Q3 2025 Leggett and Platt Inc Earnings Call
Speaker #1: Greetings and welcome to the LEGGETT & PLATT INC Third Quarter 2025 webcast and Earnings Conference call . At this time , all participants are in a listen only mode .
Speaker #1: 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 #1: As a reminder , this conference is being recorded . It is now my pleasure to introduce your host , Steven West , Vice President of Investor Relations .
Speaker #1: Thank you. You may begin.
Speaker #2: Good morning , everyone , and welcome to LEGGETT & PLATT INC Third quarter 2025 Earnings Call . With me today are Karl Glassman CEO Ben Burns , CFO Tyson Hagel , president of betting products .
Speaker #2: And Sam Smith , president of Specialized Products and furniture , flooring and textile products . This call is being recorded and a replay will be available on the Investor Relations section of our website .
Speaker #2: Yesterday , we issued our press release and a set of slides containing third quarter financial results . Those documents supplement the information we will discuss this morning , including non-GAAP financial reconciliations .
Speaker #2: Remarks today concerning future expectations , events , objectives , strategies , trends or results constitute forward looking statements . Actual results may differ materially due to risks and uncertainties , and the company undertakes no obligation to update or revise these statements .
Speaker #2: For a summary of these risk factors and additional information , please refer to sections in yesterday's press release and our most recent 10-K and 10-q filings entitled Risk Factors and Forward Looking Statements .
Speaker #2: And with that , I will turn the call over to Karl . Thank you . Steve .
Speaker #3: And good morning , everyone . I'm pleased with another quarter of solid results reflecting nearly two years of disciplined cost structure improvements . Despite an ongoing soft demand in residential and markets .
Speaker #3: Importantly , we are reaffirming the midpoint of our full year sales and adjusted EPs guidance , which Ben will discuss in more detail later .
Speaker #3: Our third quarter was also marked by significant progress on our key strategic initiatives. Our team has done a terrific job driving results through the execution of our restructuring plan, disciplined cost management, and improving operational execution.
Speaker #3: These efforts have culminated in improved cash flow , which allowed us to significantly strengthen our balance sheet . On August 29th , we completed the divestiture of our aerospace business , aligned with our goal of optimizing our portfolio .
Speaker #3: We use proceeds from the sale, along with a portion of our operating cash flow, to pay down all of our remaining commercial paper and substantially lower our net debt to trailing 12-month adjusted EBITDA ratio.
Speaker #3: Our restructuring plan is nearing completion and is meeting or exceeding our initial expectations . We made considerable progress on the second phase of the flooring consolidation during the quarter , and expect the consolidation to be completed by the end of the year .
Speaker #3: In hydraulic cylinders , we completed the right sizing of our UK facility beyond our formal restructuring plan in early September . We announced the consolidation of our Kentucky Adjustable Bed manufacturing operation , which will be consolidated into our Mexico operation by the end of this year .
Speaker #3: This decision was driven by lower volume and tariffs on imported components , which resulted in a cost disadvantage for our domestic production in a category that primarily competes with imported products .
Speaker #3: Throughout the quarter , we continue to navigate a very dynamic environment . We still believe tariffs will be a net positive for us , but remain concerned that wide ranging tariffs could drive inflation , hurt consumer confidence and pressure consumer demand .
Speaker #3: We are actively mitigating some of the negative impacts experienced in a few of our businesses, such as supply chain disruptions that can have an indirect impact on us and our customer demand disruptions.
Speaker #3: Our teams are actively engaged with customers and suppliers across our global footprint to reduce tariff exposure and minimize impacts . In general , import issues are an ongoing risk , especially for our betting product segment .
Speaker #3: But we are encouraged that some recent enforcement actions support fair competition for domestic manufacturers and importers alike . US Customs and Border Patrol recently dismantled a Chinese mattress transshipment scheme , estimated to have evaded more than $400 million in duties .
Speaker #3: The consumer Product Safety Commission has also recently issued recalls and product safety warnings for certain imported mattresses that fail mandated US flammability standards .
Speaker #3: Now , more than ever , misclassification of shipments and understated product values are additional problems that domestic manufacturers face when competing against imports .
Speaker #3: While we continue to believe that imports have a role in the US , bedding market , the domestic industry must be able to compete on a level playing field amid these initiatives and macroeconomic challenges , our teams remain focused on providing high quality , innovative products to our customers , keeping our employees safe and continuously improving at everything we do .
Speaker #3: I'll now turn the call over to Ben . Thank you , Carl , and good morning , everyone . Third quarter sales were just over $1 billion , down 6% year over year due .
Speaker #2: Primarily to continued soft demand in residential end markets , as well as sales attrition from both the divestiture of our aerospace business and our restructuring efforts .
Speaker #2: Looking at sales by segment , betting product sales decreased 10% year over year , but improved 3% sequentially versus .
Speaker #3: The second .
Speaker #2: Quarter , and sales accelerated through the quarter . Specialized product sales declined 7% , while furniture , flooring and textile products sales were flat year over year in bedding products as anticipated , sales weakness at a certain customer and retailer , merchandising changes drove volume declines in adjustable bed and specialty foam .
Speaker #2: US spring unit volume was in line with both mattress consumption and domestic mattress production volumes , both of which we estimate declined low single digits .
Speaker #2: US mattress industry production improved sequentially versus the second quarter , marking the second consecutive quarter of improved domestic production volume . While we are encouraged to see sequential improvement , third quarter domestic volume remained negative year over year .
Speaker #2: It is worth noting that the improvements we have seen are not consistent across the industry . Certain channels and market participants are performing better than others .
Speaker #2: We have also started to see stabilization and demand patterns between holiday promotional periods . In the fourth quarter . We expect US domestic mattress production to slow sequentially due to normal seasonality and to .
Speaker #2: Remain negative on a year over year basis . Total market consumption for the full year is now expected to decline . Low single digits , with domestic production down mid to high .
Speaker #2: Single digits . Within our specialized product segment , we experienced modest sales declines in automotive and hydraulic cylinders . With the divestiture of aerospace making up the largest sales drag during the quarter .
Speaker #2: Looking ahead , multiple global automotive supply chain risks such as availability of aluminum , certain semiconductors and access to rare earth minerals have materialized as we moved into the fourth quarter and has begun impacting both the industry and our business .
Speaker #2: However , we have experienced no material impact to date . Finally , within furniture , flooring and textiles , continued sales growth in textiles and furniture was offset by declines in home furniture and flooring .
Speaker #2: We anticipate continued year over year strength in the component side of our textiles business . While current trends in seasonality will likely continue in the other businesses within the segment through the remainder of the year .
Speaker #2: As mentioned last quarter , aggressive competitive discounting , particularly in flooring and textiles , has led to pricing adjustments that will negatively impact us in the fourth quarter .
Speaker #2: Third quarter Ebit was $171 million and adjusted Ebit was $73 million , a $3 million decrease year over year . Primarily from lower volume , partially offset by metal margin expansion and restructuring benefit .
Speaker #2: Third quarter earnings per share were $0.91 on an adjusted basis , third quarter EPs was $0.29 , a three cent decrease year over year .
Speaker #2: Third quarter operating cash flow was $126 million , an increase of $30 million versus the third quarter of 2020 . Four . This increase was primarily driven by working capital benefits .
Speaker #2: Moving to the balance sheet , we reduced debt by $296 million in the third 12:45 point $5 billion , bringing our total debt reduction for the year to date to $367 million .
Speaker #2: As Karl noted , we reduced our commercial paper balance to zero , significantly strengthening our balance sheet and lowering our net debt to trailing 12 month adjusted EBITDA ratio to 2.6 times .
Speaker #2: Excluding aerospace . On a pro forma basis , the ratio is about 0.3 times higher at September 30th . Total liquidity was $974 million , comprised of $461 million of cash on hand and 513 million in capacity remaining under our revolving credit facility .
Speaker #2: We ended the quarter with adjusted working capital as a percentage of annualized sales , down over 200 basis points year over year . Moving to our update , we have nearly completed the execution of the plan , which has delivered significantly better Ebit contribution with lower associated costs than originally announced .
Speaker #2: We remain on track to realize an EBIT benefit of $60 to $70 million on an annualized basis. This positive EBIT contribution is despite approximately $60 million in sales attrition, and we remain on track to generate real estate proceeds of $70 to $80 million.
Speaker #2: Since plan inception , we have realized $43 million of proceeds , and now expect up to an additional $17 million in the fourth quarter of 2025 , with the balance in 2026 .
Speaker #2: Despite the current dynamic operating environment , I'm pleased to say we are reaffirming the midpoint of our sales and adjusted EPs guidance while narrowing the previous guidance range .
Speaker #2: Sales are now expected to be 4.0 to $4.1 billion , or down 6% to 9% , versus 2024 . Earnings per share of $1.52 to $1.72 , and adjusted earnings per share of $1 to $1.10 .
Speaker #2: Adjusted Ebit margin is expected to be between 6.4% and 6.6% , and cash from operations is expected to be approximately $300 million . Our CapEx will be lower than usual this year at 60 to $70 million , which is primarily due to customer driven delays of some growth initiatives and due to our focus on executing and wrapping up our restructuring plan .
Speaker #2: Annual CapEx should return to more normalized levels going forward . 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 share repurchases .
Speaker #2: Longer term , our priorities for use of cash remain consistent . Investing in organic growth , funding , strategic acquisitions , and returning cash to shareholders through dividends and share repurchases .
Speaker #2: With that , I'll turn the call over to Karl for his closing remarks .
Speaker #3: Thank you . Ben . In a relatively short time , we have made significant progress on our strategic priorities . We have strengthened our balance sheet by adjusting our capital allocation to prioritize debt reduction through our restructuring plan .
Speaker #3: We have created a leaner manufacturing footprint that can meet customer demand . When it rebounds and support strong incremental contribution margins . We have simplified our portfolio through recent divestitures to improve focus on core operations .
Speaker #3: All of this has been accomplished with a consumer who has seemingly been in a recession for more than three years , compounded by the complexities of a dynamic tariff landscape .
Speaker #3: Leggett and Platt has been at the forefront of innovation for a very long time . Today , we have a robust innovation pipeline and relatively new products that are just gaining traction .
Speaker #3: We have also closely partnered with many of our customers to develop innovative products designed to meet their specific needs . These efforts , combined with meaningful cost reductions and operational improvements , position us well to aggressively pursue longer term profitable growth opportunities that will create value for our shareholders .
Speaker #3: With that , I would like to thank all of our employees for their continued hard work and dedication to position Leggett and Platt for a very bright future .
Speaker #3: Operator , you may now open the line for Q&A .
Speaker #1: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .
Speaker #1: A confirmation tone will indicate your line is in the question queue . You may press star two . If you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys .
Speaker #1: One moment please . While we pull for your questions . Our first question comes from the line of Susan McClary with Goldman Sachs .
Speaker #1: Please proceed with your questions .
Speaker #4: Good morning everyone .
Speaker #3: Good , Susan .
Speaker #5: My first . .
Speaker #4: Good morning . My first question is I want to talk a bit more about the benefit that you're seeing from the cost actions and the restructuring that you've undertaken in the last two years or so .
Speaker #4: It seems like you're really getting a nice lift from that in the margins . Despite the volume and the demand environment that we're in .
Speaker #4: Can you just help us kind of parse out how those are coming through ? What the upside is ? As we think about the forward quarters and anything else that's notable as it relates to that .
Speaker #2: Yeah . Susan , this is Ben . Thanks for the question . You know , as we said in the prepared remarks , our teams have done a great job executing the restructuring plan .
Speaker #2: And we're really nearly complete at this point . And as we look at the metrics that we laid out at the beginning in our original expectations , we're meeting or exceeding them in really all categories , including Ebit benefits , costs , sales , attrition and real estate sales .
Speaker #2: So really good execution . With all of that , we've had no customer disruptions and it's important to remember this touches not only our betting segment , but also we've had significant actions in home furniture and flooring , hydraulic cylinders and also an initiative to reduce our corporate G&A expenses .
Speaker #2: So as we look forward , we're very confident in our 60 to $70 million of annualized Ebit benefit . I think , in 2025 , we'll end up around 60 million of that benefit already realized with another up to ten coming next year .
Speaker #2: The sales attrition that we laid out at the beginning , we thought was about $100 million . Now we've got that down to $60 million .
Speaker #2: So that's good news . And then from a real estate perspective , we still expect 70 to $80 million of cash proceeds . We've had $43 million to date , and we expect up to 17 million , possibly later this year , with the remainder coming in 2026 .
Speaker #2: So , you know , really good execution . And then the other thing I would say is , you know , these are all cost outs as we think about going forward .
Speaker #2: And volume recovery contribution margins should be strong for us . We think 25 to 35% as we go forward with that incremental volume .
Speaker #2: So, you know, we can't say enough about how appreciative we are of all of our employees' efforts in this area.
Speaker #4: Yeah , okay . That's great . Color , Ben . And then I want to turn to betting . Can you talk about the demand environment and how that came through during the quarter ?
Speaker #4: I think you said that you did see things improve each month in the third quarter, but it seems like that's coming despite the headwinds that we are seeing in the housing market and the volatility in consumer confidence.
Speaker #4: How do we sort of weigh those differing factors out there ? And can you just talk a bit about what you think is actually going on on the ground ?
Speaker #3: Susan , thanks for the question . Before we go down that path , I'm going to turn it over to Tyson . But I want to stop for just a second and congratulate Tyson and his team for the tremendous job that they've done in the betting segment .
Speaker #3: The restructuring has been a challenge . The demand headwinds , the team has come together . We have an innovation pipeline that is more robust than it's ever been in our history .
Speaker #3: And when you think of they still have issues , Tyson will be very candid on these issues regarding specialty foam and adjustable bed .
Speaker #3: But when you look at the financials , you can see to your earlier question the restructuring benefits . You can see cost management , operational efficiency improvements , metal margin expansion through the trade , sale of trade rods .
Speaker #3: And like I said , the early in the year we talked about the benefit of customer product launches . We're seeing that it's ramping up , but most notable is what the teams have coming into the near future .
Speaker #3: 2026 is going to be really robust from innovation . Evidence of our teams capabilities . So with all of that , Tyson , why don't you go ahead ?
Speaker #6: Sure . And thanks , Carl . And good morning , Susan . I'll start just with some comments about the market . And I think , you know , we would characterize things right now as more stable than seeing a lot of recovery , although in both the second and third quarter been been mentioned this .
Speaker #6: But we saw sequential improvement in both quarters , which was coming off a pretty tough first quarter , but still , that's that's a trend we haven't seen in quite some time .
Speaker #6: But really it's getting us back to more of a of a stable place . But still in the third quarter , especially looking at the domestic market down low single digits .
Speaker #6: When we talk about units , I a few things though , that I think are worth mentioning . Kind of within that stability .
Speaker #6: First of all , we've talked about this in some past calls that , you know , we we see some pretty high peaks when we get to the , the promotional holidays and then some pretty tough valleys when we come off of those .
Speaker #6: But we're seeing more stability month to month . So we see some improvement around the promotions . But we don't see quite the big drop offs , which I think is notable and something we'll continue to watch .
Speaker #6: The other thing is that although things are reaching more of a stable level , we don't see consistent performance across all retail channels and brands .
Speaker #6: It it is pretty choppy and from our view , that's that's coming from a variety of factors with industry consolidation that's been going on new program launches , advertising changes , all of those things are resulting in a lot of movement , which makes it a little more difficult to track exactly what's going on .
Speaker #6: But I think that's another thing . We'll watch going forward . But big picture , I think we still have to continue to watch .
Speaker #6: You mentioned it , Susan , but you know , the big macro factors that tend to drive bedding and furniture are still a pretty big challenge .
Speaker #6: You know , Karl talked about this too . But consumers dealing with a tariff environment but still pretty tough housing , you know , wages dealing with inflation and just general consumer confidence .
Speaker #6: Those are those are all big picture things that , you know , for us to plan for an actual more recovery type environment , we have to see those things start to flip to be more positive .
Speaker #4: Yeah . Okay . Thanks for that color , Tyson . And then maybe turning to the cash and the balance sheet . It's really nice to see how the leverage has come together .
Speaker #4: You mentioned , Ben , that the CapEx is going to be lower this year . How do we think about your plans for spend in 2026 ?
Speaker #4: Some of the growth opportunities that maybe are coming in there and and then maybe the potential for some resumption of shareholder returns ?
Speaker #2: Yeah , sure . Thanks , Susan . Yeah . Our CapEx is a little bit lower based on the the factors I mentioned in the prepared remarks .
Speaker #2: As we go forward , you know , with a smaller , leaner footprint , we do think a more normalized level of CapEx is something like what we started to guide the year on this year , which which was about $100 million .
Speaker #2: So , you know , obviously there'll be puts and takes in any given year and timing factors in . But that 100 million is probably a decent way to think about it .
Speaker #2: And then as we think about growth initiatives going forward , as , as Carl mentioned in his remarks as well , we do have some opportunities that we're pursuing .
Speaker #2: And so we'll continue to , you know , fund those . We've been funding whatever growth opportunities come along . And , you know , we'll we'll we'll provide more specific outlook on 2026 .
Speaker #2: In the next call .
Speaker #4: Yeah , okay . And then Benjamin , sneak one more in for you . Can you just walk through how you're thinking about this segment margins for this year .
Speaker #2: Sure thing . On the betting side , we now believe segment margins will be up 200 basis points . I think the last call we we were saying 150 basis points .
Speaker #2: So we're seeing a little bit more improvement . There on the specialized segment . We are saying margins should be up about 50 basis points year over year .
Speaker #2: And then on the furniture flooring and textile side , we're now predicting margins to be down 150 basis points , which is compared to what we said previously of 100 basis points down .
Speaker #4: Okay. Perfect. Thank you all for the color, and I'll get back in the queue.
Speaker #2: Thanks , Susan .
Speaker #1: Thank you . Our next question comes from the line of Peter Keith with Piper Sandler . Please proceed with your questions .
Speaker #7: Hi . Good morning . This is Alexia Morgan on for Peter . Thanks for taking our question . My first question is on the furniture segment .
Speaker #7: It looks like there was some sequential improvement within home furniture down five or volumes were down 5% in Q3 versus down 12 and Q2 .
Speaker #7: I was wondering how you interpret that sequential improvement. And if you think it indicates any underlying improvement within the broader category?
Speaker #8: Yeah . Hey , Alexa , go ahead . Carl .
Speaker #3: No , I was going to say go ahead , Sam .
Speaker #8: Okay , okay . Good morning Alexei . This is Sam . So if you remember back to last quarter , we talked about how those April 2nd tariffs really upended our home furniture business and caused a pretty significant drop in volume year over year .
Speaker #8: So what we saw this quarter is more of a normalization , a return to kind of business at a more consistent volume level .
Speaker #8: And I'll just kind of comment a little bit on the volume versus where I think the market is . You know , I've read some really interesting Q3 retail surveys and some credit card data that I'm going to refer to .
Speaker #8: One survey suggested that year over year retail sales could be up 6 to 7% , with the surveyed retailers . And it also showed that tariffs caused those same retailers to raise their prices .
Speaker #8: And that weighted average price increase was up 9 to 10% . So if you take the 6 to 7% sales increase , compare that back to 9 to 10% price increase .
Speaker #8: And I think you could say that unit volume per that survey is down probably around 3% . And then next to the credit card data that I saw , it showed that retail furnishings sales were up about 2% .
Speaker #8: Again , I think you got to apply some level of price increase to mitigate those tariffs . And when you apply the price increase to mitigate the tariffs , I think you can also assume unit volumes down low to mid digits .
Speaker #8: And that's pretty much in line with our performance year over year . And I think from a positive news standpoint , you know we started up our new factory in Vietnam at the end of Q3 .
Speaker #8: And we started shipping product from it early this month . And as we ramp up that plant , our products are going to be in a favorable tariff position .
Speaker #8: And that's really good for our customers . And it's good for us .
Speaker #7: Okay . Thank you . And then staying within home within furniture , could you elaborate on any any shift you've noticed in end customer behavior across different price points ?
Speaker #7: Specifically , are you still observing a divergence in performance between the lower price points versus the middle and higher price points ?
Speaker #8: Thank you . Yes , we are . We still continue to see the higher price points , be more stable on a week to week , month to month basis and there continues to be a lot of pressure at those lower price points .
Speaker #8: It's very consistent with what we were seeing last , last quarter with the exception that that tariff announcement in April seems to have passed us by , and we're past that now .
Speaker #7: Great . Thank you . And then one more moving to the bedding segment . It looked like steel rod volume dropped off significantly inflecting negative to down 20% in Q3 .
Speaker #7: Then you talk about the drivers for that inflection .
Speaker #6: Sure . Happy to . It's really it's pretty simple actually . Trade rod volumes were pretty stable . The biggest change and we've talked about this in the past .
Speaker #6: We also sell some semi-finished products called billets from time to time, and last year we had a relatively strong amount of billet sales.
Speaker #6: In the third quarter, and this year, because of both internal and external demand, we haven't had to resort to selling billets.
Speaker #6: So really the the full drop , there is just an elimination of the billet sales and overall actually our our trade rod mix was was pretty strong and helpful for us because it trended towards high carbon rather than low carbon .
Speaker #6: So although the headline there looks negative , it actually was a pretty strong result for us with the rod mill .
Speaker #3: Which is a contributor to the profitability of the segment because the non-value-added of selling a billet versus the value added of selling a rod , and someone may question , why did you sell billets last year ?
Speaker #3: And the answer was to keep the rod mill going . Keep our employees employed . We don't have that problem right now . Volume is pretty darn .
Speaker #7: Okay . Thank you so much
Speaker #7: . good
Speaker #1: Thank you . Our next question comes from the line of Bobby Griffin with Raymond James . Please proceed with your questions .
Speaker #7: Good morning . This is Alessandra Jimenez on for Bobby . Thank you for taking our questions . First , I just wanted to touch on kind of the growth opportunity for here .
Speaker #7: From here . Now that the majority of restructuring is near complete , where do you see the most opportunities for organic growth ? Assuming the macro environment is supportive ?
Sure, this has been, I'll be happy to answer that so yeah, our long-term, uh, net debt. Um, leverage Target is 2 times, so our Capital allocation strategy will continue to be to reduce that net debt as we go forward. But we're also considering, um, other uses of of cash including small strategic Acquisitions. So, to your question there, I think the most likely area would be in our Texas business. We've been very successful at, um, having, uh, fairly modest purchase price Acquisitions and bringing those in and driving immediate synergies. Um, and then we'll also be considering, uh,
Share repurchases as we look forward. Um, no specific timetable on that at this point, um, but that's uh, on the top of our mind, as well.
Thank you so much and best of luck here in the fourth quarter.
Thank you. Thank you.
Thank you as a reminder. If you'd like to ask a question. Please press star 1 on your telephone keypad,
Our next question is come from the line of Keith Hughes with truist Securities. Please proceed with your questions.
Um, thank you. Um, question on the, uh, just back to bedding. Uh, us spring was only down a point or 2 in the quarter, that's starting to feel like what you're saying the industry is, do you think it will start to track more with the industry does over the next uh, you know, year term?
Morning, Keith. Yes, this is Tyson. Yes, you know, that's something. We've talked a lot about it's been. It's been tough to track with all the moving Parts. But, you know, we've we've talked about, um, especially some of our higher value products have tracked really closely with the market and overall with more stability and, and open coil. When you kind of get to them, the total Max scores, it sort of feels like those were trending kind of in the same direction with the the domestic mattress market. And, um, you know, even within, uh, kind of the big picture view of our unit volumes. Uh, you know, there are some pretty encouraging things that that are that are going going on. We've talked about our content gains, which goes back to the, um, the long-term decline of open coil, but then the addition of our comfort core products and some other things we've been introducing in the market and, um, you know, starting to see that come through
Through especially the third quarter and that's where you see some of our profit Improvement as well. But um, we're really starting to see some momentum from that. Um, and the third quarter, we saw a significant boost in our, our Quantum share Comfort core but also our sum of semi-finished business grew more than 20% versus last year. So even when you look at the, the volume comparisons unit for unit, we think we're tracking pretty well but also picking up some, some content.
But it keeps, if you don't mind tying, while we're on that subject, much has been written about lost market share. Talk about that if you don't mind.
Well, you know, and I think a lot of that comes from the moving pieces with the imported finished mattresses and how much you're actually being consumed uh within the course of the year. Um, you know, it's been a tough thing to track but we're seeing more stability with the imported finish mattresses especially after some of those things were loaded up in the first part of the year ahead of ahead of tariffs. So it's a little easier to get a view of that that now, Carl. But, um, on top of that, and we've seen some different moves with some of the brands and Industry consolidation, but that's where we feel at least from the US spring point of view.
And if you look at, uh, adjustable and, uh, specialty, I know there's a customer issue when you laugh, that when will that start to look, you know, more wise than a chance to do better in the industry or like the industry.
Yeah, Keith. So it is a consistent um commentary from what we shared last quarter. I'll talk to you a little bit more about it. It's largely 2 customers and they're the same ones for specialty foam and adjustable bed. Um, the the first 1 uh, is is Mattress Firm. And, you know, once the the consolidation has been complete, um, with specialty foam, uh, there was uh, a private label mattress program that was taken internal and then second to that, with our adjustable bed business, we still sell, um, some product there, but we've seen, um, a change in the merchandising plan and where some of the sourcing of that product is coming.
So, those have been both impactful to both specialty foam, uh, and adjustable bed, and it will really take full fully through next year before we'll, uh, fully get through that part of it. The second, uh, the second Big Challenge again for both businesses, um, is not a market share loss, um, but it's more just of a headwind of a of a large customer of ours that that impacts both foam and, uh, adjustable bed. Now, it's, it's hard to say exactly when we anniversary those because it's, it's more of just a specific customer challenge, but not lost market share.
Okay. And you know uh I think it was Carl, your commentary on the sector. Um, you were seeing some retail do better than others. Could you talk about that a little bit more of what type of retail is seeing? Some at least sequential Improvement? I was still down year-over-year and what areas are still struggling.
Yeah, that was actually Tyson but go ahead. You sure keep? Well, it's probably what you would suspect, um, you know, on the online channels see quite a bit of strength, and some of the, the lower-end, uh, online e-commerce. Um, there's there's a lot of volume moving through there, um, in brick and mortar, um, see quite a bit of activity happening in in big box and, and through Mattress Firm. Um, but it's not as we kind of talked about here. It doesn't seem to be a rising tide lifting everybody at the, at the same level it is it is inconsistent but see stronger. Um, unit volumes, at least through through those channels,
Okay, and one other question on textiles. It was up in the quarter and up several quarters. Now, I think you talked about potential price pressure there, along with flooring. I think I know what's happening with flooring, but if you could talk about textiles and where you see that going.
Yeah, sure. Keith this is Sam uh,
We've got a little bit of bifurcation or a textile business, you know, the traditional side that services for, uh, Furniture bedding. Uh, Fabrics, that's where we're seeing a tremendous amount of price pressure. Uh, just as you would see in flooring, uh, as these, these markets continue to be down from a, a demand standpoint. Uh, so that's kind of where we see that where the growth is really coming from is from our Geo side. The us civil construction is up really nicely year-over-year, and what we call our engineered materials markets, which are, you know, Automotive filtration some building some specific building products outside of Geo textiles.
You know, those those volumes are are looking really good for us and helping Drive some of that growth.
Okay, great. Thank you.
Thank you. Our next questions, come from the line of Susan maclari with Goldman Sachs, please proceed with your questions.
Yeah, thank you. I just have a couple of follow-ups. The first is just building on Keith's, question, on textiles. You have seen a lot of really nice growth in there and I think Ben you mentioned that as a potential for some bolt-on. M&a can you talk a bit more about how you're thinking about the future trajectory of that business, what kind of deals you could possibly be interested in and how we should think about what that will mean for growth?
Sure, you want to take it, or do you want me to jump in?
Acquire uh, small businesses, both them on and really Drive immediate synergies through our purchasing, uh, which we we do really well with. Um, so I think that is something that has been very successful for us. We look for applications of the raw materials and how we can convert them uh and really service customers on a just in time basis and a lot of it also can be a geographic strategy to serve uh areas uh, a new geographies with this similar products. But Sam, what would you would would you add on to that?
All right, I think, I think you've covered it. Perfectly been.
Yep. Okay, great.
Okay. And then going back to betting, you've talked a lot about Innovation and the product pipeline that you have. And it sounds like that's gaining some really nice momentum as we look out. How do we think about the benefit that you can see from a price mix perspective and what that could mean for the business even if we remain in a tougher macro where we have those continued headwinds on overall broader demand,
Yeah yeah. Susan you know kind of represents us a little bit already but even with the semi-finished and content gains we've seen in US spring um you're kind of seeing some of it now, you know versus third quarter last year, you know, roughly half of our Eid Improvement comes from just fixed cost reductions and restructuring the other half is, you know, mostly from margin enhancement. Some of that from uh, trade Rod business. But the other part is just from exactly what you said. I've already seen the benefits of improved content through our, um, through our spring business and that comes from products. We talked about on previous calls but, you know, on top of that when I talked about working with our customers and, and our customers starting to lean in more towards, uh, differentiating their product line, a lot of that comes through, uh, improving the, the content, uh, the Comfort, or even just the, um, inclusion of specialty foam along with the, the inner spring units. So, uh, all of those end up being multiples, um, in terms of a selling price for us. Uh,
Versus kind of more of the historic uh inner spring business that you think about and that's where even as we've seen some volumes be uh even down slightly or where we've been the last couple years. That's where we see the opportunity for profit Improvement and feel more of that is is um
Is possible going into the future.
Yeah. Okay. All right. Thank you guys. Good luck with the quarter.
Thank you. Thanks Susan.
Thank you. There are no further questions at this time. I would now like to turn the floor. Back over to Stephen West for closing comments.
Thanks everyone for joining us this morning. Hey, we look forward to hosting you next quarter as well. And we are scheduled to issue. Our fourth quarter earnings release on February 11th after the market closes and our conference call will be on February 12th at 8:30 a.m. eastern standard time. In the meantime if you have any questions just reach out to me anytime. Thanks.
Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your day.