Greetings, and welcome to the LEG 2Q 2023 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. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Susan McCoy, SVP, Investor Relations. Thank you. You may begin. Good morning. Thank you for taking part in Leggett & Platt's second quarter conference call. On the call today are Mitch Dolloff, President and CEO, Ben Burns, Executive Vice President and CFO, Steve Henderson, Executive Vice President and President of the Specialized Products and Furniture, Flooring, and Textile Products segments, Tyson Hagale, Executive Vice President and President of the Bedding Products segment, Cassie Branscum, Senior Director of IR, and Kolina Talbert, Manager of IR. The agenda for our call this morning is as follows: Mitch will start with a summary of the main points we made in yesterday's press release and discuss operating results and demand trends. Ben will cover financial details and address our outlook for 2023, 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 express permission. A replay is available from the IR portion of Leggett's website. We posted to the IR portion of the website yesterday's press release and a set of PowerPoint slides that contain summary financial information along with segment details. Those documents supplement the information we discuss on this call, including non-GAAP reconciliations. I need to remind you that 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 in 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 Mitch. Good morning. Thank you for participating in our second quarter call. First, I would like to welcome Ben Burns, who stepped into the CFO role effective June 21st. Ben has been with the company for 20 years and previously led our internal audit department, served as our Treasurer, and most recently, led our business support services functions, including procurement, logistics, and risk. Ben brings a deep knowledge of our business, strong financial capabilities, and an ability to drive change that has benefited and will continue to benefit Leggett & Platt. Turning to second quarter results. Sales in the quarter were down 8% versus second quarter 2022 from lower volume and raw material-related price decreases. Acquisitions added 3% to sales. The volume decline was driven by continued demand softness in residential end markets, partially offset by growth in automotive, aerospace, and hydraulic cylinders. Second quarter earnings per share were $0.40. This included $4 million, or $0.02 per share, of gain from net insurance proceeds from April tornado damage at a shared home furniture and bedding manufacturing facility. Excluding this item, adjusted earnings per share were $0.38. Earnings decreased primarily from lower volume in residential end markets and lower metal margin in our steel rod business. Cash flow from operations was $111 million, up $21 million versus second quarter of 2022. We are lowering our full year guidance to reflect continued volatility in macroeconomic environment and low visibility in several of our end markets. Our previous guidance anticipated a modest improvement in residential end markets in the second half of the year. We are encouraged by the continued recovery in our industrial businesses, have yet to see an upward trajectory in the residential markets. Moving on to our business segment results and outlook. Sales in our Bedding Products segment were down 18% versus second quarter of 2022. We previously expected 2023 market volume to be flat, with modest improvement in the back half of the year. Although the market improved sequentially in May and June from seasonal lows in April, the second quarter was weaker than expected. In addition, signals from the broad market and customers are less, less optimistic than earlier in the year. We now expect demand to remain at or slightly below current levels. This suggests volume in the back half of the year will be down mid-single digits, and full year mattress consumption will be down high- single digits versus 2022. This estimate results in consumption down 25%-30% from the 2021 peak and at levels comparable to 2016. In the quarter, our volume generally tracked the overall market, but there is some variability within specific product categories. Trade rod and wire volume declined year-over-year as industrial demand was strong until the third quarter of last year. Steel rod production through the first half of the year was consistent with initial plans. However, full year production is now expected to be approximately 25% below historical levels to align with current demand, versus our previous expectations of 20% below historical levels. Volume in U.S. Spring was down 13% in the second quarter. ComfortCore unit volumes declined versus last year, but tracked near or positive to the overall market. Lower priced open coil innersprings and wire foundations declined more, which we believe is indicative of broader market trends. Volume in specialty foam was up 8%. Successful efforts to diversify our customer base led to growth in finished mattress units and accessories, such as mattress toppers. As expected, metal margin narrowed in the first half of the year. We still anticipate metal margin to be down mid-teens versus 2022. Market volume continues to be the greatest headwind and impact to earnings and margin. However, our teams continue to work to improve internal capabilities and bring value to our customers despite the challenging environment. In recent years, we've strategically shifted our focus in the bedding market by expanding product capabilities and growing content at attractive price points. Our Innerspring Components business has moved more towards mid to higher end price points and greater content within each unit. Our Specialty Foam business allows us to produce specialty foam components and finished products for our branded partners. Consumer interest in adjustable beds continues to grow, providing us with an additional opportunity to increase content. This strategic approach enables us to innovate high quality, differentiated products for our customers and improve comfort for the end consumer. We intend to grow our market share and increase profitability by focusing on three key areas. First, we will continue to pursue opportunities to enhance our value proposition by offering product differentiation and reducing total mattress production costs for our OEM customers. For example, our new Combination Pocket combines Perimeter Edge innersprings and specialty foam to create a fabric-encased innerspring and foam column that minimizes motion disturbance from a sleeping partner and improves airflow. Eco-Base is another new product that allows our customers to streamline their manufacturing process, lower costs, and reduce environmental impact by replacing commodity-based foam with a lighter polyester nonwoven material under a ComfortCore unit. Our second area of focus is improving specialty foam's performance and continuing to improve costs. Continued integration of our foam and innerspring operations will drive opportunities for manufacturing savings and product development gains. Our third area of focus is maintaining our production flexibility and ensuring appropriate levels of inventory. Our competitive position is unique. From our vertical integration of steel rod and wire, specialty polyols and additives, and efficient and flexible machine technology to innovative products that service our customers anywhere in the value chain, our Bedding business is well positioned to bring value to our customers and end consumers. Sales in our Specialized Products segment increased 23% versus second quarter of 2022, driven by the hydraulic cylinders acquisition completed in August of last year, and continued recovery in all three businesses. The July forecast for global automotive production shows 6.5% growth in the major markets in 2023, as the industry is seeing stronger production recovery and inventory restocking than anticipated earlier in the year. While improving, automotive industry production remains dynamic as supply chain, macroeconomic, and geopolitical impacts bring volatility across different regions. Cost recovery is continuing in our Automotive business, and we expect to make further progress as we move through the second half of the year. Strong end market demand in hydraulic cylinders is expected through the remainder of the year. Order backlogs in the material handling and heavy construction equipment market segments remain at elevated levels, but have started to moderate as our customer supply chain and labor issues have improved, allowing them to increase production levels. In our Aerospace business, we expect strong demand in the second half of the year as industry recovery continues. OEM backlogs remain strong, however, bill rates fluctuate based on supply chain availability. Sales in our Furniture, Flooring & Textile Products segment were down 14% versus second quarter of 2022. Home furniture demand remained slow during the quarter, with high-end price points softening. The lower demand also impacted volume and fabric converting. While inventory levels across the market continue to improve, we expect demand to remain soft through the third quarter, with the potential for some improvement in the fourth quarter. Work furniture demand for both contract and residential end-use products remained at low levels, consistent with previous quarters. We expect demand to continue at these levels for the rest of the year. In flooring products, residential demand improved sequentially, but remained slow in what is typically a seasonally stronger quarter, largely due to softer remodeling activity. Hospitality demand continues to improve, but remains below pre-pandemic levels. In Geo Components, we expect slower demand in the back half of the year as home improvement retail has softened and civil construction is slower than anticipated. We are maintaining our emphasis on improving areas within our control and proactively addressing the effects of the macroeconomic impacts on our businesses. Our employees have done an excellent job in driving these efforts, which include engaging with our customers on new product opportunities, some of which we mentioned earlier in our Bedding Products segment commentary, improving operating efficiency, as we have done in a North American automotive facility and as progress continues in specialty foam, and driving strong cash management, as demonstrated by our working capital improvements and year-to-date operating cash flow of $207 million. Our focused execution and enduring fundamentals position Leggett & Platt for long-term success. I'll now turn the call over to Ben. Thank you, Mitch, and good morning, everyone. In second quarter, we generated cash from operations of $111 million, $21 million higher than the $90 million we generated in second quarter of 2022. This increase reflects working capital improvements, partially offset by lower earnings. We continue to closely control all elements of working capital. We ended the quarter with adjusted working capital as a percentage of annualized sales of 15.2%. Cash from operations is still expected to be $450 million-$500 million in 2023. We ended second quarter with total debt of $2 billion, including $224 million of commercial paper outstanding and no significant maturities until November 2024. Net debt to trailing 12-month Adjusted EBITDA was 3.1 times at quarter end. The ratio has increased as EBITDA has declined in recent quarters. We expect to continue to comfortably meet our debt covenant requirements and maintain sufficient liquidity. We are focused on maintaining investment-grade debt ratings and expect this ratio to improve as earnings increase over time, and we use excess cash to pay down debt. Total liquidity was $632 million at June 30th, comprised of $272 million of cash on hand and $360 million in capacity remaining under our revolving credit facility. In May, our board of directors increased the second quarter dividend to $0.46 per share, $0.02 or 4.5% higher than last year's second quarter dividend. At an annual indicated dividend of $1.84, the yield is 6.2% based upon Friday's closing price, one of the highest yields among the Dividend Kings. This year marks our 52nd consecutive year of annual increases. We continue to deploy our cash in a balanced and disciplined manner. For the full year 2023, we expect capital expenditures of approximately $100 million-$130 million, dividends of approximately $240 million, and minimal spending for acquisitions and share repurchases as we prioritize debt reduction in the near term. Our long-term priorities for uses of cash remain unchanged. They include, in order of priority: funding organic growth, paying dividends, funding strategic acquisitions, and repurchasing shares with available cash. As announced yesterday, we are lowering our full-year sales and earnings guidance. 2023 sales are now expected to be $4.75 billion-$4.95 billion, or down 4%-8% versus 2022. The guidance reflects volumes at the midpoint, down mid-single digits, with Bedding Products down mid to high single digits, Specialized Products up high single digits, and Furniture, Flooring & Textile Products down mid to high single digits. The guidance also assumes the impact of deflation and currency combined is expected to reduce sales mid-single digits, and acquisitions completed in 2022 should add approximately 3% to sales in 2023. 2023 earnings per share are now expected to be in the range of $1.50-$1.70, including approximately $0.05 per share of gain from net insurance proceeds we expect to recognize for the year. Full-year adjusted earnings per share are now expected to be $1.45-$1.65, with a decrease versus prior guidance, primarily reflecting lower expected volume in residential end markets. EPS guidance assumes a full-year effective tax rate of 24%, depreciation and amortization of approximately $200 million, net interest expense of approximately $85 million, and fully diluted shares of 137 million. Based upon this guidance framework, our full-year Adjusted EBIT margin range is expected to be 7.3%-7.7%. EBIT margins continue to be pressured by several factors, with the largest being lower volume, primarily in our residential end markets, operational inefficiencies in specialty foam, and the inflationary impact on margin percentages as we raise selling prices to recover higher input costs. Important drivers of margin improvement going forward will be stronger volume, continued efficiency and cost improvements, and pricing discipline as raw material costs fluctuate. Longer term, we expect innovation to drive our margins higher as we work closely with our customers to develop differentiated products. We are committed to maintaining our long-held financial strength. This discipline, along with the tenacity and dedication of our employees, allows us to navigate uncertain times and capture long-term opportunities. With those comments, I'll turn the call back over to Susan. That concludes our prepared remarks. We thank you for your attention, we're glad to answer your questions. Operator, we're ready to begin the Q&A session. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you'd like to remove your question from the queue. For participants using speak equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. The first question is from Susan Maklari of Goldman Sachs. Please go ahead. Thank you. Good morning, everyone. Good morning, Susan. My first question is on the Bedding Products business. It's encouraging to hear you talk about some of the new products and some of the innovation that is coming out. As you think about the recovery in that business, I'm sorry, can you talk a bit about the role that those new products might play and how, what stage of their life cycles those are in, and how we should be thinking about the potential ramp there? Yeah, good, very good question. Thanks for asking that. Tyson, I'll, I'll let you take that one. Oh, sure thing. Good morning, Susan, and thanks for the question. Those are products that Mitch covered in his opening comments that we've been working on for a while. You know, I think we've talked about this in some of our past conference calls, that during the pandemic, there was a heavy, heavy focus on supply, and then as the supply chain started to get more stable, we had more interest from some of our customers on working on new products. Those are still both early life cycle products. They've been in our pipeline for a while, they are now being commercialized. We are selling them into the market. They're still early stage. It will take time for them to grow, there's good, strong customer interest in those products. We're also very mindful of, as we ramp those up, that we wanna support our customers really well, as we roll them out. I'd say a gradual improvement, but they're good examples of the types of innovation that we've worked on for a long time. If you think back historically, it's a continuation of, where we've been, with the growth of ComfortCore and then Perimeter Edge, ComfortCore, and then now products like Combination Pocket and, and Eco-Base, where we're adding content, not just to add it, but it adds, differentiation or, more comfort for end consumers, but also value for our OEM customers, where, we can help them either reduce labor costs or additional content, to make products more easy to manufacture. I think it's a continuation of where we've been heading for a long time, and we continue to add those types of products into our pipeline. Another area that Mitch didn't mention, but I, I think I'd like to, like to add, is, innovation from our Specialty Foam business as well. We have some good products in the pipeline there that both help with the weight of specialty foam products and then also sustainability. Those are also products that we can add into, either component form or finished products through, through specialty foam. All of these are, are pretty technical and, you know, goes well with our integration all the way back to our Machine business because they are pretty complicated in things that we have to apply machine technology all the way through our manufacturing to, to provide a good product for our customers. Okay. That, that, that's great color. Thank you, Tyson. Maybe switching gears a bit and thinking about the Specialized segment. You did see a nice recovery there. It sounds like auto production is, is slowly but surely coming back. As you think about the different geographies and the different stages that the global macros are perhaps in, as it relates to auto, how are you thinking about the, the further trajectory of that? Are there any areas that are perhaps leading versus lagging, where you can continue to see a nice lift as, as things sort of move along? Yeah. Thanks, thanks, Susan. It has been a little bit dynamic across different regions for, for a while now. I'd say that probably the case that North America and Europe are the most stable right now, and we see continued improvement, and it's really been in China and Asia, where it's been a little bit more volatile. You've seen some of the shift to EVs, especially in China, that has created a little bit of disruption. You know, the outlook is still, still very strong. The, you know, year-over-year production change for this year is now up to about 6.5%, based on the IHS data, and that's up from, you know, a little over 4% back in April when we were there. I think that also indicates some of the dynamics that we've seen, right? That does create some inefficiencies occasionally, and there's still some supply chain issues. As you said, it is getting better. I think the longer term outlook over the next four years or so is, you know, a CAGR of just under 3%, maybe. I think there is, you know, continued growth out there and will be continued stability and frankly, opportunities for us to increase operational efficiencies there, too. In 2019, total production was about 75 million vehicles in the major markets, and, you know, the latest forecast indicates we'd get there in 2026, so we still have some room to improve. Okay. That's, that's, that's perfect. I'm gonna sneak one more in, which is: Welcome, Ben, and congrats on your new role. Perhaps you can tell us, as you take on the role of CFO, what will be different, what will stay the same, and, and perhaps anything that you're more focused on as you come into this new position? Yeah. Thanks, Susan. Good morning, and thanks for the comments. Yeah, I'd say just very excited to step into this role and appreciated to have the opportunity to serve as our CFO. You know, some things that I think, you know, will stay the same, clearly, our high level of integrity, transparency, and access for the investment community. Really, I'm very aligned with Leggett's values. They're my personal values, so those are really important to me. Also, you'll see a commitment to our disciplined uses of cash. That will not change, so that will be very consistent. Also, I have a strong focus on driving shareholder value, driving strong cash flow, and really being focused on margin improvements. As I, as I come into this role and think about how I can drive some, some value, I think about developing very close connection with our businesses, really a partnership in driving results. I have some strong relationships with our business leaders that I've developed over the years, in some prior roles, and really look forward to, to just partnering with those leaders and collaborating with them and just thinking about how I can best help, help serve them and their businesses. I'll also be focused on working with our teams and thinking about how we modernize our finance function and really looking to drive efficiencies, and then over time, thinking about how do we add technology and make better use of that, so that we can spend more time thinking about value creation and how we drive that, and just optimizing those routine processes so we don't spend quite as much time on them. Really excited to jump in and get to work and appreciate the question. Yeah. Okay, thank you for that color, and I'll requeue. Thank you, Susan. The next question is from Bobby Griffin of Raymond James. Please go ahead. Good morning, everybody. Thanks for taking my questions. Hi, Bobby. I guess, first, first up for me, I wanted to maybe go back to the Bedding Products segment, and kind of just understand a little bit more of the margin drivers there. I know there's kind of basically two aspects going on. We have a little bit lower year-over-year metal margins, as well as some pretty significant volume declines. So when you, when you look at the compression and EBIT margins in that business in the quarter, can, can you maybe help just provide some color on the biggest driver? Was it, was it two thirds volume and one third the, the metal margins, or is it even more volume related? Just trying to get some context around the, the impact from really the volume declines. Sure. Hey, Bobby, this is, this is Tyson. Year-over-year, it's more heavily weighted towards metal margin, probably the inverse of what you, what you threw out. Metal margin, the majority, probably approaching 2/3, the remaining 1/3 being volume. Okay. When we-- Tyson, when we think about that, I mean, the metal margin is still pretty elevated versus historical standards. I guess the next question off of that, because, you know, my guess of 2/3, 1/3 was backwards. I mean, how do we protect margins if, if we are moving our way back towards maybe a little bit more of a historical standard? Because that is a pretty sizable impact. Sure. You know, at this point, we've talked about this in the past as well. You know, we have seen metal margins start to decline, you know, versus last year, it's down somewhere mid-teens, which is pretty close to our expectation that we shared at the beginning of the year. You know, at this point, our thought is that we'll probably see those, the remainder of the year be at pretty steady levels. When we see a change in rod pricing, it's pretty well mirrored by scrap. Part of that is being driven just by some of the industry dynamics around increased conversion costs, just inflation in utilities, labor, other consumables, and then just the, the general supply and demand environment around, around steel products in the U.S. We still think through the last half of the year, we, we see some consistency there. But longer term, you know, really hard to, hard to predict. But we have a lot of things that we're working on around improving profits and margins. The number one, Ben, Ben hit it, and I know we've talked about this for a while, but it's by far, volume. That's the, that's the biggest driver and, that we have around profitability margins. Additionally, we've, we've covered this before, too, but operational improvements at ECS, also another big area for, for some work. We've taken a lot of action so far, even as the, as the market's been soft. Our U.S. Spring business has been busy reducing both fixed and some variable costs. A lot of those we think will stick even as, as volume i- improves. We started making some progress around our material costs in our Specialty Foam business and also diversifying some of our customer base. Those, those are things that, even in the short run, we feel like we're going to start getting some benefit from. We have had some salaried headcount reductions as well as some small facility consolidations. Nothing that would impair our ability to, to support our customers, but just help us manage and reduce costs. We still have a lot of opportunities through operational improvements at ECS that we're working hard on. Our, our teams are, are really working through root causes and just finding different ways to reduce some of our costs. Then additional synergies in both development and cost savings through U.S. Spring and ECS. We have a lot of things that we're working on to help us with those things, and we're confident we'll get back to the profitability levels we've had in the past. Okay, I appreciate that. Maybe my second question, I think, Tyson, probably might stay with you, too, because it is on ECS, but is the volume growth actually surprising? It was pretty nice this quarter at 8%. You know, is the operational inefficiencies just really more on cost, or was there some uniqueness this quarter from a volume standpoint that, you know, might not be valuable for us to kind of read that 8% as a true, as a true number? We are seeing volume improvements. You know, as we, as we talked about, the diversification of our customer business is important. As we saw the market soften across bedding, it was even more severe for ECS, just where we're aligned with our customers, more on the digitally native customers that had an even greater decline overall in the market than, than the rest. A lot of our efforts in trying to, to partner with some new customers, even as the market's slow, has allowed us to, to grow our business. Though it's, it's going to take a while for things to really recover, just given the softness, we are seeing volume improvements from where we have been. We are making some improvements, most specifically on material costs, but we also have some offsets to that. We're, we're obviously looking at the long run, so we are, taking on some one-time costs as we start up some new equipment and programs and, and go through some facility changes that are also, impacting us in the short run, but we think will, will pay off in the long run. Thank you for that. I I appreciate that. On the volume, on the volume side, right, we still have a ways to go to make up that DMB volume that's declining, but the new programs, as you talked about, that's an opportunity, and it's both in finished mattresses as well as accessories, right? That's right. Thank you. And I guess lastly, for me, it's just on the balance sheet. You know, you guys mentioned about it in your pre-prepared remarks, leverage ticked up a tiny bit with the corresponding EBITDA, but, you know, you're, you're kind of guiding for some cash flow here for the back half of the year. Is, do you have any type of near-term target? Is it possible to see the net leverage get back under 3x by the end of the year, or any type of commentary you want to add there? Yeah, Ben, I'll let you take that one, and note, too, that that's our covenant calculation on leverage is a little bit different, too, right? Yeah, that's a great question. Right. Yeah, we'd say we're, you know, near the peak of our leverage, we think, and, and potential to go up maybe modestly in the third quarter, but really in a similar range. We'd expect that ratio to begin to improve by the end of the year and continue to improve into 2024. As Mitch just mentioned, our debt covenant calculation is, is a bit different than what we report publicly, and it's just a little bit more favorable for us. There's a little bit more headroom there than the 3.1x measure would indicate. We don't have a specific target right now, but we are committed to being a strong investment-grade company, which, in our view, from a long-term perspective, means having a net debt to EBITDA in the, you know, 2.5 and under range. Okay, I appreciate the details and all the transparency. Best of luck here, in the third quarter. Thank you, Bobby. The next question is from Keith Hughes of Truist Securities. Please go ahead. Thank you. My question's in Bedding Products as well. In terms of pricing for the second half of the year, are we gonna be seeing similar declines than what we saw in the first half? I guess my question is, how are you, how are you expecting steel to play out? Good morning, Keith. This is Tyson. Just like what we covered with Bobby, probably still some continuation of where we've been in terms of metal margin. You know, as we see some deflation in rod costs that pass through to innersprings, we've seen mirrored costs in scrap, so we see more continuation of our trend around metal margin. You can see in the supplemental slides, the deflation that we've seen in chemical costs, you know, low teens overall versus last year. At this point, we see that being pretty stable. Any reps or downs, you know, kinda tends to be passed through in pricing there as well. Pricing impacts from steel, you know, there we have a large portion of the majority of our business covered by contracts where indexes, manage our pricing, and for those that aren't, will be fair going down with cautious as we were going up. You have an anniversary, the decline, I guess I'm just trying to figure out when this is gonna trend down to towards zero? I think we still have a long way. I mean, I'd say both on rod pricing, chemical pricing are still way, way above, I think, you know, pre-pandemic kind of levels. Is that right, Tyson? That's right. For sure, on, on metal margins, if you think back to this time last year, we were still seeing increasing, rod pricing and just overall steel costs in the market. Didn't really start to see the declines happen till late third quarter and the fourth quarter. Yeah. I think, I guess I would say, if we have to, to guess, that it seems like we're seeing some modest deflation, but not radical moves. For the most part, we see some things going up and down. A good example would be hot rolled steel, which we use a lot of in our Home Furniture business, for example. In the first quarter, it went up quite a bit, and then, you know, in the second quarter, it's come back down, not quite as much. I think we'd see, especially chemicals tend to be a little bit volatile. I would say that, things have normalized a little bit. They continue to move, you know, probably a little bit more down than up, but not, you know, in really radical ways. Okay, 1 other question. If I look at your commentary for the year on Bedding Products versus Furniture, Flooring & Textile Products, it does look like in the second half that Furniture, Flooring & Textile Products is, is, is trending towards a flat or low single-digit decline number, but Bedding stays, you know, still pretty weak. Seems unusual those two categories are moving in different directions. Number 1, is, is that correct directionally, and what do you think the difference between them is? Yeah, Steve, I'll let you jump in here as well, I think it's a little bit more to do with our portfolio. You know, we have, our, you know, pretty, pretty diverse portfolio in, in FF&T. Home furniture, I think, is moving pretty close to the bedding markets, very much residential end market. You know, work furniture is a little bit different. It is some residential, some also, you know, office space, products. You know, it's, it's down. It's probably, after coming back to life, last year, it's, it, it fell down and is pretty low. Flooring and our Textiles businesses are quite a bit different. You know, Flooring is, I think, a little bit stronger. We're not seeing the same kind of increase that we would normally see seasonally. You know, it's holding up. We see, you know, some, some other areas there doing better. Textiles, for a big portion of that is the Geo Components, that is more almost industrial facing, so civil construction, private construction, things like that. I think that's probably what drives most of the change. Okay. All right. Thank you. The next question is from Peter Keith of Piper Sandler. Please go ahead. Hi. Thank you. Good morning, everyone. Just looking at maybe the weakness in the furniture and bedding segments that's resulting in the guide down. It looks like the volume trends came in pretty similar to Q1, but curious what the trends looked like through the quarter. Did it, did it kinda hold at a pretty consistent level, or was there any improvement as the quarter progressed? Tyson, why don't you take that? Sure thing. Good morning, Peter. Yep, I'll, I'll jump in on the bedding, bedding part of that first. I think what we saw is probably what's been reported more broadly in the market. Actually, even on our last conference call, we talked about April, which was our expectation being seasonally down, and it was, but then we did see sequential improvement as we went through the quarter. April, April was down more towards the levels that we saw in October, November of last year, and then May and June improved from that point, more to the, the levels that we've seen, both back in the first quarter and probably third quarter of last year. It, it didn't, it didn't peak out at levels that would offset the, the softness in April, but just back more to the sort of the steady state that we've been in for a while. I think the end consumer demand would be very similar in furniture and bedding, but the market changes might be a little bit different. Steve, anything you'd like to add there on home furniture? Yeah, I would just say, you know, when the quarter started, you know, the low end, the mid-end had been low for months, but the high end was hanging in there. Probably over the, over the course of the quarter, we saw that start to decline as well through, through the quarter, I would say. Then just recently starting to feel like we're probably at the bottom, bouncing around and seeing a little bit of increase in the lower end of the market. Kind of started out a little stronger, got a little weak, and then at the end and into the third quarter, getting a little stronger in terms of demand. We think that's primarily due to the inventory that was in the channel that's now, now being depleted. Yeah, I think, Steve, the other thing I would add, too, is, you know, we had the benefit of backlogs, particularly at the higher end, for quite a while. Yeah. As those are now, you know, I think, worn, worn out pretty much. So the, you know, what is sales to us, deliveries to our customers, you know, I think that, that tailwind evaporated. Okay. Yeah, I was going to ask about the, the home furniture decline, so I think you've addressed that. Maybe I'll, I'll, I'll pivot to the, to the bedding and, and the spring declines. I guess, it down, the U.S. Spring volume down 13%, pretty similar to Q1 on a volume basis. It does seem like the industry has gotten better in Q2 and maybe even continues to get better here with, with Q3. Your volumes are kind of holding steady. Is there a customer mix issue within springs? Is there some share loss? Can, can you just help us frame up why the, the volume trends aren't trending towards less negative? Sure. I, I'll jump back in here, Peter. You know, the way we look at it, things are pretty consistent. You know, looking across the market, overall, you know, I think we would see things pretty similar broadly in the market with kind of where we've been trending. You know, talked about the April weakness. The signals that we've been getting from our customers is less optimistic for the back half of the year. I think entering the year, there was optimism that we would start seeing some modest improvement from, kind of where we were, at least the last part of last year and the early part of this year. Especially with the, the modest, Memorial Day and Fourth of July, that seemed to, to dampen the expectations for a lot of improvement in the back half. But within our business, no, I don't think there's a, a customer mix change just within our products. Mitch covered in his opening comments, open coil and grids from a volume standpoint are more adversely impacted than ComfortCore. I think that's both some consumer and consumer preference and also just pressure on the lowest end of the market. I think the, the mix within our product categories is, is probably more of an issue than any, any type of customer mix. Okay. The last question I had was just on the, the, the inventory levels that you have and just thinking about maybe some of the cash flow opportunities. Do you have potential inventory reduction ahead? I know you're kind of on a low sales base right now, but your, your inventory turns are pretty far below pre-pandemic levels. Wondering what you think about the, the status of inventory and bringing that down. Good, good, good question, Peter. I think that's something that's always very focused on our mind as we focus on cash management. Ben, I'll let you share your thoughts there. Yeah, thanks. Thanks, Peter. Yeah, I think for us, from an inventory perspective, you know, the past few years have been very dynamic as we've had volatility in demand levels, supply chain challenges. Our inventory balances have gone up over the last couple of years. As we saw demand start to taper down a little bit in the back half of last year and continued into this year, we've had, you know, some great work by our teams to work those inventory levels down, while still maintaining that ability to serve our customers in a good way. We have worked it down sequentially for a number of quarters now. We also believe that there is a little bit more opportunity left there. We'll continue to focus on it. We think we can drive some cash through that. And we also pay attention to all the elements of working capital. I think our AR is in really good shape right now. Our teams have done a good job of keeping that current. Accounts payable are down a little bit, just mainly due to the lower volumes. It's something we'll continue to focus on and really look at that as a way to drive cash and then use that cash to stay disciplined with our use of the cash. You know, organic growth, funding the dividends, and then what you'll see is minimal spend on acquisitions and share repurchases in the near term. we'll use that excess cash to prioritize paying down debt, and that really supports our commitment to being a strong investment-grade company. Okay, very good. Thanks so much. Thank you. Thank you. We have a follow-up question from Susan Maklari of Goldman Sachs. Please go ahead. Thank you. I just wanted to go back to the Specialized segment. When you think about the improvement in the margin that you did see this quarter, back to that low double digit range, and you look out and you think about some of the changes that have come through in that segment, specifically with some of the acquisitions you've done more recently, and things that are sort of changing the profile of that business. How do you think about where those margins will go over time? And what is the role of the changing profile of that within the eventual sort of target, relative to perhaps where we've been in the past? Thanks, Susan. Steve, I'll let you chime in here, too. You know, I think you're right, that the, the difference of the portfolio within specialized does have some impact, and certainly those acquisitions add, you know, some more depreciation than amortization, so EBIT and EBITDA look different. You know, particularly in this downturn time, Aerospace had been a really big drag while the volume was so low. We saw struggles, you know, in automotive and then some of the inefficiencies that we talked about. You know, you see the margins improving. We think it may not be, you know, perfectly sequential, that every quarter gets better, but we do believe that we'll continue to improve over the long term. I don't know that we'll get back to the peaks that we had when automotive was, you know, in a huge, huge growth pattern and the largest part of the segment by far. It's still the largest part, but not the same share as it had before. I think that we'll continue to see movement up, you know, hopefully somewhere into the, into the teens at least, but, you know, not making any prediction at this point. I think that we do have opportunities both for continued growth in all three businesses over the long term, well-positioned strategically, and also opportunities to improve operational efficiency, you know, as we continue to grow those businesses. Steve, anything you would add there? Just I think there's also opportunities for us to continue to improve margins as those volumes increase. There's still some, you know, lack of consistency in order patterns and other things that are driving costs into our, you know, into our operations. As those line out, we should expect to see those the costs associated with those go away. Some margin expansion there, as well as some, some new product developments, particularly in hydraulics over the, over the longer term. Okay. Okay, that's helpful. You know, we've touched on this in a lot of ways in this call, but maybe thinking about just the, the differences that you're seeing across consumer or, or residential end markets relative to the industrial pieces of the business. One of the interesting dynamics is that within bedding, especially, we, the, the rate of promotions is still fairly low, and, and we've seen that normalize in some of the other categories that we cover, that are consumer related and, and have that sort of promotional element to them. Any thoughts on what you're hearing from your customers as it relates to sort of the broader state of the consumer and, you know, perhaps anything that, that they're looking to do to, to help entice them or to help drive that traffic a bit? I guess, anything that you're also seeing broadly as, as you think about the recovery potential in consumer and, and that longer term track for industrial. Do you think they'll continue to sort of both move forward, or are there any puts and takes that you would highlight? Yeah. Thanks, Susan. Tyson, I'll comment a little bit on some of the broader issues and let you come back to some of the promotional activity there. I think that, you know, it's a great question because it highlights the diversification of our portfolio. While we see this, you know, lower, lower activity in our more consumer durables-facing markets, the industrial businesses have done really well, and they're improving. I think hopefully we'll get back into growth mode and not just recovery mode before too long. I think I want to emphasize that that is a key element of our, you know, portfolio management. Secondly, I think it's an interesting question. If you think about the health of the consumer, I think it's fairly strong at this point, as we've seen inflation easing and job market remaining strong and wages improving. The focus is on consumer spending, is really remains on services, on consumables, other than durable goods, and that's really the drag that we're seeing on our, you know, furniture, flooring, and bedding, more residential end markets. I'd say the possibility of achieving a soft landing and avoiding a broader recession, you know, is still out there in the narrative, maybe even becoming more, more likely. If that's the case, hopefully consumer spending comes back into residential end markets, before too long. I think it's really difficult to predict a timeline at this point. I think that it... I would agree that we have seen promotions lower, and I'm not, I think that that just hasn't been very effective, I think is the my take on it. What do you think, Tyson? Yeah, I agree with everything, you just said, Mitch. I mean, going back to, the sort of the, the consumer sentiment and where consumers want to spend their dollars is sort of a huge question for our industry. You know, we went through a period of time where promotions weren't necessary at all, when everybody was spending on the home and focused on, on buying home-related goods, and then it, it shifted quickly. It does feel like we're back to at least the promo- seasonal promotional periods, but there's probably still some more room to go to get back to more of the, the typical types of promotions. You know, some things that, I, I guess I've already talked a little bit about what's caused us to remove the optimism for the back half of the year, some things that give us a little more confidence. Mitch talked about the maybe potential for a soft landing, improving consumer sentiment, even though it is still at relatively low levels. Some stability in the housing market. I mean, those are typically things that act as a tailwind for the bedding market. I think both us and our customers are waiting to see some real pickup and shift back from spending on services, travel, things like that, back into spending on the home, and getting more of a tailwind. Because, you know, at this point, I do feel like we are creating pent-up demand. Any type of pull forward has probably been extinguished, and at this point, it's, it's probably more creating pent-up demand rather than even neutralizing, neutralizing it now. Yeah, good point. Yeah. Okay, thanks for the, the color, and good luck with everything. Thank you, Susan. There are no further questions at this time. I would like to turn the floor back over to Susan McCoy for closing comments. Please go ahead, ma'am. Thank you for joining us today. We'll talk to you again next quarter. If you have questions, please contact us using the information in yesterday's press release. Thanks. That concludes today's conference. Thank you for joining us. You may now disconnect your lines.