Greetings and welcome to the Leggett & Platt Third Quarter 2024 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. As a reminder this conference is being recorded. It is now my pleasure to introduce, Cassie Branscum, Vice President of Investor Relations. Thank you. You may begin.

Good morning and welcome to Leggett & Platt third quarter 2024 earnings call. With me on the call today are Karl Glassman, CEO; Ben Burns, CFO; Tyson Hagale, President of the Bedding Products segment; Sam Smith, President of the Furniture, Flooring & Textile Products segment; and Kolina Talbert, Manager of Investor Relations. The agenda for our call this morning is as follows. Karl will discuss current demand trends and provide an update on the restructuring plan and other ongoing initiatives. Ben will cover our operating results and additional financial details and address our revised 2024 outlooks and the group will answer any questions you have. This conference call is being recorded for Leggett & Platt and is copyrighted material. This call may not be transcribed, recorded or broadcast without our expressed permission. A replay will be available on the Investor Relations section of our website. We posted to the IR section of our website yesterday's press release and a set of slides that contain summary financial information, along with segment details and a restructuring update. Those documents supplement the information we discuss on this call, including non-GAAP reconciliations. Remarks today 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 the sections in our most recent 10-K and subsequent 10-Q entitled Risk Factors and forward-looking statements. I'll now turn the call over to Karl.

Good morning, and thank you for joining our call today. As we begin, I want to thank our employees for their continued hard work and dedication as we navigated a challenging macro backdrop. Our third quarter sales and earnings were below our expectations, largely due to weaker than anticipated demand in residential end markets and headwinds in Automotive, Hydraulic Cylinders and Geo Components. Sluggish demand in these businesses is expected to persist through the fourth quarter and is expected to be more impactful than previously anticipated. As a result, we are reducing full year sales and earnings guidance, which Ben will detail later in the call. Now, I'd like to highlight a few of the current demand dynamics in our key end markets. The US bedding market continues to experience negative volume comparisons. Although some improvement in demand has been observed during holiday sales, periods in between have been softer. We estimate that US mattress consumption was approximately flat in the third quarter, but domestic production was likely down high single digits. Given a more challenging macro environment and softening in consumer spending, we expect the domestic market will continue to be pressured in the fourth quarter and expect 2024 domestic units to be down mid single digits versus last year. While we are encouraged to see the Fed begin a cycle of interest rate cuts, we know a series of cuts is needed to meaningfully impact housing turnover. And there will also be a lag between improvement in housing trends and an improvement in mattress demand. We still anticipate that our 2024 Bedding Products segment volume will be down high single digits due to company-specific factors. Excluding higher trade rod sales for non-bedding applications, segment volume would be expected to be down low double digits. However, it's important to note that our ComfortCore and semi-finished products continued to perform in line with or better than domestic mattress production trends. And we are working closely with our customers on a number of product line refreshes and value engineering opportunities. Turning to automotive. The market remains volatile across geographies. In China, multinational OEM customers are losing share to Chinese EV manufacturers, where we are currently less represented, resulting in short-notice production declines. In Europe, economic softness and consumer affordability issues have given Chinese EV manufacturers opportunities to supply lower-cost electric vehicles, leading to production total declines, product trade-down, and program launch delays for our customers. In North America, uncertainty around EV transition timelines and consumer affordability issues are resulting in program launch delays and product trade-down. Although our sales are more impacted by these factors than previously expected, our automotive team continues to realize efficiency improvements and closely manage cost, resulting in improved EBIT margins. Finally, weakness in our Geo Components business continued through the third quarter, impacting both the civil construction market and retail sales. These trends are expected to continue into the fourth quarter in addition to normal seasonal softness. Despite the near-term demand challenges, we remain focused on our initiatives to strengthen our balance sheet, improve operating efficiency and margins, and position ourselves for future profitable growth opportunities. I'm pleased to share that our restructuring plan remains on track, and our teams have done an excellent job executing the plan. We will exit our Mexican innerspring operation by year end, which will conclude all innerspring-related restructuring activity in the bedding products segment. Within Specialty Foam, we have closed operations and expect one more consolidation to be complete by year end. Early in the fourth quarter, we closed one adjustable bed location and shifted production to a more cost-advantaged facility to reduce excess capacity and improve our cost structure. Restructuring initiatives in the furniture, flooring, and textiles product segments are also on track. We successfully executed the restructuring activity in home furniture and expect to complete phase one of our flooring products restructuring by early next year. Within specialized products, our hydraulic cylinders team is actively working through a restructuring project designed to increase profitability through manufacturing optimization and operating efficiency improvements. Last quarter, we shared that an in-depth strategic review of our portfolio was underway. We are focused on simplifying our portfolio to businesses that are the right long-term fit for Leggett & Platt. As part of this strategic review, we are currently exploring the potential sale of our aerospace business. We do not intend to comment on or provide updates regarding our strategic evaluation process unless and until we determine that further disclosures are required or otherwise are appropriate. We also continue to work through an evaluation of our general and administrative cost structure. Our G&A project team is analyzing and identifying opportunities to drive efficiencies. We have identified approximately $10 million in corporate cost savings, which are expected to be realized in 2025. We continue to analyze and identify potential opportunities within our business unit functions. However, we anticipate potential cost reductions will be smaller than those identified in our corporate functions. We remain confident in our ability to execute the restructuring plan and other operational efficiency improvements and position our company for long-term success. I'll now turn the call over to Ben to review third quarter financial details and our revised outlook for the year.

Thank you, Karl and good morning, everyone. Third quarter sales were $1.1 billion, down 6% versus the third quarter of 2023, due to volume declines across all three segments and raw material-related selling price decreases. Compared to third quarter 2023, sales in our Bedding Product segment decreased by 8%. Third quarter sales in Specialized Products declined 6% year-over-year, and sales in Furniture, Flooring & Textile Products were down 4%. Third quarter EBIT was $78 million, and adjusted EBIT was $76 million, down $10 million versus Q3 2023, primarily due to unfavorable product mix and betting process, lower volume, metal margin compression, and higher bad debt reserves, partially offset by lower amortization expense, operational efficiency improvements, and restructuring benefits. Despite weaker than expected results, adjusted EBIT margin improved by 60 basis points sequentially this quarter. Third quarter earnings per share were $0.33. On an adjusted basis, third quarter EPS was $0.32, an 11% decrease versus third quarter 2023, adjusted EPS of $0.36. Cash generation remains a sharp focus. Our long-term priorities for the use of cash are funding organic growth, funding strategic acquisitions, and returning cash to shareholders through dividends and share repurchases. However, in the near term, we are prioritizing debt reduction while continuing to fund organic growth. In the third quarter, operating cash flow was $95 million, a decrease of $48 million versus the third quarter 2023. This decrease was primarily driven by less benefit from working capital and lower earnings. We ended the quarter with adjusted working capital as a percentage of annualized sales of 14.5%, an increase of 30 basis points versus third quarter 2023. Cash from operations is now expected to be approximately $300 million in 2024 versus our prior guidance of $300 million to $350 million. In the third quarter, we made progress on debt reduction as planned, reducing total debt by $124 million to $1.9 billion, which includes $84 million of commercial paper outstanding. Additionally, net debt to trailing 12-month adjusted EBITDA decreased to 3.78 times at quarter end. We expect to make further progress toward our long-term leverage ratio target of two times in the fourth quarter. As a reminder, cash previously used for the dividend, along with proceeds from real estate sales and any potential divestitures, will be used to accelerate debt reduction. We still expect to predominantly utilize our commercial paper program to repay $300 million of notes maturing in November. Total liquidity was $748 million at September 30, comprised of $277 million of cash on hand and $471 million in capacity remaining under our revolving credit facility. Restructuring costs during the quarter were $12 million, comprised of $11 million in cash costs and $1 million in non-cash costs. The plan remains on track from a cost perspective, and there are no changes to our total cost estimates or timing of costs. In the third quarter, we realized $6 million of EBIT benefit related to the restructuring plan and still expect approximately $10 million to $15 million of EBIT benefit to be realized in 2024. We now expect the total annualized EBIT benefit of $50 million to $60 million after initiatives are fully implemented in late 2025 versus our prior estimate of $40 million to $50 million due to the additional $10 million expected from our G&A initiatives. We realized $4 million of restructuring-related sales attrition in the third quarter and now expect approximately $15 million of sales attrition in 2024 versus our prior estimate of $25 million. Total sales attrition on an annualized run-rate basis, once all initiatives are fully implemented in late 2025, is still expected to be approximately $80 million. In the third quarter, we realized $17 million in cash proceeds from the sale of real estate associated with the plan. We now expect approximately $20 million in cash proceeds from restructuring-related real estate in 2024 versus our prior estimate of $15 million to $25 million. An additional $40 million to $60 million in proceeds is expected in 2025 when the majority of sales are anticipated to be complete. Our expectation of $60 million to $80 million in total restructuring-related real estate proceeds remains unchanged. We are lowering our 2024 sales and EPS guidance as we anticipate weaker demand trends to continue into the fourth quarter, particularly within our Specialized Products and Furniture, Flooring & Textile Products segments. 2024 sales are now expected to be $4.3 billion to $4.4 billion, down 7% to 9% versus 2023 compared to our prior guidance of $4.3 billion to $4.5 billion. Volume is now expected to be down mid-single digits, with volume at the midpoint down high-single digits and Bedding Products down mid-single digits in Specialized Products versus prior guidance of flat volume and down mid-single digits in Furniture, Flooring & Textile Products versus prior guidance of down low-single digits. Deflation and currency combined are expected to reduce sales low-single digits. Full year adjusted earnings per share are expected to be $1 to $1.10 versus our prior guidance of $1.10 to $1.25. As a result, our 2024 full year adjusted EBIT margin range is expected to be 6.0% to 6.4% versus our prior guidance of 6.5% to 6.9%. In closing, I would like to thank our employees for their significant contributions. Our employees are actively driving positive change across each of our businesses, reflecting our dedication to improve profitability, and we are committed to creating long-term value for our shareholders. With those comments, I'll turn the call back over to Cassie.

Thank you, Ben. Operator, we are ready to begin Q&A.

Thank you. We'll now be conducting a question-and-answer session. Our first question comes from the line of Susan Maklari with Goldman Sachs. Please proceed with your questions.

Thank you. Good morning, everyone.

Good morning, Susan.

My first question is regarding one of the things that you noticed was that unfavorable mix in terms of both sales and margins just given the Steel Rod and what's coming through there. Can you talk a little bit about that mix shift and what it implies for profitability as we think about the outlook in the forward quarters perhaps?

Yeah, happy to, Susan. Keeping the rod mill full is really important. But Tyson, if you don't mind, why don’t you kind of unwind the details for Susan.

Yeah, sure, thanks. Good morning, Susan. You're right, our volume in bedding is down just 3% year-over-year. But in our core products, it was down more than that. So filling in with the mix of trade rod and some other products with ECS did offset some of those declines. But going forward, we do expect a higher mix of trade rod and wire tons. And you remember that the trade market is much more low-carbon than hydrocarbons, which we use internally. And while those margins are lower, they are important. Karl said it's important for us just from an operating perspective to operate the mill as slow as we possibly can. It helps us lower or at least maintain our scrap costs. And it also helps us maintain or lower our conversion costs, which is really critical. And also it's a really skilled workforce. So maintaining our workforce and running in those fields we can is really important for us. But just the reality of where we see both the long-term decline as to my flex or grid and doc springs, the de-contenting or this lower material usage within mattress products and also just imported finished mattresses in the US. It’s just a reality for us in running the mill. So that will be a long-term expectation of ours that trade rod mix will be part of our business. Longer term, volume remains the number one headwind for us in terms of margin and recovery. Our restructuring plan and operating efficiency improvements will certainly help, but the lower mix or margin from the trade rod will be a negative or take away from that.

Okay. That's great color. Thank you, Tyson. And then on shifting to auto, Karl, you mentioned some of those bigger moves that are coming through in that business that are reflected in the results. As you think about your expectations for new programs this year, how has that shifted given what's going on in the broader industry? Can you talk a bit about some of the company's specific efforts that are also coming through in that business?

Yeah, Susan, thank you for that as well. As I said in the prepared remarks, the global automotive business is in flux and is variable by region as well. So, said differently, what's happening in North America with slow EV uptake is very different than what's happening in China. And Europe has completely different issues based around cost and affordability. So, there has been a delay in the program starts. That's not all bad because we have a lot of legacy programs that we're running out. They are very profitable programs. Our teams can focus on them. The challenge is kind of the stop-start nature of things and the uncertainty. But in terms of actions that we are taking, Sam Smith has done a wonderful job of helping me oversee the Specialized Products segment. So, Sam, if you don't mind, will you kind of detail those items for Susan and clean up any of my comments if you would?

Absolutely, Karl. Thank you. The term influx is indeed appropriate. Susan, at the start of the year, we anticipated that our core business programs would remain relatively flat heading into 2024, with volume growth expected from new program launches. However, as Karl mentioned, a significant amount of change has influenced the business across all regions. The most substantial impact on our top line has been the delay in launching these new programs. Karl referred to the transition from ICE to EV and its varying effects in different regions. Many of our customers' expectations have shifted, and various programs that we planned to initiate this year have been postponed, with some lacking a clear start date. These program delays account for approximately 40% of the difference between our initial top-line projections and our current expectations. The remaining 60% can be attributed to several other factors previously outlined by Karl. To clarify, our market production forecasts for 2024 were initially expected to be stable compared to the previous year. However, since mid-year, IHS has consistently downgraded its forecasts. Their October 2024 estimate for major markets, excluding Russia, is now about 2.5% lower than last year, leading to a more pronounced decline for our business due to challenges faced by many large multinational OEMs, which have been widely reported. Additionally, affordability remains a concern, with consumers seeking ways to cut costs, influencing our top line through product trade-downs. While these trade-downs might lower overall revenue, they aren't detrimental to us; for instance, if a manufacturer opts for a more economical lumbar system, we still retain sales volume and profitability regardless of the product type. Moreover, inventory levels are rising. According to Automotive News, US car and light truck inventories have increased by approximately 570,000 units year-over-year, growing from around 60 days of sales to 80 days. This increase in inventory may have further implications for us in the upcoming months. Now addressing your inquiry about the specific efforts we're implementing to alleviate this volume pressure, I'd like to commend our automotive team for their dedication throughout the year. They've explored every possible option. We have adjusted our variable cost structure to align with demand for long-term sustainability. Some of the measures they've undertaken include optimizing headcount across regions, focusing on automation and robotics to reduce labor costs, and relocating programs to be nearer to end customers, thus decreasing shipping costs and enhancing operational efficiencies. We've also exited several external warehouses while resizing our inventory to eliminate expensive freight costs from the past. Our emphasis on material cost savings has led us to reassess and change vendors where necessary, all while ensuring that the team continues to perform their regular BAV activities that contribute positively to our bottom line. Collectively, these initiatives are effectively supporting our goals to maintain and grow our margins despite the existing volume pressures, positioning us well for the future.

Good. That is great information, Sam. Thank you for all that detail. I just have two more quick questions for Ben. First, Ben, regarding the Capital Expenditure guidance you've provided for the full year in comparison to what you've spent in the first three quarters, there's about $40 million more expected in the fourth quarter. Can you explain what some of those projects are and how we should consider the timing of those?

Yes, good morning Susan and thanks for the question. And yes, you're right, we've spent about $60 million year-to-date, which would imply $40 million in the fourth quarter, which is a pretty heavy dose compared to what we've done so far. But these are things that we see right in front of us that we feel are very likely. And the first one I would mention is around our rod mill and just the regular maintenance that we typically do this time of year. So, that's a critical item we will be doing, and we know that that's ongoing. Also, in bedding, we've got some new programs and growth initiatives and some efficiency projects that are underway that we're getting ready to launch. In fact, some of those are already starting, so that's really positive. And then I would also say despite some of the challenges Karl and Sam talked about on the automotive side, we do have some new programs launching in the fourth quarter and some CapEx that we'll be spending there. So, it's a variety of things, and it is a heavier dose in the fourth quarter. But we feel like that's really some good things. And maybe I'll ask Tyson to jump in there with a little bit more color on some of the new initiatives that we have in bedding, which are pretty exciting.

Yes, they both relate to spring. I mean, you mentioned that the normal shutdown we take at Sterling is normal maintenance capital and is required, but the other projects are return-based. So we do have a really important initiative for both one of our customers and also for us a product line refresh. And it does require capital spending for equipment for us to manufacture the product that’s required. And I will be rolling out in the early part of next year, but the capital spend is taking place in Q4. So that’s a really important thing for both the customer and us. And then also, we have additional equipment spend also in U.S. spring to help with manufacturing efficiency both with material and labor content. So, that will be also a good return projects for us both in 2025 and move forward.

Yes, thanks. Good investments for here.

Okay, all right. Thank you for that. And then just one last one then. When we think about where we are year-to-date, can you just walk us through the margin expectations for each of the segments for this year? And any changes that you would note relative to your prior guide?

Yes, sure, thanks, Susan, happy to do it. Let's start with bedding. Compared to what we thought before, we see margins now down about 200 basis points. And that's largely an impact from the unfavorable sales mix that we talked about earlier. Our specialized products basis, we would expect margins to be down slightly. And then on the furniture, flooring, and textile side, we expect those margins to be flat.

Okay. Thank you very much. I'll pass it along. Thanks for the color, guys.

Thank you, Susan.

Thank you. Our next questions come from the line of Bobby Griffin with Raymond James. Please proceed with your questions.

Good morning, everyone. I appreciate the opportunity to ask my questions. To start, Karl, could you provide your insights on the third quarter bedding consumption being flat compared to last year? I understand that the mix between domestic and imports influenced those figures, but the overall flat performance was somewhat unexpected for me. Do you think this is mainly due to an influx of imports in the market, or what factors do you believe are at play? From my perspective, the flat consumption in today's economic environment seems somewhat encouraging.

Yes, Bobby, thanks for the question. I remember it's off a relatively easy comp in 3Q, '23. The imports have slowed. But as we had said previously, there was a significant amount of imports that came in right before the duties were levied and reimposed. We believe that those are underway winding down. But Tyson, how else would you answer that question?

Sure, thanks and good morning Bobby. You got the right call. We did see a significant ramp-up late last year with the imports coming in ahead of the duties, and then they slowed in the first and second quarter. But there was a pretty significant overhang for what came in at the end of last year. We did see some incremental growth in inflated imports into the third quarter versus second quarter, but still not nearly to the levels that we saw last year. But really, Bobby, just kind of looking at some of the channel information that we review, and especially on some of the e-commerce channels, we did see quite a lot of activity in the third quarter. And so that's where we get to overall flat, but much slower and softer for our domestic production and consumption.

Understand. That's helpful. And then advertising, you heard anything interesting from your customers or just how the brand behaving during these next couple of weeks for the election of a pullback on ad spend just because of the crowd-out factor or anything interesting just flowed through the channel there to help us understand really kind of the two, three-week impact here?

Sure. Thanks, Bobby. It really just even getting into October, things have been soft. And I think it's for what you said, I mean that’s always is the expectation of getting crowded out yet the higher advertising costs, but also just generally distracted consumers as we get closer to the election. So definitely, it's had an impact, and also our customers are watching inventories in the fourth quarter. But still overall, there has been expectations for kind of normal seasonal patterns in the fourth quarter.

Perfect. And then on specialized products, understand you guys are in the process of seeing what you can get for aerospace. So don't expect you to kind of comment on pure profitability, but could you rank order the three businesses in that segment in terms of EBITDA margins of which one is the strongest to the low, and I have a feeling hydraulic cylinders is roughly around breakeven, and my guess that would be at the bottom. But just any color on how aerospace stacks up versus auto would be helpful for us running some analysis on what potentially it could be worth.

Got it. Interesting approach that Bobby. I can kind of picture gas. I get nervous, but I'm going to tell you the answer is Automotive, Aerospace, Hydraulics.

Thank you. I appreciate it. Kind words. Great analyst, even better human, I always say. So, I hope you like that question. I guess lastly for me, just a question for Ben. Great to see the debt pay down here in the quarter. Just as we think further out and you got some winds of cash coming into the business, what's the interest savings on say $100 million of debt pay down, and we can run that then in our models?

Yes, thanks Bobby, for the question. As we kind of think about it looking forward, we'll pay off the bonds here in a few weeks with commercial paper. So that really will be the deleveraging path that is reducing our commercial paper. So think about $5 million reduction for every $100 million in debt. I'm sorry, $5 million in expense going down for every $100 million that we reduce.

Perfect. Very helpful. Congrats on the early progress within the restructuring and best of luck here in Q4.

Thank you, Bobby.

Thank you. Our next questions come from the line of Peter Keith with Piper Sandler. Please proceed with your questions.

Hi, good morning everyone. One category you hadn't talked about yet was the home furniture piece and it does sound like that was a little bit of the guide down. I guess, I was a bit confused. I think you talked about geo components, but home furniture did take a pretty notable step down sequentially on both the sales and volume basis. And I'm wondering if that's industry backdrop or something company specific?

Yeah. Good morning, Peter, and thanks for the question. It is absolutely your observation is right, first off, and it is industry. The home furniture industry is actually probably softer than bedding, if that's possible. That industry has been terribly disrupted by retailer bankruptcies. The bedding industry has been impacted to some degree, but certainly home furniture more. These industries have been challenged. The consumer faces some of the same challenges. But, Sam, you know that. I mean, heck, that's your home. Why don't you plow into Peter's question, if you don't mind?

Sure, Karl. And thanks for the question, Peter. So, yes, the retail bankruptcies that Karl mentioned are a big impact, especially at those price points, because they're being serviced by some of our domestic customers, but also a lot of our Asian customers. So, that was a big impact during the quarter. I'll tell you the next factor is more of a historical perspective and kind of a comp issue, Peter. This big industry-wide slowdown started back in 2022 and our business, especially our business in Asia was impacted first as retailers right-size their inventories from 2022 right up through the middle of 2023. Now by Q3 of last year, those retail inventories, especially at the lower price points, were a lot healthier. So what happened in Q3 of last year, retailers started ordering again, and we started getting quite a few more orders in China than we've gotten for almost a year. So our Q3 China volumes were actually fairly decent last year. Now this year, the industry has continued to soften as we've talked about. Supply chains have caught up, and there are just simply fewer orders in the chain that are coming our way than there were last year. So that comp issue is a factor. And there's another smaller thing that I want to make sure we cover. And at the beginning of this year, we moved some of our production from the US to Asia and into a few of our other US locations. And some of our larger customers who are ordering out of that location started ordering really heavy in the first half of the year to make sure they had plenty of stock. So we had a really strong Q2 from a volume standpoint. By the beginning of the third quarter this year, they realized that their warehouses were packed, and they really held off on ordering any new product until late in the quarter. So that was another factor. And those folks are ordering again, and we'll see more consistency going through Q4 from them.

Okay. That's very helpful. I do agree. The furniture industry backdrop seems challenged and interesting comments on the retail bankruptcies. I did want to pivot back to the steel rod business. and then the reverse side where furniture slowed, steel rod just accelerated massively. And it feels like there's a strategic shift here that might stick around. So the sales were up a lot. You say you want to run full capacity, still some metal margin. Are you cutting prices a little bit in order to be hyper-competitive and drive volumes? And is that a shift that we should expect going forward?

Hey, Peter, this is Tyson. Why don't you go ahead? We're not disrupting the market in any way; market pricing has been depressed in the steel sector, but some capacity has been taken offline. Our mill is incredibly efficient compared to others. Tyson, please elaborate. Sure, thanks. And Peter, no, we're not changing our pricing strategy and lowering market prices or anything like that. It is a realization, like I mentioned earlier, that the trade market will be necessary for us to run full capacity. We do have our team that is actively and all the time exploring the market and determining what makes sense for us to run a mill. I mean, you probably know our mill is pretty focused, and that's what allows us to keep our costs in line. So it is a balance of what makes sense for us and what we're actually able to serve. But it's not a pricing strategy. It's more just a market evaluation and opportunities and what makes sense for us in the mill.

Okay. And sticking on that, the metal margin was called out again as a headwind. Is there any visibility into when that will eventually normalize and no longer be a headwind on margins?

It's difficult to predict exactly when. We have seen things, like Karl mentioned, just kind of with the softness in the market, we have seen the steel market soften a bit. But overall, it's down obviously from historical highs that we've seen over the last several years. And so we're getting into a more normal range that we've seen.

Okay, great. And then lastly just to circle back on automotive, again, focusing on segments that I saw quite a bit of sequential change from last quarter. So, the automotive volume is down 9, is that based on your visibility, something that should continue for a while? Or was this just a notable air pocket in the third quarter?

Sam?

Yes. Thanks Karl. That's a great question. We normally going into Q4 see a pickup for a variety of reasons. One of which is we have a large Asian net of factories, and what we do see some pickup before Chinese New Year. That's just a routine thing. We believe we will see some pickup before Chinese New Year this year. Will it be as big as normal? That's what we're still trying to work through, Peter.

Okay. Very good. Thanks so much, guys. I appreciate the feedback.

Thank you.

Thank you. Our next questions come from the line of Judy Merrick with Truist Securities. Please proceed with your questions.

Great. Thanks. This is Judy on for Keith Hughes. Could you clarify the pace of mattress component sales? You mentioned that domestic production was down by a high single-digit percentage and you're expecting a mid-single-digit decline in the fourth quarter. Is that still based on flat US consumption?

Well, we believe that US market will be down in the fourth quarter. The domestic market is down more than the overall consumption due to the impact of the imports.

Okay. And then we saw ComfortCore. You said it was a little better than the industry. Did that show improvements in the quarter or is that just how it's performing?

That's just generally how it's been performing over time. And some of it is, obviously, the shift from open coil to ComfortCore over a long period of time, as well as just the performance of some of our customers. We've been more in line with the market or slightly ahead with ComfortCore than we have open coil and certainly the box spring product. Thank you, Judy.

Thank you for joining us and your interest in Leggett & Platt and have a great day.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.