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Leggett & Platt, Incorporated LEG reported first-quarter 2025 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. On a year-over-year basis, the top line declined, but the bottom line increased.
The quarterly results indicated continued demand softness in the company’s residential end markets due to a challenging macro environment and soft consumer spending. Softening in Automotive and Hydraulic Cylinders further impacted the company’s performance. Although LEG carried out its restructuring and operating efficiency improvement initiatives, the headwinds mentioned above overshadowed the prospects to a great extent.
Despite macroeconomic uncertainties and trade policy concerns, the company is maintaining its sales and adjusted EPS guidance for 2025. While the domestic bedding industry is expected to face more challenges than previously anticipated, the lower volume is likely to be offset primarily by steel-related tariff benefits. The company remains confident in its ability to execute strategic priorities and create long-term shareholder value.
Leggett reported adjusted earnings per share (EPS) of 24 cents, which topped the consensus estimate of 23 cents by 4.3%. In the year-ago quarter, it reported an adjusted EPS of 23 cents. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)
Net trade sales of $1.022 billion missed the consensus mark of $1.028 billion by 0.5% and declined 7% from the prior-year quarter’s $1.097 billion (all organic). Volume declined 5% due to continued demand softness in residential end markets, the expected loss of a customer in Specialty Foam, demand headwinds in Automotive and Hydraulic Cylinders, and restructuring-related sales attrition. Raw material-related selling prices and currency impact lowered sales by 1%.
Leggett & Platt, Incorporated price-consensus-eps-surprise-chart | Leggett & Platt, Incorporated Quote
Adjusted EBIT increased 4.6% to $66.6 million from the prior-year quarter’s level of $63.7 million, driven by restructuring benefits, operational efficiency improvements and disciplined cost management. This upside was partially offset by lower volume and metal margin compression.
Adjusted EBIT margin expanded 70 basis points (bps) to 6.5% from the year-ago quarter’s figure of 5.8%. Adjusted EBITDA margin also expanded 80 bps from the year-ago quarter to 9.6%.
Bedding Products' net trade sales decreased 13% from the year-ago quarter’s level to $390.7 million. Our model predicted trade sales for the segment to decline 9%. A volume decline of 10% was caused by the demand softness in the U.S. and Europe’s bedding markets, expected loss of a customer in Specialty Foam and restructuring-related sales attrition, partially offset by higher trade rod and wire sales. Raw material-related selling prices and currency impact lowered sales by 2%.
Adjusted EBIT margin contracted 50 bps to 3.3%. Adjusted EBITDA margin also contracted 40 bps year over year to 6.7%.
The Specialized Products segment's trade sales decreased 5% from the prior-year quarter’s figure to $300.1 million. Our model predicted trade sales for the Specialized Products segment to decline 5.2%. Volume was down 4% due to declines in Automotive and Hydraulic Cylinders, partially offset by growth in Aerospace. Raw material-related selling price increases added 1%, while currency impact lowered sales by 2%.
Adjusted EBIT margin expanded 310 bps year over year to 10.6%. Adjusted EBITDA margin also grew 340 bps year over year to 14.1%.
Trade sales in the Furniture, Flooring & Textile Products segment declined 1% from the prior-year quarter’s level to $331.3 million. Our model predicted trade sales for the segment to decrease 2.9%. A volume increase of 2% was driven by growth in Textiles. However, this was partially offset by continued weak demand in residential end markets. Raw material-related selling price decrease and currency translation impacted sales by 2% and 1%, respectively.
Adjusted EBIT margin of 6.5% was down 40 bps from the prior year, mainly due to raw material-related pricing adjustments. However, this was partially offset by higher volume. Adjusted EBITDA margin also declined 50 bps to 8%.
As of March 31, 2025, the company had $817 million in liquidity. It had cash and equivalents worth $412.6 million at the end of March, up from $350.2 million at 2024-end.
Long-term debt totaled $1.94 billion, up from $1.86 billion recorded at 2024-end. The trailing 12-month net debt-to-adjusted EBITDA was 3.77x compared with 3.76x at the end of 2024.
Cash from operations for the reported quarter totaled $6.8 million against cash to operations of $6.1 million in the prior-year period. Capital expenditures totaled $13 million for the first quarter compared with $26 million a year ago.
Leggett has largely maintained its full-year guidance, with a few updates to volume and pricing expectations. The company still expects sales of $4-$4.3 billion, indicating a 2-9% decline year over year. Volume is now estimated to be down low to high-single digits compared with down low to mid-single digits expected earlier. Raw material-related price increases, after accounting for currency impact, are now expected to have a flat to low single-digit positive impact on sales, compared with the earlier expectation of a low single-digit decline.
Volume is likely to be down low-double digits in Bedding Products segment and down by mid-single digits in the Specialized Products segment. Earlier, volume in both Bedding Products and Specialized Products segments is expected to be down mid-single digits. While volume in the Furniture, Flooring & Textile Products segment is still expected to be down low-single digits.
Adjusted EPS is still anticipated to be between $1 and $1.20. This includes an increase at the midpoint compared with 2024, driven by restructuring benefits and operational efficiency improvements, partially offset by lower volume.
LEG expects the adjusted EBIT margin to be in the band of 6.4-6.8%.
Capital expenditures, depreciation and amortization costs, and operating cash flow are estimated to be $100 million, $135 million and $275-$325 million, respectively. Net interest expense is expected to be $70 million. The effective tax rate for the year is anticipated to be 25%. Fully diluted shares are predicted to be approximately 139 million.
Leggett currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Zacks Consumer Discretionary sector are TEGNA Inc. TGNA, Life Time Group Holdings, Inc. LTH and American Outdoor Brands, Inc. AOUT.
TEGNA presently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TEGNA delivered a trailing four-quarter earnings surprise of 6.3%, on average. The stock has gained 19.6% in the past year. The consensus estimate for TGNA 2026 sales and EPS implies growth of 11.3% and 93.8%, respectively, from the year-ago levels.
Life Time Group presently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 21.6%, on average. The stock has surged 128.6% in the past year.
The consensus estimate for Life Time Group’s 2025 sales and EPS implies growth of 12.9% and 37.9%, respectively, from the year-ago levels.
American Outdoor carries a Zacks Rank #2 (Buy) at present. The company delivered a trailing four-quarter earnings surprise of 79.6%, on average. The stock has gained 42.7% in the past year.
The Zacks Consensus Estimate for American Outdoor’s fiscal 2025 sales and EPS indicates growth of 3.7% and 93.8%, respectively, from the year-ago levels.
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This article originally published on Zacks Investment Research (zacks.com).
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