Mitchell Dolloff
President and Chief Executive Officer at Leggett & Platt
Good morning, and thank you for joining our call today. First, I want to share that this will be Cassie's last earnings call with us, as she will be leaving the company for an exciting new opportunity later this month. Cassie has been an instrumental part of our IR team since 2018 and has been an incredible asset to the company throughout her various positions over the last 19 years. We wish her the best in her new role and will sincerely miss her. Before reviewing first quarter results, I'd like to spend a few minutes discussing who we are, where we stand today, and where we are going in the future.
Across most of our businesses, we are positioned as a leading provider of differentiated engineered products with opportunities to increase content over time, while collaborating with our customers to provide solutions. Our core businesses have strong market positions in industries with large and attractive addressable markets. In Bedding Products, our 2019 acquisition of ECS meaningfully increased our addressable bedding market, allowing us to expand into specialty foam and compressed mattresses, trends which have significantly changed the domestic bedding landscape in the last 10 years.
Although the bedding market has been challenged recently, the strategic rationale for that acquisition remains intact and should enable us to drive long-term growth and product innovation. In Specialized Products, all three of our businesses supply technical, critical components that are developed with a deep customer relationship and collaborative design. For example, our automotive business is aligned with trends of increasing comfort and convenience features. Our ability to partner directly with OEMs to solve specific problems means we compete on differentiation rather than just price.
In Furniture, Flooring & Textile Products, most of our businesses are mature and stable with steady margins and solid cash generation. These businesses tend to compete based on high levels of customer service or product differentiation and include our home furniture, work furniture, and flooring operations. Within textiles, our geo components business leverages sourcing synergies from our fabric converting operations to supply fabrics for applications such as erosion control and landscaping.
Geo components competes in a fragmented industry with sizable opportunities for growth. With that context in mind, I'll now address our near-to-mid-term strategic priorities, which are a blueprint for ensuring the sustainable long-term success of our business. Our priorities are: One, strengthening our balance sheet and liquidity; two, improving margins by optimizing operations and our general and administrative cost structure; and three, positioning the company for profitable growth opportunities.
We're committed to maintaining our long-held financial strength and have recently taken action to support this objective. In March, we proactively amended the agreement for our existing revolving credit facility to provide us with additional liquidity and flexibility. The leverage ratio was increased from 3.5 times to 4 times through June 30, 2025, creating a bigger cushion in a time of near-term weak demand in residential end markets. Yesterday, we announced that the Board of Directors declared a quarterly dividend of $0.05 per share. The decision to reduce the dividend was made following a very thorough evaluation. This action will free up capital to invest in driving improvements in our business and solidify our long-held financial strength.
Additionally, we continue to advance our initiatives across our business to drive operational excellence and enhance our efficiency. We expect these initiatives will allow us to drive margin improvement and continue to strengthen our financial foundation in the near to mid-term. Domestic bedding manufacturers are facing numerous challenges, including low demand, overcapacity and increased pressure for finished mattress imports, resulting in financial stress across the industry. The domestic mattress market has changed dramatically in a relatively short timespan. The landscape has shifted from a largely domestic OEM-produced innerspring mattress market to one where innerspring, foam and hybrid mattresses are sold at a wide range of price points through a variety of channels and produced by a mix of fewer large domestic OEMs, domestic private label producers, and import manufacturers.
These changes have effectively reduced the size of the domestic innerspring mattress market by a third. While we anticipate that import mattresses will always have a place in the market, any volume reshored to the US as a result of the ongoing anti-dumping case is beneficial for the domestic industry. In such a dynamic environment, we recognize that we must also make changes to profitably compete in the bedding market today and in the future. Across our Bedding Products segment, we are executing on the restructuring plan announced in January to optimize our manufacturing and distribution footprint.
We are making steady progress and remain on track to achieve our objectives. To date, we have closed four smaller US spring distribution facilities, transitioned manufacturing out of three facilities and into our four larger remaining spring production facilities, and closed a small specialty foam operation. We still expect the consolidation activities within US Spring to be completed by year-end and are currently downsizing our Chinese innerspring operation. Finally, two additional specialty foam facility consolidations are underway and should be complete by year-end.
As previously announced, restructuring actions will be complete by the end of 2025. I want to thank our entire team for their dedication and hard work during this time of transition. Our rod, wire and spring business continues to have healthy margins as a result of our refocused strategy targeting higher-value content, combined with disciplined cost management from our operations team. However, volume recovery, restructuring activities, and other operational initiatives will drive meaningful improvement. Specialty Foam is a significant drag on our company profits, but we continue to drive operational improvements and margin recovery through our four-wall manufacturing improvement plan.
Efforts to diversify our customer base have seen initial success, but we have more work to do in the current low-demand environment where many market participants are increasingly financially constrained. In adjustable bed, low demand and a market shift towards lower-value products have been a meaningful drag on profit. We are working hard to reduce cost and simplify the supply chain to drive profit and cash flow improvements. Our European bedding business faces market conditions that are very similar to our domestic challenges. The team continues to drive profitability in innersprings but has opportunities to improve our Kayfoam business where the customer base has changed meaningfully since acquisition.
We remain confident that our unique positioning in the bedding industry enables us to drive value for our branded customers and we are addressing our cost structure to do so as competitively as possible. In Specialized Products, operational improvement activities are ongoing within each business. In automotive, the team continues to make good progress improving profitability. We continue to evaluate efficiency enhancement opportunities and options to leverage automation and vertical integration. In both aerospace and hydraulic cylinders, efforts to improve production efficiencies are underway.
In hydraulic cylinders, we are shifting some production to our operations in India to reduce cost and improve profitability. Restructuring initiatives in the Furniture, Flooring & Textile Products segment are also on track. We have closed a flooring products production line and redeployed the manufacturing equipment to one of our other production facilities. In home furniture, we closed one plant and have transferred that production to other remaining facilities.
We expect to market that real estate by mid-summer. In work furniture, we continue to explore opportunities to reduce cost and improve profitability. Beyond our manufacturing operations, we are evaluating our general and administrative cost structure to drive further improvements in profitability. Shifting our focus to the future, in the long term, we plan to invest in key focus areas, including Bedding, Automotive and geo components. The changes underway now in our bedding business support our future ability to drive product synergies across specialty foam and innersprings and capture greater product content through semi-finished and private-label finished goods.
We are committed to leveraging our capabilities in springs and foam to expand our hybrid mattress programs and drive value for our customers through product development activities. Additionally, we expect that future growth in adjustable beds will stem from higher attachment rates and innovative product designs tailored to meet consumer needs. In automotive, we see growth potential in our convenience products offerings such as motors and actuators, particularly as vehicle technology and electrification increases. Our geo components business has grown via greenfields and small bolt-on acquisitions over time, and we anticipate further growth as we continue to expand our product lines and geographic footprint.
We are confident that the actions we are taking in the near to mid-term will better position us for the future and enhance shareholder value. Our current profitability does not meet our expectations, but we are taking the necessary steps to improve our performance. Moving on to first quarter 2024. Results were in line with our expectations at the beginning of the year. First quarter sales were $1.1 billion, down 10% versus the first quarter of 2023 from volume declines, primarily in residential end markets and raw material-related selling price decreases.
First quarter EBIT was $63 million, down $26 million versus the first quarter of 2023. Adjusted EBIT was $64 million, down $25 million versus first quarter 2023. EBIT and adjusted EBIT decreased primarily from lower volume, increased bad debt reserve, less benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition, and the non-recurrence of pandemic-related cost reimbursements. These decreases were partially offset by lower current-year amortization expense. Restructuring costs during the quarter were $11 million, comprised of $6 million in cash cost and $5 million in non-cash cost.
The restructuring charges were mostly offset by gains from idle real estate sales and insurance proceeds of $8 million and $2 million, respectively. First quarter earnings per share and adjusted earnings per share were $0.23, a 41% decrease from first quarter 2023 EPS of $0.39. Moving on to segment results. Sales in our Bedding Products segment decreased 15% versus first quarter 2023. Ongoing weakness in domestic and international bedding markets negatively impacted volume this quarter as demand continues to bounce along the bottom. US Spring volume was down 15% versus first quarter 2023, driven by declines in open coil and wire grids, partially offset by growth in higher-value semi-finished products, such as combination pocket and EcoBase.
Domestic mattress market production was likely down high single-digits and we saw similar trends in ComfortCore demand. For the full year, we expect US mattress consumption to be slightly down versus 2023. Sales in our Specialized Products segment decreased 1% compared to first quarter 2023. In automotive, our volumes were in line with the market in the first quarter. We still expect our automotive business will outperform global automotive production in 2024, primarily due to new programs initiating production throughout the year. We continue to experience strong demand and benefit from lengthy industry backlogs in our aerospace business.
First quarter volume was up 13% as industry production continues to recover from pandemic impacts. In hydraulic cylinders, first quarter sales were negatively impacted by softer demand in heavy construction markets and the lag timing of index-based price changes. For the full year, we anticipate flat demand with weakness in European heavy construction markets, offset by material handling backlogs in the US. Sales in our Furniture, Flooring & Textile Products segment were down 9% versus first quarter 2023. Demand in home furniture continues to be soft. We have recently seen stronger performance in Asia than in the US and believe this is related to consumer trade-down.
Work furniture demand also remains low. Pockets of improvements in contract markets are offset by softness in residential markets. We expect 2024 demand to be in line with 2023. In Flooring Products, we anticipate another year of lower residential demand, driven by lower levels of residential construction and remodeling activity. Hospitality demand has recovered slower than expected and remains well below pre-pandemic levels. Within textiles, first quarter sales were negatively impacted by weak bedding and furniture demand within our fabric converting business, partially offset by growth in US civil construction demand within our geo components business.
We expect infrastructure funding will be a tailwind later this year and anticipate full year demand in geo components will be modestly higher year-over-year. Despite an uncertain macroeconomic environment and challenging demand in residential end markets, our full year sales and earnings guidance has not changed. Our ongoing initiatives, including our restructuring plan, remain on track, and the management team is executing against our near to mid-term strategic priorities outlined earlier. I'll now turn the call over to Ben to review our updated capital allocation priorities, additional first quarter financial details, and our outlook for the year.
