Leggett & Platt Inc.

08/07/2025 | Press release | Distributed by Public on 08/07/2025 13:35

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Page No.
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Highlights
26
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Introduction
26
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Results of Operations
35
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Liquidity and Capitalization
39
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Critical Accounting Policies and Estimates
46
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Contingencies
46
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New Accounting Standards
48
HIGHLIGHTS
We had trade sales of $1,058 million for the three months ending June 30, 2025, a decrease of 6% versus the second quarter 2024. In the first six months of 2025, trade sales were $2,080 million versus $2,226 million for the same period of 2024.
Earnings Per Share (EPS) was $.38 for the second quarter and $.60 for the six months ending June 30, 2025, compared to $(4.39) and $(4.16) in the same periods of 2024. Second quarter EPS includes $.02 in restructuring and restructuring-related charges and a $.10 gain from the sale of real estate. EPS for the six months ending June 30, 2025 includes $.06 in restructuring and restructuring-related charges and a $.12 gain from the sale of real estate.
Earnings Before Interest and Taxes (EBIT) for the second quarter and six months ending June 30, 2025 was $90 million and $153 million, respectively. This is up $705 million compared to the same periods in 2024. Second quarter includes $4 million of restructuring and restructuring-related costs and a $18 million gain from the sale of real estate. EBIT for the six months ending June 30, 2025 includes $11 million of restructuring and restructuring-related costs and a $22 million gain from the sale of real estate.
In April, we entered into an agreement to sell our Aerospace Products Group for a cash purchase price of $285 million, subject to adjustments for working capital, cash, and indebtedness. We expect to receive approximately $240 million in after-tax proceeds from the sale, which is subject to customary closing conditions and regulatory approvals.
In May, we sold a small Work Furniture operation located in Mexico for a net sales price of $4 million.
The 2024 Restructuring Plan continues to progress across all three of our segments, including our corporate general and administrative cost initiatives.
Operating cash flow was $91 million in the first six months of 2025, an increase of $3 million versus the same period of 2024.
In late July 2025, we amended our credit agreement to extend the maturity date to July 24, 2030, and reduce the lending commitments from $1.2 billion to $1.0 billion.
INTRODUCTION
What We Do
We are a diversified manufacturer that conceives, designs, and produces a wide range of engineered components and products found in many homes, offices, and automobiles. We make components that are often hidden within, but integral to, our customers' products.
We are a leading supplier of bedding components and private label finished goods; automotive seat comfort and convenience systems; home and work furniture components; geo components; flooring underlayment; hydraulic cylinders for material-handling and heavy-construction industries; and aerospace tubing and fabricated assemblies.
Our Segments
Our operations are comprised of approximately 115 production facilities located in 18 countries around the world. Our reportable segments are the same as our operating segments, which also correspond with our management organizational structure. Our segments are described below.
Bedding Products: This segment supplies a variety of components used by bedding manufacturers in the production and assembly of their finished products, as well as produces private label finished mattresses and adjustable bed bases. This segment is also vertically integrated in the production and supply of specialty foam chemicals, steel rod, and drawn steel wire to our own operations and to external customers. We also supply steel rod and wire to trade customers that operate in a broad range of markets. This segment contributed 38% of our trade sales during the first six months of 2025.
Specialized Products: From this segment, we supply lumbar support systems, seat suspension systems, motors and actuators, and control cables used by automotive manufacturers. We also produce and distribute tubing and tube assemblies for the aerospace industry and engineered hydraulic cylinders used in the material-handling and heavy-construction industries. This segment contributed 29% of our trade sales in the first six months of 2025.
Furniture, Flooring & Textile Products:Operations in this segment supply a wide range of components for residential and work furniture manufacturers, as well as select lines of private label finished furniture. We also produce or distribute carpet cushion, hard surface flooring underlayment, and textile and geo components. This segment contributed 33% of our trade sales in the first six months of 2025.
Customers
We serve a broad suite of customers, with our largest customer representing less than 8% of our trade sales in 2024. Many are companies whose names are widely recognized. They include bedding brands and manufacturers, residential and office furniture producers, automotive OEM and Tier manufacturers, and a variety of other companies.
Organic Sales
We calculate organic sales as trade sales excluding sales attributable to acquisitions and divestitures consummated within the last twelve months. Management uses the metric, and it is useful to investors, as supplemental information to analyze our underlying sales performance from period to period in our legacy businesses.
Major Factors That Impact Our Business
Tariffs Impacting our Business
We continue to monitor and evaluate policy changes impacting global trade, including tariff regulations, the effects of recently announced tariffs and tariff warning letters, and the potential imposition of modified or additional tariffs. Prior to tariff announcements in 2025, our U.S. businesses sourced approximately $400 million of products annually from trade and intercompany suppliers located in foreign countries, including approximately $100 million from China. Approximately 60% of our trade sales are produced and consumed in the United States, while another 8% of sales produced abroad are consumed in the United States, with 5% currently exempt under the United States-Mexico-Canada Agreement (USMCA). Tariffs present both positive and negative impacts across our businesses, but, in the aggregate, based on limited information to date, which may change, we expect the recent tariff changes may produce a net positive impact on our consolidated results of operations. However, it is possible that wide-ranging tariffs could drive inflation, weaken consumer confidence, and ultimately reduce consumer demand for our products.
Across our businesses, we continue to be actively engaged with customers and suppliers to mitigate the impact of tariffs. Our efforts include leveraging our global footprint to shift production and sourcing to less-impacted regions, implementing pricing actions where appropriate, and pursuing increased demand opportunities domestically.
In Bedding Products, although reciprocal tariffs could benefit our U.S. mattress operations by creating a more level playing field between domestic and foreign producers, enforcement remains an unknown.
Historically, duties have led to more transshipment of mattresses to avoid higher rates, but recent comments by the administration appear to contemplate penalties for those activities. This will be an important consideration for the actual impact of reciprocal tariffs. Additionally, the White House announced the suspension of the de minimis rule, effective August 29, 2025. The rule generally allowed for goods valued at $800 or less to be imported into the United States without duties. While we are currently unable to quantify the specific impact on our business, we believe this policy change may create a more level playing field by reducing the cost advantage associated with imported mattresses previously enjoyed by foreign competitors. Furthermore, Section 232 steel tariffs have led to expanded metal margins and increased demand for our Steel Rod and Drawn Wire operations, but we have yet to see noticeable improvement in our innerspring demand. However, our most significant tariff exposure in Bedding Products continues to be in our Adjustable Bed operations, primarily due to electronic components imported by our domestic operations from China. We expect our Mexican Adjustable Bed operation to remain cost competitive, assuming that the reciprocal tariff exemption for USMCA compliant products remains in place.
Within Specialized Products, our Automotive business continues to face the largest potential indirect tariff exposure. The majority of our North American production is in Canada and Mexico and is USMCA compliant and currently exempt from most tariffs. As a result, implementation of global tariffs on automotive parts has not directly impacted our operations. However, tariffs could cause reduced demand from our OEM and Tier customers if consumer affordability becomes an issue and they need to reduce production. Additionally, there is an emerging disruption risk of the critical rare earth supply chain, which feeds into Chinese-sourced magnets used in semiconductors and electronics in vehicles. While this has impacted some of our customers, it has had minimal impact on us to date.
In Furniture, Flooring & Textile Products, our Home Furniture operations in China primarily sell components to Asian customers who export finished furniture to the United States. Our Chinese operations experienced meaningful disruptions early in the second quarter, including shipment delays, order cancellations, and customer shutdowns, which began to normalize later in the quarter with the postponement of tariffs. Additionally, we sell components to U.S. customers and maintain some intercompany supply from our Chinese operations. To help mitigate our tariff exposure, we continue to make progress in setting up production in another low-cost country and anticipate beginning production later this year. Within Work Furniture, our teams are pursuing new opportunities with customers who are seeking regionally-supplied finished furniture and components. Finally, our Textile businesses continue to mitigate most tariff exposure by shifting to alternative sources in countries with lower tariff rates.
We are actively evaluating the potential impact of tariffs and counter-tariffs on our results of operations and financial condition, while also exploring possible opportunities to mitigate their impact. Although our analysis is preliminary and based on limited and changing information, we currently do not expect tariffs, as presently implemented or anticipated, to have a material adverse effect on our consolidated results of operations. However, if tariffs are modified or expanded, additional tariffs are implemented, or our preliminary information is incorrect, our consolidated results of operations could be materially negatively impacted.
Sale of the Aerospace Business
On April 2, 2025, we entered into a Share Purchase Agreement to sell our Aerospace Products Group for a cash purchase price of $285 million, subject to adjustments for working capital, cash, and indebtedness. Leggett's Aerospace Products Group is a supplier of complex, highly-engineered tube and duct assemblies for use primarily in commercial and military aircraft platforms and space launch vehicles. The business is comprised of seven manufacturing facilities located in the United States, the United Kingdom, and France and approximately 700 employees with net trade sales of $190 million in 2024.
Although we expect to receive approximately $240 million of after-tax proceeds from the sale, there is no assurance that the transaction will close on the anticipated terms, or at all. The Share Purchase Agreement is subject to customary closing conditions and regulatory approvals. The Share Purchase Agreement can be terminated if the transaction has not closed by October 2, 2025 (which will be extended to December 2, 2025, if approvals under foreign investment laws have not been obtained).
Late in the first quarter 2025, the Aerospace Products Group met the criteria to be classified as held for sale, but did not meet the criteria for discontinued operations because it does not represent a strategic shift that
would have a major effect on our financial results. For more information, see Note Nto the Consolidated Condensed Financial Statements on page 23.
Goodwill and Long-Lived Asset Impairment Testing
A significant portion of our assets consists of goodwill and other long-lived assets, the carrying value of which would be reduced if we determine that those assets are impaired. At June 30, 2025, goodwill and other intangible assets represented $849 million, or 23% of our total assets. In addition, all other long-lived assets totaled $1.1 billion, or 30% of total assets.
We perform our annual goodwill impairment testing in the second quarter. We test goodwill for impairment at the reporting unit level (the business groups that are one level below the operating segments) when triggering events occur or at least annually. We conduct impairment testing based on our current business strategy in light of present industry and economic conditions, as well as future expectations. In addition, our long-lived assets are reviewed for recoverability at year end and whenever events or changes in circumstances indicate carrying values may not be recoverable.
The annual goodwill impairment testing in the second quarter of 2025 indicated no impairments. As of June 30, 2025, the fair values of all reporting units exceeded their respective carrying amounts by less than 100% in part due to ongoing macroeconomic uncertainties, including the announcement of tariffs. The fair values of our reporting units were reconciled to our consolidated market capitalization, which decreased due to the decline in the stock price compared to the prior year. Fair value exceeded carrying value by less than 50% at June 30, 2025 for the reporting units summarized in the table below.
Reporting Unit
(Dollar amounts in millions)
June 30, 2025 Goodwill Value
Fair value in excess of carrying value as of June 30, 2025
Bedding $ 324 20 %
Aerospace 1
68 48
Home Furniture 68 34
Work Furniture 55 29
1 This unit was classified as held for sale during 2025, and the June 30, 2025 goodwill is presented in Non-current assets held for sale on our balance sheet (see Note N).
The annual goodwill impairment testing in the second quarter of 2024 indicated that fair value had fallen below carrying value for three reporting units. We had impairments for the six months ending June 30, 2024 of $587 million, $44 million, and $44 million in our Bedding, Work Furniture, and Hydraulic Cylinders reporting units, respectively. After this impairment, the Hydraulic Cylinders reporting unit did not have any goodwill remaining.
In evaluating the potential for impairment of goodwill and other long-lived assets, we make assumptions and estimates regarding future operating performance, business trends, and market and economic performance, including future sales, operating margins, growth rates, and discount rates. Given the pending sale of the Aerospace Products unit, we also incorporated the estimated sales price when performing our second quarter 2025 valuation analysis for this unit.
We are continuing to monitor all factors impacting these reporting units. If actual results or the long-term outlook of any of our reporting units materially differ from the assumptions and estimates used in the goodwill and other long-lived assets valuation calculations, along with a sustained decrease in our stock price, we could incur future non-cash impairment charges, which would have a material negative impact on our earnings.
2024 Restructuring Plan
In 2024, we committed to a restructuring plan. The 2024 Plan is primarily associated with our Bedding Products segment and includes, to a lesser extent, our Furniture, Flooring & Textile Products segment, an opportunity within the Specialized Products segment, and general and administrative cost structure initiatives. Over the course of the restructuring timeline, we expect to consolidate between 15 and 20 production and distribution facilities in the Bedding Products segment and a small number of production facilities in the Furniture, Flooring & Textile Products segment. The following summarizes the 2024 Plan activity:
2024 ACCOMPLISHMENTS
Bedding Products segment
•Consolidated 14 production and distribution facilities (ten in U.S. Spring, three in Specialty Foam, one in Adjustable Bed)
◦Consolidated all domestic innerspring production into our four remaining locations
◦Exited our Mexican innerspring operation
•Downsized our Chinese innerspring operation
•Sold two properties
Specialized Products segment
•Launched restructuring activities in our Hydraulic Cylinders business to optimize manufacturing and improve operating efficiencies
Furniture, Flooring & Textile Products segment
•Closed one facility in Home Furniture
•Closed one facility in Flooring Products and substantially completed Phase 1 of Flooring Products restructuring
Corporate
•Reduced corporate general and administrative expenses to be fully realized in 2025
2025 PROGRESS
Bedding Products segment
•Divested a small U.S. machinery business (two facilities)
•Consolidated one Specialty Foam production facility
•Sold two properties
Specialized Products segment
•Continued implementation of manufacturing efficiency improvement activities in Hydraulic Cylinders
Furniture, Flooring & Textile Products segment
•Launched second phase of our consolidation efforts in Flooring Products
ADDITIONAL EXPECTATIONS
Bedding Products segment
•Completion of Specialty Foam consolidation
Specialized Products segment
•Full implementation of manufacturing efficiency improvement activities in Hydraulic Cylinders
Furniture, Flooring & Textile Products segment
•Completion of restructuring initiatives in Flooring Products
(Dollar amounts in millions-all pretax) 2024
Actual 		Six Months Ended
June 30, 2025 		Full Year Estimates
for 2025
Total Plan
Estimate
Total Plan Prior Estimate
Plan activity:
Restructuring and restructuring-related costs:
Cash $ 30 $ 7 $10 to $15 $40 to $45 $45 to $50
Non-cash 18 2 5 to 10 25 to 30 35 to 40
Total costs $ 48 $ 9 $15 to $25 $65 to $75 $80 to $90
Pretax net cash from real estate 1
$ 20 $ 19 $20 to $30 $70 to $80 $60 to $80
1 This is only related to the 2024 Plan and does not include the sale of idle real estate. The 2024 sale of real estate resulted in a pretax gain of $17 million. We expect up to an estimated $25 million of pretax gains in 2025, including the $17 million in the second quarter of 2025, comprised of:
•One facility that closed in late April 2025 for $4 million
•One facility that closed in early June 2025 for $13 million
Due to the timing of listing properties, we expect the remaining real estate sales to occur in 2026.
EBIT Benefit:
We expect annualized EBIT benefit of $60-$70 million to be realized after initiatives are fully implemented.
•We realized $22 million for the full year 2024.
•We expect approximately $35-$40 million of incremental benefit to be realized in the full year 2025, of which $27 million was realized in the six months ended June 30, 2025.
•We expect approximately $5-$10 million of incremental benefit in 2026.
Sales Attrition:
We anticipate approximately $65 million of annual sales attrition after initiatives are fully implemented versus our prior expectations of $80 million.
•We realized $15 million for the full year 2024.
•We expect approximately $45 million of incremental sales attrition in 2025, of which $25 million was realized in the six months ended June 30, 2025 (including $3 million from the divestiture of a small U.S. machinery business in our Bedding Products segment).
•We expect approximately $5 million of incremental sales attrition in 2026.
Unrelated to the 2024 Plan, we have incurred cash charges for divestiture-related expenses associated with the pending sale of our Aerospace business that met held-for-sale criteria late in the first quarter of 2025 as discussed in Note Nto the Consolidated Condensed Financial Statements on page 23. Costs were $2 million for the six months ended June 30, 2025. There were no costs for the six months ended June 30, 2024.
Total restructuring and restructuring-related costs, including 2024 Plan costs and costs incurred due to the pending sale of our Aerospace business, for the six months ended June 30, 2025 were $10 million ($8 million cash and $2 million non-cash charges).
2024 Plan costs are expected to be substantially complete by the end of 2025.
Because of certain risks and uncertainties, the estimates of the number of facilities to be consolidated, EBIT benefit, sales attrition, proceeds from the sale of real estate, and the cash and non-cash costs and impairments associated with the 2024 Plan may change as our analysis develops and additional information is obtained. Also, we may not be able to implement the 2024 Plan in a timely manner that will positively impact our financial condition and results of operations. Moreover, we may not be able to dispose of real estate pursuant to the 2024 Plan or obtain the expected proceeds in a timely manner. The 2024 Plan may also negatively impact our relationships with employees, customers, and vendors. The 2024 Plan may not achieve its intended outcomes. Any failure to achieve the intended outcomes could materially adversely affect our business, financial condition, results of operations, cash flows, and liquidity.
We continue to evaluate our businesses for further restructuring opportunities in addition to those activities included in the 2024 Plan. The execution of any of these opportunities may result in additional material restructuring costs, restructuring-related costs, or impairments.
Market Demand
Market demand (including product mix) is impacted by several economic factors, with housing turnover and consumer confidence being the most significant. Other important factors include disposable income levels, employment levels, and interest rates. All of these factors influence consumer spending on durable goods, and therefore affect demand for our products and components. Some of these factors also influence spending on infrastructure, facilities, and equipment, which has historically impacted approximately 25%-30% of our sales. The dynamic macroeconomic environment has pressured most of our end markets and negatively affected the demand for our products. We are also concerned that wide-ranging tariffs will drive inflation, weaken consumer confidence, and pressure consumer demand.
In recent years, the U.S. mattress market has become increasingly bifurcated. High volume imports have dominated online sales and pressured opening and mid-tier price points for traditional domestic OEMs. Additionally, some mattress manufacturers and retailers have faced financial stress as overall consumer demand for mattresses has declined. In the near-term, the domestic mattress industry is expected to continue to experience some level of volatility resulting from industry bankruptcies, consolidations, and import pressure.
Volatility related to the growth of Chinese EV manufacturers and multinational OEM market share challenges are expected to continue to impact the automotive industry. Delays in EV programs in Europe and changing expectations for internal combustion engines to EV program transitions in North America, along with consumer affordability issues, add additional uncertainty to OEM demand.
As a result of these uncertainties, we expect 2025 overall demand to be down from 2024 levels.
Trends in Cost of Goods Sold
Our costs can vary significantly as market prices for raw materials (many of which are commodities) fluctuate. We typically have short-term commitments from our suppliers; accordingly, our raw material costs generally move with the market. We have also been impacted by fluctuations in transportation, energy, and labor costs. Our ability to recover higher costs (through selling price increases) is crucial. When we experience significant increases in costs, we typically implement price increases to recover the higher costs. Conversely, when costs decrease significantly, we generally pass those lower costs through to our customers. The timing of our price increases or decreases is important; we typically experience a lag in recovering higher costs, and we also realize a lag as costs decline.
Steel is our principal raw material. At various times in past years, we have experienced significant cost fluctuations in this commodity. In most cases, the major changes (both increases and decreases) were passed through to customers with selling price adjustments. Steel costs modestly declined throughout 2024 as U.S. steel markets continued to face soft demand and increased foreign competition. In early 2025, steel costs increased largely due to higher demand and, in early April, we started seeing increased costs due to recently implemented tariffs reducing foreign competition.
As a producer of steel rod, we are also impacted by changes in metal margins (the difference in the cost of steel scrap and the market price for steel rod). Steel rod and steel scrap costs both declined modestly during 2024, leading to metal margin compression. In the first quarter of 2025, metal margins expanded but were still below metal margins in the first quarter of 2024. In the second quarter 2025, metal margins expanded sequentially to levels above those in the second quarter of 2024.
We have exposure to the cost of chemicals, including TDI, MDI, and polyol. The cost of these chemicals has fluctuated at times, but we have generally passed the changes through to our customers. Average costs in in the first half of 2025 were in line with 2024 average costs.
Our other raw materials include woven and nonwoven fabrics. When we have experienced changes in the costs of these materials, we generally have been able to pass them through to our customers. In order to mitigate exposure under recently announced tariffs, our Textiles business has proactively been sourcing the majority of these materials from outside of China. We are well positioned to serve customers that may face supply disruption from their existing vendors.
When we raise our prices to recover higher raw material costs, this sometimes causes customers to modify their product designs and replace higher cost components with lower cost components. We must continue providing product options to our customers that enable them to improve the functionality of their products and manage their costs, while providing higher profits for our operations.
Supply Chain Shortages and Disruptions
We have experienced supply chain disruptions related to freight challenges, including higher costs.
In recent years, drought conditions lowered the water levels of the Mississippi River and Panama Canal, reducing traffic through these waterways and impacting some of our shipments. Although these issues did not materially impact our results of operations, additional logistical disruptions could result in additional costs and delays in our ability to deliver products timely to customers. Also, in 2023 and 2024, the conflict in the Red Sea caused delays with some of our shipments, while other shipments from China to the United States or Europe have been re-routed. Although these issues did not materially impact our results of operations, additional logistical disruptions including, but not limited to, labor availability, potential strikes, port congestion, and trade tensions could result in additional costs and delays in our ability to deliver products timely to certain customers.
Competition
Many of our markets are highly competitive, with the number of competitors varying by product line. In general, our competitors tend to be smaller, private companies. Many of our competitors, both domestic and foreign, compete primarily on the basis of price. Our success has stemmed from the ability to remain price competitive, while delivering innovation, better product quality, and customer service.
We continue to face pressure from foreign competitors, as some of our customers source a portion of their components and finished products offshore. In addition to lower labor rates, foreign competitors benefit (at times) from lower raw material costs. They may also benefit from currency factors and more lenient regulatory climates. We typically compete in market segments that value product differentiation. When we do compete on cost, we typically remain price competitive in most of our business units, even versus many foreign manufacturers, as a result of our efficient operations, automation, vertical integration in steel rod and wire, logistics and distribution efficiencies, and large-scale purchasing of raw materials and commodities. We have also reacted to foreign competition in certain cases by developing new proprietary products that help our customers reduce total costs and by shifting production offshore to take advantage of lower input costs.
We produce innersprings for mattresses that are sold to bedding manufacturers. We produce steel wire rod for consumption by our wire mills (primarily used by our innerspring manufacturing facilities to produce innersprings) and to sell to third parties. We also produce and sell finished mattresses.
In response to petitions filed with the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC) generally alleging that innersprings, steel wire rod, and mattresses were being unfairly sold in the United States by certain foreign manufacturers at less than fair value (dumping) and that certain foreign manufacturers of steel wire rod and mattresses were unfairly benefiting from subsidies, antidumping and/or countervailing duties have been imposed on the imports of such products. Following the DOC's determination in February 2025 that revocation of the 2019 antidumping duty order would likely lead to the continuation or recurrence of dumping of mattresses from China, the ITC extended the 2019 antidumping duty order on mattresses from China. The previous duties of up to 1,732% on mattresses from China will remain in place through May 2030. In 2025, the DOC and ITC determined that the revocation of certain innerspring orders would likely lead to the continuation or reoccurrence of dumping of uncovered innersprings from China, Vietnam, and South Africa. Consequently, they extended the antidumping duty orders on innerspring imports from these countries, with duties ranging from 116% to 234%, for an additional five years through April 2030.
In March 2020, the Company, along with other petitioners, filed petitions with the DOC and the ITC alleging that manufacturers of mattresses in seven different countries were unfairly selling their products in the United States at less than fair value and manufacturers of mattresses in China were benefiting from subsidies. These petitions resulted in antidumping and countervailing duty orders set to remain in effect for five years, through May 2026, at which time the DOC and ITC will conduct a sunset review to determine whether to extend the orders for an additional five years. Following certain appeals that were filed with the U.S. Court of International Trade (CIT), the CIT ruled in favor of the ITC and petitioners and sustained the ITC's unanimous injury decision. In February 2024, one respondent filed an appeal of the CIT's decision to the U.S. Court of Appeals for the
Federal Circuit, but that respondent agreed to dismiss the appeal on October 29, 2024. As a result, this particular appeal to the U.S. Court of Appeals for the Federal Circuit has been finally resolved. Following the decisions by the CIT and the DOC to revoke the antidumping order on mattresses from Indonesia, the Company, along with other petitioners, filed an appeal with the U.S. Court of Appeals for the Federal Circuit on April 17, 2025, challenging those decisions.
In July 2023, the Company, along with other petitioners, filed petitions with the DOC and the ITC alleging that manufacturers of mattresses in twelve additional countries were unfairly selling their products in the United States at less than fair value and manufacturers of mattresses in Indonesia were unfairly benefiting from subsidies, causing harm to the U.S. industry and seeking the imposition of duties on mattresses imported from these countries. The ITC made a preliminary determination of injury in September 2023, and the DOC's preliminary determination on dumping was issued in February 2024.With respect to eight of the countries, the DOC's final dumping determinations were issued in May 2024, and the ITC's final injury determination was issued in June 2024. In June 2029, the DOC and ITC will conduct a sunset review to determine whether to extend those orders for an additional five years. With respect to the five remaining countries, the DOC's final determinations were issued in July 2024, and the order evidencing the ITC's final determination with respect to the four countries which were above the de minimis threshold was issued in September 2024. This case has been finally resolved with respect to the duties and injury findings, but an importer filed an appeal with respect to the ITC's critical circumstances determination imposing retroactive duties, which is still pending. In October 2029, the DOC and ITC will conduct a sunset review to determine whether to extend the orders for an additional five years.
See Item 1 Legal Proceedingson page 50 for more information.
If any of the foregoing existing or future antidumping and countervailing duties are overturned on appeal or not extended beyond their current terms and dumping and/or subsidization recurs, or manufacturers in the subject countries continue to circumvent the existing duties through transshipment in other jurisdictions or otherwise, our market share, sales, profit margins, and earnings have been, and could continue to be, adversely affected.
Strategic Initiatives
We are evaluating the market attractiveness and competitive position of all our businesses and assessing opportunities for profitable, long-term growth. In addition to the planned sale of the Aerospace Products Group, we recently completed the sale of a small Work Furniture operation. We are continuing to determine which businesses are the best long-term fit for the company, and which, if any, should be divested.
Potential Insurance Gain
In July 2025, a fire damaged or destroyed equipment and machinery that had been stored in a leased location for the Bedding Products segment. This claim is in the initial assessment stage and is subject to review and approval from our insurance carriers that may materially change the eventual outcome of the claim, including the timing and amount of proceeds received, if any at all. However, we currently expect potential net cash proceeds (after restoration and clean-up costs) resulting in an estimated gain of $20 million to $40 million, in multiple payments over the next 12 to 18 months.
Termination of Pension Plan
In September 2024, the Board of Directors approved a resolution to merge two of our domestic defined benefit pension plans and terminate the resulting merged plan effective December 31, 2024. Participants in the plan have stopped earning benefits. All regulatory requirements were satisfied during the second quarter of 2025, and the distribution of plan assets and settlement of benefit obligations are expected to occur during the fourth quarter of 2025. Upon completion, we expect to recognize an estimated pretax pension settlement charge (a non-cash charge for the recognition of pretax actuarial losses in Accumulated other comprehensive loss) of $20 million and an estimated cash contribution of $7 million. However, these estimates are subject to change and will depend on various factors.
RESULTS OF OPERATIONS
Discussion of Consolidated Results
Second Quarter:
Trade sales were $1,058 million in the current quarter, a 6% decrease versus the second quarter 2024. Organic sales decreased 6%. Volume was down 7%, primarily from continued weak demand in residential end markets, demand softness in Automotive and Hydraulic Cylinders, and restructuring-related sales attrition. These declines were partially offset by higher trade wire and rod sales and growth in Textiles, Work Furniture, and Aerospace. Raw material-related selling price increases and currency benefit increased sales 1%. Divestitures of small operations in Bedding and Work Furniture reduced sales less than 1%.
EBIT increased $705 million to $90 million, primarily from the non-recurrence of a $675 million non-cash goodwill impairment charge, metal margin expansion, restructuring benefit, gain from the sale of real estate, lower restructuring costs, disciplined cost management, and the non-recurrence of CEO transition compensation costs. These increases were partially offset by lower volume and currency impact.
EPS increased to $.38 in the current quarter, versus $(4.39) in the second quarter of 2024. The increase primarily reflects higher EBIT as discussed above.
Six Months:
Trade sales were $2,080 million in the first six months of 2025, a 7% decrease versus the same period last year. Organic sales decreased 6%. Volume was down 6%, primarily from continued weak demand in residential end markets, demand softness in Automotive and Hydraulic Cylinders, restructuring-related sales attrition, and the expected exit of a customer in Specialty Foam. These declines were partially offset by higher trade rod and wire sales and growth in Textiles and Aerospace. Raw material-related selling price decreases and currency impact reduced sales less than 1%. Divestitures of small operations in Bedding and Work Furniture reduced sales less than 1%.
EBIT increased $705 million to $153 million, primarily from the non-recurrence of a $675 million non-cash goodwill impairment charge, restructuring benefit, metal margin expansion, lower restructuring costs, gain from the sale of real estate, disciplined cost management, and the non-recurrence of CEO transition compensation costs. These increases were partially offset by lower volume and the non-recurrence of a gain on net insurance proceeds from tornado damage.
EPS increased to $.60 for the first six months of 2025, versus $(4.16) in the same period of 2024. The increase primarily reflects higher EBIT as discussed above.
Net Interest Expense and Income Taxes
2025 net interest expense was $4 million and $1 million lower than the six and three months ended June 30, 2024 primarily due to lower average net debt levels in 2025 versus 2024.
Our worldwide effective tax rate was 27% for the second quarter of 2025, compared to 5% for the same quarter last year. While the U.S. statutory federal income tax rate was 21% in both years, impacts associated with our foreign operations including foreign withholding taxes, foreign rate differentials, and Global Intangible Low-Taxed Income, added 6% to our tax rate in both years. Our rate in 2024 was reduced by 20% attributable to nondeductible goodwill impairment charges and by another 2% due to other less significant items.
For the full year, we are anticipating an effective tax rate of approximately 26%, including the impact of discrete tax items that we expect to occur from quarter to quarter. We utilize prudent tax planning strategies for opportunities to optimize our tax rate, but other factors, such as our overall profitability, the mix and level of earnings among jurisdictions, the type of income earned, business acquisitions and dispositions, the impact of tax audits, and the effect of tax law changes can also influence our rate.
On July 4, 2025, President Trump signed Public Law 119-21, also known as the "One Big Beautiful Bill Act," which includes changes to the U.S. corporate income tax system, such as modifications to the limitation on interest deductibility, the reinstatement of 100% bonus depreciation, and the immediate expensing of qualifying
research and experimentation expenses, which will affect our financial statements in the third quarter of 2025. In addition, other U.S. corporate tax changes embodied in the legislation, including certain modifications to the international tax system, will be effective for the Company in 2026. We are currently evaluating the future impact of these tax law changes on our financial statements.
Discussion of Segment Results
Second Quarter:
A description of the products included in each segment, along with segment financial data, appears in Note Cto the Consolidated Condensed Financial Statements on page 10. A summary of segment results is shown in the following tables. We use EBIT to assess operational performance, and it is useful to investors as it aids in understanding of underlying operational profitability.
Trade Sales
(Dollar amounts in millions)
Three Months Ended
June 30, 2025 		Three Months Ended
June 30, 2024 		Change in Trade Sales
% Change in Organic Sales 1
$ %
Bedding Products $ 391.4 $ 438.0 $ (46.6) (10.6) % (9.9) %
Specialized Products 304.1 319.6 (15.5) (4.8) (4.8)
Furniture, Flooring & Textile Products 362.5 371.0 (8.5) (2.3) (2.2)
Total trade sales $ 1,058.0 $ 1,128.6 $ (70.6) (6.3) % (6.0) %
Three Months Ended June 30, 2025 Three Months Ended June 30, 2024 Change in EBIT EBIT Margins
EBIT
(Dollar amounts in millions)
$ % Three Months Ended June 30, 2025 Three Months Ended June 30, 2024
Bedding Products $ 27.2 $ (591.8) $ 619.0 104.6 % 6.9 % (135.1) %
Specialized Products 38.7 (9.5) 48.2 507.4 12.7 (3.0)
Furniture, Flooring & Textile Products 24.4 (9.4) 33.8 359.6 6.7 (2.5)
Intersegment eliminations and other .1 (3.6) 3.7
Total EBIT 2
$ 90.4 $ (614.3) $ 704.7 114.7 % 8.5 % (54.4) %
Depreciation and Amortization
(Dollar amounts in millions) 		Three Months Ended June 30, 2025 Three Months Ended June 30, 2024
Bedding Products $ 13.3 $ 14.3
Specialized Products 8.2 10.3
Furniture, Flooring & Textile Products 4.6 5.5
Unallocated 3
3.6 2.5
Total depreciation and amortization $ 29.7 $ 32.6
1 This is a change in trade sales not attributable to acquisitions or divestitures in the last 12 months. Refer to the respective segment discussion below for a reconciliation of the change in total segment trade sales to organic sales.
2 Total three months ended June 30, 2025 EBIT of $90.4 million less interest expense net of interest income of $18.7 million and income tax of $19.2 million equals three months ended June 30, 2025 Net earnings (loss) of $52.5 million. Total three months ended June 30, 2024 EBIT of $(614.3) million less interest expense net of interest income of $20.0 million and income tax of $(32.2) million equals three months ended June 30, 2024 Net earnings (loss) of $(602.1) million.
3 Unallocated consists primarily of depreciation and amortization of non-operating assets.
Bedding Products
Trade sales decreased $47 million, or 11%. Organic sales decreased 10%. Volume decreased 12%, primarily due to demand softness in U.S. and European bedding markets, retailer merchandising changes in Adjustable Bed, and restructuring-related sales attrition. These declines were partially offset by higher trade wire and rod sales. Raw material-related selling price increases and currency benefit increased sales 2%. Divestiture of a small U.S. machinery business that was part of the 2024 Plan reduced sales 1%.
EBIT increased $619 million, primarily from the non-recurrence of a $587 million non-cash goodwill impairment charge, metal margin expansion, gain from the sale of real estate, lower restructuring charges, and restructuring benefit. These increases were partially offset by lower volume.
Specialized Products
Trade sales decreased $16 million, or 5%. Organic sales decreased 5% and volume decreased 6%, with declines in Automotive and Hydraulic Cylinders partially offset by growth in Aerospace. Raw material-related selling price increases added 1% to sales.
EBIT increased $48 million, primarily from the non-recurrence of a $44 million non-cash goodwill impairment charge, disciplined cost management, restructuring benefit, lower depreciation and amortization due to Aerospace meeting held-for-sale criteria, and gain from the sale of real estate. These increases were partially offset by lower volume and the non-recurrence of benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition.
Furniture, Flooring & Textile Products
Trade sales decreased $9 million, or 2%. Organic sales decreased 2%. Volume decreased 1%, primarily from declines in Home Furniture and Flooring, partially offset by growth in Textiles and Work Furniture. Raw material-related selling price decreases, net of currency benefit, reduced sales 1%. Divestiture of a small Work Furniture operation in May reduced sales less than 1%.
EBIT increased $34 million, primarily from the non-recurrence of a $44 million non-cash goodwill impairment charge, partially offset by pricing adjustments, particularly in Flooring and Textiles, and other smaller items.
Six Months:
A description of the products included in each segment, along with segment financial data, appears in Note Cto the Consolidated Condensed Financial Statements on page 10. A summary of segment results is shown in the following tables. We use EBIT to assess operational performance, and it is useful to investors as it aids in understanding of underlying operational profitability.
Trade Sales
(Dollar amounts in millions)
Six Months Ended
June 30, 2025 		Six Months Ended
June 30, 2024 		Change in Sales
% Change in Organic Sales 1
$ %
Bedding Products $ 782.1 $ 886.0 $ (103.9) (11.7) % (11.1) %
Specialized Products 604.2 635.5 (31.3) (4.9) (4.9)
Furniture, Flooring & Textile Products 693.8 704.0 (10.2) (1.4) (1.4)
Total trade sales $ 2,080.1 $ 2,225.5 $ (145.4) (6.5) % (6.3) %
Six Months Ended
June 30, 2025 		Six Months Ended
June 30, 2024 		Change in EBIT EBIT Margins
EBIT
(Dollar amounts in millions)
$ % Six Months Ended
June 30, 2025 		Six Months Ended
June 30, 2024
Bedding Products $ 36.8 $ (576.1) $ 612.9 106.4 % 4.7 % (65.0) %
Specialized Products 67.1 14.2 52.9 372.5 11.1 2.2
Furniture, Flooring & Textile Products 49.2 14.2 35.0 246.5 7.1 2.0
Intersegment eliminations and other .2 (3.6) 3.8
Total EBIT 2
$ 153.3 $ (551.3) $ 704.6 127.8 % 7.4 % (24.8) %
Depreciation and Amortization
(Dollar amounts in millions) 		Six Months Ended
June 30, 2025 		Six Months Ended
June 30, 2024
Bedding Products $ 26.3 $ 28.9
Specialized Products 18.6 20.4
Furniture, Flooring & Textile Products 9.5 10.8
Unallocated 3
6.9 5.4
Total depreciation and amortization $ 61.3 $ 65.5
1This is a change in trade sales not attributable to acquisitions or divestitures in the last 12 months. Refer to the respective segment discussion below for a reconciliation of the change in total segment trade sales to organic sales.
2Total six months ended June 30, 2025 EBIT of $153.3 million less interest expense net of interest income of $36.5 million and income tax of $33.7 million equals six months ended June 30, 2025 Net earnings (loss) of $83.1 million. Total six months ended June 30, 2024 EBIT of $(551.3) million less interest expense net of interest income of $40.6 million and income tax of $(21.4) million equals six months ended June 30, 2024 Net earnings (loss) of $(570.5) million.
3Unallocated consists primarily of depreciation and amortization of non-operating assets.
Bedding Products
Trade sales decreased $104 million, or 12%. Organic sales decreased 11%. Volume decreased 11%, primarily due to demand softness in U.S. and European bedding markets, the expected loss of a customer in Specialty Foam, retailer merchandising changes in Adjustable Bed, and restructuring-related sales attrition. These decreases were partially offset by higher trade rod and wire sales. The divestiture of a small U.S. machinery business that was part of the 2024 Plan reduced sales 1%.
EBIT increased $613 million, primarily from the non-recurrence of a $587 million non-cash goodwill impairment charge, metal margin expansion, lower restructuring charges, restructuring benefit, and gain from the sale of real estate. These increases were partially offset by lower volume.
Specialized Products
Trade sales decreased $31 million, or 5%. Organic sales decreased 5%. Volume decreased 5% with declines in Automotive and Hydraulic Cylinders partially offset by growth in Aerospace. Raw material-related price increases were offset by currency impact.
EBIT increased $53 million, primarily from the non-recurrence of a $44 million non-cash goodwill impairment charge, disciplined cost management, restructuring benefit, lower depreciation and amortization due to Aerospace meeting held-for-sale criteria, and gain from the sale of real estate. These increases were partially offset by lower volume, the non-recurrence of benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition, and higher restructuring charges.
Furniture, Flooring & Textile Products
Trade sales decreased $10 million, or 1%. Organic sales decreased 1%. Volume was flat with growth in Textiles and Work Furniture offset by continued weak demand in residential end markets. Raw material-related selling price decreases and currency impact reduced sales 1%.
EBIT increased $35 million, primarily from the non-recurrence of a $44 million non-cash goodwill impairment charge, gain from the sale of real estate, lower restructuring costs, and restructuring benefit, partially offset by pricing adjustments and the non-recurrence of a gain on net insurance proceeds from tornado damage.
LIQUIDITY AND CAPITALIZATION
Liquidity
Sources of Cash
Cash on Hand
At June 30, 2025, we had cash and cash equivalents of $369 million primarily invested in interest-bearing bank accounts and in bank time deposits with original maturities of three months or less. Substantially all of these funds are held in the international accounts of our foreign operations.
If we were to immediately bring back all our foreign cash to the United States in the form of dividends, we would pay foreign withholding taxes of approximately $22 million. Due to capital requirements in various jurisdictions, approximately $33 million of this cash was inaccessible for repatriation at June 30, 2025. Inaccessible cash balances can fluctuate from quarter to quarter based on the amount of foreign distributable profits available and the variability of our foreign cash balances.
Cash from Operations
The primary source of funds for our short-term cash requirements is our cash generated from operating activities. Earnings and changes in working capital levels are the two factors that generally have the greatest impact on our cash from operations. Cash from operations for the six months ended June 30, 2025 was $91 million, up $3 million from the same period last year, primarily driven by a smaller use of working capital versus last year.
We closely monitor our working capital levels and ended the quarter with adjusted working capital at 14.7% of annualized trade sales. The table below explains this non-GAAP calculation. We eliminate cash, current debt maturities, and the current portion of operating lease liabilities from working capital to monitor our operating efficiency and performance related to trade receivables, inventories, and accounts payable. We believe this provides a more useful measurement to investors since cash and current maturities can fluctuate significantly from period to period. As discussed in Cash on Handabove, substantially all of these cash and cash equivalents are held by international operations and may not be immediately available to reduce debt on a dollar-for-dollar basis.
(Dollar amounts in millions) June 30, 2025 December 31, 2024
Current assets $ 1,742.7 $ 1,690.5
Current liabilities 802.3 846.4
Working capital 940.4 844.1
Less: Cash and cash equivalents included in current assets 368.8 350.2
Add: Current debt maturities and current portion of operating lease liabilities included in current liabilities 52.2 54.7
Adjusted working capital $ 623.8 $ 548.6
Annualized trade sales 1
$ 4,232.0 $ 4,225.6
Working capital as a percent of annualized trade sales 22.2 % 20.0 %
Adjusted working capital as a percent of annualized trade sales 14.7 % 13.0 %
1 Annualized trade sales is the respective quarter's trade sales multiplied by 4 (second quarter 2025 and fourth quarter 2024 trade sales were $1,058.0 million and $1,056.4 million, respectively). We believe measuring our working capital against this sales metric is more useful, since efficient management of working capital includes adjusting those net asset levels to reflect current business volume.
Primary Components of our Working Capital
Amount (in millions) Days
Three Months Ended Twelve Months Ended Three Months Ended
June 30, 2025 December 31, 2024 June 30, 2024 June 30, 2025 December 31, 2024 June 30, 2024
Trade Receivables $ 542.2 $ 503.0 $ 593.0
DSO 1
47 44 48
Inventories $ 648.6 $ 722.6 $ 755.4
DIO 2
68 77 73
Accounts Payable $ 468.4 $ 497.7 $ 521.8
DPO 3
49 52 50
1Days sales outstanding
a. Quarterly: end of period trade receivables ÷ (quarterly net trade sales ÷ number of days in the period)
b. Annually: ((beginning of year trade receivables + end of period trade receivables) ÷ 2) ÷ (net trade sales ÷ number of days in the period)
2Days inventory on hand
a. Quarterly: end of period inventory ÷ (quarterly cost of goods sold ÷ number of days in the period)
b. Annually: ((beginning of year inventory + end of period inventory) ÷ 2) ÷ (cost of goods sold ÷ number of days in the period)
3Days payables outstanding
a. Quarterly: end of period accounts payable ÷ (quarterly cost of goods sold ÷ number of days in the period)
b. Annually: ((beginning of year accounts payable + end of period accounts payable) ÷ 2) ÷ (cost of goods sold ÷ number of days in the period)
We continue to monitor all elements of working capital in order to optimize cash flow.
At June 30, 2025, our Aerospace Products Group met the criteria to be classified as held for sale. As a result, we reclassified trade receivables of $29 million, inventories of $65 million, and accounts payable of $23 million to current assets and current liabilities held for sale, as discussed in Note Nto the Consolidated Condensed Financial Statements on page 23. These balances are excluded from the table above, which decreased our DSO and DPO by approximately two days. DIO decreased by seven days, due to the long lead times typical in the aerospace business.
Trade Receivables-Our trade receivables and DSO increased at June 30, 2025 compared to December 31, 2024 primarily due to volume increases in our Textiles businesses, timing of collections, and currency. These were partially offset by the Aerospace receivables reclassified to held for sale. Trade receivables and DSO decreased compared to June 30, 2024 due to the Aerospace receivables reclassified to held for sale, restructuring plan impacts, and demand softness.
We recorded bad debt expense of $2 million and $8 million during the first six months of 2025 and 2024, respectively. Weak demand and changing market dynamics have created disruption and financial instability for some of our customers, particularly in the Bedding Products segment. We monitor our receivables portfolio closely and make reserve decisions based upon individual customer credit risk reviews, aging of customer accounts, historical loss experience, and general macroeconomic and industry trends that could impact the expected collectability of all customers or pools of customers with similar risk.
Inventories-Our inventories and DIO decreased at June 30, 2025 compared to both December 31, 2024 and June 30, 2024 due to the Aerospace inventories reclassified to held for sale and inventory reductions to align with demand softness, partially offset by currency.
We continuously monitor our slower-moving and potentially obsolete inventory through reports on inventory quantities compared to usage within the previous 12 months. We also utilize cycle counting programs and complete physical counts of our inventory. When potential inventory obsolescence is indicated by these controls, we will take charges for write-downs to maintain an adequate level of reserves. Inventory write-downs for the first six months of 2025 were $8 million versus $22 million in 2024.
Accounts Payable- Our accounts payable and DPO decreased compared to both December 31, 2024 and June 30, 2024 primarily due to the Aerospace accounts payable reclassified to held for sale, demand softness, and timing of payments, partially offset by currency impacts. We continue to look for ways to establish and maintain favorable payment terms through purchasing synergies and also utilize third-party services that offer flexibility to our vendors, which, in turn, helps us manage our DPO as discussed below.
Accounts Receivable and Accounts Payable Programs- We participate in trade receivables sales programs in combination with certain customers and third-party banking institutions. Under each of these programs, we sell our entire interest in the trade receivable for 100% of face value, less a discount. Because control of the sold receivable is transferred to the buyer at the time of sale, accounts receivable balances sold are removed from the Consolidated Condensed Balance Sheets and the related proceeds are reported as cash provided by operating activities in the Consolidated Condensed Statements of Cash Flows. We had approximately $40 and $45 million of trade receivables that were sold and removed from our balance sheets at June 30, 2025 and December 31, 2024, respectively. These sales reduced our quarterly DSO by roughly four days at both June 30, 2025 and December 31, 2024. Activities in these programs decreased year-to-date operating cash flow by approximately $5 million for the six months ended June 30, 2025.
For accounts payable, we have historically looked for ways to optimize payment terms through utilizing third-party programs that allow our suppliers to be paid earlier at a discount. Contracts with our suppliers are negotiated independently of supplier participation in the programs, and we cannot increase payment terms pursuant to the programs. While we continue to make payments based on our customary terms, a supplier can elect to take payment from a third party earlier with a discount, and in that case, we pay the third party on the original due date of the invoice. As such, there is no direct impact on our DPO, accounts payable, operating cash flows, or liquidity. The accounts payable settled through the third-party programs, which remain on our Consolidated Condensed Balance Sheets, were approximately $105 million and $120 million at June 30, 2025 and December 31, 2024, respectively.
The above items encompass multiple individual programs that are utilized as tools in our cash flow management, and we offer them as options to facilitate customer and vendor operating cycles. Because many of these programs operate independently, and a cessation of all these programs at the same time is not reasonably likely, we do not expect changes in these programs to have a material impact on our operating cash flows or liquidity.
Mexico Value-Added Taxes (VAT) Recoverable- We are subject to VAT in various jurisdictions. Where we are entitled to a refund of the VAT we have paid, we submit claims to the government authorities and establish receivables for these claims. As of December 31, 2024, we had outstanding Mexico VAT receivables of $36 million, primarily due to delays in processing refunds by the local tax authorities. Refunds received in the first half of 2025 reduced this receivable to $8 million at June 30, 2025. To mitigate the impact of future VAT outflows in Mexico, we obtained a temporary tax exemption for one of our primary Mexico entities, thereby improving cash flow and reducing the need to submit refund claims.
Commercial Paper Program
Another source of funds for our short-term cash requirements is our $1.2 billion commercial paper program as of June 30, 2025, of which we had $509 million available for borrowing. In conjunction with the credit facility amendment in late July as discussed below, the authorized amount of commercial paper that can be issued was reduced from $1.2 billion to $1.0 billion. For more information regarding the borrowing capacity under our commercial paper program, see Commercial Paper Programon page 44.
Credit Facility
Our credit facility is a multi-currency facility providing us with the ability, from time to time, to borrow, repay, and re-borrow up to $1.0 billion ($1.2 billion as of June 30, 2025) until the maturity date, at which time our ability to borrow under the facility will terminate. The credit facility serves as a back-up for our commercial paper program, is subject to covenants restricting our borrowing capacity, and matures in July 2030. Currently, there are no borrowings under the credit facility. For more information on our credit facility, see Credit Facilityon page 45.
Capital Markets
Our cost of borrowing and ability to access the capital markets are affected by market conditions and the credit ratings assigned to our debt. While we believe that we have the ability to raise debt in the capital markets which acts as a source of funding of long-term cash requirements, a downgrade of our credit rating could limit our access to the capital markets and result in increased borrowing costs. Currently, we have $1.8 billion of total debt outstanding. The maturities of the long-term debt range from 2027 through 2051. For more information, please see Long-Term Debt (including Current Maturities)on page 45.
Uses of Cash
We expect to fully repay our commercial paper balance later this year using a combination of after-tax proceeds from the Aerospace divestiture and cash generated by operations. We anticipate applying the majority of our cash flow from operations to reduce net debt. As we continue deleveraging, we will also consider other uses such as small strategic acquisitions and share repurchases. In the longer term, we expect to use cash to grow our business both organically and through strategic acquisitions, while also returning cash to shareholders through a combination of dividends and share buybacks.
Capital Expenditures
We are making investments to support expansion in businesses and product lines where sales are profitably growing, for efficiency improvement and maintenance, and for system enhancements. We expect capital expenditures of $80-$90 million in 2025 of which we have spent $22 million as of June 30, 2025. For the periods covered, our employee incentive plans emphasized returns on capital, including capital expenditures and working capital. This emphasis focuses our management on asset utilization and helps ensure that we are investing additional capital dollars where attractive return potential exists.
Acquisitions
We seek strategic acquisitions that complement our current products and capabilities.
We did not acquire any businesses in the first six months of 2025. For the full year 2025, we currently expect acquisition activity to be minimal.
Dividends
In the second quarter of 2025, we declared a quarterly dividend of $.05 per share, consistent with the quarterly dividend declared in the second quarter of 2024. During the second quarter of 2025, we paid $7 million for the $.05 per share quarterly dividend declared in the first quarter of 2025. During the second quarter of 2024, we paid $62 million for the $.46 per share quarterly dividend declared in the first quarter of 2024.
Stock Repurchases
During the second quarter of 2025, there were no material share repurchases and we issued .2 million shares through employee benefit plans. For the first six months of 2025, we repurchased .2 million shares of our stock (at an average price of $9.83) and issued 1.1 million shares through employee benefit plans.
We have been authorized by the Board to repurchase up to 10 million shares each calendar year, but we have established no specific repurchase commitment or timetable. The amount of future repurchases is dependent upon the price of the stock, the amount of discretionary cash flow generated by the Company, alternative uses for the cash (including debt reduction, organic growth opportunities, and acquisitions) and other factors. We expect stock repurchases to be minimal for the remainder of 2025.
Short-Term and Long-Term Cash Requirements
In addition to the expected uses of cash discussed above, we have various material short-term (12 months or less) and long-term (more than 12 months) cash requirements. There have been no material changes in the second quarter 2025 to our short-term or long-term cash requirements as previously reported in our cash requirements table on page 55 of our Form 10-Kfiled February 26, 2025. We expect to have adequate liquidity to meet our short-term and long-term cash requirements.
Capitalization
Capitalization Table
This table presents key debt and capitalization statistics for the periods presented:
(Dollar amounts in millions) June 30, 2025 December 31, 2024
Total debt excluding credit facility/commercial paper $ 1,496.5 $ 1,496.1
Less: Current maturities of long-term debt and short-term debt
1.3 1.3
Scheduled maturities of long-term debt 1,495.2 1,494.8
Average interest rates 1
3.8 % 3.8 %
Average maturities in years 1
10.9 11.4
Credit facility/commercial paper 2
297.0 368.0
Weighted average interest rate on period-end balance outstanding 5.1 % 5.1 %
Average interest rate during the period (2025-three months; 2024-twelve months)
5.1 % 5.6 %
Total long-term debt 1,792.2 1,862.8
Deferred income taxes and other liabilities 253.4 262.2
Total equity
855.8 690.2
Total capitalization $ 2,901.4 $ 2,815.2
Unused committed credit: 2
Long-term $ 903.0 $ 832.0
Short-term - -
Total unused committed credit $ 903.0 $ 832.0
Cash and cash equivalents $ 368.8 $ 350.2
1
These rates include current maturities, but exclude commercial paper to reflect the averages of outstanding debt with scheduled maturities.
2
The unused committed credit amount is based on our revolving credit facility and commercial paper program which, at year-end 2024 and at the end of the second quarter of 2025, had a total authorized program amount of $1.2 billion (reduced to $1.0 billion in late July). However, our borrowing capacity is limited by covenants to our credit facility. Reference is made to the discussion under Commercial Paper Programbelow and Credit Facilityon page 45 for more details about our borrowing capacity at June 30, 2025.
Commercial Paper Program
Amounts outstanding related to our commercial paper program were:
(Amounts in millions) June 30, 2025 December 31, 2024
Total authorized program $ 1,200.0 $ 1,200.0
Commercial paper outstanding (classified as long-term debt) 297.0 368.0
Letters of credit issued under the credit agreement - -
Amount limited by restrictive covenants of credit facility 1
394.3 388.8
Total program available $ 508.7 $ 443.2
1
Our borrowing capacity is limited by covenants to our credit facility. Reference is made to the discussion under Credit Facilityon page 45 for more details about our borrowing capacity at June 30, 2025.
The average and maximum amounts of commercial paper outstanding during the second quarter of 2025 were $475 million and $518 million, respectively. At quarter end, we had no letters of credit outstanding under the credit facility, but we had issued $93 million of stand-by letters of credit under other bank agreements to take advantage of better pricing.
Over the long-term, and subject to our credit ratings, market conditions, capital needs, and alternative capital market opportunities, we generally expect to maintain the indebtedness under the commercial paper program by continuously repaying and reissuing the commercial paper notes. We view the notes as a source of long-term funds and have classified the borrowings under the commercial paper program as long-term borrowings on our balance sheet. We have the intent to roll over such obligations on a long-term basis and have the ability to refinance these borrowings on a long-term basis as evidenced by our amended revolving credit facility maturing in July 2030 discussed below in Credit Facility.
In 2024, our credit ratings were lowered and could be lowered further. Lower credit ratings could adversely affect our borrowing capacity and our financial arrangements, including access to the commercial paper market, our lending agreements, and supply chain financing arrangements. If we are unable to meet our short-term borrowing needs in the commercial paper market, we may rely more heavily on bank debt to fund short-term working capital needs at higher interest costs.
Credit Facility
We amended our Credit Agreement in July 2025. Our credit facility is a multi-currency facility maturing in July 2030, providing us with the ability, from time to time, to borrow, repay, and re-borrow up to $1.0 billion, subject to certain restrictive covenants and customary conditions. Prior to the amendment, the maturity date was September 2026 and our authorized amount was $1.2 billion. The credit facility serves as back-up for our commercial paper borrowing. Capitalized terms used in this section but not defined herein have the meanings set forth in the Credit Agreement.
Our credit facility contains restrictive covenants, which include: (a) a Leverage Ratio requiring us to maintain, as of the last day of each fiscal quarter, (i) Consolidated Funded Indebtedness minus the lesser of: (A) Unrestricted Cash, or (B) $750 million to (ii) Consolidated EBITDA for the four consecutive trailing quarters most recently ended on or prior to such date, such ratio not being greater than 3.50 to 1.00; provided however, subject to certain limitations, if we make a Material Acquisition, at our election, the maximum Leverage Ratio shall be 4.00 to 1.00 for the fiscal quarter during which such Material Acquisition is consummated and the next three consecutive fiscal quarters; (b) a limitation of the amount of total secured obligations to 15% of our total consolidated assets; and (c) a limitation on our ability to sell, lease, transfer, or dispose of all or substantially all of our assets and the assets of our subsidiaries, taken as a whole (other than accounts receivable sold in a Permitted Securitization Transaction, products sold in the ordinary course of business and our ability to sell, lease, transfer, or dispose of any of our assets or the assets of one of our subsidiaries to us or one of our subsidiaries, as applicable) at any given point in time. We were in compliance with all of our debt covenants at the end of second quarter 2025. For more information about long-term debt, please see Note J on page 101 of the Notes to Consolidated Financial Statements in our Form 10-Kfiled February 26, 2025.
Our credit facility serves as back-up for our commercial paper program. At June 30, 2025, we had $297 million commercial paper outstanding and had no borrowing under the credit facility. As our trailing 12-month Consolidated EBITDA, Unrestricted Cash, and debt levels change, our borrowing capacity increases or decreases. Based on our trailing 12-month Consolidated EBITDA, Unrestricted Cash, leverage ratio covenant of 4.00 to 1.00, and debt levels at June 30, 2025, our borrowing capacity under the credit facility was $509 million. However, this may not be indicative of the actual borrowing capacity moving forward, which may be materially different depending on our Consolidated EBITDA, Unrestricted Cash, debt levels, and current leverage ratio of 3.50 to 1.00.
Long-Term Debt (including Current Maturities)
We have total debt of $1.8 billion. The maturities of our senior notes range from 2027 through 2051. We expect lower interest expense as we deleverage. For more details on long-term debt, please refer to Note J on page 101 of the Notes to Consolidated Financial Statements in our Form 10-Kfiled February 26, 2025.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. To do so, we must make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosures. If we used different estimates or judgments, our financial statements could change. Some of these changes could be significant. Our estimates are considered by management, at the time they are made, to be reasonable and appropriate. Estimates are adjusted for actual events as they occur.
Critical accounting estimates are those that are: (a) subject to uncertainty and change and (b) of material impact to our financial statements. There were no newly identified critical accounting policies or estimates in the first six months of 2025, and there have been no material changes to our critical accounting policies and estimates as previously disclosed beginning on page 58 in our Form 10-Kfiled February 26, 2025.
CONTINGENCIES
Litigation
Litigation Contingencies
We are exposed to litigation contingencies that, if realized, could have a material negative impact on our financial condition, results of operations, and cash flows.
Although we deny liability in all currently threatened or pending litigation proceedings, we have recorded an immaterial aggregate litigation contingency accrual at June 30, 2025 (which does not include accrued expenses related to employment, workers' compensation, vehicle-related personal injury, product and general liability claims, taxation issues, and environmental matters). Based on current known facts, aggregate reasonably possible (but not probable, and therefore, not accrued) losses in excess of accruals for litigation contingencies are estimated to be $18 million. If our assumptions or analyses regarding any of our contingencies are incorrect, or if facts change or future litigation arises, we could realize losses in excess of the recorded accruals (including losses in excess of the $18 million referenced above), which could have a material negative impact on our financial condition, results of operations, and cash flows. Also, we could be subject to future litigation of various types that could negatively impact our financial condition, results of operations, and cash flows. For more information regarding our litigation contingencies, see Item 1 Legal Proceedingson page 50 and Note O Contingencieson page 24 of the Notes to Consolidated Condensed Financial Statements.
Climate Change
Transition Risks
Change in Laws, Regulations, and Policies.Climate change, often attributed to increased greenhouse gas (GHG) emissions, including carbon dioxide, has led to significant legislative and regulatory efforts to limit such emissions. At June 30, 2025, we had approximately 115 production facilities in 18 countries, primarily located in North America, Europe, and Asia. We also maintain a fleet of semi-trucks that emit GHG. Certain transition risks, or risks related to the process of reducing our carbon footprint, could materially affect our business, capital expenditures, results of operations, financial condition, competitive position, and reputation. One transition risk is the change in laws, regulations, and policies that could impose significant operational and compliance burdens. Also, if our customers incur additional costs to comply with such laws, regulations, and policies, impacting their ability to operate at the same or similar levels, the demand for our products could be adversely affected. Inconsistent climate legislation in jurisdictions where we operate creates economic and regulatory uncertainty and could increase our costs if such laws, regulations, or policies impose significant operational restrictions and compliance requirements on us. Non-compliance with such laws, regulations, and policies could also negatively impact our reputation. To date, however, we have not experienced a material impact from these legislative and regulatory efforts.
Market Transition.We manufacture various automotive components, including lumbar support and massage systems for seating, seat suspension systems, motors, actuators, and cables. For decades, automotive manufacturers have sought lightweight components to increase the fuel efficiency of automobiles.
Replacing traditional steel components with lightweight alternative components can directly reduce vehicle weight and fuel consumption. This increased fuel efficiency also indirectly reduces GHG emissions.
These long-standing market transitions have negatively impacted our market share, although not materially. However, if we are unable to react to technological changes, develop new and innovative products, or respond to evolving business trends, including continuing to produce comparatively lightweight components, our share in these markets could be negatively impacted.
Driven in part by climate change legislation, the global automotive industry has experienced a rapid acceleration in the transition from internal combustion engine vehicles to electric vehicles (EVs). According to the International Energy Agency, EVs are expected to represent more than 25% of all new car sales worldwide in 2025. China has emerged as a global leader in EV adoption, with Chinese EV manufacturers increasing market share at the expense of multinational OEMs. This shift has intensified competitive pressures across traditional automotive supply chains and has begun to impact our market share, particularly in regions where Chinese EV manufacturers have seen success in competing on price. If the multinational OEMs are unable to compete effectively with the Chinese EV manufacturers, their market share could continue to be further reduced, which could negatively impact the demand for our Automotive products.
Physical Climate Change Risks
Direct Physical Effects.The acute and chronic physical effects of severe weather-related events, natural disasters, and/or significant climate pattern changes could increasingly adversely impact our business and customers. As of June 30, 2025, we had approximately 115 manufacturing facilities in 18 countries, primarily located in North America, Europe, and Asia. We serve thousands of customers worldwide. In 2024, our largest customer represented less than 8% of our sales, and our customers were located in approximately 100 countries. Although our diverse geographical manufacturing footprint and our broad geographical customer base mitigates the potential risks of any local or regional severe weather-related event having a material effect on our operations and results, the increased frequency and severity of such weather-related events could damage our physical assets, local infrastructure, transportation systems, water delivery systems, and our customers' or suppliers' operations, and disrupt our manufacturing operations (including our steel rod mill and wire drawing mills), all of which could harm our business, results of operations, and financial condition.
Indirect Physical Effects.The physical effects of climate change could continue to adversely impact our supply chain. In the past, we experienced (due, in part, to severe weather-related impacts) supply shortages in chemicals, which restricted foam supply and constrained overall mattress production in the bedding industry. This reduced our production levels and increased our cost of chemicals and foam. Severe weather impacts could also reduce the supply of other products in our supply chain, resulting in higher prices for our products and the resources needed to produce them. If we are unable to secure an adequate and timely supply of products in our supply chain, or the cost of these raw materials or products materially increases, it could negatively impact our business, results of operations, and financial condition.
In recent years, drought conditions lowered the water levels of the Mississippi River and Panama Canal, reducing traffic through these waterways and impacting some of our shipments. Although these issues did not materially impact our results of operations, additional logistical disruptions could result in additional costs and delays in our ability to deliver products timely to customers.
In addition, although the costs have not been material to our business, results of operations, and financial condition, severe weather-related incidents have resulted and may, in the future, result in increased costs of our property insurance.
GHG Emissions Reduction Strategy
To date, we have not experienced material climate-related compliance costs. However, evaluating opportunities to reduce our emissions, setting emissions reduction goals, and measuring performance in achieving those goals are part of our sustainability and corporate governance strategy. We completed our GHG emissions inventory covering 2019 through 2024. To ensure our information is complete and accurate, we engaged a third-party limited assurance provider for these years. Our emissions inventory includes Scope 1 and Scope 2 carbon dioxide equivalent emissions. We considered the principles and guidance of the GHG Protocol Corporate Accounting and Reporting Standard. At the end of 2024, our total GHG emissions, measured using a market-based approach, were approximately 21% less than our combined Scope 1 and 2 GHG emissions over
our baseline year of 2019, which was due in significant part to the decrease in production over the same time period.
Our baseline measurement will inform a long-term GHG emissions reduction strategy, including setting reduction targets and other key performance areas. Our key initiatives for 2025 and 2026 include: developing our emissions reduction pathways to reduce GHG emissions, undertaking our first Scope 3 emissions inventory, assessing where emission reduction opportunities lie within our value chain, and preparing for and complying with new reporting requirements. We anticipate setting an emissions reduction target by the end of 2025. We currently do not have an estimate of the capital expenditures or operating costs that may be required to implement our GHG emissions reduction strategy. However, we do not expect that such capital expenditures or operating costs will be material to our financial condition or results of operations. Our GHG emissions reduction strategy will continue to evolve, and we expect to share more specific information by the end of 2025, in conjunction with our emissions reduction target. Our Sustainability Progress Report can be found at www.leggett.com/sustainability. Neither our Sustainability Progress Report nor the Leggett website constitute part of this Quarterly Report on Form 10-Q.
Cybersecurity Risks
We rely on information systems to obtain, process, analyze, and manage data, as well as to facilitate the manufacture and distribution of inventory to and from our facilities. We receive, process, and ship orders, manage the billing of and collections from our customers, and manage the accounting for and payment to our vendors. We also manage our production processes with certain industrial control systems. Consequently, we are subject to cybersecurity risk.
Although we have purchased broad form cyber insurance coverage and strive to provide a balanced level of cybersecurity protections, cybersecurity risk has increased due to remote access and increased sophistication of cybersecurity adversaries, as well as the increased frequency of cybersecurity attacks. As such, information technology failures or cybersecurity breaches could still create system disruptions or unauthorized disclosure or alterations of confidential information and disruptions to the systems of our third-party suppliers and providers. We cannot be certain that the attacker's capabilities will not compromise our cybersecurity defenses surrounding our information systems or bypass our detection capabilities, including those resulting from ransomware attached to our industrial control systems. If these systems are interrupted or damaged by any incident or fail for any extended period of time, then our results of operations could be adversely affected. We may incur remediation costs, increased cybersecurity protection costs, lost revenues resulting from unauthorized use of proprietary information, litigation and legal costs, increased insurance premiums, reputational damage, damage to our competitiveness, and negative impact on our stock price and long-term shareholder value. We may also be required to devote significant management resources and expend significant additional resources to address problems created by any such interruption, damage, or failure.
NEW ACCOUNTING STANDARDS
The FASB has issued accounting guidance effective for current and future periods. See Note A Interim Presentationto the Consolidated Condensed Financial Statements on page 9 for a more complete discussion.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rates
Substantially all of our debt is denominated in United States dollars. The fair value of fixed rate debt was approximately $200.0 million less than carrying value of $1,489.2 million at June 30, 2025 and approximately $245.0 million less than carrying value of $1,488.3 million at December 31, 2024. The fair value of fixed rate debt was based on quoted market prices in an active market. The fair value of variable rate debt is not significantly different from its recorded amount.
Investment in Foreign Subsidiaries
We view our investment in foreign subsidiaries as a long-term commitment, and it can vary based on operating cycles and currency rate fluctuations. This investment may take the form of either permanent capital or notes. Our net investment (i.e., total assets less total liabilities subject to translation exposure) in foreign operations with functional currencies other than the U.S. dollar was $1,173.7 million at June 30, 2025 compared to $1,022.8 million at December 31, 2024.
Derivative Financial Instruments
We are subject to market and financial risks related to interest rates and foreign currency. In the normal course of business, we utilize derivative instruments (individually or in combinations) to reduce or eliminate these risks. We seek to use derivative contracts that qualify for hedge accounting treatment; however, some instruments may not qualify for hedge accounting treatment. It is our policy not to speculate using derivative instruments. Information regarding cash flow hedges and fair value hedges is provided in Note A Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in our Form 10-Kfiled February 26, 2025 and Note M Derivative Financial Instrumentsbeginning on page 22 of the Notes to Consolidated Condensed Financial Statements and is incorporated by reference into this section.
MARKET AND INDUSTRY DATA
Unless indicated otherwise, the information concerning our industries contained herein is based on our general knowledge of and expectations concerning the industries. Our market share is based on estimates using our internal data, data from various industry analyses, internal research, and adjustments and assumptions that we believe to be reasonable. We have not independently verified data from industry analyses and cannot guarantee their accuracy or completeness.
Leggett & Platt Inc. published this content on August 07, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on August 07, 2025 at 19:35 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]