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LEGGETT & PLATT INC (LEG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 sales were $1.06B, down 6% YoY, with GAAP EPS of $0.38 and adjusted EPS of $0.30; profitability improved on metal margin expansion and restructuring benefits despite lower volumes .
  • Results were roughly in line with consensus: revenue $1.058B vs $1.060B* and adjusted EPS $0.30 vs $0.305*; adjusted EBITDA modestly beat ($105.4M actual vs $104.2M*) as metal margins expanded and SG&A leveraged .
  • FY25 guidance on July 31 was maintained for sales ($4.0–$4.3B) and adjusted EPS ($1.00–$1.20), with GAAP EPS narrowed to $0.88–$1.17; D&A and capex outlook reduced; tax rate raised to 26% .
  • Subsequent event: on Aug 29, LEG closed the sale of Aerospace (~$250M after-tax proceeds) and revised FY25 guidance to sales of $3.9–$4.2B and GAAP EPS of $1.43–$1.72 (incl. ~$0.60 gain); adjusted EPS to $0.95–$1.15—deleveraging and the transaction are key stock catalysts near term .

What Went Well and What Went Wrong

What Went Well

  • Margin improvement and cost discipline: Adjusted EBIT rose to $75.6M with adjusted EBIT margin of 7.1% (up from 6.3% YoY) on metal margin expansion, restructuring benefits, and SG&A leverage .
  • Balance sheet progress: Debt reduced by $143M in Q2, net debt/TTM adjusted EBITDA improved to 3.5x; credit facility amended (size cut to $1.0B, covenant at ≤3.5x, maturity extended to 2030) .
  • Strategic portfolio action: Stayed on track in Q2 to sell Aerospace (closed Aug 29) to strengthen leverage and focus the portfolio; management reiterated confidence in long-term growth positioning .

“Focused execution and diversified portfolio give us the conviction to reaffirm full‑year guidance” — CEO Karl Glassman .

What Went Wrong

  • Demand softness and volume declines: Organic sales fell 6%; volume down 7% on continued weakness in residential end markets, Automotive, and Hydraulic Cylinders; bedding and adjustable bed faced customer-specific headwinds .
  • Pricing pressure: Furniture, Flooring & Textile (FF&T) adjusted EBIT fell YoY as aggressive competitive discounting in flooring/textiles led to pricing adjustments .
  • Tariff-driven disruptions: Home Furniture saw shipment delays and customer pauses amid tariff volatility; management highlighted complexity and start/stop dynamics in Asia sourcing during Q2 .

Financial Results

Headline Results (GAAP and non-GAAP)

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1,128.6 $1,022.1 $1,058.0
GAAP EPS ($)($4.39) $0.22 $0.38
Adjusted EPS ($)$0.29 $0.24 $0.30
EBIT ($M)($614.3) $62.9 $90.4
Adjusted EBIT ($M)$71.2 $66.6 $75.6
EBIT Margin (%)(54.4%) 6.2% 8.5%
Adjusted EBIT Margin (%)6.3% 6.5% 7.1%

Q2 2025 Actuals vs Wall Street Consensus (S&P Global)

MetricQ2 2025 ConsensusQ2 2025 Actual
Revenue ($USD Millions)$1,059.8*$1,058.0
Adjusted EBITDA ($M)$104.2*$105.3
Primary/Adjusted EPS ($)$0.305*$0.30

Values marked with * retrieved from S&P Global.

Segment Performance – Q2 2025 vs Q2 2024

SegmentTrade Sales Q2’24 ($M)Trade Sales Q2’25 ($M)YoY %Adj EBIT Q2’24 ($M)Adj EBIT Q2’25 ($M)Adj EBIT Margin Q2’24Adj EBIT Margin Q2’25
Bedding Products$438.0 $391.4 (11%) $0.6 $12.6 0.1% 3.2%
Specialized Products$319.6 $304.1 (5%) $35.4 $37.6 11.1% 12.4%
Furniture, Flooring & Textile$371.0 $362.5 (2%) $35.1 $25.3 9.5% 7.0%

Key Operating/Balance Sheet KPIs

KPIQ4 2024Q1 2025Q2 2025
Operating Cash Flow ($M)$122.3 $6.8 $84.0
Capex ($M)$21.8 $13.3 $8.5
Total Debt ($M)$1,864.1 $1,936.4 $1,793.5
Cash & Equivalents ($M)$350.2 $412.6 $368.8
Net Debt / TTM Adjusted EBITDA (x)3.76 3.77 3.51
Liquidity ($M)$793 $817 $878

Non‑GAAP adjustments in Q2 2025 included ~$18M gains on real estate and $4M restructuring; net impact ($0.08) reconciles GAAP EPS $0.38 to adjusted EPS $0.30 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SalesFY2025$4.0–$4.3B (Feb 13) $4.0–$4.3B (Jul 31) Maintained
GAAP EPSFY2025$0.83–$1.24 (Feb 13) $0.88–$1.17 (Jul 31) Narrowed range
Adjusted EPSFY2025$1.00–$1.20 (Feb 13) $1.00–$1.20 (Jul 31) Maintained
Adjusted EBIT MarginFY20256.4%–6.8% (Feb 13) 6.5%–6.9% (Jul 31) Slightly raised
EBIT MarginFY20255.7%–7.0% (Feb 13) 5.9%–6.8% (Jul 31) Reframed
D&AFY2025$135M (Apr 28) $125M (Jul 31) Lowered
Net InterestFY2025$70M (Apr 28) $70M (Jul 31) Maintained
Tax RateFY202525% (Apr 28) 26% (Jul 31) Raised
Op Cash FlowFY2025$275–$325M (Apr 28) $275–$325M (Jul 31) Maintained
CapexFY2025$100M (Apr 28) $80–$90M (Jul 31) Lowered
Volume AssumptionsFY2025Bedding down low double digits; Specialized down mid-single digits; FF&T down low single digits (Apr 28) Bedding down mid‑teens; Specialized down mid‑single digits; FF&T down low single digits (Jul 31) Bedding lowered
Credit FacilityN/A$1.2B revolver (prior) $1.0B; covenant ≤3.5x; matures 2030 (Jul 24) Amended
DividendQ3 2025—Declared $0.05/share; pay Oct 15; record Sept 15 (Aug 7) Maintained low payout

Subsequent to Q2 close:

  • Post-Aerospace Sale: Sales $3.9–$4.2B; GAAP EPS $1.43–$1.72 (incl. ~$0.60 gain); Adjusted EPS $0.95–$1.15; implied adj EBIT margin 6.3%–6.7%; net interest $65M (Aug 29) . Change: EPS raised (transaction gain), sales range lowered (removing Aerospace), interest reduced.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Tariffs / MacroTariffs a potential net positive; cautious consumer; maintained FY25 guide (Q1 PR) Tariffs seen as net positive overall; Section 232 steel supports metal margins; enforcement on trans‑shipment/de minimis could aid U.S. mattress demand Improving tailwind if enforced
Bedding DemandQ4 softness; Bedding volume down; 2025 Bedding volume down low double digits at guide (Feb 13; Apr 28) 2Q stronger than 1Q; still soft outside promos; bedding guide lowered to mid‑teens decline; customer‑specific headwinds in foam/adjustable Stabilizing sequentially, still down YoY
Metal MarginCompression noted 2H’24 (Q4 PR) Expanding YoY and sequentially; viewed as sustainable under 232 regime Positive
RestructuringTarget annual EBIT benefit $60–$70M; attrition expected; proceeds $60–$80M (Q1 PR) Costs reduced to $65–$75M total; 2025 cost $15–$25M; annual benefit $60–$70M; proceeds $70–$80M; timing shifted On track; improved cost/proceeds
Supply Chain / AsiaQ1: tariff uncertainty; mitigating via sourcing (PR) Start/stop in Asia due to tariff changes; moving production to low‑cost country; U.S. customers paused shipments during tariff shifts Volatile but adjusting
Portfolio / AerospaceExploring Aerospace sale (Q1 PR) On track in Q2; closed Aug 29 with ~$250M after‑tax proceeds; guidance updated Completed divestiture

Management Commentary

  • “We are pleased to report another quarter of profitability improvement… We also remain on track to complete the sale of our Aerospace business this year… reaffirm our full-year guidance for both sales and adjusted EPS.” — Karl Glassman, CEO .
  • “Second quarter adjusted EBIT… up $4M versus 2Q24… primarily due to metal margin expansion, restructuring benefit, and disciplined cost management… Operating cash flow was $84M.” — Ben Burns, CFO .
  • “Metal margin is expanding year‑on‑year… impacted by Section 232 tariffs… we think expansion is sustainable.” — Karl Glassman .
  • “We amended our revolver… $1.0B capacity… covenant requires net debt/TTM adjusted EBITDA ≤3.5x… maturity July 2030.” — Ben Burns .

Q&A Highlights

  • Bedding linkage and share: Management clarified U.S. springs down mid‑single digits comparable to domestic production after adjusting for Mexico attrition; not losing share, expecting share regain in core springs .
  • Metal margins sustainability: CEO expects continued expansion supported by Section 232 protections; margins now at levels making sense for U.S. steel makers .
  • Consumer/timing: April was soft; Memorial Day/July 4 promotional periods were solid; modest sequential improvement expected 2H if tariff‑driven inflation doesn’t derail consumer .
  • Tariff enforcement: Management optimistic that duties and de minimis changes plus CPSC flammability enforcement can curb mattress trans‑shipment and support domestic producers .
  • SG&A leverage: Reductions from late 2024 restructuring flowing through; expected to hold or improve .
  • Home furniture: Significant tariff-related start/stop in Asia; operations shifting to Southeast Asia; normalization as policy clarified .

Estimates Context

  • Q2 revenue and EPS were essentially in line: $1.058B actual vs $1.060B consensus*; adjusted EPS $0.30 vs $0.305*; adjusted EBITDA slightly beat: $105.3M actual vs $104.2M* .
  • Street models likely trend modestly higher on margins given metal margin commentary and restructuring benefits, but bedding volume assumptions may be trimmed (mid‑teens decline at segment midpoint) and FF&T pricing pressure persists .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Profitability inflecting despite weak volumes: margin expansion (metal + cost) is the key driver; watch for sustainability of metal margins and SG&A leverage into 2H .
  • Bedding remains the swing factor: sequential improvement but FY volume lowered to mid‑teens decline; tariff enforcement on mattress imports is the primary upside catalyst .
  • Balance sheet repair is working: net leverage down to 3.5x; Aerospace proceeds (~$250M after-tax) and revolver amendment add flexibility; expect CP paydown in 2H .
  • 2025 guide maintained on July 31 and revised post-Aerospace: adjusted EPS to $0.95–$1.15 with lower sales base; GAAP EPS raised by gain—model both sets for comparability .
  • FF&T under price pressure: discounting in flooring/textiles weighs on margins near term; look for stabilization as competitive environment normalizes .
  • Near-term trading setup: catalysts include tariff enforcement developments, bedding demand prints around key holidays, Aerospace deleveraging effects, and real estate monetization pacing .

Appendix: Additional Details

  • Q2 cash flow and liquidity: Operating cash flow $84M; capex $8.5M; liquidity $878M comprised of $368.8M cash and $509M revolver capacity .
  • Restructuring plan update: total cost now $65–$75M (down), annual EBIT benefit expected $60–$70M after full implementation; 2025 incremental EBIT benefit $35–$40M; 2025 sales attrition ~$45M; real estate proceeds $70–$80M over time .
  • Dividend: Q3 2025 dividend declared at $0.05 per share (record Sept 15; pay Oct 15) .