Greetings, and welcome to the Leggett & Platt First 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. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Cassie Branscum, VP of Investor Relations. Thank you. Ms. Branscum, you may begin.

Good morning, and welcome to Leggett & Platt's first quarter 2025 earnings call. With me on the call today are Karl Glassman, CEO; Ben Burns, CFO; Tyson Hagale, President of the Bedding Products segment; and Sam Smith, President of the Specialized Products and Furniture, Flooring & Textile Products segment. The agenda for our call this morning is as follows. Karl will provide an update on our strategic priorities, and outline our current exposure to, and plans to address tariffs. Ben will cover our first quarter operating results, demand trends, additional financial details, and provide an update to our 2025 guidance. 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, a tariff overview, and a restructuring update. These documents supplement the information we discussed on this call, including non-GAAP reconciliation. 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 risk and uncertainties, and the company undertakes no obligations 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. We are pleased to report better-than-anticipated first quarter earnings. Our earnings improvement is a testament to the excellent execution of our restructuring plan and operational efficiency improvement initiatives, as well as disciplined cost management. In the first quarter, we made further progress on our restructuring plan. In bedding, we divested a small U.S. machinery business, helping us to further narrow our product focus. In flooring products, we launched Phase 2 of our consolidation efforts. Finally, we continue to make significant strides on our restructuring initiatives within hydraulic cylinders. We expect restructuring activity to be substantially complete by year-end. We are also continuing to make progress on our strategic business review. We recently signed an agreement to sell our aerospace business and expect to receive after-tax cash proceeds of approximately $240 million. This transaction is expected to close this year and represents a step towards a more focused portfolio. While our experienced management team remains focused on our strategic priorities, they are also diligently working to guide our business through a complex and fluid tariff environment. Before I walk through the most significant potential tariff impacts, I would like to provide some context. On the supply side, prior to recently implemented tariffs, our U.S. businesses sourced approximately $400 million annually from trade and intercompany suppliers located in foreign countries, including approximately $100 million from China. On the sales side, the majority of our trade revenues are produced in the geography of consumption. Approximately, 60% of our trade revenues are produced and consumed in the U.S., while another 8% of revenues produced abroad are consumed in the U.S., with 5% currently exempt under USMCA. Tariffs present positive and negative impacts across our businesses, but in aggregate, are likely a net positive for us. However, we remain concerned that wide-ranging tariffs will drive inflation, hurt consumer confidence, and pressure consumer demand. Across our businesses, our teams are engaging with our customers and suppliers, as well as taking action to mitigate tariff impact by sourcing in less impacted geographies, shifting production where we have a global footprint, and passing on price increases when necessary. We are also actively pursuing opportunities to capture demand where interest for domestically produced products has increased, although such opportunities may be limited as low-cost foreign competitors implement measures to minimize market share loss. Global reciprocal tariffs could benefit U.S. mattress production. These tariffs are another avenue to help level the playing field versus low-priced import mattresses that have flooded the market for years amid difficult enforcement of anti-dumping measures. Additionally, steel tariffs have the potential to benefit domestic innerspring producers. Within our bedding segment, steel tariffs are currently leading to expanded metal margins and higher demand for our steel rod and drawn wire operations. As a leading U.S. innerspring manufacturer, we are well-positioned to quickly support customers looking to shift from imported to domestic product. In some cases, this may also present an opportunity for us to provide a semi-finished product, which improves manufacturing efficiencies and total product costs for our OEM partners. The most significant tariff exposure in bedding is within our adjustable bed business, where we produce adjustable bases both domestically and in Mexico. In Mexico, the steel content of our bases is currently subject to a 25% tariff. In the U.S., global reciprocal tariffs impact all imported components, with electronics from China representing our largest exposure. In contrast, most of our competitors are importers who manufacture bases primarily in Southeast Asia. These importers are currently only subject to a 25% tariff on the steel content of their adjustable bases. As a result, our domestic production is now significantly disadvantaged in comparison to import competitors. To offset this disadvantage, we are heavily leaning into our Mexican operations, which still provide our customers with the advantages of a North American footprint. Within specialized products, our automotive business will likely have the largest indirect tariff exposure. The North American auto industry is highly integrated across borders, and implementation of tariffs on auto components on May 3rd is expected to be very disruptive throughout the supply chain. The majority of our North American production is in Canada and Mexico, but our products are USMCA-compliant, and therefore, currently exempt from tariffs on these countries. Implementation of global auto parts tariffs will have very little direct impact on us, but will likely cause Tier 1s and OEMs to shift production and sourcing, trigger pricing negotiations in the supply chain, and disrupt demand. In furniture, flooring, and textiles products, tariffs impact our businesses to varying degrees. In home furniture, our Chinese operations primarily sell components to Asian customers who export finished furniture to the U.S. Our Chinese customers have slowed production significantly and are ramping up Southeast Asian factories. Additionally, we sell components to U.S. customers and have some intercompany supply from our Chinese operation. We are moving some sourcing of our commodity products to other countries and taking advantage of our U.S. operations where we can. We are also in the early stages of setting up production in another low-cost country and will be on par in the second half of the year with our competitors who have low-cost facilities. Finally, our textiles business would have faced the largest direct tariff exposure in this segment. We have proactively been sourcing outside of China. We are well-positioned to serve customers that may face supply disruption from their existing vendors. Our other businesses, including aerospace, have minimal impact from the various tariffs in effect today. Now, more than ever, we are committed to our strategic priorities of strengthening our balance sheet, improving profitability and operational efficiency and positioning the company for long-term growth. Our sharp focus in these key areas has enabled us to perform well in challenged end markets and gives us confidence in our ability to weather current macro uncertainties and dynamic trade policies. I'll now turn the call over to Ben.

Thank you, Karl, and good morning, everyone. First quarter sales were $1 billion down 7% versus the first quarter of 2024 resulting from continued weak demand in residential end markets, soft demand in automotive and hydraulic cylinders, the expected exit of the specialty foam customer and restructuring related sales attrition. These declines were partially offset by strength in trade rod and wire sales, geo components, and aerospace along with modest volume improvement in fabric converting. Compared to first quarter 2024, sales in our Bedding Products segment decreased 13%, sales in specialized products declined 5% and sales in furniture, flooring, and textile products were down 1%. In bedding products, strong trade rod sales and steady trade wire sales are partially offsetting continued demand softness in mattresses and adjustable bases. U.S. mattress production was down low double digits in the first quarter, while total mattress consumption was down high single to low double digits as imports gained share versus a year ago. We now expect the market to be down mid-single digits in 2025 with domestic production down mid to high single digits. As anticipated, automotive sales were down versus first quarter 2024. However, sales in the quarter were above our expectations as our team continues to execute against a challenging industry backdrop. Our Geo Components business had better than expected growth in the civil construction sector even with some unfavorable weather disruption early in the first quarter. We expect demand strength in civil construction as we move into the normal seasonal selling periods. First quarter EBIT was $63 million and adjusted EBIT was $67 million up $3 million versus first quarter 2024 adjusted EBIT, primarily due to restructuring benefit, operational efficiency improvements and disciplined cost management, partially offset by lower volume and metal margin compression. First quarter earnings per share was $0.22. On an adjusted basis, first quarter EPS was $0.24, a 4% increase from first quarter 2024 adjusted EPS of $0.23. Restructuring plan costs during the quarter were $6 million comprised of $5 million in cash costs and $1 million in non-cash costs. We realized $14 million in incremental EBIT benefit and had $14 million in sales attrition related to the restructuring plan in the first quarter. The plan continues to make solid progress and our previously shared estimates for 2025 and full implementation restructuring plan EBIT benefit, cost, sales attrition and real estate sales remain the same. First quarter operating cash flow was $7 million, an increase of $13 million versus first quarter 2024. This increase was primarily driven by a smaller use of working capital. We ended the quarter with adjusted working capital as a percentage of annualized sales of 15%, a decrease of 30 basis points versus first quarter 2024. We ended first quarter with total debt of $1.9 billion including $440 million of commercial paper outstanding. As of March 31, total liquidity was $817 million comprised of $413 million of cash on hand and $404 million in capacity remaining under our revolving credit facility. Net debt to trailing twelve month adjusted EBITDA increased slightly to 3.77 times at quarter end. This uptick was anticipated due to normal seasonality of working capital investments. We expect to reduce leverage later this year and are still targeting a long-term leverage ratio of two times. As a reminder, this will be our first full-year at a lower quarterly dividend. Cash previously allocated for the dividend along with proceeds from real estate sales and divestitures will primarily be used in our deleveraging efforts as we prioritize debt reduction and funding organic growth in the near term. Following the anticipated divestiture of our aerospace business and deleveraging later this year, we may adjust our near term capital allocation priorities including share repurchases, particularly if our share price remains depressed. However, our long-term priorities for use of cash remain consistent: funding organic growth, funding strategic acquisitions, and returning cash to shareholders through dividends and share repurchases. Moving on to guidance, our February guidance contemplated a more conservative demand outlook across our businesses than industry forecasts projected at that time. Consequently, we are maintaining our sales and adjusted earnings guidance, but have modified our underlying assumptions. We now expect lower volume in our domestic bedding business due to softer U.S. mattress production offset primarily by increased U.S. rod and wire pricing due to steel related tariff benefits. 2025 sales are still expected to be $4.0 billion to $4.3 billion or down 2% to 9% versus 2024. Volume is now expected to be down low to high single digits versus prior guidance of down low to mid-single digits with volume at the midpoint embedding products down low double digits versus prior guidance of down mid-single digits, specialized products down mid-single digits and furniture, flooring and textile products down low single digits. Inflation net of currency impact is expected to be flat to a low single digit increase to sales versus prior guidance of a low single digit reduction to sales. 2025 earnings per share are expected to be $0.85 to $1.26 including approximately $0.16 to $0.22 per share of negative impact from restructuring costs and $0.07 to $0.22 per share gain from sales of real estate. Full-year adjusted earnings per share are expected to be $1 to $1.2 The midpoint reflects increased restructuring benefit, operational efficiency improvements and metal margin expansion partially offset by lower volume. Based upon this guidance framework, our 2025 full-year adjusted EBIT margin range is expected to be 6.4% to 6.8%. Cash from operations is expected to be $275 million to $325 million in 2025. While we do not anticipate a benefit from working capital this year, we will continue to have a sharp focus on cash flow generation.

Thank you, Ben. Even in a dynamic environment, we continue to make solid progress on our key initiatives. As always, I am immensely proud of the work our employees are doing and am confident in our ability to navigate macroeconomic uncertainties and demand volatility. We remain committed to delivering long-term shareholder value. Operator, we're now ready to begin Q&A.

Thank you. Our first question comes from the line of Susan Maklari with Goldman Sachs. Please proceed with your questions.

Thank you. Good morning, everyone, and congrats on a good quarter.

Thank you, Susan.

I want to start with the restructuring, Karl. It's good to hear and to see how all those benefits are coming through to the business despite the operating environment that you're facing today. As you look out, can you talk a bit about how we should think about those benefits that you currently expect for this year to actually roll through to the business? And is there the potential for some upside over time as you think about where volumes may come and some of these other dynamics that are starting to come through that could perhaps have implications for production and demand across the businesses?

Susan, thank you for the compliment. Our teams have done a terrific job on restructuring. As I've said in the past, it was a heavy lift, never more important than the headwinds that the industry faces today. So, when we look back at the first quarter, it's really a testament to diligence, hard work, and forecasting the need to do the restructuring plan. So, the restructuring benefits will continue to roll through the year. The upside is, my goodness, at some point there is going to be demand recovery in the markets that we serve. Every one of the markets, especially the residential facing markets, furniture and bedding, I should say home furniture and bedding have been under pressure now probably this is our third year of depression. At some point, there is going to be volume recovery and the dropdown benefit of that as a result of the restructuring is going to be significant. The teams will be rewarded, and the shareholders will be rewarded. We can see that first quarter was proof of that capability. But Cassie, in terms of the timing of the roll-through, how would you quantify it? I mean we've.

Yes. So, for the first quarter, we had about $14 million of EBIT benefit. So, if you annualize that put on a run rate, we're close to the $55 million to $60 million that we stated for 2025. And then, as we move through the year, kind of towards the end of the year, will we start layering on a bit more that then we'll fully realize into 2026.

Yes, Susan, this is Ben, too. I would just add on, we're continuing to make good progress on our real estate sales as well. We didn't have any in the first quarter that were related to restructuring, but we did have another property outside of that, that we closed. But we have already closed one related to restructuring in Q2 and have two more under contracts to close here in the second quarter. So, really good progress there. And I would say, our costs are staying in line as we move through this process. And then, the other thing I would say is the benefits that we have articulated are things that are within our control. Those are cost outs. And to Karl's point, when volumes do improve, I think there is some upside there as we think about incremental margins on that volume that we know will come at some point. So, like Karl said, the teams are doing a great job and continuing to execute really, really well.

Yes. Okay. Thank you all for that color. And then, maybe following up, one of the questions that we have been getting around the tariffs and the trade situations is the potential that there's been some pull forward. I guess, can you talk a bit about just the state of the consumer, did you see any pull forward in there? And how are you thinking about channel inventories especially as it does relate to the bedding business?

Susan, great question. Intuitively, I expected that we were seeing some pull forward. And when we've looked back and tried to quantify it, we can't identify it. So, I think our customers may have sold some product out of inventory in anticipation of tariffs. But from a channel refill, we didn't see any significant pull forward at all.

Susan, I'll add on to that just really quickly. After the election, we did see business ramp up, but that was after some really slow periods. But I think the other thing that we have to keep in our mind, especially for our business is imported components and finished mattresses that have also come in the fourth quarter and the first quarter likely some of those ahead of the tariffs. And so, that's another factor that we have to consider just with market estimates for consumption, and how those inventories there kind of now on hand in the U.S. will flow through for the rest of the year.

Yes. Okay. Thank you for the color, Tyson. And then, maybe shifting to aerospace and the specialized segment, can you give us any idea, or any kind of guide on how we should think about what that segment could look like post that divestiture? Should a go-through is expected? Just any idea on the profile of what that will look like?

Hi, Susan. Yes, thanks for the question. This is Ben. I've said I think we've said this before, but we're not going to give specific guidance on the segment itself until after the sale closes. However, during the first quarter, our Aerospace business did meet the held for sale criteria from an accounting perspective. So, you'll see in our upcoming 10Q some additional disclosures around that that probably will help you with that question a little bit. So, you'll see that first quarter '25 sales were $53 million and EBIT was $7 million. Now that $7 million does not include corporate overhead charges based on the accounting disclosure rules. And that compares to sales of $46 million in the first quarter of twenty '24 and EBIT of $3 million again in the first quarter of '24, which also excludes the corporate overhead charges. So, that information will be out there. But I will note that the most recent quarterly results may not be indicative of an annualized forecast for aerospace. But generally speaking, there's not a lot of seasonality in that business. So, that should give you a little bit of a ballpark there.

Yes, Susan, we've said that we expect the transaction to close by year-end. When we probability adjust that, I think it's going to be sometime by the end of the third quarter, but we'll see. It's dependent on the U.K. and the French authorities giving the approval both have a defense industry element to it. So, everything's in good shape. We're just waiting on external factors. So, and as Ben said, we'll update guidance based on that forecast at the appropriate time.

Yes, okay. That's great. And then, I'm going to sneak one last question in, which is for Ben. Ben, can you walk us through how you're thinking about the margins for each of the segments this year, helpful the color that you gave on the volumes and how you're thinking about that, but just any updated thoughts on how what we should expect for the margins?

Sure. You bet, Susan. So, from a bedding perspective, we think up around 150 basis points. For specialized, we think up about 50 basis points versus flat what we thought before, and then, from an FF&T perspective down about 50 basis points.

Okay, perfect. All right. Well, I will turn it over there. Thank you all for the color and good luck with everything.

Thank you, Susan.

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

Good morning, buddy. Thanks for taking my questions.

Good morning.

Hey, Bobby.

Karl and Ben, just to start, I want to maybe go back to the capital allocation comment. If you take Aerospace, add on maybe a little of the real estate that you're targeting this year and then cash flow that at the midpoint of guide back out the dividend, you get pretty close to probably what you have outstanding in commercial paper. So, is it reasonable thing, you could be out of commercial paper sometime in the next year? And if that's the case, what is the kind of leverage profile you would like to see in the business before you go back and maybe do some more call it, shareholder friendly capital allocation on dividends or repurchases?

Yes, Bobby, this is Ben. Thanks for the question. And you're right. If you put all of those things together from our guidance, you would see somewhere between $400 million and $450 million of cash available to reduce debt, which would be our plan. And so, at the end of the first quarter, we had about $440 million outstanding of commercial paper. So, there is a scenario where we would be out of commercial paper. And we would look at the leverage metric at that time. As a reminder, our long-term target is 2x debt to EBITDA. But if we're somewhere under 2.5x and we're in a position where we have delevered quite a bit, then we'll likely take a look at our capital allocation priorities and see if it's a good value to invest in share repurchases. But that would only be after the meaningful deleveraging that we talked about.

Yes, that's exciting because that's a result of our approach.

So, put some more math to it, we talk about our covenant calculation from an IR perspective, but just from a transparency, I want you to know that our current covenant is four times. It steps down to 3.5 times at the end of the third quarter. Our current leverage on a covenant calculation is 3.17 times. So, we're in a pretty comfortable position. But to your good point, we're confident that we're going to be able to step down and be out of Commercial Paper by the end of the year.

Very good. Yes, that's good news. And then, maybe Ben, just another way to ask the aerospace question, is do you feel like the EBITDA like the interest reduction offsets the EBITDA loss on an EPS basis. Is it accretive that way? You can maybe help us frame that up because you're going to take the cash, pay down commercial paper and then we don't exactly know what the aerospace EBITDA is, but just maybe back into it that way?

Yes. Bobby, I don't think it would be a complete offset, but it would the interest reduction would help a little bit, but I don't think it would get you all the way there.

Okay, very good. That's helpful. And then, maybe switching gears just on the bedding side of things. Can we talk a little bit about your kind of volume side, your kind of volume performance in the first quarter on innersprings versus kind of what you called out for the domestic market as well as consumption and some of the moving parts there and the differences of kind of what you guys saw versus what you think the market did?

Sure, Bobby. This is Tyson and I'll take that one. I'll start by saying despite all of our touch points with the market, it is really difficult right now to work through what's happening. Like I mentioned on Susan's question, even just with the consumption of imported components or finished mattresses, it's giving us a pretty cloudy picture at the moment. That said, we did have some underperformance versus what we called out as the U.S. consumption in the first quarter. But I should start with sales attrition really related to our restructuring and most of that being with our Mexican spring operation that we exited last year. That alone has about a 3% impact to the volume. So, that's the biggest call out that we would have in the discrepancy. Second to that, we do think finished imports did gain some share at the expense of some of our customers, which obviously flows back to us as well. The other part of this, the remainder of the difference is mostly volatility within our contract and non-contract customer base. And it is a little different explanation between the two. We do have a little bit of a range with our contractual customers, but just normal within the requirements of our agreements. So, year-over-year, we did have some shifts there, but nothing that's out of the ordinary just with market demand. What's different about our non-contract customers are just going through and looking at the detail there. We're just at such a low demand environment. We really just have lumpy activity with our customers. Certain periods they're taking more product and then it drops off pretty significantly. So, it is impacting our results kind of quarter-to-quarter just seeing how those accounts are placing their orders. I think the only thing I would point out, probably just some timing differences between our business and how we would think about mattress consumption. We started the year with January and it was very, very soft. It was a significant drop off from December kind of post-election bump. Things did improve through the quarter, but still even with the improvement, it wasn't enough to offset what we saw in January. So, I think timing also played a part in that as well.

Thank you. That's helpful. And then, Karl, maybe just one last clarification, on the expanded metal margin, that was a comment about what you're seeing in April since the tariffs started to take place or is that an expectation going forward? Just trying to get a sense of if you're already seeing that in call it the first thirty days here of 2Q?

Yes. The way to think about them, Bobby, is that year-on-year metal margins declined sequentially, including in hand in April, they've improved. So, year-on-year actually metal margins are stronger in April. Obviously sequentially, they improved. And we have that expectation through the full-year that we've said that tariffs are a challenge. But on average, there's puts and takes. But when you aggregate all of Leggett, tariffs are probably a net positive because of the nature of the 232 steel and aluminum tariffs. It's most acute at the rod and wire level. We believe those tariffs, if any of the tariffs are sustainable for the term of the current administration, it's the steel tariffs. So, we feel pretty good about our metal margins going forward. We also feel really good about the demand there. And while Tyson made reference to the soft conditions in residential, the steel mill is sold out right now, as is the wire mills, I should say. And the excess is going to commercial construction, which continues to be strong in the country. So, we see that I'm going a little further. Just to tie this all together, we see that in our Geo Components business as well. So, that's really where we're seeing the net positives.

Very good. I appreciate the details, and best of luck here in the second quarter.

Thanks, Bobby. Hey, best of luck to you next week too, Bobby.

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

Thank you. I wanted to revisit the topic of automotive tariffs. I believe I understand what you mentioned about shipping components to Mexico and then bringing them back to the United States, but could you clarify it one more time? I feel a bit confused.

Yes. Sam, do you want to clear up auto tariffs?

Sure, Keith. So, referring back to what Karl mentioned earlier, our automotive business operates regionally. Essentially, almost everything we produce in Asia is used in cars manufactured in Asia, and the same goes for our production in Europe and North America, where it stays within the region. The products made at our Canadian and Mexican facilities comply with the USMCA. As long as the USMCA remains in effect, our analysis indicates we are in a good position since our product classifications fall outside the auto tariffs announced for early May. If there are any changes regarding the USMCA, my previous statements would also need to be adjusted. From a direct impact perspective, I don’t believe there will be significant effects. The larger concern would be indirect impacts; if tariffs lead to price increases, we might witness a decline in car production and sales in North America. The IHS market forecast from April indicated that could occur. However, apart from a few factories being temporarily inactive in April, mainly due to inventory issues, our signals from OEMs and Tier 1 suppliers suggest stability for the coming months. So at this moment, we aren’t experiencing any significant issues. Does that help clarify things?

Okay, great. Yes, that helps, very smart. Thank you. Let's just shift over to the mattress industry real quick for Karl. With the tariffs we have in place today, and I know some of these are going to change, what do you think is going to happen to the kind of sub-$500 mattress market? Is that even a doable price claim? Or is that just going to rise to a higher floor in the industry?

Yes, Keith, it's hard to forecast when you add in what happens with reciprocal tariffs at some point too. But Tyson, how would you?

Yes. And it's difficult also, Keith, because we've got the impact of what's been happening with the online mattress, and where consumers are buying those. But just in the short-term, we have seen, despite the rest of the market struggles, the lowest end still being supported by online marketplaces and the imported finished mattresses. But it is really difficult to estimate what's going to happen. We just don't have much visibility of what the reciprocal tariffs might be. As Karl had said in his opening comments, that's probably the biggest factor in leveling the playing field for the imported finished mattresses that are earlier taking most and a lot of the share in that sub-$500 category.

Keith, I'll add. We are happy that the administration put in the de minimis tariffs on imports as well because there were a significant number of mattresses coming into the country that were not tariffable under the $800 threshold. So, that is very helpful to the industry.

And it doesn't look like the industry, the importers have preshipped a lot of units coming in ahead of the tariffs. Is that correct? At least that's what the government number.

Yes. Well, from looking at late last year, we did see quite a bit of a ramp-up that was greater than what we thought the consumption would be. So, even leading into the end of 2024, we felt like some of that built up. And it did drop off in the first quarter. We're kind of looking at some longer time periods.

Okay. All right. Thank you.

Thanks, Keith.

Thank you.

Thank you. Our last question comes from Peter Keith with Piper Sandler. Please proceed with your questions.

Hey, thanks. Good morning, everyone. Thanks for taking the questions. I did want to keep focused a bit on bedding, just with that volume guidance reduction. So, if I understand correctly, it sounds like January started slow, didn't get any better. What do you see now from an end-market demand in recent months? I think a lot of people are curious if anything changed post Liberation Day in April. Has it gotten worse? Or, are you just taking the trend from the last couple of months and kind of carrying it forward for rest of the year to make your forecast?

Peter, yes, I'll jump in on that one. For us and like I said, it may be a little different with our timing than what you may hear from others. But January was a very, very soft month. And it did improve through the quarter, but really more to the levels that we've kind of seen more on average through the fourth quarter. April, kind of post Liberation Day, it's been more of the same. It did not for us drop off back to another level. It's just kind of been a continuation of what we saw in February and March. So, we'll see. I think we've seen some of our customers like I mentioned that are hesitant to make big inventory bets. And they just want to see what comes to the tariffs and the consumer activity. But for us, it's been relatively stable over the last couple of months.

Okay. Thanks for that. And then, I guess what was interesting to me was the drop in bedding volume. And that's factoring your forecast, and then, no change in the FF&T outlook. And specifically with home furniture, it seems to be kind of holding steady. Any thought as to why mattress volumes have weakened versus the furniture, which seems to be holding steady with the original view?

No, I would say that our outlook for home furniture and flooring has decreased due to the impact of tariffs. However, this is being balanced by ongoing growth in textiles, particularly in the geo component and fabric converting areas, focusing more on dyeing and finishing rather than residential effects. Our outlook on the residential market is cautious because of current consumer challenges, leading to concerns about reduced demand for bedding, home furniture, and flooring. On the other hand, work furniture is performing quite well, and we're gaining market share in that sector, which gives us a positive outlook for work furniture and textiles. Conversely, we're viewing home furniture and flooring negatively.

Okay. That's helpful context. And then, lastly for me, just thinking about tariffs and the commodity dynamic, so, steel prices up, so your rod and wire prices will be up, will that flow through to price increases for springs? So, should we see some sales benefit from springs from prices? And then, separately, it does seem like with lower oil prices that chemical costs are coming down a lot. I'm curious how that might impact the margins in specialty foam. Do you contract pricing at foam, or will you hold price inflow even as input cost from chemicals come down?

I'll jump back in on that one. So, I would separate the steel comment into the trade rod and wire this spring, and what we talked about, looked and share with the guidance, that the increase demands in trade rod and wire and the middle margin expansion and it's helping offset the weakness we are seeing in our residential market. And that's really what we're already seeing just even at the end of the first quarter. And that's separate from what was through to our U.S. spring business. We do have, as part of our guidance, increases, some in the second quarter and some through the back-half of the year. But through our contractual business, those are based off of different drivers, different timings, and then, for non-contract business it's based off of actually when the price increases hit, and market activity. So, we do some flowing through the back-half of the year. But as it relates to guidance, that offset is largely in trade rod and wire. And then, question on chemicals, we have seen some ups and downs from the chemical suppliers. Some related to what you called out, but also just some of the normal industry shutdowns and other cost increases that they've experienced, but with the soft demand environment, some of those have not stepped. So, at this point, our assumption around chemical cost is relatively flat to last year.

Okay. All right, very good. And then, I guess, maybe one last question. Congrats on divesting the aerospace business. As it relates to the business review of your other segments and business lines, is there a business review that's still ongoing, or do you feel like that review has largely been completed at this point?

Peter, it's ongoing. We will continue to look at every business to see if we're the rightful owner and what's our position in the market, our market knowledge, and our effectiveness from product development and pricing. So, it will continue. It is continuing.

Okay, very good. Thanks so much.

Thank you.

Thank you. There are no further questions at this time. I would now like to turn the floor back over to Cassie Branscum for closing comments.

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

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.