Everybody, thank you for joining us. Today we have Leggett & Platt presenting at our conference here. With us from the company are CEO, Mitch Dolloff, and from IR, Cassie Branscum. With Mitch, I'll turn that over to you, and maybe we'll have a little time at the end for Q&A. All right, great. Also thank you for joining us. Okay. Thank Thank you so much. You guys have been long supporters of this conference all the way back to my predecessor, so we appreciate it. Yeah, pleasure to be here for sure. Thanks everybody for joining us this afternoon. Great to be with you. Appreciate your interest in Leggett & Platt. We've got a lot of slides to cover and not a lot of time. We'll save some time for Bobby so I'd move through it quickly. This slide is just our obligatory disclaimer on forward-looking statements; I won't spend any time here. This slide really is who we are. It reflects, you know, our strong balance sheet and cash flow. We have a history of strong cash discipline. We have a high dividend yield. In 2022, we increased our dividend for the 51st consecutive time. We're a leader in most of our markets with few large competitors. It doesn't mean we don't have competitors. Few of them have the breadth of products or scale that we do, or the technical capabilities that we have in many of our industrial markets. We have opportunities for long-term growth. We'll dig into this more. We've got particularly large addressable markets in bedding and in automotive. We have skin in the game. We think like investors because we are investors. Here you see a quick look at our portfolio. Bedding is our largest business, with about 42% of revenues. Automotive is the second largest, about 18%. You see a pretty diverse group of companies across there. I think about automotive, aerospace, and hydraulic cylinders. Those are more sort of industrial related businesses, and the others, generally more consumer durables related. We'll see that on the next slide. Here you see our breakdown, sorry, real quick, of the geo-geographic breakdown. See 65% Europe, or U.S., about 10% in Europe and China as well. Sorry. Thanks. Here's a quick look at our segments. We're broken down into three segments. Bedding, which is largely vertically integrated. We'll talk about that more. Specialized products, which I just listed. and then our furniture, flooring, and textiles products. Home furniture, work furniture, flooring, and textiles. A quick look at our macro market exposure. You see about 55% consumer durables, automotive, and then those commercial industrial markets that we had talked about. After really surging in 2020 and 2021 with the focus on the home after the lockdown and the COVID lockdown in consumer durables, we saw quite a bit of softening in 2022 with high inflation and the impact of high interest rates and their impact on consumer confidence. When you think about consumer confidence as really the, you know, the key economic indicator for our businesses and, you know, that remains challenged in the consumer durables area for us for sure. Housing turnover is also important, but because of the, you know, amount of replacement activity that there are as furniture and bedding activities, I think consumer confidence is the most important one for us. Okay, let's dig in a little bit on more current topics. Quick, real quick on 2022 highlights. Sales, $5.15 billion, up about 1% from the prior year. EBIT margins and EPS were down versus 2021. The key drivers here were really lower volume and lower overhead absorption as we reduced production to manage inventory, and ended the year in a really good position there. We also had some negative impacts from operational inefficiencies in our specialty foam business, as well as raw material and transportation cost recovery challenges in automotive business. Those were partially offset by strong metal margins in our steel rod business and pricing discipline in our furniture, flooring, and textiles business. Good news is we generated strong cash, $441 million. As I said, increased our dividend for the 51st consecutive year. Here's a look at our guidance for 2023. At the midpoint, sales is about $5 billion, reflecting the continuing macro and economic uncertainty that we face here. At the midpoint, we expect volume to be down by low single digits, mainly driven by bedding and FF&T. You'll notice that specialty products are up, expected to be up high single digits. We see, you know, stronger market there. We also expect a drag on sales from raw material deflation and currency impact, partially offset by some gains from acquisitions that we completed in 2022. From an EPS standpoint, our midpoint is $1.70. Midpoint again reflects lower metal margins in our steel rod business in 2022. I'll just say that those remain at historically very high levels, but lower than 2022. Lower volume in some of our businesses and moderate pricing pressure from deflation. I guess again, strong operating cash flow expected here, $450 million-$500 million. A quick look at our commodity impacts. Our biggest commodities are steel and chemicals, largely used in bedding, but in some of our other businesses as well. Those reach record highs in 2021 and 2022. We routinely pass along inflation and deflation in these commodities. We were successful in doing so during these time periods. Great example would be in our inner springs business, about 60% of our customers are, have on contracts that have pass-through clauses in them. The pass-throughs typically lag about 90 days up or down. Similar on the chemical side with a lag of about 30 days. I mentioned automotive impact of raw material costs. That's the one part of our business that typically operates on fixed costs, actually with cost downs. That's just how the industry works. Things have to get really, really high pressure on inflation before we're able to get cost prices moving. That happened in 2022. We probably recovered 1/2 to 2/3 of the inflationary impact and expect to recover the rest of it this year. Okay. What are we doing? We can't control the macroeconomic environment, but we are focused on controlling the things that are in our power. Continuing to drive strong cash flow, working with our customers on new product opportunities, and continuing our focus on operational efficiency. We'll dig into these as we go through the rest of the presentation. Enduring fundamentals. This is really just a deeper dive into the core values of our business. You know, the center of it is really strong cash flow. You've seen it, you know, guidance and in the prior year, we have a long history of that, including in economic downturns. That's a key point of resiliency for us. Our operating cash flows exceeded capital expenditures and dividends for 33 of the last 44, 34 years. We expect to exceed it again in 2023. We also have a focus on maintaining investment-grade credit rating. We have a $1.2 billion revolving credit facility and no significant maturities until November of 2024. Our uses of cash have really remained consistent for quite a long time. Our first priority is funding organic growth. Shortly following that, barely following that, is paying dividends, seen from our dividend record. Third, we'll fund strategic acquisitions. With excess cash, we'll repurchase shares. Mentioned our dividend growth already. I'll just reiterate that we have 5% dividend yield. It's one of the highest yields among the 50 companies that are known as Dividend Kings. Let's talk a little bit about profitable growth. The real key to profitable growth, to me in our business is portfolio management. We've added new businesses that get us into attractive new markets and help diversify our business. For example, aerospace and hydraulic cylinders that we've mentioned before. We've also add businesses that can add capabilities that we need or fill strategic gaps. Our specialty foam business that we'll talk about more, I think completed that. It's important to focus and take action on businesses that aren't meeting our return targets or margin or cash flow targets. You've seen that we've exited a number of small businesses over the last several years that really just weren't strategic and weren't adding a lot of value. We'll continue to do that, to take a hard look at our portfolio management, but also to correct businesses where we think we have the opportunity to do so that are underperforming. The restructuring that we completed with our home furniture business, I think, is a great example of that. The long-term key to driving profitable growth for us really revolves around innovation, creating high-value products that, you know, serve consumers, provide differentiation for our customers, and continue to drive our competitive advantage. That's really the foundation for us. Let's dig in a little bit deeper into our bedding and automotive markets. These are our largest businesses. As I said, they have really large addressable markets. The addressable market for U.S. bedding is about $11 billion. A few years ago, not too long ago, our addressable market there would have been $5 billion, with about $3 billion coming from innersprings, of which we had large market share, about $2 billion from foundations. With the emergence of direct-to-consumer online sales and compressed mattresses, and really just kind of opening up the bedding market, where it used to be only, you know, a channel through the OEMs to retailers, we thought that the dynamics were shifting, and we took a deep dive into looking at the market. That led us to the specialty foam acquisition that helped us expand our addressable market from that $5 billion to $11 billion by including not only the production of foam, but the production of fully finished private label mattresses that we can sell to our customers or ship directly to end consumers. Have a different but similar story in automotive, where we provide comfort and convenience features. We started out in seating comfort, providing lumbar support systems and seat suspension systems. Those use cables, motors, and actuators, and we vertically integrated into those technologies and then recognized that that allowed us to expand into convenience features, particularly with motors and actuators, expanding our addressable market from about $10 billion to $20 billion. We'll dig into those a little bit more. Competitive advantages in bedding, we really have a very unique profile here. We can service our customers anywhere from components to finished goods, finished mattresses, adjustable foundations, accessories like pillows and toppers. The key here for us, again, derives from innovation, as we mentioned, our technology or that we can develop our machinery equipment to develop very sophisticated innersprings more efficiently than anybody else, as well as the specialty foam capabilities that we have that drive tangible benefits to the consumer and differentiation for our customer. We also gain advantage from vertical integration, particularly in our rod wire and spring businesses, a cost advantage. Here's some examples of products that we have in our bedding market. We don't have much time, so I won't spend much here. You see CoolFlow solved the heat retention problem in memory foams. A new foam product here, Gorilla Foam, that adds strength that allows greater compression. I will just touch on the Eco-Base product there on the left. That's an innerspring product that takes a process out of our OEM customers' manufacturing process because we ship it with that blue polyester textile fabric there that eliminates the gluing of a base foam. It's lighter, takes cost out, and is more sustainable. Here's a look at our bedding value chain. At the top, this is kind of rod wire springs. We start with melting scrap in our reheat furnace, converting that to steel rod, converting that to wire, putting it into the equipment that we make to generate those high-value springs into innerspring cores that can be sold as components or used in hybrid mattresses that we produce internally. Similarly, on the foam side down there at the bottom, we create specialty polyols and foam additives to create specialty foams that can either be sold as components, foam mattresses or hybrid mattresses. That's a very, very integrated business for us. Okay, competitive advantage in automotive. Really comfort and convenience features, you know, grow because of enhancing the consumer experience. We work early on in the process with OEMs to help develop products that provide them with differentiation. We bring our engineering and technical prowess to the table to create those products that, you know, create that differentiation, but also meet the demanding technical requirements that are there in automotive. We have very reliable program launch and product quality, which is also very critical to success in the automotive business, and we have a global footprint that allows us to serve all major markets and help our customers expand their programs globally. Here's a look at some of the products that we make. On the left there, you'll see a number of luxury massage systems from mid to high-end. In the middle, you see some modular lightweight products, such as our Modular Smart Metal Alloy Valve that's used in very small, used in pneumatic products. Should mention here that our products can be used both in vehicles with internal combustion engines as well as electric vehicles. Both benefit from smaller size, lighter weight, and lower noise. Those more technical requirements are a benefit to us. On the right, you'll see some examples of our motors and actuators. I'll pick the middle one, Smart Latch Actuator, which is an all-in-one solution to allow second and third-row seats to recline, fold, and to release the headrest. Just a few quick examples there. Won't spend much time here on our acquisitions here. I think we've talked about it. It's, you know, pretty straightforward. Look for things that are a strong strategic fit, that are in attractive markets, that have a strong competitive advantage. We also take a really deep look into the financial screen, right? We wanna make sure that it's accretive to EPS and to cash flow within a year and also provide returns well above our cost of capital. We also think that cultural alignment is really important to successful integration. In 2022, we did four acquisitions. Probably the most significant was the hydraulic cylinders. We acquired a global manufacturer of hydraulic cylinders, so think big and technical, for the heavy construction equipment market to build scale in our existing hydraulic cylinders business, but also enters into a very attractive segment of the market that aligns with long-term trends towards automation and autonomous equipment. I think that's a great step forward for us. We've also been building our textiles business, both in the fabric converting, but primarily in our geotextiles business. We did three of those small acquisitions. These are typically very small low multiples that provide immediate synergies to us and strong returns. We did two Canadian geocomponent distributors, those distribute erosion control, storm water management, and various other applications, and then a small fabric converting business. Sources of margin improvement. In the near term, it's fundamentally volume, right? As we talk about the consumer durable markets being slow at a relatively consistent level but low, returning that volume will be the biggest margin improvement for us, opportunity as well as for overhead recovery. I think beyond that, we have some opportunities to improve our operational efficiencies, you know, in our particularly in our specialty foam business that I mentioned, and we've got progress there. After that, I think, you know, we've done a really good job maintaining pricing discipline, and we've looked to the ongoing opportunities, which I think go back to, as we talked about, portfolio management, innovation, those sorts of things. This slide is really about ESG, right? For us, I think we're really strong historically on the governance side. That is more of a maintain function for us. I think we have more opportunities to improve on the environmental and social side, and I think are making good progress. On the environmental front, we'll file our third annual sustainability report next month. We've completed our first materiality assessment, so reviewing with our stakeholders to understand their priorities, assessing their potential impact to our business, setting our priorities that will help us set goals, and then communicating our progress on those goals. We've also, I think, completed our first greenhouse gas emissions collection. We've completed those for 2019 through 2021, about to wrap up 2022. We've got an insurance assessment going through those as well. Hope to report those in the second half of this year. Again, eventually, we'll get to some target setting. On the social side, we've made a lot of progress. We've really rebuilt and modernized our human resources infrastructure, making sure we're in, you know, being competitive in how we treat our employees to help us attract and retain them. We've also built out an inclusion, diversity, and equity strategy that I think is well underway. We've built the infrastructure, now it's getting more tangible across our organization. It aligns with our values, I think it really will help us to be able to attract and retain, you know, top talent around the world and make our company more successful. I think the last slide here, yes, is just our key takeaway. You know, our real focus here in the near term is continuing to focus on the things we can control to navigate this challenging macroeconomic environment. Our strong foundation and our strong financials and balance sheet give us comfort that we'll be able to navigate these economic cycles, continuing to fund the dividend with our strong cash flow, continuing to invest in opportunities going forward. We'll continue to focus on our commitment to enhance our ESG capabilities. Last slide, this just lists our contact information for our IR team. They're always around and very happy to talk to you should you have any questions at any time. Thanks, Mitch. Okay, thanks. I think we have a couple minutes for Q&A. I'll get us started. I guess first to kind of build off the acquisition slide there. Leggett has a long history of acquisitions. Can you talk about how you see kind of M&A playing in the growth algorithm? Not really in the short term, but more kind of on a longer term basis. Do you see opportunities to further diversify the revenue base as well through M&A? That's a great question, Bobby, and I think it goes to the portfolio management that I talked about before. You know, we've had, you know, we're getting a little bit less focused, but have really historically had a strong base in consumer durables, right? I think that continuing to create some differentiation there is a good thing. I think our portfolio is in a really strong place, so I don't think we need to do anything radical in the near or midterm, really. I think it is about continuing to build out the where we have these growth opportunities, particularly around some of those newer businesses building some scale. We've done a number of acquisitions to build out textiles. I think those opportunities continue as well. In the longer run, I think it's looking at, you know, call it, you know, a longer term megatrends, right? That will influence the future opportunities, being able to assess those and find areas that are a good fit for our capabilities and be able to translate our portfolio into those functions as we go on. Some of our businesses are very mature, right? If you think about our home furniture, work furniture businesses and looking out into the future to make sure we have growth opportunities is important from my standpoint. Absolutely. Another question we get a lot is just kind of the sustainability of the higher steel margins. Leggett's very unique that they're vertically integrated there for the bedding business. Can you talk about some of the dynamics that might have changed over the last few years that could drive those to be higher than what maybe you and I are used to when we think back kind of the 10-year history here? Yeah, that's a great question as well, Bobby. You know, they've reached, you know, I think all-time highs really in 2022. I think there's a number of factors in play here. The first is some previous right sizing of capacity in the industry, in the rod industry over the last several years. This isn't the last couple of years, but probably before that, where there's some excess capacity. I think you see the leaders of that industry, you know, being very thoughtful about the returns that they need to realize on the really high capital investment required to build these steel mills and to run them. I think the third impact probably comes from the Section 232 tariffs that were introduced in 2018 that increased the cost of imports. You know, those have remained in place, and we expect them to remain in place to make the U.S. market more competitive. I think the fourth one that is maybe not quite as well understood is the increased input cost today besides scrap. We think about material margin as just the difference between rod and scrap, but there's other inputs on top of that, energy, other kinds of metals, and those have increased significantly. Even just to maintain margins, the rod price has to be higher. The final thing, which I think is a positive, is the Infrastructure Act, right? I think that it will drive more construction, more civil construction, that will increase the need for different types of steel materials as we go forward over the next several years. I think those are the factors that I think will hold the material margin probably above the historical levels that you mentioned. Okay. Maybe let's switch gears, talk a little bit on bedding. It's really kind of been a few interesting years for the bedding industry with a lot of changes, you know, growth of imports coming down, a primary big competitor, or big bedding manufacturer filing for bankruptcy. Can you maybe just update us on, you know, kind of what's happening in the industry, what's been some of the trends, and kind of where the industry is today from kind of a, you know, I guess, competitive standpoint or anything like that? Yes. It's been certainly a dynamic cycle and, tough to navigate. We talked about this before, but of course, you know, when the, we saw the pandemic hit in 2021, and then all of a sudden this focus on the home surged, and we had supply chains. We were one of the first impacted. We recovered fairly quickly. There's this surge in demand that I think accelerated into 2021 and well exceeded sort of the normal levels of growth. As we got into 2022, we saw that demand soften again as we saw the impacts of inflation, consumer sentiment, interest rates, all those things took their course. It led to softening through 2022. I think industry forecasts show units down about 25%. It's been relatively steady at a soft level, but still at a really soft level. From our perspective, we think that the decline in demand has offset the surge that we saw in those previous times. You know, we're sort of working in a moat here. You know, I think when we see sort of this consumer durables recessionary environment recede, we'll see us return back to more normalized levels, I think that might take a while to be there. You know, you mentioned some of the bankruptcies that we've seen in the industry, I think similar in some of the furniture industries. I think those are just indicators of, you know, the underlying situations what's going on here, that it's, you know, it's a challenging environment. You see us and you see others with, you know, strong financial base, strong cash flow, doing well and able to navigate that. It's not the most pleasant. Do I wish we had more volume? Yes, it'll be fine. Okay. Then when you think about maybe international versus U.S., do you think the international side, your European bedding is also kind of in that U at the bottom of the U where it's maybe bottoming a little bit? Or is that one a little bit different to predict? Yeah, that's a great question, and it's a little bit harder to answer. I think it's very similar. You know, the difference there is the impact of the conflict in Ukraine, right? That made them take us another step down and the real concerns around energy and inflation that fortunately weren't as bad as we thought through the winter, but there was, you know, a lack of chemical availability as well. I think we see it stabilizing as well, again, at a kind of a low level, but we'll have a little bit more concern there. I guess lastly, you know, one of the slides that showed kind of the long-term margin targets, you know, the business is below that today, clearly coming off multiple years of very challenging cost and supply chain environments. Can you talk a little bit some of the drivers and opportunities to rebuild the margin profile of Leggett? Is, you know, how much is volume related, how much is cost recovery and kind of where we are on the different, I guess, business units on that journey? Yeah. Well, I won't take 20 minutes to walk through them all, but I think that. We got three. Three minutes. The biggest driver for sure is returning volume, returning the overhead recovery, without a doubt. you know, that's mainly applies across their bedding businesses, home furniture, work furniture. Those are probably the most impacted, right? When we look at our more industrial businesses, automotive, aerospace, hydraulics cylinders, those markets are expanding. It's just our customers working through their own capacity constraints to continue to do that. I think that is by far the biggest impact. As I mentioned, we have some, you know, moderate opportunities for operational efficiency. We'll continue to focus on that. It's a great time during this slow demand period to improve that. I think we're getting back to innovation and customers caring about innovation as there gets to be a little bit stable, more stable environment. In the longer term, that'll drive that margin growth back, too. If we got to, you know, more normalized volume and overhead recovery, we'd be a heck of a lot closer to our targets. Okay. Very good. Well, thank you for your time, and we appreciate you attending. Okay. Thanks so much. Appreciate it.