A large non-cash impairment charge led to a second-quarter net loss of more than $600 million at Leggett & Platt Inc.
The Carthage, Missouri-based component and machinery supplier said the $675 million charge was necessitated by current market conditions and a significant decline in its stock price.
Second-quarter sales fell 8% to $1.13 billion — a figure that included a 13% drop in sales in its bedding segment and a 6% sales decline in the furniture, flooring and textiles segment.
The net loss of $602.2 million, or $4.39 per share, compares with net income of $54.2 million, or 40 cents per share, in last year’s second quarter. Without the impairment charge and a few other one-time costs and adjustments, the company said it would have recorded earnings per share of about 29 cents.
“Demand in our residential end markets remains weak as consumers continue to delay big-ticket, discretionary purchases,” said Karl Glassman, president and CEO. “Additionally, the global automotive market remains volatile due to a slower than expected shift to electric vehicles and disruption from new Chinese market entrants.”
Glassman said a restructuring plan announced earlier this year is proceeding as planned, and said the company already is seeing some cost savings as a result.
“While our second quarter results reflect the ongoing challenging macro environment, I am immensely proud of our team’s execution,” he said. “The restructuring plan is on track, with some elements of the plan progressing ahead of schedule and exceeding expectations. We remain committed to investing in our key businesses to drive profitable growth when market conditions improve.”
The restructuring, which largely involves the bedding segment and furniture, flooring and textiles segment, is expected to add $40 million to $50 million to earnings before interest and taxes by late 2025. Glassman said about $3 million was added in the second quarter and said EBIT should be boosted by $10 million to $15 million this year — above an earlier forecast of $5 million to $10 million.
Once completed, he said the restructuring will reduce sales by about $80 million annually, which is less than an earlier projection of $100 million.
The company also tweaked its sales and earnings forecasts for the year. Sales are now projected to be $4.3 billion to $4.5 billion, down slightly from prior guidance of $4.35 billion to $4.65 billion.
Adjusted earnings per share, which don’t include one-time costs such as impairment and restructuring charges, are now projected to be $1.10 to $1.25. The prior estimate was $1.05 to $1.35.
For the first half of 2024, companywide sales fell 9% to $2.23 billion. The net loss came to $570.6 million, or $4.16 per share.
Read more on Leggett & Platt’s 1st quarter results: L&P Sales Down in 1st Quarter.
