LEGGETT & PLATT ANNOUNCES RESTRUCTURING PLAN TO DRIVE IMPROVED PERFORMANCE AND PROFITABLE GROWTH
- Restructuring Plan expected to generate $40 to $50 million in EBIT benefit
- Reshaping Bedding Products strategy to better position for long-term success
- Withdrawing long-term financial targets
- Recording a $450 million long-lived asset impairment charge in 4Q23
The restructuring plan announced by Leggett & Platt, involving the optimization of their manufacturing and distribution footprint, represents a significant operational shift designed to enhance efficiency and reduce costs. The projection of $40 to $50 million in annualized EBIT benefit by late 2025 indicates a potential improvement in the company's profitability margins. The financial implications are substantial, with an estimated reduction in annual sales by $100 million, which could impact revenue streams but is offset by the expected EBIT growth. The net cash proceeds from the sale of real estate, estimated between $60 to $80 million, could provide short-term liquidity and contribute to funding the restructuring process. Investors should note the withdrawal of long-term financial targets, which introduces uncertainty regarding future performance metrics. The long-lived asset impairment charge of $450 million is a non-cash expense that reflects adjustments to the company's balance sheet and may affect investor perception of asset valuation and future profitability.
From a market perspective, Leggett & Platt's strategic refocusing on innovative, higher-value bedding products aligns with consumer trends favoring specialized and premium offerings. The consolidation of facilities from 50 to approximately 30 to 35 is indicative of an industry trend towards leaner operations in response to changing market demands. The company's initiative to integrate specialty foam and innerspring capabilities could enhance its competitive edge in the bedding market. It is crucial to monitor how these changes will affect the company's market share and customer relationships, particularly as the bedding market has undergone significant changes in recent years. The emphasis on maintaining market-leading service and product quality levels, while improving efficiency, highlights a strategic balance between cost management and value creation.
From a legal standpoint, the restructuring plan entails navigating complex employment and contract law issues, particularly with the consolidation of manufacturing facilities and potential workforce reductions. The anticipated restructuring and related costs of $65 to $85 million, including cash costs of $30 to $40 million, suggest significant expenditures related to severance, lease terminations and other associated legal matters. It is important for stakeholders to consider the legal implications of these actions, including compliance with local and international regulations, which can influence the timeline and cost-effectiveness of the restructuring process. Moreover, the sale of real estate assets as part of the plan may involve intricate legal transactions, potentially affecting the projected net cash proceeds.
- Continuing to adapt Bedding Products strategy to advance innovative, higher-value content and provide additional product solutions for our customers
- Optimizing manufacturing and distribution footprint to enhance the efficiency of our business while maintaining ability to service our customers
- Executing plan initiatives expected to generate
$40 $50 million - Withdrawing company's long-term financial targets
- Recording an estimated
$450 million
Diversified manufacturer Leggett & Platt announced that it is implementing a Restructuring Plan primarily in its Bedding Products segment and to a lesser extent, in its Furniture, Flooring & Textile Products segment. In response to evolving markets, the Company is taking actions to improve manufacturing and distribution efficiency, advance its product strategy, and further support customer needs. These actions are expected to generate
President and CEO Mitch Dolloff commented, "We are taking actions to create a more focused, agile organization with a portfolio of products and operating footprint aligned with the markets we serve. The bedding market has experienced unprecedented change in recent years and the competitive landscape has continued to evolve. Reshaping our Bedding Products strategy is expected to better position us for long-term success as the leading provider of bedding solutions across the value chain. In addition, optimizing our operating footprint in both Bedding Products and Furniture, Flooring & Textile Products will reduce complexity and enhance the efficiency of our business. Looking forward, we expect to advance key product growth, improve profitability, and drive enhanced value for customers and shareholders."
OVERVIEW OF INITIATIVES
The major Bedding Products initiatives that are part of the Restructuring Plan include:
- Refocusing Strategy: We are continuing to reshape our Bedding Products business to focus on innovative, higher-value content, driven by customer and end-consumer needs. We are proud of our long history of providing product solutions our customers value and see further opportunities to do so in both innersprings and specialty foam, from components to private label finished goods.
- Optimizing Manufacturing and Distribution Footprint: We plan to consolidate certain locations across the Bedding Products segment, reducing our manufacturing and distribution footprint of 50 facilities to approximately 30 to 35 facilities. Creating a new and more efficient regional distribution network will support our ability to maintain sufficient manufacturing capacity in fewer, higher-output facilities to effectively serve our customers and better align with anticipated future market demand. These actions should allow us to integrate our specialty foam and innerspring capabilities while maintaining market- leading service and product quality levels and improving overall efficiency.
The initiatives outlined above are expected to enable profitable growth through expanded product capabilities and increased content at attractive price points, reduce costs, and create shareholder value.
In Furniture, Flooring & Textile Products we plan to consolidate a small number of production facilities in Home Furniture and Flooring Products to better align capacity with regional demand and drive operating efficiencies.
FINANCIAL IMPACT
In total, the initiatives are expected to reduce annual sales by approximately
We expect to incur restructuring and restructuring-related costs of
LONG-TERM FINANCIAL TARGETS
In connection with the Restructuring Plan, we are withdrawing our previously stated Total Shareholder Return goal of 11–
FOURTH QUARTER 2023 IMPAIRMENT CHARGE
In addition, but unrelated to the Restructuring Plan, we are impairing an estimated
FOR MORE INFORMATION: Visit Leggett's website at www.leggett.com.
COMPANY DESCRIPTION: Leggett & Platt (NYSE: LEG) is a diversified manufacturer that designs and produces a broad variety of engineered components and products that can be found in many homes and automobiles. The 141-year-old Company is 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 applications; and aerospace tubing and fabricated assemblies.
FORWARD-LOOKING STATEMENTS: This press release contains "forward-looking" statements including the positioning of the Company for long-term success as the leading provider of bedding solutions across the value chain; reducing complexity and enhancing the efficiency of our business; advancing key product growth; improving profitability; driving enhanced value for customers and shareholders; integrating our specialty foam and innerspring capabilities; delivering profitable growth through expanded product capabilities; increasing content at attractive price points; reducing costs; creating shareholder value; the amounts and timing of restructuring and restructuring related costs (cash and non-cash); the amount and timing of EBIT benefit; the amount and timing of the reduction of sales; the amount and timing of proceeds from the sale of facilities; the number of Bedding Product segment production and distribution facilities to be consolidated; reduced future sales and earnings; the amount of long-lived asset impairment; the maintenance of our investment grade debt ratings and current dividend practices; and the underlying assumptions relating to the forward-looking statements. These statements are identified either by the context in which they appear or by use of words such as "anticipate," "estimate," "expected," "plan, "should," or the like. All such forward-looking statements are expressly qualified by the cautionary statements described in this provision. Any forward-looking statement reflects only the beliefs of the Company or its management at the time the statement is made. Because all forward-looking statements deal with the future, they are subject to risks, uncertainties and developments which might cause actual events or results to differ materially from those envisioned or reflected in any forward-looking statement. Moreover, we do not have, and do not undertake, any duty to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement was made. For all of these reasons, forward-looking statements should not be relied upon as a prediction of actual future events, objectives, strategies, trends or results.
It is not possible to anticipate and list all risks, uncertainties and developments which may cause actual events or results to differ from forward-looking statements. However, some of these risks and uncertainties include the following: (i) the preliminary nature of the estimates related to the Restructuring Plan, and the amount of long-lived asset impairment, and the possibility that all or some of the estimates may change as the Company's analysis develops, and additional information is obtained; (ii) our ability to timely implement the Restructuring Plan in a manner that will positively impact our financial condition and results of operation; (iii) our ability to timely dispose of assets pursuant to the Restructuring Plan and obtain expected proceeds; (iv) the impact of the Restructuring Plan on the Company's relationships with its employees, customers and vendors; (v) our ability to accurately forecast future sales and earnings; (vi) factors that may cause the Company to be unable to achieve the expected benefits of the Restructuring Plan; (vii) sufficient cash generation to pay the dividend at current levels; and (viii) the risks and uncertainties detailed from time to time in reports filed by the Company with the Securities and Exchange Commission, including reports filed on Forms 8-K, 10-Q and 10-K.
CONTACT: Investor Relations, (417) 358-8131 or invest@leggett.com
Cassie J. Branscum, Vice President of Investor Relations
Kolina A. Talbert, Manager of Investor Relations
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SOURCE Leggett & Platt Incorporated
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