Leggett & Platt Inc. Q1 2009 Earnings Call Transcript

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2009-04-24 11:29:13.0

Tags: Call Transcript, Quarter, Earnings, Leggett & Platt Inc., Sales Strategy, Corporate Law, Financial Accounting, Sales Force Management, Sales, Business Operations, Finance, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) And our first question comes from the line of Mark Rupe with Longbow Research. Go ahead please.

Mark Rupe – Longbow Research

Just had a question on the Residential Furnishings segment. Any color you can provide on how some of the bedding-related business did versus the overall furniture? And then just secondly, on the seasonality going into the second quarter, I know the second quarter last year was very strong for that segment. Just curious to see how the performance might be in the second quarter for that channel?

Karl Glassman

Mark, this is Karl. If we separate the Residential Furnishings segment, what I'm going to do is give you sales by kind of product category, and these are sequential. So they are sales, not units, fourth quarter to first quarter. U.S. spring sales were up about 5%. Units - innerspring units were up 1%. Box springs were off slightly, that were kind of indicative of the market in total. We think the bedding industry was down. The last [ISPA] number we saw through February was 15%. We think a more accurate number for the quarter was off 20. So that’s indicative of our regaining some market share and the de-verticalization that we made in 1Q of '08. So bedding performed well.

International spring was off about 30%. Included in that is us walking away from some poor performing business in some geographies. Furniture was off about 15%. Consumer Products off about 11%. Our Hanes, which is our non-woven fabrics, non-decorative fabrics business, primarily, was off about 30%. There is a little bit of divestiture activity included there also. And carpet underlay was off 12%.

So, as we speak, we think that, basically feel that the demand trends have softened. First quarter was obviously pretty tough compared to the fourth. As regards to the tough second-quarter comp, we don't see much improvement. We don't see much deterioration. So there is a little bit of a seasonal pickup normally housed around Memorial Day. We’ll see what happens. But we are guarded in our forecast.

David Haffner

And Karl, wouldn't you say that, generally speaking, the lower-priced products have done better than the premium-priced products?

Karl Glassman

Very much so. I think that’s part of what our market share gain is, is we are certainly picking up market share from the alternative-- pure-play alternative sleep products that are more highly priced. So yes, our customers at every pricing strata have down-spec to a degree and are selling lower-priced goods.

 

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