Leggett & Platt, Incorporated (LEG): BCG Matrix [11-2024 Updated]

In 2024, Leggett & Platt, Incorporated (LEG) presents a dynamic portfolio that illustrates the company's strategic positioning across various markets. This analysis utilizes the Boston Consulting Group Matrix to categorize Leggett & Platt's business segments into Stars, Cash Cows, Dogs, and Question Marks. Discover how the recovery in bedding and aerospace products contrasts with challenges in work furniture and the competitive landscape of specialty foam, and learn what this means for the company's future growth potential.

Background of Leggett & Platt, Incorporated (LEG)

Leggett & Platt, Incorporated (LEG) is a diversified manufacturer founded in 1883, headquartered in Carthage, Missouri. The company specializes in the design and production of a wide range of engineered components and products utilized in numerous industries, including bedding, automotive, aerospace, and furniture. Its operations span across approximately 120 production facilities located in 18 countries worldwide.

The company operates through three primary segments:

• Bedding Products: This segment provides components and machinery used by bedding manufacturers, including private label finished mattresses and adjustable bed bases. It is vertically integrated, producing specialty foam chemicals, steel rod, and drawn steel wire for both internal use and external customers.
• Specialized Products: This segment supplies automotive manufacturers with lumbar support systems, seat suspension systems, motors, actuators, and control cables. Additionally, it produces tubing for the aerospace industry and hydraulic cylinders for material handling and heavy construction.
• Furniture, Flooring & Textile Products: Operations here supply components for residential and commercial furniture manufacturers, as well as private label finished furniture. The segment also produces carpet cushioning and flooring underlayment.

As of September 30, 2024, Leggett & Platt reported total sales of $3.36 billion for the first nine months of the year, a decline from $3.61 billion in the same period in 2023. The company is currently navigating challenges, including a significant $675 million non-cash goodwill impairment charge and restructuring efforts aimed at consolidating production facilities to enhance operational efficiency.

The company's stock performance has been volatile, with its share price dropping significantly in 2024. As of June 28, 2024, the stock price was $11.46, a stark decrease from $26.17 at the end of 2023. This decline reflects broader market pressures and reduced demand in key sectors.

Leggett & Platt has faced competitive pressures from foreign manufacturers, prompting strategic adjustments including price changes and product innovation to maintain market share. The company has also engaged in legal actions against foreign competitors over unfair pricing practices, resulting in the imposition of antidumping duties on certain imported products.

Leggett & Platt, Incorporated (LEG) - BCG Matrix: Stars

Bedding Products showing recovery potential

For the nine months ended September 30, 2024, Leggett & Platt's Bedding Products segment reported trade sales of $1,331.5 million, a decline of 12.2% compared to $1,516.2 million in the same period of 2023. Organic sales also decreased by 12.2%. The segment's EBIT was a loss of ($550.6 million), primarily due to a $675 million non-cash goodwill impairment charge, as well as restructuring costs and lower volume from demand softness in the U.S. and European markets.

Aerospace Products with demand recovering to pre-pandemic levels

The Aerospace Products segment has shown resilience, with its fair value exceeding carrying value by 21% as of the second quarter of 2024, compared to 44% in the previous year. This segment has not incurred impairment charges and is benefiting from a recovery in demand, which is now similar to pre-pandemic levels.

Specialized Products demonstrating growth in Aerospace sector

The Specialized Products segment, which includes components for the aerospace industry, reported trade sales of $935.4 million for the nine months ended September 30, 2024, down 2.7% from $961.3 million in the prior year. Despite a decrease in volume, this segment has experienced growth in the aerospace market, which partially offset declines in automotive and hydraulic cylinders.

Strong EBIT improvement expected post-restructuring

Leggett & Platt anticipates an annualized EBIT benefit of $50 million to $60 million following the completion of its restructuring initiatives. As of September 30, 2024, the restructuring plan already yielded an EBIT benefit of $9 million year-to-date, with expectations to realize an additional $10 million to $15 million in 2024.

Leggett & Platt, Incorporated (LEG) - BCG Matrix: Cash Cows

Hydraulic Cylinders maintaining stable demand.

The Hydraulic Cylinders segment has shown stable demand, contributing approximately $43.6 million in trade sales for the first nine months of 2024. The fair value of this reporting unit exceeded its carrying value by 18% at the second quarter 2023 testing date. However, it faced operational inefficiencies due to an acquisition in August 2022, which impacted its overall performance.

Furniture, Flooring & Textile Products with consistent revenue generation.

This segment generated trade sales of $1,060.3 million for the first nine months of 2024, although it experienced a decline of 6% compared to the previous year. The EBIT for this segment was $41.6 million, reflecting a margin of 3.9%. Despite facing challenges, the segment remains a significant cash generator for Leggett & Platt.

Established market presence in Bedding Products supporting cash flow.

The Bedding Products segment reported trade sales of $587.2 million for the first nine months of 2024. However, it also faced a significant EBIT loss of $550.6 million, largely attributed to a non-cash goodwill impairment charge of $587 million. The segment's fair value was reported to be below its carrying value, indicating ongoing challenges but still contributing to overall cash flow.

Historical profitability in Specialized Products segment despite recent challenges.

In the Specialized Products segment, trade sales were $935.4 million for the first nine months of 2024. The EBIT decreased to $39 million, representing a margin of 4.2%. This segment has historically been profitable, contributing positively to Leggett & Platt's cash flow, although it too faced operational challenges in recent times.

Leggett & Platt, Incorporated (LEG) - BCG Matrix: Dogs

Work Furniture experiencing sustained low demand.

The Work Furniture segment has shown a significant decline in demand, particularly for contract and residential end-use products. The fair value of this segment exceeded its carrying value by only 74% as of the second quarter of 2023, indicating a challenging market position.

Bedding Products facing overcapacity and competition from imports.

The Bedding Products segment reported trade sales of $1,331.5 million for the nine months ended September 30, 2024, down from $1,516.2 million in the same period of 2023, reflecting a decrease of 12%. This decline is attributed to overcapacity, increased competition from finished mattress imports, and a general softening in demand.

Declining EBIT margins in Bedding Products due to market disruptions.

EBIT for the Bedding Products segment saw a drastic decline, posting a loss of $550.6 million in the first nine months of 2024 compared to a profit of $87.4 million in 2023. This reflects a staggering decrease of 730%, primarily due to a non-cash goodwill impairment charge of $587 million.

Hydraulic Cylinders showing operational inefficiencies from acquisitions.

The Hydraulic Cylinders segment has faced operational inefficiencies, particularly stemming from an acquisition made in August 2022. The fair value of this unit at the second quarter 2023 testing date exceeded its carrying value by just 18%, indicating that it is struggling to achieve operational synergies.

Leggett & Platt, Incorporated (LEG) - BCG Matrix: Question Marks

Aerospace Products with uncertain long-term forecasts despite current stability

The Aerospace segment of Leggett & Platt has displayed low market share in a market that is otherwise experiencing growth. As of September 30, 2024, the goodwill associated with the Aerospace reporting unit was $67.7 million, with its fair value exceeding the carrying value by 21%. However, the market conditions remain volatile, which raises questions about the sustainability of this segment's growth potential.

Potential for growth in Specialty Foam products but highly competitive

Specialty Foam products have shown potential for growth; however, the segment is facing significant competition. Trade sales for this category were $935.4 million for the nine months ended September 30, 2024, reflecting a 2.7% decrease from the previous year. The EBIT for Specialty Products during the same period was $39 million, down from $93 million. This decrease highlights the challenges in capturing market share in a competitive landscape.

Furniture, Flooring & Textile Products facing pressure from economic conditions

The Furniture, Flooring & Textile Products segment is under pressure due to unfavorable economic conditions. For the nine months ended September 30, 2024, this segment reported trade sales of $1,060.3 million, which is a 6.4% decline year-over-year. The EBIT for this segment was $41.6 million, down significantly from $96.7 million. The declining sales and earnings reflect the need for strategic initiatives to enhance market share.

Need for strategic initiatives to enhance market share in declining segments

To address the challenges faced by its Question Marks, Leggett & Platt must implement strategic initiatives. The company is currently evaluating its portfolio and exploring potential sales of underperforming segments, including Aerospace. As of September 30, 2024, the company had cash and cash equivalents of $277 million, which could be utilized for investment in promising segments. The overall market conditions will require careful navigation to prevent these Question Marks from becoming Dogs.

In summary, Leggett & Platt, Incorporated (LEG) showcases a diverse portfolio illustrated by the BCG Matrix, where Stars like Bedding and Aerospace Products signal recovery and growth, while Cash Cows such as Hydraulic Cylinders and established Furniture segments continue to generate steady cash flow. Conversely, Dogs like Work Furniture and struggling Bedding Products highlight areas of concern, and Question Marks in Aerospace and Specialty Foam products indicate potential but require strategic focus to capitalize on uncertain opportunities. As the company navigates these dynamics, its ability to leverage strengths while addressing weaknesses will be crucial for sustained success.

Updated on 16 Nov 2024

Resources:

1. Leggett & Platt, Incorporated (LEG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Leggett & Platt, Incorporated (LEG)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Leggett & Platt, Incorporated (LEG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.