Leggett & Platt, Incorporated

Greetings and welcome to the Leggett and Platt second quarter 2025 webcast and earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve West, Vice President of Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to Leggett and Platt second quarter 2025 earnings call. With me today are Carl Glassman, CEO, Ben Burns, CFO, Tyson Hagel, President of the Bedding Products segment, Sam Smith, President of the Specialized Products and Furniture, Flooring and Textile Products segments, and Cassie Branscombe, Vice President of Financial Planning and Analysis. This conference call is being recorded for Leggett and Platt and is copyrighted material. This call may not be transcribed, recorded, or broadcast without our express permission. A replay will be available on the Investor Relations section of our website. Yesterday we posted our press release and a set of slides that contain summary financial information, along with segment details, a tariff overview, and a restructuring update. Those documents supplement the information we will discuss this morning, including non-GAAP reconciliations. Remarks concerning future expectations, events, objectives, strategies, trends, or results constitute forward-looking statements. Actual results or events may differ materially due to a number of risks and uncertainties, and the company undertakes no obligation to update or revise these statements. For a summary of these risk factors and additional information, please refer to yesterday's press release and these sections in our most recent 10-K and subsequent 10-Q entitled Risk Factors and Forward-Looking Statements. I will now turn the call over to Carl.

Thank you, Steve, and good morning, everyone. I would like to start by introducing Steve West, who recently joined us as our new Vice President of Investor Relations. Steve brings more than 20 years of experience as both a sell-side equity analyst and a corporate IR leader at multiple companies in the consumer discretionary sector, including Panera Bread Company and Dick's Sporting Goods. We're excited to have him on board, and I know he is looking forward to engaging with all of you. I would also like to announce that Cassie Branscombe was promoted to a new Senior Leadership role as Vice President of our Financial Planning and Analysis Group. With this new focus, Cassie will continue to collaborate closely with Investor Relations while also playing a critical role in the formation and execution of our financial strategy. This appointment reflects her strong cross-functional expertise, strategic insight, and continued dedication to advancing our financial goals. Turning to our second quarter results, I am pleased we grew our earnings versus last year and continue to strengthen our balance sheet and cash flow generation. Our team has done a terrific job driving these results through the execution of our restructuring plan and disciplined cost management, as well as making progress on our priorities of improving operational execution and paying down debt. Embedding activities related to our announced restructuring plan are now largely complete. In flooring products, we made steady progress on phase two of our consolidation efforts. In hydraulic cylinders, we continued implementation of manufacturing efficiency improvements. We expect company-wide restructuring activity to be substantially complete by year end. We are also continuing to make progress on our strategic business review and optimization efforts. At the end of May, we sold a small operation in work furniture in Mexico, which enables the team to focus on larger core operations. We also remain on track to close the aerospace transaction this year after the required regulatory approvals. As we execute our strategic priorities, we continue to navigate a very dynamic tariff landscape with discipline and agility across our businesses. Given the prominence of tariffs in the market today, let me provide an overview of how they are affecting our businesses. As a reminder, prior to the recently implemented tariffs, our U.S. businesses sourced approximately $400 million annually from trade and inter-company suppliers located in foreign countries, including approximately $100 million from China. While tariff impacts vary across our businesses in aggregate, given what we know today, the recent tariff changes are a net positive for us. However, we remain concerned that wide-ranging tariffs will drive inflation, hurt consumer confidence, and pressure consumer demand. We continue to be actively engaged with customers and suppliers, taking steps to mitigate tariff impacts, whether by leveraging our global footprint to shift production and sourcing to less impacted regions or implementing pricing actions where appropriate. We're also pursuing increased demand opportunities domestically as a result of increased tariffs. Although reciprocal tariffs have the potential to support U.S. mattress demand by creating a more level playing field between domestic and foreign producers, enforcement remains a key unknown. Historically, duties led to transshipment of mattresses to avoid higher rates, but recent comments by the administration appear to contemplate duties for those activities. This will be an important consideration for actual impact of reciprocal tariffs. Within our bedding segment, 232 steel tariffs have led to expanded metal margins and increased demand for our steel rod and rod and wire operations. But we have not yet seen a noticeable improvement in our innerspring demand. In contrast, our domestic adjustable bed business continues to face significant tariff exposure. However, our Mexican adjustable bed operation is a strategic asset that should continue to be cost competitive, assuming the reciprocal tariff exemption of U.S. MCA compliant products remains in place. Within specialized products, our automotive business continues to have the largest potential indirect tariff exposure. The implementation of the auto parts tariffs has not directly impacted us, but could cause lower demand with our Tier 1 and OEM customers if consumer affordability becomes an issue. They will need to reduce production. Additionally, there is emerging disruption risk of the critical rare earth mineral supply chain, which feeds into Chinese source magnets used in semiconductors and electronics and vehicles. While this has impacted some of our customers, it has had minimal impact on us to date. In furniture, flooring, and textiles products, tariffs impact our businesses to varying degrees. In home furniture, we experienced meaningful disruptions early in the second quarter. Our Chinese operations face shipment delays, order cancellations, and customer shutdowns, which began to normalize later in the quarter with the postponement of the tariffs. We are making progress on setting up production within another low cost country that will help mitigate our tariff exposure and anticipate beginning production later this year. Within our work furniture business, our teams are pursuing new opportunities with customers who are looking for regionally supplied finished furniture and components. Finally, our textiles business continues to mitigate most tariff exposure by shifting to alternative sources in countries with lower tariffs. Our other businesses, including aerospace, have minimal impact from various tariffs in effect today. We're consistently executing against our priorities of strengthening the balance sheet, enhancing profitability, and driving operational efficiency, while positioning the company for long term growth. This focus has enabled us to deliver improved margins and reduce our debt despite softness in many of our end markets and reinforces our confidence in navigating ongoing macroeconomic and trade related uncertainties. I'll now turn the call over to Ben.