Manufacturing company Leggett & Platt (NYSE: LEG) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 6.3% year on year to $1.06 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $4.15 billion at the midpoint. Its non-GAAP profit of $0.30 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Leggett & Platt’s second quarter results met Wall Street’s expectations for both revenue and adjusted earnings, but the market responded negatively to ongoing sales declines and persistent demand challenges. Management attributed the 6.3% year-over-year revenue decrease to soft demand in key residential end markets, as well as the impact of ongoing restructuring initiatives. CEO Karl Glassman noted, “Our team has done a terrific job driving these results through the execution of our restructuring plan and disciplined cost management,” but acknowledged continued headwinds from tariffs and weak consumer demand, especially in the Bedding and Furniture segments.

Looking ahead, Leggett & Platt’s guidance reflects cautious optimism as management expects restructuring benefits and improved operational efficiency to gradually support margins. CFO Ben Burns highlighted that the company anticipates metal margin expansion and restructuring benefits to partly offset lower volumes, while cautioning that “merchandising changes will remain as headwinds through the remainder of the year.” Management emphasized that tariff dynamics and consumer demand recovery are central to their outlook, with Glassman stating, “When the consumer reengages, I am extremely confident this company is in a position of strength to leverage all the hard work that has been done.”

Key Insights from Management’s Remarks

Management cited restructuring progress, cost control, and shifting demand patterns as core themes influencing the latest quarter’s financial performance, while also highlighting external trade and tariff pressures impacting segment results.

• Restructuring nearing completion: The company’s multi-year restructuring program is largely finished, with most facility closures and operational changes implemented. Management expects restructuring-related cost savings to reach $60-$70 million annually, though these efforts have also resulted in some sales attrition.

• Tariff impacts mixed by segment: Management described tariffs as a net positive at the company level due to improved metal margins, particularly in the steel rod and wire operations. However, tariffs created ongoing challenges in the Bedding and Home Furniture segments, disrupting supply chains and leading to order cancellations and shipment delays, especially for products sourced from China and Southeast Asia.

• Bedding segment softness continues: The Bedding Products segment remained under pressure from weak mattress and adjustable base demand. Changes in retailer merchandising and a large customer’s sales challenges were called out as specific headwinds, with management anticipating these issues will persist over the coming quarters.

• Operational efficiency gains: The company reported improved operating margins, driven by disciplined cost management, restructuring benefits, and metal margin expansion. SG&A expenses were reduced as part of the restructuring, with management expecting further incremental improvements in overhead efficiency.

• Portfolio optimization underway: Leggett & Platt sold a small Work Furniture operation in Mexico and is on track to divest its Aerospace business, signaling ongoing efforts to focus on core operations and streamline the business. Management also discussed real estate sales associated with restructuring, contributing to debt reduction.

Drivers of Future Performance

Management’s outlook for the remainder of 2025 centers on restructuring benefits, tariff-related market shifts, and ongoing demand recovery challenges, with significant emphasis on cost discipline and operational efficiency.

• Restructuring benefits to margins: The company expects ongoing cost savings from restructuring to provide a tailwind for operating margins, even as certain sales are lost due to facility closures and business exits. Management projects $35–$40 million in incremental EBIT benefits this year, with additional gains in 2026.

• Tariff-driven market dynamics: Management views recent tariff changes as a net positive, particularly for domestic steel operations, but also cautions that tariffs could drive inflation and suppress consumer confidence. The company is adjusting sourcing strategies and leveraging its global footprint to mitigate adverse impacts, while monitoring enforcement and regulatory changes closely.

• Demand uncertainty persists: While there are signs of stabilization in some end markets, management remains cautious about the pace of consumer demand recovery, especially in Bedding and Furniture. Retailer merchandising changes and aggressive pricing competition are expected to weigh on volumes, and management highlighted the risk of ongoing headwinds if macroeconomic conditions do not improve.

Catalysts in Upcoming Quarters

Looking forward, our analyst team will be monitoring (1) the pace at which restructuring cost savings translate into sustained margin improvement, (2) the evolution of tariff enforcement and its impact on supply chains and domestic demand, and (3) stabilization or recovery in residential end markets such as Bedding and Home Furniture. Additional focus will be placed on progress with portfolio optimization and the redeployment of capital from divestitures.

Leggett & Platt currently trades at $8.97, down from $9.53 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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