Leggett & Platt (LEG) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales were $1.1 billion, down 8% year-over-year, with volume declines, weak residential demand, and a lost customer in Specialty Foam.

• Reported EPS was $(4.39), reflecting a $675 million non-cash goodwill impairment, restructuring charges, and CEO transition costs.

• Adjusted EBIT for Q2 was $71 million, down 23% year-over-year, with margin at 6.3%.

• Restructuring plan is progressing ahead of schedule, with $73 million in debt paid down and EBIT benefits realized earlier than expected.

• Strategic portfolio review underway to align with long-term profitability and growth.

Financial highlights

• Q2 2024 EBIT loss was $614 million, mainly due to the $675 million goodwill impairment; adjusted EBIT was $71 million, down $21 million year-over-year.

• Adjusted EPS for Q2 was $0.29, down from $0.38 last year; adjusted EBITDA was $104 million, margin 9.2%.

• Operating cash flow for Q2 was $94 million, down $17 million year-over-year.

• Net debt to adjusted EBITDA at 3.83x as of June 30, 2024; total liquidity at $705 million.

• Dividend reduced to $0.05 per share in Q2 2024 to prioritize deleveraging.

Outlook and guidance

• 2024 sales guidance lowered to $4.3–$4.5 billion, down 5–9% from 2023; adjusted EPS expected at $1.10–$1.25.

• Full-year EPS expected to be a loss of $3.43–$3.58, including $4.61 per share impact from goodwill impairment.

• Adjusted EBIT margin for 2024 expected at 6.5–6.9%; operating cash flow forecast at $300–$350 million.

• Restructuring Plan expected to deliver $40–$50 million annualized EBIT benefit by late 2025, with $10–$15 million in 2024.

• Capital expenditures projected at $110 million; dividends at $135 million.