Q2 2025 Leggett & Platt Inc Earnings Call
Greetings and welcome to the leet and Platt, second quarter, 2025 webcast and earnings conference call. At this time, all participants are in a listen-only mode.
A brief question and answer session will follow the formal presentation. Should anyone require operator? Assistance? During the conference? Please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host. Steve West vice president of investor relations. Thank you. You may begin.
Good morning everyone and welcome to leet and plats second quarter 2025 earnings call.
With me today are Carl Glassman, CEO, Ben Burns CFO.
Tyson Hegel president of the betting product segment.
Sam Smith president of the specialized products and Furniture flooring, and textile product segments and Cassie branscome vice president of financial planning and Analysis.
This conference call is being recorded for luggage and Platt and is copyrighted material. This call may not be transcribed, recorded or broadcast with our our express permission.
A replay will be available on the investor relations section of our website.
Yesterday, we posted our press release and a set of slides that contain summary financial information, along with segment details, a tariff overview, and a restructuring update.
those documents supplement, the information we will discuss this morning including non-gaap, reconciliations
Remarks concerning future expectations, events, objectives, strategies, trends, or results constitute forward-looking statements.
Axle 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 10K and subsequent 10 Q, entitled risk factors and forward-looking statements. I will now turn the call over to Carl
Thank you, Steve and good morning everyone. I would like to start by introducing Steve West who recently joined us as our new vice president of investor relations.
Steve brings more than 20 years of experience as both a sales side, Equity analyst and a corporate IR leader at multiple companies in the consumer discretionary sector, including Panera, Bread company, and Dick Sporting Goods. We're excited to have him on board and I know he is looking forward to engaging with all of you.
I would also like to announce that Cassie branscome was promoted to a new senior leadership role as vice president of our financial planning and Analysis group.
With this new Focus, Cassie will continue to collaborate closely with investor relations while also playing a critical role in the formation and execution of our financial strategy.
This appointment reflects her strong cross, functional expertise, strategic insight, and continued dedication to advancing our financial goals.
Turning to our second quarter results, I am pleased. We grew our earnings versus last year and continue to strengthen our balance sheet and cash flow generation. Our team has done a terrific job driving these results, through the execution of our restructuring plan and disciplined cost management.
As well as making progress on our priorities of improving operational execution and paying down debt.
Embedding activities related to our announced restructuring plan are now largely complete in flooring products. We made steady progress on Phase 2 of our consolidation efforts in hydraulic cylinders. We continued implementation of manufacturing efficiency improvements. We expect company-wide restructuring activities to be substantially complete by year-end.
We are also continuing to make progress on our strategic Business review and optimization efforts.
Which enables the team to focus on larger core operations. We also remain on track to close the Aerospace transaction this year. After the required regulatory approvals,
As we execute our strategic priorities, we continue to navigate a very dynamic tariff landscape with discipline and agility across our businesses.
Given the prominence of tariffs in the market today. Let me provide an overview of how they are affecting our businesses.
As a reminder, prior to the recently implemented tariffs are us businesses sourced approximately 400 million dollars annually from trade and intercompany suppliers located in foreign countries including approximately 100 million dollars from China.
While tariff, impacts vary across our businesses and aggregate. What we know today, the recent tariff changes are a net positive for us.
however, we remain concerned, that wide-ranging, terrorists will drive inflation hurt consumer, confidence, and pressure consumer, demand
We continue to be actively engaged with customers and suppliers, taking steps to mitigate tariff impacts. Whether by leveraging our global footprint to shift production and sourcing to less impacted regions or implementing pricing actions where appropriate.
we're also pursuing increased demand opportunities domestically as a result of increased tariffs,
although reciprocal, tariffs have the
Potential to support us mattress Demand by creating a More Level Playing Field between domestic and foreign producers enforcement remains a key unknown.
Historically duties, led to transshipment of mattresses to avoid higher rates but recent comments by the administration appear to contemplate duties. For those activities, this will be an important consideration for actual impact of reciprocal tariffs.
Within our betting segment, 232 steel, tariffs have led to expanded metal margins and increased demand for our steel rod and Rod and wire operations.
But we have not yet. Seen a noticeable improvement in our inner spring demand.
In contrast, our domestic adjustable bed business continues to face significant tariff exposure.
However, our Mexican adjustable bed operation is a strategic asset that should continue to be cost competitive, assuming the reciprocal tariff exemption of U.S. MCA-compliant products remains in place.
Within specialized products are automotive business continues to have the largest potential indirect terrific exposure, the implementation of the auto parts. Tariffs has not directly impacted us but could cause lower Demand with our Tier 1 and OEM customers. If consumer, affordability, becomes an issue.
They will need to reduce production.
Additionally, there is emerging disruption risk of the critical rare earth mineral supply chain, which feeds into Chinese-sourced magnets used in semiconductors and electronics in vehicles.
While this has impacted some of our customers, it has had minimal impact on us to date.
In Furniture flooring. And textiles products tariffs impact our businesses to varying degrees in home furniture. We experience meaningful disruptions early in the second quarter.
Our Chinese operations face shipment delays order cancellations and customer shutdowns, which began to normalize later in the quarter with the postponement of the tariffs.
We are making progress on setting up production within another low-cost country that will help mitigate our terrific exposure and anticipate beginning production later this year.
Within our work Furniture business.
Our teams are pursuing new opportunities with customers who are looking for regionally supported finished furniture and components.
Finally, our textiles business continues to mitigate most tariff exposure by shifting to alternative sources in countries with lower tariffs.
Our other businesses including Aerospace have minimal impact from various tariffs in effect. Today, we're consistently executing against our priorities of strengthening the balance sheet and enhancing profitability and driving operational efficiency while positioning the company for long-term growth.
Approved margins and reduced our debt, despite softness in many of our end markets, reinforce our confidence in navigating ongoing macroeconomic and trade-related uncertainties. I'll now turn the call over to Ben.
Thank you, Carl, and good morning, everyone.
Second core sales were 1.1 billion dollars, down 6% versus second quarter of 2012. 24 result from continued, self- demand, and residential, and markets automotive, and hydraulics and dealers, as well as restructuring related sales attrition
These declines were partially offset by strength in trade, wire and rod sales, textiles, furniture, and aerospace.
Looking at sales by segment, betting product sales decreased by 11% compared to the second quarter of last year. Additionally, specialized products declined by 5%, and furniture, flooring, and textile product sales were down by 2%.
Digging deeper into betting products, strong trade rod and wire sales were offset by weakness in mattresses and adjustable bases.
Inner spring volume was in line with domestic mattress production, which we believe was down mid to high single digits. However, sales weakness at a certain customer and retailer merchandising changes contributed to year-over-year volume declines in specialty foam and adjustable beds.
We expect these merchandising changes will remain as headwinds through the remainder of the year.
Us mattress industry production improved sequentially versus the first quarter while we are encouraged to see the sequential Improvement. As the industry continues to look for a positive inflection. To the multi-year. Downturn second quarter volume remains soft outside of key promotional periods.
We estimate total mattress consumption was down low single digits year-over-year.
Is still expected to modestly improve on a sequential basis. In the second half, resulting in full year. Volume down mid single digits and domestic production down high single digits.
Within our specialized product segment Aerospace growth of 6%. Year-over-year was more than offset by sales declines, in automotive and hydraulic cylinders.
While Automotive Sales declined year-over-year, given the challenging industry, backdrop compounded by the dynamic tariff environment. We are pleased with our team's efforts to manage our pricing and closely control manufacturing costs.
And finally, within our furniture, flooring, and textile products segments, work furniture and textiles showed positive sales growth versus the second quarter of last year, which was more than offset by year-over-year declines in home, furniture, and flooring products.
We expect the main strength in civil construction to continue to support our Geo Components business. As we move through the third quarter, a normal positive seasonality,
However, aggressive competitive discounting, particularly in Florin and textiles, has led to pricing adjustments, which began late last year, and we expect this trend to continue through the rest of the year.
Second quarter ebit was 90 million and adjusted ebit was 76. Million up, 4 million versus second quarter 2024, adjusted ebit. Primarily due to metal margin expansion, restructuring, benefit, and discipline cost management partially offset by lower volume.
Second quarter earnings per share were 38 cents on an adjusted basis. Second quarter EPS was 30 cents. A 3%. Increase from second quarter of 2024 adjusted, EPS of 29 cents,
Second quarter, operating cash flow was 84 million, a decrease of 10 million versus second quarter 2024.
This decrease was primarily driven by less benefit from working capital and non-cash earnings items.
We ended the quarter with adjusted working capital as a percentage of annualized sales of 14.7%, a decrease of 20 basis points for the second quarter of 2024.
Moving to the balance sheet, we reduce total debt by 143 million in the second quarter to 1.8 billion, which includes 297 million of commercial paper outstanding.
At June 30th total liquidity was 878, million comprised of 369 million of cash on hand and 509 million in capacity remaining under our revolving credit facility.
This led to a decrease, in our net debt, to trailing 12-month, adjusted ebaa to 3.5 times.
As a reminder, our credit facility. Covenant calculation is more favorable than our publicly stated leverage ratio.
And I'm pleased to say last week with the endorsement of our strong and supportive bank group, we amended our revolving credit facility agreement. The amended agreement provides for a borrowing capacity of 1 billion down. From 1.2 billion, we believe the credit facility is appropriately. Sized to meet our liquidity needs and allows us to optimize borrowing costs.
We will continue to use the facility as a backup to our commercial paper program.
Met that the trailing 12-month adjusted ibaa to be at or below 3.5 times the facility now matures in, July 2030.
We expect the fully repay. Our commercial paper balance later this year, using a combination of after tax proceeds from the Aerospace de vesture which are expected to be approximately 240 million and cash generated by operations.
In the near term, we plan to continue to use most of our excess cash flow to reduce net debt while. Also considering other uses such as small, strategic Acquisitions and opportunistic share of purchases.
Longer term, our priorities for use of cash remain consistent investing in organic growth, strategic Acquisitions and returning cash to shareholders through dividends and share our purchases.
Moving to our restructuring update.
We now expect for structuring costs of 15 to 25 million in 2025 down from our prior estimate of 30 to 40 million.
Total restructuring costs are now projected at 65 to 75 million also, down from our prior estimate of 80 to 90 million. All to be incurred by year end 2025
This reduction is due largely to our decision to retain a small number of facilities that were previously identified for closure.
We anticipate 35 to 40 million in incremental ebit, benefits this year with an additional 5 to 10 million in 2026, bringing the total annualized benefit to 60 to 70 million.
We also expect 45 million in related sales attrition in 2025 and 5 million in 2026 with total attrition. Now estimated at 65 million versus our prior expectation of 80 million
And we now estimate real estate proceeds associated with our restructuring, to be 70 to 80 million versus our prior estimate of 60 to 80 million.
Today we have realized approximately 40 million dollars of proceeds and expect up to 10 million dollars in the second half of 2025, with your remainder in 2026.
And finally as announced yesterday we maintained our full year 2025 sales and adjusted EPS guidance, including sales in the range of 4.0 to 4.3 billion for down 2% to 9% versus 2024.
Our earnings per share is now $0.88 to $1.17 versus $0.85 to $1.26 previously.
Our gap UPS includes approximately $0.08 to $0.13 per share of negative impact from restructuring costs.
11 cents per share of fourth-quarter impact from a non-cash settlement charge related to the termination of a pension plan, and 12 to 16 cents per share gain from sales of real estate.
Adjusted earnings per share is still expected to be $1 to $120. The midpoint reflects metal, margin expansion, and restructuring benefit, partially offset by lower volume.
Adjusted ebit.
Margin range is expected to be between 6.5% and 6.9% and cash from operations remains at 275 to 325 million.
With that, I'll turn the call back over to Carl for his closing remarks.
Thank you Ben, as we near completion of our restructuring plan, which is strengthening our profitability and balance sheet. The question I often get is, what's next. I'm proud of what this company has achieved in a short amount of time. It hasn't been easy. And the Tariff volatility has only added to that challenge.
As you all know, it's hard to predict the future that said, when the consumer re-engages, I am extremely confident. This company is in a position of strength to leverage. All the hard work that has been done. We are more efficient, more agile and more financially sound. We are well positioned for long-term profit and cash flow growth. And we are ready to take advantage of our strengthened position.
As we continue to leverage, we will utilize our cash to reinvest in organic growth.
We will also look for strategic Acquisitions and evaluate the merits of returning cash to shareholders by re-engaging our existing share repurchase program. I would like to thank all of our shareholders who have supported us on this journey and our employees for all their hard work and dedication to this great company. Operator. We're now ready to begin Q&A.
Handset, before pressing the star Keys 1 moment, please while we pull for questions.
The first question is from Bobby Griffin from Raymond James, please go ahead.
Morning buddy. Thanks for taking my question. Steve uh official welcome to uh the IR function there at legit. Look forward to working with you. I'll probably give you a few days before I start doing the line by line, uh, modeling questions quite yet, but uh good to meet you over the phone.
um, Carl, I guess this
start wanted to kind of maybe zero in, on, on the bedding business. Um, you guys have been called out at consumption number that you kind of estimate for the quarter. If, if there's a way you can connect, um, that consumption to your us volume number and kind of what was the difference there? I understand there's some sales attrition from the restructuring, but just anything there to help us kind of connect, the 2 figures would be, would be helpful to start.
Yeah. Good morning, Bobby, and thanks for the question. It is complicated because there are moving parts between the U.S. and spring side of things, then specialty, foam, and aggregating it through and rolling it up to a segment. But Tyson, if you don't mind, will you try to unwind all of that? I'm sure thing, and good morning, Bobby. Uh, let me start with U.S. spring. That's probably actually the easiest to compare to, uh, the U.S. market, U.S. domestic production market. Um, so if you think about U.S. spring, we showed year-over-year volume down 9%, and like we've talked about for quite a few quarters in a row, that's impacted negatively by grid volume, but if you get to Mattress KORS, it was, it was.
A little bit less than that, uh, but also about a third of that 9% related to sales attrition to our structuring, specifically, our Mexican spring operation. Um, so really us spring, uh, that's going into mattress Kors down, mid single digits. So, pretty comparable to what we think. The domestic Market was actually probably the more at the higher end of, of that estimate. Um, then when you get to, um, our specialty foam and adjustable bed business, they were impacted, uh, by some pretty specific factors 1, a common customer that that we share to both. That's had some had some sales challenges, and it's a, it's a large customer for both of those businesses. And then also another common customer at retail,
Where we've had some challenges and adjustable beds with a promotional base that we source and distribute from Asia. Um, just some inventory work downs and a change, at least from our observation and a change in the way that products being promoted. Um, and then also specifically there at at our specialy phone business where we have a private label, Matt finished mattress that we sell uh that's being converted to an internal production. Um so we we probably trades off over the mid to long term into a component opportunity for us. Uh, but it's a trade down for Fitness mattresses and and Specialty files.
Hey, I'm Bobby. I think it's important. You know, what Tyson said, when we look at it strictly from a US spring standpoint,
They look like we're losing share; we are not losing share.
If the, you know, the the melt off of the Mexican business, which was a good decision for us to get out of that operation, it was relatively small but if anything I think we're starting to regain share.
Very good that's helpful and and that's good to hear on the the starting to regain share part. Maybe can we switch over to the metal margin? Looks like that is a bright spot here. I think it was called out in the ebook Bridge just curious are you seeing that accelerate today and and is that is there a way to dive in is that starting to show the benefit of some, of the tariffs against the rod, the imported Rod or are we still kind of just at, probably what the metal margin was doing before this, tariff impact, starts to show up, and that potential expansion still to come?
No, I think it's, it's expanding sequentially, it's expanding year on year. Now, it's expanding as we enter, the third quarter, uh, it is being impacted by the 232 tariffs.
Um, and I don't want anybody to think that the metal margins user Us in any way. It it's uh, finally back to a point where it makes sense for the US steel, uh, manufacturers. And Bobby we think that the metal margin expansion is sustainable that as the Administration has talked about tariffs, obviously a lot this week, that the 1 Thing
That seems to be sacred is the 232 steel, aluminum related tariffs. So we would expect for the duration of the current Administration that uh the US steel industry for defense purposes will continue to be uh protected.
Very good and I guess lastly for me Carl just uh, I think in the prepared remarks of of reference, keeping a few facilities that maybe were up for sale or the messenger in the original, uh, restructuring plan. So, just any further detail on on what might have changed is, is it demand coming back a little better? Or does customer demographics or or what might have changed in that decision making
Uh 1 in vetting side of things and 1 in Hydraulics as we continue to evaluate customer relationships that um we need to continue to lean into those geographies.
Yeah, Carl I guess I'll try just from from betting which is the largest part of this. Uh you know, we're just looking at the landscape and all the changes that are happening in the market and you know, things are moving in a pretty Dynamic way and looking at our plan and then how we think about uh, the longer term and balancing out the, the risk and opportunities that we have, we felt like they were the right decision. So it's just really an updating, our thinking on, uh, where we saw the market and our opportunities at risk and it made sense for us to make some adjustments. Yeah, it's just indicative that the markets Ever Changing Bobby. You know, the restructuring plan was developed in the fourth quarter of 2023. So, you know, business changes
Absolutely, uh, completely understandable. And I appreciate all the details here, best of luck, uh, and brief you.
Yeah, thank you Bobby.
The next question is from Susan McClary from Goldman Sachs, please. Go ahead.
Good morning. This is Charles Barron on for Susan. Thanks for taking my question this morning.
Absolutely good morning. Charles
Good morning. Um first I want to talk about, you know, what you're seeing on the health of the consumer. What are you hearing from your key customers as the macarons uncertainty remains elevated? And how does this inform your expectations for volume and demand through the second half across your businesses?
Yeah, trying to do an assessment of the health of the consumer's, um, is a challenge. Um, if we look at our residential businesses, so specifically, betting and furniture, and to some some degree, uh, the flooring side of things that what we saw was as business exited the first quarter.
Things were relatively soft. We had a, a tough April, you know, we had just passed through Liberation day and and there was uncertainty from a demand perspective. The consumer didn't know what tariff impacts would have. And and they, they really effectively stopped purchasing. And then, as we, so April was very soft. As we move through the second quarter, we started to see a little bit of uptick, uh, probably steeped in consumer confidence and and maybe fears of longer term tariff impacts around the Memorial Day holiday. Um, so Memorial day was pretty strong. I think it it's important to note that holidays are strong, but there's troughs behind holidays that people don't always capture. Um, and then as we moved into the fourth,
Of July selling holiday. It was Promotional and the consumer was out and about and and it was relatively good. So as we exited second quarter, we're certainly more optimistic.
Going into the third quarter than we were than when we exited the first quarter. But we we don't know. You know as you saw the consumer confidence to statistics stepped up a little bit. Um, at the end of the day, it's going to depend on the inflationary impacts that are driven by tariffs with the consumer hasn't seen them yet. They've seen, actually, uh, input cost break on energy recently, so we'll see. But overall, we think it's helpful to the health of the consumers, more positive today, than it was 3 months ago for sure.
Got it. That that makes a lot of sense. Second, I just want to touch on, you know, the price cost Dynamics. You see across the different segments. Obviously, you've talked a lot about the impact of tariffs and how you're mitigating those impacts through, um, sourcing strategies. But how do you approach decisions to implement pricing to our system of those and, you know, protect your price cost relationship across segments?
On purchased products, we're working with the suppliers, um, trying to get them to absorb as much of that tariff exposure as possible. When that doesn't work, um, we're passing through that pricing. Um, we do not believe in any way that tariffs will be negative; actually, counter to that.
Terrorists is is we said in the prepared, remarks should be positive um to us in in total but it varies by each 1 of our businesses business units. But um, I don't want anybody to think that we don't have pricing power as it relates to tariff. Impact our customers, understand that pass through. And we're we're very active in engaging in those conversations.
Got it. That's good color. And maybe last week, maybe for been, um, I appreciate all the call you provided, um, in your prepared remarks. But can you help us walk through the guidance by segment and the expectations for operating margins specifically?
The sales volume and margins for you by segment. So, first embedding, we'd expect, uh, the midpoint sales to be down low double digits with volume down mid-teens, but our margins we would expect to be up 150 basis points.
On the specialized side, we'd expect sales and volumes to both be down, mid single digits and our margins to be up uh about 100 basis points. And then in Furniture flooring, and textiles we would expect sales and volume to be down low, single digits and margins to be down about 100 basis points.
Thank you. That's very good color. Good luck with the quarter, guys.
Thanks Charles.
The next question is from Peter, Keith from Piper Sandler, please go ahead.
Betting. Um, there's kind of a lot of numbers thrown around in terms of your your depiction of the quarter, whether it's the total industry versus uh us production. So I guess 2 questions are um,
Do you think the the betting industry got better in Q2 as a whole and it it sounds Carl like looking forward. You're a little more optimistic on the consumer but the betting guidance is coming down. Uh on a volume basis is that reduction from the the customer change that you're you've been referencing?
Yeah, short answer is. Yes. That uh we think that the the betting demand certainly was stronger in 2q than it was in 1 q and
Our guide is based on those adjustments. But Tyson, anything that...
Sure. Hey. Good morning Peter
I agree with Carl. Uh, second quarter was was definitely better than the first. The first quarter was was very challenged and we talked a lot about that in our last call, uh, with the Tariff uncertainty and, uh, coming off of. Let's a better end to to 2024. But, uh, at least kind of walk it through the quarter in April, it was still pretty weak. Uh, momentum, you know, wasn't great, exiting the first quarter and we saw that in the early part of April, but we did start to see the market improve towards the end of April and definitely going through May leading up to Memorial Day and did hear from a lot of our customers. They felt better about Memorial Day and the and the promotion. And then we had from some prior holiday periods, especially President's Day. And then the follow through, uh, post Memorial Day was was still improved from definitely what we saw in the first quarter. So felt more positive about the market for sure in the second quarter. Um, but we, we do expect additional headwinds, like, like Carl mentioned in the back half of the year and adjustable bed and specially foam from the factors. You mentioned, but General matches because mattress consumption, similar in the third quarter, probably
What we saw in the second second quarter and then the, the seasonal salt slow down the fourth quarter, but also improved from what we saw in the first quarter.
Okay.
Uh, that's that's very helpful. Um and uh Carl. You you were talking about um the mattress Imports and and uh how tariffs could help slow that I think we we've all been wanting to see import activities, slow for a number of years. And I do agree that um,
The enforcement is the key. Could you maybe expand on what you're seeing? I think you you're referencing duties and and there's tariffs kind of mixed in. I was I was getting a little bit confused and maybe you could unpack if you think import flow is going to uh, come down or or or kind of Hold Steady.
Peter, we are really optimistic um, as regards the impact that the recently announced as recently as last night, um, terrorists may have on the Finish mattress import. So think of it this way, that of the, the mattresses that are imported into the US in recent months, greater than 50% of them have come from Indonesia.
Um, there is not an anti-dumping tariff or duty on Indonesia at this point. So if the Indonesians have to pay now a 19% duty, and as you know, Indonesia, Malaysia, and Vietnam are all in that 19% to 20% range, South Korea is at 15%.
And Laos at 40% all significant exporters of product into the United States.
What's most important to us, though, is that I don't believe—and I'll say I, on this one—that very many of those mattresses are produced in those countries. There are Chinese-produced mattresses that are transshipped, and the Administration's focus on transshipment, even in the executive order of last night, is notable. This proposed 40% penalty for transshipment: if the Administration has the ability...
the fact that they're focusing on it, and
They're let's call it, threatening those countries to stop. That facilitation is really important.
And Carl. I'll I'll throw in 1. Other thing that I think is also could be really helpful but the the change on the exemption on the Minimus shipments into the US, it's sort of a black hole, it's hard to track. Even how many mattresses might have been coming in underneath that threshold, but certainly, there are a lot and I think that changes is also a, um, potentially beneficial update for the US market.
Okay, computer to go down 1 more rabbit hole with you. I can't help but if I apologize, um
We Believe.
That about 75% of the mattresses, through our own testing that have come into this country, do not meet the US flammability laws.
And there has been increased rigor by the CPSC to enforce those regulations as well. So, not only are these products being transshipped and dumped, they're not meeting the U.S. flammability regulations, and the CPSC has become more aggressive in administration. So, all we want, all the U.S. manufacturing industry wants, is a level playing field, and we may be starting to see that in the not-too-distant future.
Okay, then, thank you. That's very detailed encouraging.
Um, maybe I'll I'll address my last question to to been um, within the model the um, the sgna. Leverage in the quarter was was notable. It's the first time you've levered sgna in several years that the SGD stepped down from from q1 anything to call out there in terms of changes that that you might be able to hold this. Uh, this lower level for a while.
Yeah, Peter, um, thanks for the question. So, you might recall late last year we talked about some G&A reductions that we made as part of our overall restructuring plan. So what you're starting to see is that flow through. Um, and so, yeah, we feel really good about that continuing to hold. As we move through the year, I would expect that to be consistent and maybe even expand a little bit as we go forward.
Okay, very helpful. Thanks guys.
You bet, thanks.
The next question is, from Keith Hughes from truist Securities. Please go ahead.
Uh, thank you. My question is in the um, Home Furniture it since you're restructuring a couple years ago, a little bit before me better than betting cousins, it took a little bit of a step down in second quarter, if you talk more what's going on and what's your kind of expecting the next, uh, 6 months or so?
Yeah, thank thanks for bringing that up. Keith Sam. Why don't you dive into it? Yeah, thanks. Thanks. Keith for the question. So, you're right. Our, uh, volume was all pretty significantly in Q2 and when we look at home furniture business,
there is an absolute bifurcation in that business right now.
Our customers who are making higher price point furniture, their business is pretty decent. Their attitude and outlooks are pretty solid, and our business with those guys, both in the U.S. and in Europe, is really solid as well. So that part of the business looks good. Now, when you start moving down to price point.
the market starts looking a lot differently and I'll just share a few factors that really impacted our volume, uh, in Q2.
So,
For the our large us.
Kind of bell weather. Mid price point customers.
This year just year-over-year. They were simply making less volume.
And so that was impactful to us just a drop in volume impacted us. And if you take another step down in price point and we go back to the uh, April Terrace that we talked about.
When those terrorists came out in Southeast Asia and China on April 2.
It was as if somebody turned the switch from 1 day to the next business, just ground to a halt in Asia. And, you know, we've got a sizable operation in China.
That service is primarily Asian customers with a little bit of export to the US. And when that those tariffs went into place our us customers who buy from China. Also, tap the brakes
And what we were hearing specifically from our Asian customers was that the US retailers were telling them. We're not going to pay 40 50 plus percent, uh, tariffs because we have plenty of inventory to try to last this thing out.
And see what happens. So,
Particularly the tariffs dropped from 46 to 10%.
Manufacturers in Southeast. Asia started ramping back up.
Our Chinese customers who have operations in Southeast Asia started, moving more production, out of China, down to Southeast Asia, and business started to get back to normal. But as we went through the quarter and got into late May and into June,
when that 90-day pause was looking like it was going to be over,
Some of those uh, retailers said. Hey, let's pause shipments again because we don't want to get
Stuck with Goods on the water and then we have to pay a 46% tariff out of Vietnam, so really kind of start and stop uh it with our Asian operations.
Throughout the quarter uh things seem to be in a better place. Now that we changed uh,
The uh, the trade policy with Vietnam and and those Southeast Asian countries. At least we know what the playing field looks like. So we anticipate that to continue to improve as we move through the, through the back half of the year.
Okay. Wow, that's really complicated. All right, thank you very much. It's it's super helpful. Yeah.
This concludes the question and answer session and today's teleconference you may all disconnect your lines at this time. Thank you for your participation.