CARTHAGE, Mo., Jan. 16,
2024 /PRNewswire/ --
- 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 to $50 million
of annualized EBIT benefit when fully implemented in late 2025
- Withdrawing company's long-term financial targets
- Recording an estimated $450
million long-lived asset impairment charge in 4Q23 related
to prior year acquisitions in Bedding Products segment
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
$40 to $50
million in EBIT benefit on an annualized run-rate basis when
fully implemented in late 2025.
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 $100 million and generate $40 to $50 million
in EBIT benefit on an annualized run-rate basis when
fully implemented in late 2025, with some of the benefit starting
to be realized in the second half of 2024. Additionally, we
anticipate receiving approximately $60 to $80 million
in net cash proceeds from the sale of real estate associated with
the initiatives, with transactions largely complete by the end of
2025.
We expect to incur restructuring and restructuring-related costs
of $65 to $85
million, of which approximately half are anticipated to be
incurred in 2024 and the remainder in 2025. This includes
$30 to $40
million in cash costs, the majority of which are anticipated
to be incurred in 2024. In the first half of 2024, we anticipate
$20 to $25
million of restructuring and restructuring-related costs
(approximately half in cash costs).
LONG-TERM FINANCIAL TARGETS
In connection with the
Restructuring Plan, we are withdrawing our previously stated Total
Shareholder Return goal of 11–14% and financial targets, including
revenue growth, EBIT margin, and dividend payout ratio. Revised
financial targets will be issued at a future date. We are not
changing our objectives of maintaining our investment grade debt
ratings and our current dividend practices.
FOURTH QUARTER 2023 IMPAIRMENT CHARGE
In
addition, but unrelated to the Restructuring Plan, we are impairing
an estimated $450 million of
long-lived assets (primarily intangibles) associated with prior
year acquisitions in the Bedding Products segment. Prolonged weak
demand and changing market dynamics have created disruption and
financial instability for some of our customers. As a result,
recent efforts by certain customers to improve their financial
position are expected to reduce our future sales and earnings. We
are not otherwise updating guidance for, or reporting upon, our
fourth quarter 2023 or full year 2023 financial results. These
financial results and 2024 full year guidance will be released on
February 8, 2024.
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