Leggett & Platt (LEG) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales were $1.129 billion, down 8% year-over-year, driven by weak residential demand, volume declines, and customer loss in Specialty Foam.

• Reported EPS was $(4.39), reflecting a $675 million non-cash goodwill impairment, restructuring charges, and CEO transition costs; adjusted EPS was $0.29, down from $0.38 last year.

• Restructuring plan is progressing ahead of schedule, with $73 million in debt paid down, $22 million in restructuring costs YTD, and sequential improvement in adjusted EBIT margin.

• Strategic portfolio review underway to assess long-term fit and growth potential of each business.

• Dividend reduced to $0.05 per share to prioritize debt reduction and financial strength.

Financial highlights

• Q2 2024 EBIT was a loss of $614 million, driven by a $675 million goodwill impairment; adjusted EBIT was $71 million, down 23% year-over-year, with margin at 6.3%.

• Q2 net loss attributable to shareholders was $(602.2) million; diluted EPS was $(4.39).

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

• Adjusted EBITDA for the quarter was $103.8 million, margin 9.2%, down from 11.2% last year.

• Net debt to trailing 12-month adjusted EBITDA was 3.83x at quarter end; total liquidity at June 30 was $705 million.

Outlook and guidance

• 2024 full-year sales expected at $4.3–$4.5 billion, down 5–9% from 2023, with adjusted EPS guidance narrowed to $1.10–$1.25.

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

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

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

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