Q3 2024 Leggett & Platt Inc Earnings Call
Greetings and welcome to the LEGO Inplat 3rd quarter 2024 webcasts and earnings conference call. At this time, all participants are in a listen only mode.
A brief question and asked session. We'll follow the formal presentation.
and the Federal Government. Thank you.
Speaker Change: Good morning and welcome to Legit in Plats 3rd Quarter 2024 earnings call.
Speaker Change: With me on the call today are Karl Glassman, CEO, Ben Burns, CFO, Tyson Hagel, President of the Bedding Products Segment, Sam Smith, President of the Furniture, Flooring, and Textile Products Segment, and Kalina Talbert, Manager of Investor Relations.
Speaker Change: The agenda for our call this morning is as follows. Karl will discuss current demand trends and provide an update on the restructuring plan and other ongoing initiatives. Ben will cover our operating results and additional financial details and address our revised 2024 outlook, and the group will answer any questions you have.
Speaker Change: We posted to the IR section of our website yesterday's press release and a set of slides that contain summary financial information along with segment details and a restructuring update.
Speaker Change: Those documents supplement the information we discuss on this call, including non-GAAP reconciliations.
Speaker Change: Remarks today concerning future expectations, events, objectives, strategies, trends, or results constitute forward-looking statements.
Speaker Change: Actual results or events may differ materially due to a number of risk and uncertainties, and the company undertakes no obligation to update or revise these statements.
Speaker Change: 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 and subsequent 10-Q entitled Risk Factors and Forward-Looking Statements. I'll now turn the call over to Karl.
Karl Glassman: Good morning, and thank you for joining our call today.
Karl Glassman: As we begin, I want to thank our employees for their continued hard work and dedication as we navigate a challenging macro backdrop.
Karl Glassman: Our third quarter sales and earnings were below our expectations, largely due to weaker than anticipated demand in residential end markets and headwinds in automotive, hydraulic cylinders, and geocomponents.
Karl Glassman: Sluggish demand in these businesses is expected to persist through the fourth quarter and is expected to be more impactful than previously anticipated. As a result, we are reducing full-year sales and earnings guidance, which Ben will detail later in the call.
Karl Glassman: Now I'd like to highlight a few of the current demand dynamics in our key end markets.
Karl Glassman: We estimate that U.S. mattress consumption was approximately flat in the third quarter, but domestic production was likely down high single digits.
Karl Glassman: We still anticipate that our 2024 betting product segment volume will be down high single digits due to company-specific factors. Excluding higher trade rod sales for non-betting applications, segment volume would be expected to be down low double digits.
Karl Glassman: However, it's important to note that our comfort core and semi-finished products continue to perform in line with or better than domestic mattress production trends.
Karl Glassman: and we are working closely with our customers on a number of product line refreshes and value engineering opportunities.
Karl Glassman: Turning to automotive, the market remains volatile across geographies.
Karl Glassman: In China, multinational OEM customers are losing share to Chinese EV manufacturers, where we are currently less represented, resulting in short notice production declines.
Karl Glassman: Product Trade Down and Program Launch Delays for our Customers.
Karl Glassman: In North America, uncertainty around EV transition timelines and consumer affordability issues is resulting in program launch delays and product trade downs.
Karl Glassman: Although our sales are more impacted by these factors than previously expected, our automotive team continues to realize efficiency improvements and closely manage cost, resulting in improved EBIT margins.
Karl Glassman: Finally, weakness in our geocomponents business continued through the third quarter, impacting both the civil construction market and retail sales. These trends are expected to continue into fourth quarter, in addition to normal seasonal softness.
Karl Glassman: Despite the near-term demand challenges, we remain focused on our initiatives to strengthen our balance sheet, improve operating efficiency and margins, and position ourselves for future profitable growth opportunities.
Karl Glassman: I'm pleased to share that our restructuring plan remains on track, and our teams have done an excellent job executing the plan.
Karl Glassman: Within Specialty Foam, we have closed two operations and expect one more consolidation to be complete by year-end.
Karl Glassman: Restructuring Initiatives in the Furniture, Flooring, and Textiles Product Segment.
Karl Glassman: Within Specialized Products, our Hydraulic Cylinders team is actively working through a restructuring project designed to increase profitability through manufacturing optimization and operating efficiency improvements.
Karl Glassman: Last quarter, we shared an in-depth strategic review of our portfolio was underway. We are focused on simplifying our portfolio to businesses that are the right long-term fit for Leggett & Blatt.
Karl Glassman: As part of this strategic review, we are currently exploring the potential sale of our aerospace business.
Karl Glassman: We do not intend to comment on or provide updates regarding our strategic evaluation process unless and until we determine that further disclosure is required or otherwise appropriate.
Karl Glassman: We also continue to work through an evaluation of our general and administrative cost structure. Our G&A project team is analyzing and identifying opportunities to drive efficiencies.
Karl Glassman: We have identified approximately $10 million in corporate cost savings, which are expected to be realized in 2025.
Speaker Change: We remain confident in our ability to execute the restructuring plan and other operation efficiency improvements and position our company for long-term success. I'll now turn the call over to Ben to review third quarter financial details and our revised outlook for the year.
Ben Burns: Thank you, Karl, and good morning, everyone. Third quarter sales were $1.1 billion, down 6% versus the third quarter of 2023, due to volume declines across all three segments and raw material-related selling price decreases.
Ben Burns: Compared to third quarter 2023, sales in our bedding product segment decreased 8%. Third quarter sales in specialized products declined 6% year over year, and sales in furniture, flooring, and textile products were down 4%.
Ben Burns: Lower volume, metal margin compression, and higher bad debt reserves, partially offset by lower amortization expense, operational efficiency improvements, and restructuring benefit.
Ben Burns: Despite weaker than expected results, adjusted event margin improved by 60 basis points sequentially this quarter.
Ben Burns: Third quarter earnings per share was $0.33. On an adjusted basis, third quarter EPS was $0.32, an 11% decrease versus third quarter 2023 adjusted EPS of $0.36.
Ben Burns: Cash generation remains a sharp focus. Our long-term priorities for use of cash are funding organic growth, funding strategic acquisitions, and returning cash to shareholders through dividends and share repurchases.
Ben Burns: However, in the near term, we are prioritizing debt reduction while continuing to fund organic growth.
Ben Burns: We ended the quarter with adjusted working capital as a percentage of annualized sales of 14.5% and increase of 30 basis points versus third quarter 2023.
Ben Burns: Cash from operations is now expected to be approximately $300 million in 2024 versus our prior guidance of $300 to $350 million.
Ben Burns: In the third quarter, we made progress on debt reduction as planned, reducing total debt by $124 million to $1.9 billion, which includes $84 million of commercial paper outstanding.
Ben Burns: Additionally, net debt to trailing 12-month adjusted EBITDA decreased to 3.78 times at quarter end.
Ben Burns: We expect to make further progress toward our long-term leverage ratio target of two times in the fourth quarter. As a reminder, cash previously used for the dividend, along with proceeds from real estate sales and any potential divestitures, will be used to accelerate debt reduction.
Ben Burns: Total liquidity was $748 million at September 30, comprised of $277 million of cash on hand and $471 million in capacity remaining under our revolving credit facility.
Ben Burns: Restructuring costs during the quarter were $12 million comprised of $11 million in cash costs and $1 million in non-cash costs.
Ben Burns: In the third quarter, we realized $6 million of EBIT benefit related to the restructuring plan and still expect approximately $10 to $15 million of EBIT benefit to be realized in 2024.
Ben Burns: We now expect a total annualized EBIT benefit of $50 to $60 million after initiatives are fully implemented in late 2025 versus our prior estimate of $40 to $50 million due to the additional $10 million expected from our GNA initiatives.
Ben Burns: We realized $4 million of restructuring-related sales attrition in the third quarter and now expect approximately $15 million of sales attrition in 2024 versus our prior estimate of $25 million.
Ben Burns: Total sales attrition on an annualized run rate basis, once all initiatives are fully implemented in late 2025, is still expected to be approximately $80 million.
Ben Burns: In the third quarter, we realized $17 million in cash proceeds from the sale of real estate associated with the plan.
Ben Burns: An additional $40 to $60 million in proceeds is expected in 2025 when the majority of sales are anticipated to be complete.
Ben Burns: Our expectation of $60 to $80 million in total restructuring-related real estate proceeds remains unchanged.
Ben Burns: We are lowering our 2024 sales and EPS guidance as we anticipate weaker demand trends to continue into the fourth quarter, particularly within our specialized products and furniture, flooring, and textile products segments.
Ben Burns: 2024 sales are now expected to be 4.3 to 4.4 billion or down 7 to 9% versus 2023 compared to our prior guidance of 4.3 to 4.5 billion.
Ben Burns: Volume is now expected to be down mid-single digits with volume at the midpoint, down high-single digits in bedding products, down mid-single digits in specialized products versus prior guidance of flat volume, and down mid-single digits in furniture, flooring, and textile products versus prior guidance of down low-single digits.
Ben Burns: Deflation and currency combined are expected to reduce sales low single digits.
Ben Burns: Full year adjusted earnings per share are expected to be $1 to $1.10 versus our prior guidance of $1.10 to $1.25.
Speaker Change: With those comments, I'll turn the call back over to Cassie.
Cassie: Thank you, Ben. Operator, we're ready to begin Q&A.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would 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 would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions.
Speaker Change: Our first questions come from the line of Susan McLaury with Goldman Sachs. Please proceed with your questions.
Susan McLaury: Thank you. Good morning, everyone.
Speaker Change: Good morning, Susan.
Susan McLaury: My first question is in betting, one of the things that you noticed was that unfavorable mix in terms of both the sales and the margins just given the steel rod and what's coming through there. Can you talk a bit a bit a little bit about that mix shift and what it implies for profitability as we think about the outlook and the forward quarters perhaps?
Speaker Change: Yeah, happy to, Susan. Keeping the rod mill full is really important, but Tyson, if you don't mind, why don't you kind of unwind the details for Susan?
Speaker Change: Good morning, Susan.
Speaker Change: You're right, you know, our volume in vetting was down just 3% year over year, but in our four products, it was down more than that. So filling in with the mix of trade rod and then some other products within ECF did offset some of those declines. But going forward, we do expect a higher mix of trade rod and wire tons.
Speaker Change: And while those margins are lower, they are important. Karl said it's important for us just from an operating perspective to operate the mill as full as we possibly can. It helps us lower or at least maintain our scrap costs. It also helps us maintain or lower our conversion costs.
Speaker Change: Longer term, volume remains the number one headwind for us in terms of margin and recovery. Our restructuring plan and operating efficiency improvements will certainly help. But on the flip side, the lower mix or margin from the trade drop is will be a negative or take away from that.
Speaker Change: Okay, that's great color. Thank you, Taysen. And then shifting to auto, you know, Karl, you mentioned some of those bigger moves that are coming through in that business that are reflected in the results. As you think about your expectations for new programs this year, how has that shifted given what's going on in the broader industry? And can you talk a bit about some of the company specific efforts that are also coming through in that business?
Karl Glassman: Yeah, Susan, thank you for that as well.
Karl Glassman: So, there has been delay in program starts.
Karl Glassman: That's not all bad, because we have a lot of legacy programs that we're running out. They're very profitable programs. Our teams can focus on them. The challenge is kind of the stop-start nature of things and the uncertainty.
Karl Glassman: Yeah, sure, Karl. Thanks. And the words you used, influx, are definitely the right words, I think. And Susan?
Susan McLaury: If you go back to the beginning of the year, our assumptions were that the underlying business, the programs that we had, were really going to be flat.
Susan McLaury: coming into 2024. And then our volume growth would come from these new program launches. And, you know, Karl's talked about the tremendous amount of change that's impacted the business across all the regions. And the single biggest impact to our business
Susan McLaury: From a top line standpoint has been that those those new programs just haven't launched
Susan McLaury: You know, he's mentioned the ICE to EV transition.
Susan McLaury: and how it's been impactful across all the different regions and in different ways across each region. Most of our customers' launch expectations really changed in one way or another. And many of those programs that we won,
Susan McLaury: and that we were going to start up this year, they've really been delayed or in some even pushed out with no clear start date yet. So these program delays account for about 40 percent of where we thought our top line would be at the beginning of the year versus where we see it being now.
Speaker Change: The other 60% come from a variety of reasons that Karl's already mentioned at a high level.
Speaker Change: So I mentioned that at the beginning of the year, the 2024 major market production forecasts were supposed to be relatively flat year over year. And what's happened is that since the middle of this year,
Speaker Change: and that dropped significant to our business and it's being driven by the difficulties that are facing many of the major multinational OEMs that I'm sure everyone's read about.
Speaker Change: So product trade downs are impacting our top line. Now, product trade downs are not a bad thing for us. Let's say a manufacturer switches from a high-end massage system to a pneumatic lumbar.
Speaker Change: or from a pneumatic lumbar to a mechanical lumbar, they save some money and they can pass that on to consumers, but we still keep the volume. So it drops the top line a little bit, but we make a profit regardless of the product choice.
Speaker Change: And finally, inventories going up. We follow the Automotive News, which is a trade publication, and a few weeks ago,
Speaker Change: They reported that U.S. car and light truck inventory is up about 570,000 units year-over-year. And that translates going from about 60 days of sales a year ago to 80 days now. So, we think that the inventory growth...
Speaker Change: may also impact us as we get into the last few months of the year.
Speaker Change: to kind of mitigate this volume pressure. So I'll say that we're really proud of the hard work that the automotive team have been doing all year long. They've pulled every lever that they possibly can, and we're aligning our variable cost structure.
Speaker Change: to be in line with demand and to be sustainable over time. So just a few things they've done.
Speaker Change: They've resized the headcount across the business, across all the regions. They've done salary, direct and indirect. They're focusing on using automation.
Speaker Change: and Robotics to further reduce labor costs. Got several projects going in now going well. They're moving programs from, you know, across our footprint to get them closer to the end customer.
Speaker Change: Some shipping costs, improve operational efficiencies. We've moved out of several outside warehouses while resizing and reshaping our inventory so that we can eliminate premium freight that hurt us in the past.
Speaker Change: We're focusing heavily.
Speaker Change: on raw material cost savings. And in some cases, we're resourcing vendors where we need to to get those savings. And the team continued to do their day-to-day, week-to-week, routine VAV work that delivers bottom line, delivers money to the bottom line. So,
Speaker Change: So all these efforts have a very positive impact on our ability to hold and grow our margins despite the volume pressures we're seeing and I think they set us up nicely for the future.
Speaker Change: That is great color, Sam. Thank you for all that detail. I just have two more quick ones, maybe for Ben. The first is, Ben, when we think about the CapEx guide that you've laid out for the full year, relative to what you've done in the first three quarters, it would imply that there's about 40 million more spend coming through in the fourth quarter.
Speaker Change: Can you just talk through what some of those projects are and how we should think about the timing of that?
Ben Burns: Yeah, good morning, Susan, and thanks for the question. And yes, you're right. We've spent about 60 million year to date, which would imply 40 million in the fourth quarter, which is a pretty heavy dose compared to what we've done so far. But these are things that we see right in front of us that we feel are very likely. And the first one I'd mentioned is around our rod mill and just the regular maintenance that we typically do this time of year. So that's critical work that we'll be doing. And we know that that's ongoing. Also embedding, we've got some new programs and growth initiatives and some efficiency projects that are underway that we're getting ready to launch. And in fact, some of those are already starting. So that's
Ben Burns: really positive. And then I would also say, despite some of the challenges Karl and Sam talked about on the automotive side, we do have some new programs that are launching in the fourth quarter and some CapEx that we'll be spending there. So it's a variety of things, but it is a heavier dose in the fourth quarter, but we feel like that's really some good things. And maybe I'll ask Tyson to jump in there with a little bit more color on some of the new initiatives that we have in bedding, which are pretty exciting. Yeah. Yeah. They both relate to spring. I mean, you mentioned that the normal shutdown we take at Sterling is normal maintenance capitals required, but the other projects are return based. And so we do have a
Ben Burns: really important initiative for both one of our customers and also for us on a product line refresh. And, and that does require capital spending for equipment for us to
Ben Burns: And then also we have additional equipment spend also in U.S. spring to help with manufacturing efficiency both with material and labor content, so that will be also a good return project for us both in 2025 and moving forward.
Speaker Change: Okay, all right. Thank you for that. And then just one last one, Ben, you know, when we think about where we are year to date, can you just walk us through the margin expectations for each of the segments for this year and any changes that you would note relative to your prior guide?
Ben Burns: On a specialized products basis, we would expect margins to be down slightly and then on the furniture flooring and textiles side, we expect those margins to be flat.
Speaker Change: Okay, thank you very much. I'll pass it along. Thanks for the color guys
Susan McLaury: Thank you, Susan.
Speaker Change: Thank you. Our next questions come from the line of Bobby Griffin with Raymond James. Please proceed with your questions.
Bobby Griffin: Morning, buddy. Thanks for taking my questions.
Speaker Change: Morning, Bobby.
Bobby Griffin: The first thing I wanted to chat on, Karl, was maybe just the comments on 3Q betting consumption being flat year-over-year. I understand the mix between domestic and imports was, you know, moved those numbers around some, but I guess the overall flat surprised me a little.
Karl Glassman: Do you believe that's just a function of a flush of imports coming into the market or kind of what do you think is driving that? Because I guess the flat to me in today's macro was a little bit better just from a pure consumption standpoint.
Karl Glassman: Yeah, Bobby, thanks for the question. Remember, it's off a relatively easy comp in 3q23. The imports have slowed, but as we had said previously, there was a significant amount of imports that came in right before the duties were levied, and we believe that those are unwinding.
Speaker Change: How else would you answer that question?
Speaker Change: Good morning, Bobby. You got it right, Karl. We did see the significant ramp up late last year with imports coming in ahead of the duties, and then they slowed in the first and second quarter. But there was a pretty significant overhang for what came in at the end of last year.
Speaker Change: We did see some incremental growth in inflated imports in the third quarter versus second quarter, but still not nearly to the levels that we saw last year. But really, Bobby, just kind of looking at some of the channel information that we review, and especially on some of the e-com channels, we did see quite a lot of activity in the third quarter, and so that's where we get to overall flat, but much slower and softer for domestic production and consumption.
Speaker Change: But also just a generally distracted consumer as we get closer to the election. So definitely feel like that's an impact and also our customers watching inventories in the fourth quarter, but still overall just expecting kind of the normal seasonal pattern in the fourth quarter.
Bobby Griffin: Could you rank order the three businesses in that segment in terms of EBITDA margins of which one's the strongest to the lowest? And I have a feeling hydraulic cylinders is roughly around break even in my guess. So that'd be at the bottom. But just
Speaker Change: Any color on how aerospace stacks up versus auto would be helpful for us running some analysis on what potentially it could be worth.
Speaker Change: Oh, that's an interesting approach, Bobby. I can kind of picture Cassie getting nervous, but I'm going to tell you the answer is automotive aerospace hydraulics.
Speaker Change: Thank you. I learned from the master of how to try to, you know, fit those questions than the former guy worked with. You absolutely did. And actually, I do want to digress for a second. Bobby, you made reference to him.
Speaker Change: Bud Bugatch was very much a friend of Leggett and Platt, covered us for 35 years, and we miss Bud, and, you know, thank you. I kind of feel a little bit of Bud in you every time you ask a question, and he would be pleased. That was masterful, the way you slipped that in.
Speaker Change: I appreciate, Karl. Thank you. Kind words. Great analyst, even better human, I always say, so I absolutely like that question.
Bobby Griffin: I guess lastly for me, just a question for Ben, great to see the debt pay down here in the quarter. Just as we think further out and you got some winds of cash coming into the business, what's the interest savings on say $100 million of debt pay down and we can run that then in our models?
Ben Burns: Yeah, thanks, Bobby, for the question as we kind of think about it looking forward.
Bobby Griffin: Perfect. Very helpful. Congrats on the early progress within the restructuring and best of luck here in 4Q.
Ben Burns: Thank you, Bobby.
Speaker Change: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad.
Speaker Change: Our next questions come from the line of Peter Keith with Piper Sandler. Please proceed with your questions.
Peter Keith: Hi, good morning, everyone. One category you hadn't talked about yet was the home furniture piece. And it does sound like that was a little bit of the guide down. I was
Peter Keith: I guess I was a bit confused. I think you talked about geocomponents, but your home furniture did take a pretty notable step down sequentially on both the sales and volume basis. And I'm wondering if that's, you know,
Peter Keith: Industry Backdrop or something company specific.
Speaker Change: Good morning, Peter. And thanks for the question. It is absolutely your observations, right, first off, and it is industry that the home furniture industry is is actually probably softer than bedding, if that's possible.
Speaker Change: that industry has been terribly disrupted by retailer bankruptcy.
Speaker Change: And it's been challenged. The consumer has some of the same challenges. But, Sam, you know that. I mean, heck, that's your home. Why don't you plow into Peter's question, if you don't mind.
Sam Smith: Sure, Karl. And thanks for the question, Peter. The retail bankruptcies that Karl mentioned are a big impact.
Sam Smith: Especially at those price points because they're being serviced by some of our domestic customers, but also some of our, a lot of our Asian customers. So, so that was a big impact during the quarter.
Sam Smith: I would say the next factor is more of a historical perspective and kind of a comp issue, Peter.
Sam Smith: You know, this big industry wide slowdown started back in 2022, and in our business, especially our business in Asia, was impacted first as retailers right-size their inventories from 2022 right up through the middle of 2023.
Sam Smith: Now, by Q3 of last year, those retail inventories, especially at the lower price points, were a lot healthier. So what happened in Q3 of last year, retailers started ordering again, and we started getting quite a few more orders in China than we'd gotten for, you know, almost a year.
Sam Smith: So our Q3 counter volumes were actually fairly decent last year.
Sam Smith: Now, this year, the industries continue to soften, you know, as we've talked about.
Sam Smith: supply chain's caught up and there're just simply fewer orders in the chain that are coming our way than there were last year. So that comp issue is a factor. And there's another smaller thing that I want to make sure we cover.
Sam Smith: And at the beginning of this year, we moved some of our production from the U.S. to Asia and into a few of our other U.S. locations.
Sam Smith: and some of our larger customers who are ordering out of that location started ordering really heavy in the first half of the year to make sure they had plenty of stock. So we had a really strong Q2 from a volume standpoint.
Sam Smith: By the beginning of the third quarter this year, they realized that their warehouses were packed and they really held off ordering any new product until late in the quarter. So that was another factor. And you know, those folks are ordering again and we'll see more consistency going through Q4 from them.
Sam Smith: steel rod business.
Sam Smith: and then the reverse side where furniture slowed, the steel rod just accelerated massively. And it feels like there's a strategic shift here that might stick around. So...
Sam Smith: Peter, this is Pat. No, Peter.
Peter Keith: Oh, yeah, why don't you go ahead? I just want to we're not disrupting the market in any way that market pricings have been depressed in the in the steel market, but there has been some capacity that's been taken offline. So we're
Speaker Change: Our mill is incredibly efficient as compared to others, but Tyson, please elaborate.
Tyson Hagel: Sure thing. And Peter, no, we're not changing our pricing strategy and lowering market prices or anything like that. It is a realization, like I mentioned earlier, that the trade
Tyson Hagel: Mark, it will be necessary for us to run full.
Tyson Hagel: We do have our team that is actively and all the time exploring the market and see and determine what makes sense for us around the mill. You probably know our mill is pretty focused and that's what allows us to keep our costs in line.
Tyson Hagel: So, it is a balance of what makes sense for us and what we're actually able to serve. But it's not a pricing strategy, it's more just a market evaluation and opportunities and what makes sense for us in the middle.
Speaker Change: Okay. And sticking on that, the metal margin was called out again as a headwind. Is there any visibility into when that will eventually normalize and no longer be a headwind on margins?
Speaker Change: Okay, great. And then lastly, just just circle back on automotive.
Speaker Change: Again, focusing on segments that saw quite a bit of sequential change from last quarter. So the automotive volumes down nine, is that, based on your visibility, something that should continue for a while? Or was this a, you know, just a notable air pocket in the third quarter?
Speaker Change: Sam Kass, cso, Bob Hardy, V. O.B. – Writers, Journalists, Educators�� David Guinardi, Producer, Jamie Koss,
Speaker Change: Yeah, thanks, Karl.
Speaker Change: at a factory and we do see some pickup before Chinese New Year. That's just a routine thing. We believe we will see some pickup before Chinese New Year this year. Will it be as big as normal? That's what we're still trying to work through, Peter.
Peter Keith: Okay. Very good. Thanks so much, guys. I appreciate the feedback.
Speaker Change: Thank you.
Speaker Change: Thank you. Excuse me. Thank you. Our next questions come from the line of Judy Merrick with Truist Securities. Please proceed with your questions.
Judy Merrick: Great, thanks. This is Judy on for Keith Hughes. I just, if you could kind of clarify the pace of the mattress component sales, you said the domestic production was down high single digits and you're looking for mid single digit decline in the fourth quarter. Is that still on flat U.S. consumption?
Speaker Change: Unknown Speaker. Thank you. Thank you.
Speaker Change: Well, we believe the U.S. market will be down in the fourth quarter. The domestic market's down more than the overall consumption due to the impact of the imports.
Speaker Change: And then there's where you saw Comfort Core. You said it was a little better than the industry. Did that show improvement through the quarter or that's just how it's performing?
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you, Judy.
Speaker Change: Thank you. There are no further questions at this time. I would now like to turn the floor back over to Cassie Branscum for any closing comments.
Cassie Branscum: Thank you for joining us and your interest in Legged Implant and have a great day.
Cassie Branscum: Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.