Leggett & Platt Incorporated : Q1 2024 Leggett & Platt Earnings Presentation 368.4 KB

First Quarter 2024

Summary Financial Information and

Strategic Business Update

April 30, 2024

Forward-Looking Statements

Statements in this presentation that are not historical in nature are "forward-looking." These statements are identified either by the context in
which they appear or by use of words such as "anticipate," believe," "estimate," "expect," "guidance," "intend," "may," "plan," "project,"
"should," or the like. These statements include, but are not limited to, future EPS, adjusted EPS, sales, volume for the Company and per
segment, raw material-related price decreases, currency impacts, depreciation and amortization, net interest expense, tax rate, diluted shares
outstanding, operating cash, capital expenditures, amount of dividends, minimal acquisitions and share repurchases, implied adjusted EBIT
margin, restructuring costs, gain from the sale of real estate, sales attrition and EBIT benefit from the restructuring plan, per share impacts from
restructuring plan costs and sales of real estate, pricing responses to global steel cost differentials and metal margin compression, and lower
amortization from long-lived asset impairment. All such forward-looking statements are expressly qualified by the cautionary statements
described in this provision. We do not have, and do not undertake, any duty to update any forward-looking statement. Forward-looking
statements should not be relied upon as a prediction of actual future events or results. Any forward-looking statement reflects only the beliefs of
Leggett at the time the statement is made. All forward-looking statements are subject to risks and uncertainties which might cause actual events
or results to differ materially from the forward-looking statements. These risks and uncertainties include: the preliminary nature of the estimates
related to the Restructuring Plan, and the possibility that all or some of the estimates may change as the Company's analysis develops, and
additional information is obtained; our ability to timely implement the Restructuring Plan in a manner that will positively impact our financial
condition and results of operation; our ability to timely dispose of real estate pursuant to the Restructuring Plan, or otherwise obtain expected
proceeds; the impact of the Restructuring Plan on the Company's relationships with its employees, customers and vendors; global inflationary
and deflationary impacts; macro-economic impacts; demand for our products and our customers' products; our manufacturing facilities' ability to
obtain necessary raw materials and parts, maintain appropriate labor levels and ship finished products to customers; goodwill and long-lived
asset impairment; inability to issue commercial paper or borrow under the credit facility; inability to collect receivables; inability to pass along raw
material price increases; inability to maintain profit margins; conflict between China and Taiwan; changes in our capital needs; changing tax
rates; restructuring-related costs in addition to the Restructuring Plan; market conditions; increased trade costs; foreign country operational
risks; price and product competition; cost and availability of raw materials, parts, labor, and energy costs; cash generation to pay the dividend;
political risks; ability to grow acquired businesses; disruption to our rod mill; disruption to our operations and supply chain from weather-related
events and other impacts; foreign currency fluctuation; our ability to manage working capital; anti-dumping duties; data privacy; cybersecurity
incidents; unauthorized use of artificial intelligence; customer bankruptcies and losses; climate change regulations; ESG risks; cash repatriation;
litigation risks; and other risk factors in Leggett's most recent Form 10-K.	2

Financial Summary

Overview

1. Q1 sales of $1.1 billion, a 10% decrease vs. Q1-23
2. • Volume was down 6%
   • Raw material-related price decreases reduced sales 4%

1. Q1 adjusted1 EBIT of $64 million, down $25 million vs. Q1-23 EBIT

1. Adjusted1 EBIT margin 5.8%, down 160 bps vs. Q1-23 EBIT margin of 7.4% o Q1 adjusted1 EPS of $.23, down $.16 vs. Q1-23 EPS of $.39
   o 2024 sales and EPS guidance unchanged
2. • Sales: $4.35-$4.65 billion
   • EPS: $.95-$1.25
   • Adjusted EPS: $1.05-$1.35
   • Cash Flow: $300-$350 million (vs previous guidance of $325-$375 million)
   • See slides 5 and 26 for calculation of adjusted EBIT, adjusted EBIT margin, and adjusted EPS

4

Q1 2024 Financial Highlights

$'s in millions	Reported	Adj.1	Adj.	Q1-23	Change
(except EPS)	Q1-24		Q1-24
Sales	$1,097		$1,097	$1,214	(10%)
EBIT	63	1	64	89	(29%)
EBIT Margin	5.7%		5.8%	7.4%	(160 bps)
EPS	.23	.00	.23	.39	(41%)
Cash from Operations	($6)		($6)	$97	(106%)
EBITDA	96	1	97	135	(28%)
EBITDA margin	8.7%		8.8%	11.1%	(230 bps)
¹ See slide 26 for non-GAAP adjustments

5

Q1 2024 Sales & EBIT Bridge

Sales:	mln $'s		% change
1st Qtr 2023	$1,214
Approx volume decrease	(73)	(6%)
Approx raw material-related pricing and currency impact	(44)	(4%)
Organic Sales	(117)	(10%)
Acquisitions	-		-%
1st Qtr 2024	$1,097	(10%)

EBIT:

1st Qtr 2023

Primarily lower volume and several higher expense items partially offset by lower amortization expense

margin

$897.4%

(25)

Adjusted1 1st Qtr 2024	$64		5.8%
¹ See slide 5 for calculation of adjusted EBIT and adjusted EBIT margin

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Q1 2024 Earnings

$'s in millions	Reported	Adj.1	Adj.		Q1-23	Change
(except EPS)	Q1-24		Q1-24
EBIT	$63	$1	$64	$89	(29%)
Net interest	21		21	21
Pre-tax earnings	42	1	43		68	(37%)
Income taxes	11	0	11	15
Tax rate			25.5%	21.7%
Net earnings	32	0	32	54	(40%)
Noncontrolling interests	-		-		-
Net earnings attributable to L&P	32	0	32		54	(40%)
EPS	.23	.00	.23	.39	(41%)
¹ See slide 26 for non-GAAP adjustments

7

Adjusted Working Capital

$'s in millions	3/31	12/31	3/31
	2024	2023	2023
Cash & equivalents	$361	$365	$345
Accounts receivable, net	635	637	718
Inventories, net	807	820	893
Other current assets	57		59		59
Total current assets	1,860		1,881		2,015
Current debt maturities	(304)	(308)	(9)
Current operating lease liabilities	(58)	(57)	(55)
Accounts payable	(496)	(536)	(552)
Accrued and other current liabilities	(331)	(361)	(352)
Total current liabilities	(1,188)	(1,263)	(969)
Working capital	672	619	1,046
% of annualized sales ¹	15.3%	13.9%	21.6%
W/C, excl. cash & current debt/lease	673	619	766
% of annualized sales ¹	15.3%	13.9%	15.8%

• Annualized sales: 1Q24: $1,097x4=$4,388; 4Q23: $1,115x4=$4,460; 1Q23: $1,214x4=$4,854

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Net Debt to Adjusted EBITDA

$'s in millions	3/31	12/31	3/31
	2024	2023	2023
Long-term debt	$1,773	$1,680	$2,109
Current maturities	304		308		9
Total debt	2,077	1,988	2,118
Less: Cash & equivalents	(361)		(365)		(345)
Net debt	1,715	1,622	1,773
EBIT, trailing 12 months	(117)	(90)	437
Depreciation & amortization	167		180		179
EBITDA	51	90	616
Non-GAAP adjustments (pretax) 1	425		424		-
Adjusted EBITDA, trailing 12 months	475	513	616
Net debt to 12-month adjusted EBITDA 2	3.61x		3.16x		2.88x

• 3/31/24 Non-GAAP adjustments include $444 long-lived asset impairment, $11 restructuring charges, ($19) gain on sale of real estate, and ($11) gain from net insurance proceeds; 12/31/23 Non-GAAP adjustments include $444 long-lived asset impairment, ($11) gain on sale of real estate, and ($9) gain from net insurance proceeds. For additional non-GAAP reconciliation information, see page 8 of the press release.

2 Calculated differently than the Company's credit facility covenant ratio.

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Cash Flow

	$'s in millions		1st Qtr
		2024	2023
	Net earnings	$32	$54
	D&A	33	45
	Impairment, write-offs & other	14	2
	Other non-cash	(2)	14
	Changes in working capital:
	Accounts receivable	(29)	(38)
	Inventory	1	14
	Other current assets	1		-
	Accounts payable	(36)	31
	Other current liabilities	(20)		(25)
	Cash from operations	(6)	97
	Capital expenditures	26	38
	Acquisitions	-		-
	Dividends	61	58
	Share repurchases (issuances), net	4	5
	Proceeds from asset sales	15	1
	Additions (repayments) of debt, net	85	29	10

2024 Sales and EPS Guidance Unchanged

1. Sales: $4.35-$4.65 billion; down 2% to down 8% versus 2023
2. • Volume is expected to be down low to mid-single digits
   • Volume at the midpoint:
   • • Down high single digits in Bedding Products Segment
     • Up low single digits in Specialized Products Segment
     • Down low single digits in Furniture, Flooring & Textile Products Segment
   • Raw material-related price decreases and currency impact combined expected to reduce sales low single digits

1. EPS: $.95-$1.25
2. • Includes $.20-$.25 per share negative impact from restructuring costs
   • Includes $.10-$.15 per share gain from sales of real estate, consisting of idle real estate and real estate exited from restructuring plan initiatives

1. Adjusted EPS: $1.05-$1.35
2. • Decrease versus 2023 is primarily from lower expected volume in our Bedding Products and Furniture, Flooring & Textile Products segments, pricing responses related to global steel cost differentials, and metal margin compression partially offset by lower amortization from the long-lived asset impairment

o Implied adjusted EBIT margin of 6.4%-7.2%	11

2024 Guidance (continued)

1. Depreciation and amortization ~$135 million

1. Net interest expense ~$85 million

1. Tax rate ~25%

1. Operating cash $300-$350 million (vs prior guidance of $325-$375 million)
2. • Decrease due to less benefit from working capital than previously expected

1. Cap-ex$100-$120 million

1. Dividends ~$135 million (vs prior guidance of $245 million)

1. Diluted shares ~138 million

1. Minimal acquisitions and share repurchases

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Strategic Business Update

Refreshed Capital Allocation Priorities

1. balanced approach focused on driving shareholder value

Near Term Focus:9 Upholding long-held balance sheet strength and continuing to invest in our businesses

• Targeting long-term ratio of 2.0x Net Debt to Adjusted EBITDA

Long Term Priorities

ORGANIC GROWTH

• Investing in our businesses for the future

STRATEGIC ACQUISITIONS

• Primarily bolt-on opportunities complementing our existing portfolio of businesses

SHAREHOLDER RETURNS

9 Dividends

• Opportunistic share repurchases

14

Restructuring Initiatives Are Underway

Bedding Products

• Closed four small U.S. Spring distribution facilities
• Shifted manufacturing from three U.S. Spring facilities to remaining operations
• Closed one small Specialty Foam plant
• Currently downsizing innerspring operations in China
• Two additional Specialty Foam consolidations underway
• Preparing to list 5 properties for sale

Home Furniture

• Closed one plant and shifted production to remaining facilities
• Engineering team relocating to nearby location
• Property expected to be listed for sale by Q3 2024

Flooring Products

• Closed one production line and transferred manufacturing to other locations
• Redeploying equipment from closed line to another facility

15

Restructuring Plan Is On Track

1. EBIT Benefit:
2. • Annualized EBIT benefit of $40-$50 million realized after initiatives are fully implemented in late 2025
   • Approximately $5-$10m EBIT benefit expected in 2H 2024
   • Minimal benefit in 1Q 2024

1. Sales Attrition:
2. • $100m annual sales attrition expected once initiatives are fully implemented in late 2025
   • Approximately $40m sales attrition expected in 2024
   • No impact to 1Q 2024 results

Restructuring Costs

Cash from Real Estate

Total

2025

$65-$85m

2024

$25-$35m

1H 2024

$40-$50m

1Q 2024

$20-$25m

$11m

1Q 2024

$-

2024

$0-$10m

2025

$50-$80m

Total

$60-$80m

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Segment Detail

Q1 2024 Segment Summary

	Q1-24	Q1-24	∆ vs Q1-23	Q1-24	∆ vs Q1-23
	Organic	Adj. EBIT 2	EBIT	Adj. EBITDA 2	EBITDA 2
	Sales	Margin	Margin	Margin	Margin
	Growth 1, 2
Bedding Products	(15%)	3.8%	-250 bps	7.1%	-400 bps
Specialized Products	(1%)	7.5%	-140 bps	10.7%	-160 bps
Furniture, Flooring &	(9%)	6.9%	-90 bps	8.5%	-90 bps
Textile Products
Total Consolidated	(10%)	5.8%	-160 bps	8.8%	-230 bps

1. Includes raw material-related selling price impact and currency impact
2. See slides 19, 21, 23, and 26 for non-GAAP reconciliations

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Bedding Products

Trade Sales	mln $'s		% change
1st Qtr 2023	$528
Organic Sales 1	(80)		(15%)
1st Qtr 2024	$448	(15%)

1 Lower volume (10%) and raw material-related selling price decreases (5%)

mln $'s	EBIT	EBIT	D&A		EBITDA	EBITDA
		margin				margin
1st Qtr 2023	$33	6.3%	$26	$59	11.1%
Change 2	(16)		(11 )		(27)
Adjusted 3 1st Qtr 2024	$17	3.8%	$15	$32	7.1%

1. Calculations impacted by rounding
2. Adjusted to exclude restructuring charges $9m and gain on sale of real estate ($8m)

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Bedding - Key Points

1. Q1 organic sales were down 15%:
2. • Volume decreased 10% from continued demand softness in U.S. and European bedding markets
   • Raw material-related selling price decreases, net of currency benefit, reduced sales 5%

o Sales trends:

	Q1	Q1
	Organic Sales	Volume1
Steel Rod	(1%)	12%
Drawn Wire	(18%)	(7%)
U.S. Spring	(19%)	(15%)
Specialty Foam	(13%)	(5%)
Adjustable Bed	(16%)	(16%)
International Bedding	(15%)	(11%)

1 Volume represents organic sales excluding raw material-related selling price impact and currency impact

1. Q1 adjusted EBIT decreased primarily from lower volume, increased bad debt expense, and steel-related pricing adjustments partially offset by lower amortization expense

20