I think, like Mitch said, that gives us the flexibility to start to look at some of those other opportunities to drive growth. And so again, if we redirected all available free cash flow to debt reduction, it would probably take us a couple of years. But again, as we make progress, we'll have the ability to be a little bit more flexible and look at those other opportunities. So I think flexibility is the key word, right, Mitch? For sure, but we'll definitely be opportunistic in those other opportunities.

Speaker Change: Again, as we make progress we'll have the ability to be a little bit more flexible and look at those other opportunities. So I think flexibility is the word right.

Mitch Dallas: For sure, but we will definitely be opportunistic in those other other opportunities.

Peter Jacob Keith: Okay, very good. And then to follow up on Bobby's question regarding spring competition, I think he mentioned there are some larger international players that are competitive. What about the domestic market? It does seem like there are more spring factories popping up in the US. Has the level of US domestic competition also intensified in recent years? Hi Peter.

Speaker Change: Okay very good and then to follow up on Bobby's question regarding spurring competition I think you had referenced there's some larger international players that are competitive.

Speaker Change: What about the domestic market. It does seem like there's more spring factories popping up in the U S. A as the Buffalo on U S. Domestic competition also intensified in recent years.

Tyson Hagel: Yes, we have seen some of that. You know, Bobby asked the question about equipment. That is something, especially during the pandemic, that we saw a rise in some of the capacity ads. You know, some of that has also come as a result of the anti-dumping cases where we've seen some reshoring of mattress production in the U.S., and so some of it that wasn't part of our addressable market to begin with, it was being imported, and now we're competing with them domestically.

Speaker Change: And Peter you, Yes, we have seen some of that you know Bobby a question about equipment that is something especially during the pandemic that we saw a rise of smoke.

Speaker Change: Capacity adds.

Peter Jacob Keith: You know some of that has also come from a result of the anti dumping cases, where we've seen some re shoring mattress production U S and so some of it wasn't part of our addressable market to begin with it was it was being imported and now we're competing with them domestically. So we have seen that as part of the market and that's as part of what we're talking about with changing domestic market.

Tyson Hagel: So we have seen that as part of the market, and that's part of what we're talking about with the changing domestic market and why we're making adjustments for our business as well. Okay, very good. And then the last one for me is that in the last quarter, you had referenced that some customers were looking to improve their financial position, and that could negatively impact your sales; you took the impairment charge on, especially the film business.

Peter Jacob Keith: We're making adjustments to our business as well.

Peter Jacob Keith: Okay.

Speaker Change: Very good and then the last one for me is that the last last quarter, you had referenced that some customers looking to improve their financial position.

Speaker Change: And and that could negatively impact your sales you took the impairment charge on the specialty film business.

Tyson Hagel: The heart of the question is, some of those lost sales, I guess customers might be going elsewhere and closing down. Did that show up fully in Q1? Or is there more impact to come as we think about Q2 and going forward from this customer change? Go ahead. I'll take that one as well, Peter.

Speaker Change: The heart of the question is some of those lost sales I guess customers might be going elsewhere shutting down did that show up fully in Q1 or is there more impact to come as we think about Q2.

Speaker Change: And going forward from this customer changes.

Tyson Hagel: We didn't see, we saw some just a general slowdown from some of those accounts, but more that would track the market in the first quarter, but most of the impacts that we've talked about previously, and we're taking the impairment charts, we'll start to really see in the back half of the year, and that's part of our guidance. Okay. So I'll just develop on that. I understand the guidance, and no one has the perfect crystal ball. But certainly, like we look at betting. Unis down, iSingle.

Speaker Change: Go ahead, Matt I'll take that one theater.

Matt: Didn't see we saw some just general slow down from some of those accounts, but more it would track the market in the first quarter, but most of the impacts that we've talked about previously and we've taken the impairment charge will start to really see in the back half of the year and that's part of our guidance.

Speaker Change: Okay.

Speaker Change: So I'll just follow up on that.

Speaker Change: Understand the guidance no one has a perfect crystal ball, but certainly like if we look at bedding.

Peter Jacob Keith: I guess from where you're training in the first half of the year, it does imply some healthy improvement in the back half. Is this a function of comparisons? It does seem like you've got the customer headwind coming. What gives the confidence in that general improvement as we look to the back half of the year?

Speaker Change:

Speaker Change: Yeah. Your units down I think like I said from where you were kind of first half of the year. It does imply.

Speaker Change: The improvement in the back half.

Speaker Change: Is it a function of compares those seem like you've got the customer headwind coming I guess, what gives the confidence and and that general improvement as we look to the back half of year.

Benjamin M. Burns: Ben, I'll let you take that one, but I mean, there's some seasonality, too, particularly in, like, automotive and things like that.

Speaker Change: Yeah, I'll, let you take that one but I mean, there's some seasonality to it particularly in like automotive and things like that yeah, and then I'd say on the bedding side, its really the comparisons get a bit easier in the back half of the year, yeah. When we really from a demand standpoint, playing for it to be more of the same I mean really what we saw late last year, we haven't forecasted any op.

Benjamin M. Burns: Yeah, and then I'd say on the betting side, it's really the comparisons get a bit easier in the back half of the year. Yeah, when we really, from a demand standpoint, plan for it to be more the same. I mean, really, what we saw late last year; we haven't forecasted an optimistic recovery or anything like that in demand, and we have baked in the customer attrition that we talked about. Okay, very good. Thanks so much.

Speaker Change: Domestic recovery or anything like that in demand and we have baked in to the customer attrition that we talked about.

Speaker Change: Okay very good thanks, so much.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Okay.

Peter Jacob Keith: As a reminder, if you'd like to ask a question, please press star one. Our next question is from Keith Hughes with Truist Securities. Please proceed with your question.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star one.

Operator: Thank you. A couple questions.

Speaker Change: Our next question is from Keith Hughes with truly Securities. Please proceed with your question.

Keith Brian Hughes: First, on the dividend, I understand why you're cutting the dividend, but I'm a little confused as to why that dividend in February was paid at the old rate. I mean, the landscape looks very similar to what you thought in the last earnings release, probably what you were forecasting in January. Can you go through the thought process of the board of how the path that we took got us to where we are right now?

Keith Brian Hughes: Thank you a couple of questions first on the dividend I understand why you're cutting the dividend.

Keith Brian Hughes: I'm a little confused why that dividend in February was paid at the old rate I mean that landscape looks very similar to what you thought the last furniture, where he is probably what you were forecasting in January.

Keith Brian Hughes: Can you go through the thought process of the board of.

Keith Brian Hughes: The path that we got to where we are right now.

Mitch Dollop: Yeah, and I tried to comment on this earlier, Keith, but I mean, it really goes back to how seriously we took that decision. And we wanted to do the work that we needed to explore the various options that were in front of us and what the impacts were for us, both in the near and the long term. And so, you know, it was a long, vigorous, thorough discussion and investigation of different opportunities.

Speaker Change: Yeah, and I tried to comment on this area there Keith but to me it really goes back to how seriously we took that decision and we wanted to do the work that we need it to explore the various options that were that were in front of us and what the impacts were for us both in the near and the long term and so yeah. We it was a a a.

Speaker Change: Long and vigorous and thorough discussion and investigation of different opportunities and so you. While we wanted to make sure we were making the right choice and also signaling that it was a discussion that we were having and so just that's houses.

Mitch Dollop: And so, you know, while we wanted to make sure we were making the right choice and also signal that it was a discussion that we were having. And so just that's how the timing worked out.

Speaker Change: Timing worked out.

Keith Brian Hughes: Okay, so you brought up the long-term ramifications of this. So you've got a big restructuring plan you're working on that you highlighted at the beginning of the year, that involves a lot of cost takeout and things like that. But without a big dividend, it kind of changes how the stock's going to trade. I guess my question is, will there be a real look inside this portfolio to say what businesses are really growth engines moving forward, and maybe ones you don't know?

Speaker Change: Okay.

Speaker Change: So you brought up the long term ramifications of this so you.

Speaker Change: You've got a big restructuring plan, they're working on but you highlighted the beginning of the year. That's a lot of cost take out things like that.

Speaker Change: But without a lot of the big dividend it kind of changes how the stock's going to try it I guess my question does well that'll be.

Speaker Change: A real look inside this portfolio to say what businesses are really growths engines, Ben and Gordon, which maybe once you don't need to be out in the future.

Mitch Dollop: Yeah, great, great question, Keith. I mean, portfolio management is always something that's on our radar. You know, we think about and have conversations about the complexity of our business and what we can do to maybe simplify that. And that means not only our portfolio but even within some of our views, there are a lot of complicated elements to it. So, you know, it's something that is definitely always on our radar and that, you know, we'll continue to dig into.

Benjamin M. Burns: Yeah, Great Great question, Keith I mean portfolio of advent is always something that's on our radar you know, we think about and have conversations about the complexity of our business and what do we do to maybe simplify that and it means not only our portfolio, but even within some of our b use there's a lot of complicated elements too.

Speaker Change: So you know.

Speaker Change: It's something that is definitely always on our radar and that you know we'll continue to dig into.

Keith Brian Hughes: And is there an ongoing review? Is there a, you know, kind of date on which we might see a result of that? Or is this more the traditional review business every six months, 12 months, whenever you do it? Well, I think it's a little bit of both.

Speaker Change: And is there are ongoing review was or.

Speaker Change: To date, we might see a result of that or is this more just traditional.

Speaker Change: Revisits every six month 12 month whenever you do it.

Mitch Dollop: Well, I think it's a little bit of both. I mean, we have a lot of activity that's underway right now, so we want to make sure that we're advancing on the restructuring, that we're taking these other operational efficiency improvement activities, that we're looking at our G&A costs and all those things as well, and also digging into the portfolio. So, you know, it's definitely an ongoing priority for us, so I don't want it to sound like that it's not something that's on our radar, but I think we have work to do to determine where we are. Okay, thank you.

Speaker Change: Well I think it's little bit of both I mean, we have a lot of activity. That's underway right. Now so we wanted to make sure that we're advancing on the restructuring that we're taking these other operational efficiency improvement activities that we're looking at our G&A costs at all of those things as well and also.

Speaker Change: Digging into the portfolio.

Speaker Change: So and do.

Speaker Change: You know it's.

Speaker Change: Something thats definitely a an ongoing.

Speaker Change: Priority for us so I don't want to sound like that it's not something that's on our radar, but I think we have work to do to determine where we go.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Operator: Thank you. Our next question is from Susan Maklari with Goldman Sachs. Please proceed with your question. Susan, are you on mute?

Speaker Change: Thank you. Our next question is from Susan Mcclary with Goldman Sachs. Please proceed with your question.

Speaker Change: Okay.

Susan R. McCoy: Susan how are you on mute.

Susan Marie Maklari: Yep, can you hear me? We can now. Okay. Sorry about that. I was on mute.

Susan R. McCoy: Oh, Yeah can you hear me.

Susan R. McCoy: We can now.

Unknown Attendee: I just wanted to follow up on a couple of points. One is that you mentioned in your remarks a focus on administrative costs in addition to the operational side of the business. And SG&A was higher in dollars and as a percent of revenues year over year in the first quarter. Is there anything specific there that you're looking at, or anything that you could kind of highlight in terms of SG&A and the opportunity there?

Susan R. McCoy: Okay, sorry about that I was on mute.

Susan R. McCoy: I just wanted to follow up on a couple of points. One is you mentioned in your remarks that focus on administrative costs and in addition to the operational side of the business and yesterday was higher in dollars and as a percent of the revenues year over year in the first quarter.

Susan R. McCoy: Specific there that you're looking to or anything that you could kind of highlight in terms of the SG&A and the opportunity there.

Benjamin M. Burns: Sure, then I'll let you take that one. Yeah, thanks for the offer.

Susan R. McCoy: Sure I'll, let Ben I'll, let you take that one yeah. Thanks for the question Susan I'd say at this point, we're just in the very early stages of this evaluation and we really don't have an estimate on the impact at this point, but what we're doing is investigating opportunities such as streamlining our processes, eliminating duplicate duplicate activities.

Susan Marie Maklari: Thank you for your question, Susan. I'd say at this point we're just in the very early stages of this evaluation.

Benjamin M. Burns: We really don't have an estimate on the impact at this point.

Benjamin M. Burns: What we're doing is investigating opportunities such as streamlining our processes, eliminating duplicate activities between our shared services and our business units, and then taking a look at some of the elements of our IT systems to see what opportunities we might have.

Benjamin M. Burns: Between our shared services and our business units and then taking a look at some of the elements of our I T systems to see what opportunities we might have to to prune out some costs. There. So I'm just like I said early innings of that but that's really what that entails.

Speaker Change: Okay, Alright, and then I also just wanted to touch a bit on the cost structure I know that you mentioned that you still expect deflation. This year, but can you just talk about you know how costs are moving more recently it does seem like you know some of these commodities have kind of come up off the bottom just any thoughts on how that's trending and and and where.

Susan R. McCoy: Things are going.

Speaker Change: Yeah, I think that things have been you know, maybe we haven't seen modest deflation, but ups and downs on different things and chemicals and things like that but relatively stable, but Tyson anything you would add no. It is it is relatively stable at this point of view.

Tyson Hegel: Your suppliers back in a good place and I think overall, just where demand has been that we've seen some about some bumps up and down relatively minor and overall, it's just don't appreciate anyways.

Speaker Change: Okay, Alright, and then I just have one last one which is that it seems like especially as we've gone through earnings there's been some mixed maybe commentary and color on the state of the consumer when you step back and you sort of look at your business and the overall trends that you are seeing broadly.

Tyson Hegel: I guess, how would you characterize the overall state of the consumer and and where do you think they are today and has anything changed there.

Speaker Change: Yeah. That's a great question I think there are mixed views I don't feel like a lot has changed since we last talked about this but I think it depends on where their focus is right I think on the.

Speaker Change: Consumer durable products, there's still a lot of focus there and I think it's impacted by higher interest rates and inflation and you know just.

Tyson Hegel: Need if people who dedicate their income to you know there are two food and resources and things like that and more still have a bit of a focus on services, but I don't know if there's anything you see different no I think that's the core issue in the short run I think and you still can you see where the inflation is definitely haven't got a major in.

Tyson Hegel: Packed on banning staples and that takes the focus away from longer term durable and they can push some of those products off I think you know the other thing that we're watching really closely just housing affordability.

Tyson Hegel: Back to about the availability of mortgage rates and you know that tends to be a big driver for a lot of our products and we're at a pretty rough spot for that right now as well. So I think those things go hand in hand, but that's definitely a big macro trend that we're watching yeah, and I think with what we've seen in the recent inflation in the fed's position you know I think theirs.

Tyson Hegel: Less optimism that those rates are going to come down in the near term. So that's why we're preparing to deal with this current environment as long as we need to.

Speaker Change: Okay Alright, thank you for for all the color and good luck with everything.

Speaker Change: Okay. Thank you Susan.

Speaker Change: Uh huh.

Unknown Executive: [inaudible]

Speaker Change: Thank you there are no further questions at this time I would like to turn the floor back over to Kathy Braskem for closing comments.

Susan Marie Maklari: Okay. All right.

Susan Marie Maklari: And then I also just want to touch a bit on the cost structure. I know that you mentioned that you still expect deflation this year, but can you just talk about how costs are moving more recently? It does seem like some of these commodities have kind of come up off the bottom. Any thoughts on how that's trending and where things are?

Mitch Dollop: Yeah, I think that things have been, you know, maybe we've seen modest deflation, but some ups and downs on different things, maybe chemicals and things like that, but relatively stable. Tyson, anything you would add?

Tyson Hagel: No, it is relatively stable at this point. I mean, your supplies are back in a good place. And I think overall, where demand has been, we've seen some bumps, bumps up and down, relatively minor, and overall, it's still pretty stable.

Susan Marie Maklari: Okay, all right. And then I just have one last one, which is that, especially as we've gone through earnings, there's been some sort of mixed, maybe, commentary and color on the state of the consumer. When you step back and you sort of look at your business and the overall trends that you are seeing broadly, I guess, how would you characterize the overall state of the consumer and where you think they are today? And has anything changed?

Mitch Dollop: Yeah, that's a great question. I think there are mixed views. I don't feel like a lot has changed since we last talked about this, but I think it depends on where their focus is, right? I think on consumer durable products, there's still not a focus there. And I think it's impacted by higher interest rates and inflation and, you know, just the need for people to dedicate their income to food and resources and things like that, and more still a bit of a focus on services. But I don't know, Tyson, anything you see differently?

Tyson Hagel: No, I think that's the core issue in the short run. I think you see where inflation is definitely having a major impact on basic staples, and that takes the focus away from longer-term durables, and they can push some of those products off. I think the other thing that we're watching really closely is just housing affordability, which goes back to both availability and mortgage rates. And, you know, that tends to be a big driver for a lot of our products, and we're in a pretty rough spot for that right now as well.

Tyson Hagel: So I think those things go hand in hand, but that's definitely a big macro trend that we're watching. Yeah, and I think with what we've seen in recent inflation and the Fed's position, you know, I think there's less optimism that those rates are going to come down in the near term. So that's why we're preparing to, you know, just deal with this current environment as long as we can.

Cassie Branscum: Thank you for joining us and for your interest in Leggett & Platt. Have a good day.

Cassie Branscum: Thank you for joining us and your interest in Leggett and Platt and have a good day.

Mitch Dollop: Okay. All right. Thank you for all the color and good luck with everything. Okay, thank you, Susan.

Operator: Thank you. There are no further questions at this time. I would like to turn the floor back over to Cassie Branscum for closing comments.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.