Leggett & Platt acquires trio; lowers full year guidance

Diversified furniture components manufacturer Leggett & Platt has announced three new acquisitions while downgrading its full year guidance.

In late August, the Company acquired a converter of construction fabrics for the furniture and bedding industries located in Shannon, Mississippi. On 3 October, Leggett & Platt acquired a distributor of geo components located in Ottawa, Canada. Each of these textiles businesses have annual sales under $10m.

Also, in late August, Leggett & Platt acquired a leading global manufacturer of hydraulic cylinders for heavy construction machinery. The company has manufacturing facilities in Eschwege, Germany and Ningbo, China and a distribution facility in Halifax, Pennsylvania with combined 2021 sales of approximately $65m.

According to its latest update, Leggett & Platt has lowered its sales guidance to $5.1–$5.2bn, down from a top range of $5.4bn. This is primarily due to lower volume than previously expected. Based upon this guidance, EBIT margin range should be 9.5% to 10.0%, again down from its previous top range of 10.7%.

President and CEO Mitch Dolloff commented: “The increasingly challenged global economic environment and consumer backdrop is expected to result in lower than previously anticipated sales and earnings in the third and fourth quarters of 2022. Demand in the U.S. bedding market is fairly stable but remains at relatively weak levels as industry headwinds persist, including inflationary and monetary policy impacts on consumer spending and consumer sentiment as well as higher inventory levels. Given the bedding demand environment and slowing market for steel generally, we are cutting production in our Rod and Wire businesses to reduce inventory.

“Our Specialty Foam business has experienced larger demand impacts as a result of previous pandemic-related supply issues and channel specific pressures. Lower demand in Specialty Foam in combination with operational inefficiencies, which are being addressed by continuing integration work, are taking longer than originally expected to resolve.

“Demand in International Bedding has declined more significantly amid geopolitical and macroeconomic disruptions in Europe. Home Furniture demand has softened significantly in the last few months with slower consumer demand and excess inventory at retail.

“Volume and cost recovery are improving sequentially in Automotive, but at a slower rate than anticipated. While improving year-over-year, industry production forecasts remain dynamic as supply chain and geopolitical impacts bring continued volatility.

“We continue to focus on things we can control and are taking action to mitigate the impact of these challenges by aligning costs, production levels, and inventory with demand; evaluating near-term opportunities with our customers and working with them on new product developments; and continuing to build out our existing businesses through acquisitions. Our strong balance sheet and cash flow give us confidence in our ability to navigate challenging markets while investing in long-term opportunities.”

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