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L&

LEGGETT & PLATT INC (LEG)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue of $1.04B declined 6% YoY; adjusted EPS was $0.29 (down $0.03 YoY), while GAAP EPS of $0.91 benefited from an $87M gain on the Aerospace divestiture .
  • Revenue modestly beat S&P Global consensus ($1.036B vs $1.025B*), and adjusted EPS matched ($0.29 vs $0.29*); management reaffirmed the midpoint of 2025 sales and adjusted EPS and narrowed ranges .
  • Deleveraging accelerated: net debt/TTM adjusted EBITDA fell to 2.62x (from 3.51x in Q2) as LEG reduced debt by $296M using Aerospace proceeds and operating cash flow; liquidity stood at $974M .
  • Guidance tweaks: FY25 GAAP EPS raised to $1.52–$1.72 (from $0.88–$1.17) on gains; adjusted EPS narrowed to $1.00–$1.10 (from $1.00–$1.20); capex cut to $60–$70M (from $80–$90M); OCF about $300M .
  • Potential stock catalysts: visible deleveraging, narrowed guidance, restructuring benefits tracking to $60–$70M EBIT run-rate, and tariff developments; watch Q4 price pressure (Flooring/Textiles) and seasonal mattress slowdown .

What Went Well and What Went Wrong

What Went Well

  • Balance sheet: Net debt/TTM adjusted EBITDA improved to 2.62x after $296M debt paydown; total liquidity $974M (cash $461M; $513M revolver capacity) .
  • Operational execution: Adjusted EBIT margin held 7.0% (vs 6.9% LY) despite lower volume; bedding adjusted EBIT up 35% YoY on metal margin expansion and restructuring benefits .
  • Restructuring ahead of plan: Annualized EBIT benefit expected at $60–$70M; sales attrition trimmed to ~$60M; no customer disruptions; Q3 realized ~$10M incremental EBIT benefit .

Selected management quotes:

  • “We are pleased to report solid results… successfully completed the sale of our Aerospace business, further sharpening our focus on core operations.” — CEO Karl Glassman .
  • “We are reaffirming the midpoint of our full-year sales and adjusted EPS guidance… significantly strengthened our balance sheet.” — CEO Karl Glassman .
  • “We’re meeting or exceeding [restructuring plan metrics]… confident in $60–$70M annualized EBIT benefit.” — CFO Ben Burns .

What Went Wrong

  • Top-line pressure: Sales -6% YoY; volume -6% on soft residential, Automotive, and Hydraulic Cylinders; divestitures -2% to sales .
  • Segment headwinds: Furniture, Flooring & Textile adjusted EBIT -30% YoY on pricing pressure, especially in Flooring and Textiles; management expects aggressive discounting to weigh in Q4 .
  • Bedding volume mix issues: Adjustable Bed and Specialty Foam pressured by a customer exit and retailer merchandising; Q4 domestic mattress production expected to slow seasonally and remain negative YoY .

Financial Results

Headline Metrics: Sequential and YoY

MetricQ3 2024Q2 2025Q3 2025
Revenue (Trade Sales, $M)$1,101.7 $1,058.0 $1,036.4
GAAP EPS ($)$0.33 $0.38 $0.91
Adjusted EPS ($)$0.32 $0.30 $0.29
Adjusted EBIT ($M)$76.0 $75.6 $72.8
Adjusted EBIT Margin (%)6.9% 7.1% 7.0%
Adjusted EBITDA ($M)$112.4 $105.3 $102.2
Operating Cash Flow ($M)$95.5 $84.0 $125.9
Net Debt / TTM Adj EBITDA (x)3.78 3.51 2.62

Q3 2025 Actuals vs S&P Global Consensus

MetricActualConsensusDelta
Revenue ($B)$1.0364 $1.0253*+$0.0111
Adjusted EPS ($)$0.29 $0.29*In line

*Values retrieved from S&P Global.

Segment Performance (Q3 2025 vs Q3 2024)

SegmentTrade Sales ($M)YoY %Adjusted EBIT ($M)YoY %Adjusted EBIT Margin
Bedding Products$402.5 vs $445.5-10% $26.4 vs $19.5+35% 6.6% vs 4.4%
Specialized Products$277.5 vs $299.9-7% $27.0 vs $28.6-6% 9.7% vs 9.5%
Furniture, Flooring & Textile$356.4 vs $356.3~0% $19.6 vs $27.9-30% 5.5% vs 7.8%

KPIs and Balance Sheet (Q3 2025)

KPIQ3 2025
Debt reduction (quarter)$296M
Total debt$1.5B (three $500M tranches)
Liquidity$974M ($461M cash; $513M revolver capacity)
Operating Cash Flow$126M
Capital Expenditures$16M
Dividends (Q3 declared)$0.05/share
Dividend (Q4 declared Nov 6)$0.05/share; payable Jan 15, 2026
TTM Adjusted EBITDA$395.4M

Guidance Changes

MetricPeriodPrevious Guidance (Q2 2025)Current Guidance (Q3 2025)Change
SalesFY 2025$4.0–$4.3B $4.0–$4.1B Narrowed; midpoint reaffirmed
GAAP EPSFY 2025$0.88–$1.17 $1.52–$1.72 Raised (divestiture/real-estate/insurance gains; pension settlement)
Adjusted EPSFY 2025$1.00–$1.20 $1.00–$1.10 Narrowed lower top end
EBIT MarginFY 20255.9%–6.8% GAAP; 6.5%–6.9% adj. 8.4%–9.0% GAAP; 6.4%–6.6% adj. GAAP up (gains); adj. narrowed
Operating Cash FlowFY 2025$275–$325M ~$300M Tightened to point estimate
CapexFY 2025$80–$90M $60–$70M Lowered
Net Interest ExpenseFY 2025$70M $65M Lowered
Effective Tax RateFY 202526% 27% Increased
Fully Diluted SharesFY 2025139M 140M Increased
Segment Volume OutlookFY 2025Bedding down low double digits; Specialized mid-single; FF&T low single Bedding mid-teens; Specialized mid-single; FF&T low single Bedding outlook softer
Dividends2025$0.05/share per quarter (maintained) $0.05/share (Q3, Q4 declared) Maintained

Notes to EPS framework include restructuring costs ($0.13), special tax item ($0.02), pension settlement charge ($0.11), and gains from real estate, Aerospace ($0.58), and insurance ($0.07) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Restructuring & cost actionsPlan progressing; FY25 adjusted EBIT margin 6.5%–6.9%; expected $60–$70M annualized benefit; sales attrition initially $80–$100M; no disruptions Nearly complete; benefits meeting/exceeding plan; EBIT benefit $60–$70M; sales attrition trimmed to ~$60M; strong incremental margins (25%–35%) on recovery Positive execution; benefit tracking at high end
Bedding market demandWeak residential; Specialty Foam customer exit; maintained FY guide; metal margin compression in Q1 Stabilizing sequentially; Q3 improved each month; Q4 seasonal slowdown expected; domestic production negative YoY Stabilization but no broad recovery
Tariffs & tradeTariffs viewed net positive, but inflation risk to demand; Q2 credit facility amended Tariffs still net positive but broad tariffs may dampen demand; CPSC mattress recalls; push for level playing field Watch policy risk; mixed impact
Portfolio actionsAgreement to sell Aerospace (Q1); expected close in 2025 Aerospace sale closed; $87M gain recognized Completed divestiture; deleveraging
Capex & allocationFY25 capex guided to $80–$100M; prioritize deleveraging Capex cut to $60–$70M; OCF ~$300M; leverage target 2.0x LT; consider small M&A (textiles) and buybacks later More conservative near term; optionality later
Textiles & FF&T pricingPricing pressure emerging; adjusted EBIT down in Q2 Continued pricing pressure; Q4 negative impact expected; geo-textiles strong Ongoing headwind on margins
Home furniture supply chainTariffs disrupted volumes in Q2 Normalization; Vietnam plant ramping to optimize tariffs Gradual improvement with footprint shift

Management Commentary

  • “We used proceeds from the [Aerospace] 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.” — CEO Karl Glassman .
  • “We’re reaffirming the midpoint of our sales and adjusted EPS guidance while narrowing the previous guidance range… adjusted EBIT margin is expected to be between 6.4% and 6.6%.” — CFO Ben Burns .
  • “This decision [consolidating Kentucky adjustable bed into Mexico] was driven by lower volume and tariffs on imported components… a category that primarily competes with imported products.” — CEO Karl Glassman .

Q&A Highlights

  • Restructuring benefits: Execution meeting/exceeding plan; ~$60M EBIT benefit realized in 2025 with up to $10M more in 2026; sales attrition trimmed to ~$60M; strong 25%–35% incremental margins on volume recovery .
  • Bedding demand & mix: Sequential stabilization; Q4 seasonality to slow; content gains (Comfort Core, semi-finished) helping margins even with flat-to-down units .
  • Rod/billet dynamic: Apparent steel rod volume decline driven by elimination of billets; trade rod mix favorable (more high carbon), supporting margins .
  • FF&T/home furniture: Tariffs upended Q2; volumes normalized in Q3; Vietnam factory ramping to improve tariff position for customers and LEG .
  • Capital allocation: LT leverage target ~2x; prioritize net debt reduction; small M&A likely in textiles; buybacks possible over time .

Estimates Context

  • Q3 2025 results vs S&P Global consensus: Revenue beat ($1.036B vs $1.025B*), adjusted EPS in line ($0.29 vs $0.29*); consensus coverage included 4 revenue and 4 EPS estimates* .
  • Implications: With adjusted EPS flat YoY and narrowed FY25 adjusted EPS range ($1.00–$1.10), estimate revisions may be minimal near term; EBITDA softness in FF&T and anticipated Q4 pricing pressure could bias Q4 margin expectations lower .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Deleveraging is tangible and rapid (ND/EBITDA 2.62x), reducing equity risk and improving optionality for future buybacks/M&A when conditions permit .
  • Top-line remains challenged, but margin defense is holding via restructuring and metal margin tailwinds; adjusted EBIT margin steady at ~7% despite volume headwinds .
  • FY25 guidance narrowed: GAAP EPS higher from gains; adjusted EPS unchanged at midpoint—watch Q4 pricing pressure in Flooring/Textiles and seasonal mattress slowdown .
  • Bedding stabilization with content gains supports profitability even without unit recovery; 2026 innovation pipeline referenced as a medium-term driver .
  • Portfolio simplification (Aerospace divestiture) and footprint optimization (e.g., adjustable bed move to Mexico; Vietnam plant in furniture) should structurally improve returns and tariff positioning .
  • Capital intensity lower near term (capex $60–$70M); OCF ~$300M affords continued debt paydown and select bolt-ons in textiles .
  • Policy watch: Tariffs are a net positive for LEG’s domestic businesses, but broad tariffs risk inflation and consumer demand—key swing factor for 2026 recovery timing .