# LEGGETT & PLATT INC (LEG) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from LEGGETT & PLATT INC's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/58492/000005849225000136/leg-20241231.htm
Accession: 0000058492-25-000136
Filing date: 2025-02-26
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/LEG/
All MD&A years: /company/LEG/mda/
Previous year: /company/LEG/mda/fy2023/ (FY 2023)
Next year: /company/LEG/mda/fy2025/ (FY 2025)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

[[GREPCENT_TABLE]]
[["","","Page No."],["\u2022","Highlights","35"],["\u2022","Introduction","36"],["\u2022","Results of Operations 2024 vs 2023","43"],["\u2022","Results of Operations 2023 vs 2022","46"],["\u2022","Liquidity and Capitalization","49"],["\u2022","Critical Accounting Policies and Estimates","58"],["\u2022","Contingencies","60"],["\u2022","New Accounting Standards","63"]]
[[/GREPCENT_TABLE]]

HIGHLIGHTS

[[GREPCENT_TABLE]]
[["","2024","","2023","","2022"],["(Dollar amounts in millions, except for per share data)"],["Net trade sales","$","4,384","","","$","4,725","","","$","5,147"],["Earnings (loss) before interest and taxes (EBIT)","(430)","","","(90)","","","485"],["Cash from operations","306","","","497","","","441"],["Total debt","1,864","","","1,988","","","2,084"],["Dividends per share","$",".61","","","$","1.82","","","$","1.74"]]
[[/GREPCENT_TABLE]]

Trade sales decreased 7% in 2024. Organic sales decreased 7% with volume declines of 4% and raw material-related price decreases of 3%. 2023 trade sales decreased 8%. Organic sales decreased 10%, with volume declines of 6% and combined raw material-related price decreases and currency impact of 4%. Acquisitions, net of divestitures, contributed 2% to sales growth.

Earnings in 2024 decreased primarily from $676 million non-cash goodwill impairment charges, $50 million of restructuring and impairment charges, lower volume and unfavorable sales mix, raw material-related pricing adjustments (primarily in our Bedding Products segment), metal margin compression in our Steel Rod business, and other expected higher expense items such as bad debt, medical, and less benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition. These decreases were partially offset by the non-recurrence of a $444 million non-cash impairment of long-lived assets (primarily customer relationships, technology, and trademark intangibles), lower amortization as a result of the 2023 long-lived asset impairment, operational efficiency improvements, gains on the sale of real estate, and restructuring benefit. Earnings in 2023 decreased primarily from a $444 million non-cash impairment of long-lived assets, metal margin compression in our Steel Rod business, and lower trade sales volume in residential end markets partially offset by higher trade sales volume in industrial end markets.

In 2024, we generated $306 million in cash from operations compared to $497 million in 2023. The decrease was primarily driven by lower earnings and less benefit from working capital. Cash flow in 2023 increased primarily from working capital improvements partially offset by lower earnings.

We ended 2024 with $443 million of availability under the $1.2 billion credit facility. In November 2024, we used our commercial paper program to repay $300 million of 3.8%, 10-year bonds that matured. In 2024, we paid down $126 million of debt.

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We decreased the annual dividend in 2024 to $.61 per share from $1.82 per share in 2023. The decision to reduce the dividend was made following a thorough evaluation by the Board and our management team. This action along with minimal acquisitions and share repurchases frees up capital to accelerate the deleveraging of our balance sheet and solidify our long-held financial strength. We had no acquisitions in 2024 and 2023. In 2024, we used $5 million to repurchase approximately .3 million shares of our stock at an average price of $19.17.

In the first quarter of 2024, we committed to a restructuring plan (the “2024 Restructuring Plan” or “2024 Plan”). The 2024 Plan is primarily associated with our Bedding Products segment and, to a lesser extent, our Furniture, Flooring & Textile Products segment. The 2024 Plan was expanded in the second quarter of 2024 to include a restructuring opportunity within the Specialized Products segment and in the third quarter of 2024 to include the general and administrative cost structure initiatives. We continue to make solid progress implementing the 2024 Plan. Portfolio management remains a strategic priority. We are focused on simplifying our portfolio to businesses that are the right long-term fit.

These topics are discussed in more detail in the sections that follow.

INTRODUCTION

Customers

We serve a broad suite of customers, with our largest customer representing less than 8% of our sales in 2024. Many are companies whose names are widely recognized. They include bedding brands and manufacturers, residential and office furniture producers, automotive OEM and Tier 1 manufacturers, and a variety of other companies.

Organic Sales

We calculate organic sales as trade sales excluding sales attributable to acquisitions and divestitures consummated within the last twelve months. Management uses the metric, and it is useful to investors, as supplemental information to analyze our underlying sales performance from period to period in our legacy businesses.

Major Factors That Impact Our Business

Goodwill and Long-Lived Asset Impairments

A significant portion of our assets consists of goodwill and other long-lived assets, the carrying value of which may be reduced if we determine that those assets are impaired. At December 31, 2024, goodwill and other intangible assets represented $935 million, or 26% of our total assets. In addition, net property, plant and equipment, operating lease right-of-use assets, and sundry assets totaled $1,036 million, or 28% of total assets.

GOODWILL IMPAIRMENT

We test goodwill for impairment at the reporting unit level (the business groups that are one level below the operating segments) when triggering events occur or at least annually. We perform our annual goodwill impairment testing in the second quarter. The 2023 goodwill impairment testing indicated no impairments.

The 2024 annual goodwill impairment testing indicated that fair value had fallen below carrying value for three reporting units, and fair value exceeded carrying value by less than 100% for one reporting unit.

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The following table represents 2024 total goodwill impairments. This includes non-cash pretax charges of $675 million related to our second quarter annual goodwill impairment testing and $1 million related to a small operation in the Bedding Products segment that reached held-for-sale status in the fourth quarter of 2024 and was associated with the 2024 Plan.

[[GREPCENT_TABLE]]
[["","","","","Year Ended"],["Reporting Unit","","Segment","","December 31, 2024"],["Bedding","","Bedding Products","","$","588"],["Work Furniture","","Furniture, Flooring & Textile Products","","44"],["Hydraulic Cylinders","","Specialized Products","","44"],["","","","","$","676"]]
[[/GREPCENT_TABLE]]

The fair values of our reporting units in relation to their respective carrying values and significant assumptions used are presented in the tables in Note F to the Consolidated Financial Statements, beginning on page 96.

In general, the fair values for these reporting units decreased versus prior year due to macroeconomic pressures, including low demand, particularly in residential end markets. The fair values of our reporting units were reconciled to our consolidated market capitalization, which decreased due to the significant decline in stock price during the second quarter of 2024. Our closing stock price per share was $26.17 on December 29, 2023, $19.15 on March 28, 2024, and $11.46 on June 28, 2024. We concluded that an impairment existed under generally accepted accounting principles in connection with the preparation and review of our second quarter financial statements filed on August 7, 2024 as part of the quarterly report on Form 10-Q. If actual results differ materially from estimates used in our calculations, we could incur future impairment charges.

Units with Impairments

In addition to the decline in our stock price during the second quarter, the reporting units discussed below also had the following factors contributing to the impairments:

Bedding

Domestic bedding manufacturers are facing numerous challenges, including low demand, overcapacity, and increased pressure from finished mattress imports, resulting in financial stress across the industry. The domestic mattress market has changed dramatically in a relatively short time span. 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 domestic OEMs, domestic private label producers, and import manufacturers. These changing market dynamics and weak demand have created disruption and financial instability with some of our customers.

The Bedding reporting unit's fair value exceeded carrying value by 40% at our second quarter 2023 testing date and had decreased to 19% after a triggering event occurred to test for goodwill impairment for this reporting unit late in the fourth quarter of 2023, as discussed in the "Long-lived asset impairment" section below.

Work Furniture

Work Furniture demand for both contract and residential end-use products has remained at sustained low levels. Fair value exceeded carrying value by 74% at our second quarter 2023 testing date.

Hydraulic Cylinders

The Hydraulic Cylinders reporting unit's fair value at our second quarter 2023 testing date exceeded carrying value by 18%. Fair value approximated carrying value primarily due to an August 2022 acquisition that is experiencing operational inefficiencies.

Units with No Impairments, but Fair Value Exceeded Carrying Value by Less than 100%

Aerospace Products

The Aerospace Products reporting unit did not incur impairment charges, but fair value exceeded carrying value by less than 100% at both testing dates. The fair value of this reporting unit exceeded its carrying value by 21% at our second quarter 2024 testing date as compared to 44% in 2023. Aerospace’s long-term forecasts continue to reflect demand improvements as industry recovery continues.

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LONG-LIVED ASSET IMPAIRMENT

Late in the fourth quarter of 2023, we had a triggering event to review long-lived assets and test for impairment when certain of our Elite Comfort Solutions (ECS) and Kayfoam customers notified us of efforts to improve their financial position by moving their business to or exploring alternative suppliers, which adversely impacted our future cash flow forecast. While sales and earnings were lower as compared to acquisition-date estimates for the customer bases associated with ECS and Kayfoam (acquired in 2019 and 2021, respectively), estimated undiscounted cash flows for these asset groups exceeded their carrying amounts until the fourth quarter of 2023. In early January 2024, we conducted an evaluation and determined that our sales and earnings forecasts should be reduced, and, as a result, we performed a recoverability test for these asset groups. Because the forecasted undiscounted cash flows had fallen below the carrying value for these asset groups, we tested for impairment by comparing the estimated fair value of long-lived assets to their carrying values. This resulted in a non-cash pretax charge of $444 million for long-lived asset impairments (primarily customer relationships, technology, and trademark intangibles) in the Bedding Products segment during the fourth quarter of 2023. This impairment was unrelated to the 2024 Restructuring Plan discussed below.

The fourth quarter 2023 activities resulting in the long-lived asset impairments discussed above were also considered a triggering event for goodwill impairment testing of the Bedding reporting unit, and no impairments were indicated (as discussed in Goodwill and Long-Lived Asset Impairments) starting on page 36.

In evaluating the potential for impairment of goodwill and other long-lived assets, we make assumptions and estimates regarding future operating performance, business trends, and market and economic performance, including future sales, operating margins, growth rates, and discount rates. If actual results or the long-term outlook of any of our reporting units materially differ from the assumptions and estimates used in the goodwill and other long-lived assets valuation calculations, we could incur future non-cash impairment charges, which could have a material negative impact on our earnings.

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2024 Restructuring Plan

In the first quarter of 2024, we committed to a restructuring plan. The 2024 Plan is primarily associated with our Bedding Products segment and, to a lesser extent, our Furniture, Flooring & Textile Products segment. The 2024 Plan was expanded in the second quarter of 2024 to include a restructuring opportunity within the Specialized Products segment and in the third quarter of 2024 to include the general and administrative cost structure initiatives. We expect to consolidate between 15 and 20 production and distribution facilities in the Bedding Products segment and a small number of production facilities in the Furniture, Flooring & Textile Products segment. The following summarizes the 2024 Plan activity:

[[GREPCENT_TABLE]]
[["2024 PROGRESS"],["Bedding Products segment"],["\u2022Consolidated 14 production and distribution facilities (ten in U.S. Spring, three in Specialty Foam, one in Adjustable Bed)"],["\u2022Consolidated all domestic innerspring production into our four larger remaining spring production facilities"],["\u2022Exited our Mexican innerspring operation"],["\u2022Downsized our Chinese innerspring operation"],["\u2022Sold two properties"],["Specialized Products segment"],["\u2022Launched restructuring activities in our Hydraulic Cylinders business to optimize manufacturing and improve operating efficiencies"],["Furniture, Flooring & Textile Products segment"],["\u2022Closed one facility in Home Furniture"],["\u2022Closed one facility in Flooring Products"],["Corporate"],["\u2022Reduced corporate general and administrative expenses to be fully realized in 2025"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["2025 EXPECTATIONS"],["Bedding Products segment"],["\u2022Further reductions of our Bedding footprint (primarily consolidations in Specialty Foam)"],["Specialized Products segment"],["\u2022Full implementation of manufacturing efficiency improvement activities in Hydraulic Cylinders."],["Furniture, Flooring & Textile Products segment"],["\u2022Completion of restructuring initiatives in Flooring Products"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["(Dollar amounts in millions-all pretax)","","2024 Actual","","","","Estimatesfor 2025 1","","Total PlanEstimate2, 3, 4","","Total Plan Prior Estimate 3"],["Plan activity:"],["Restructuring and restructuring-related costs:"],["Cash","","$","30","","","","","$15 to $20","","$45 to $50","","$30 to $40"],["Non-cash","","18","","","","","15 to 20","","35 to 40","","35 to 45"],["Total costs","","$","48","","","","","$30 to $40","","$80 to $90","","$65 to $85"],["Pretax net cash from real estate 5","","$","20","","","","","$15 to $40","","$60 to $80","","$60 to $80"],["Plan impacts:"],["Sales attrition","","$","15","","","","","$","60","","","$","80","","","$","80"],["EBIT benefit","","$","22","","","","","$55 to $60","","$60 to $70","","$50 to $60"]]
[[/GREPCENT_TABLE]]

1 Estimates for 2025 sales attrition and EBIT benefit include full year impacts of the actions completed in 2024 and additional actions expected to be completed in 2025.

2 Due to implementation timing of certain restructuring activities, we expect to have a small amount of incremental EBIT benefit and sales attrition in 2026. Additionally, due to the timing of listing properties, we expect the remainder of real estate sales to occur in 2026.

3 Estimates of annualized sales attrition and EBIT benefit are expected to be realized after the 2024 Plan is fully implemented in late 2025.

4 Increases in our total plan estimates for both cash costs and EBIT benefit are related to 2024 Plan activities in our Specialized Products segment and our general and administrative initiatives.

5 Pretax net cash from real estate is only related to the 2024 Plan and does not include the sale of idle real estate. The 2024 sale of real estate resulted in a pretax gain of $17 million. We estimate up to $37 million of pretax gains on the sale of real estate in 2025.

Unrelated to the 2024 Plan, we began exploring a potential sale of our Aerospace business in 2024 and have incurred $3 million of restructuring-related costs related to this activity. This business has not reached the criteria to be classified as held for sale.

Total restructuring and restructuring-related costs, including 2024 Plan costs and costs to explore the potential sale of our Aerospace business, for the year ending December 31, 2024, were $51 million ($33 million cash and $18 million non-cash).

2024 Plan costs are expected to be substantially complete by the end of 2025.

Because of certain risks and uncertainties, the 2024 Plan may not achieve its intended outcomes. Our estimates of the number of facilities to be consolidated, EBIT benefit, sales attrition, proceeds from the sale of real estate, and the cash and non-cash costs and impairments associated with the 2024 Plan may change as our analysis develops and additional information is obtained. Also, we may not be able to implement the 2024 Plan in a timely manner that will positively impact our financial condition and results of operations. Moreover, we may not be able to dispose of real estate pursuant to the 2024 Plan or obtain the expected proceeds in a timely manner. Any potential sales of real estate pursuant to the 2024 Plan are subject to conditions, some of which may be out of our control, that could change the timing of any sale, the amounts, the pretax gains, as well as whether such sale is completed at all. Those conditions include the listing and marketing of these properties, negotiations with prospective buyers, and other factors. The 2024 Plan may also negatively impact our

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relationships with employees, customers, and vendors. Any failure to achieve the intended outcomes could materially adversely affect our business, financial condition, results of operations and cash flows, and liquidity.

We continue to evaluate our businesses for further restructuring opportunities in addition to those activities included in the 2024 Plan. The execution of any of these opportunities may result in additional material restructuring costs, restructuring-related costs, or impairments.

Market Demand

Market demand (including product mix) is impacted by several economic factors, with housing turnover and consumer confidence being the most significant. Other important factors include disposable income levels, employment levels, and interest rates. All of these factors influence consumer spending on durable goods, and therefore affect demand for our products and components. Some of these factors also influence spending on infrastructure, facilities, and equipment, which has historically impacted approximately 25%-30% of our sales. The dynamic macroeconomic environment has pressured most of our end markets and negatively affected the demand for our products.

In recent years, the U.S. mattress market has become increasingly bifurcated. High volume imports have dominated online sales and pressured opening and mid-tier price points for traditional domestic OEMs. Additionally, some mattress manufacturers and retailers have faced financial stress as overall consumer demand for mattresses has declined. In the near-term, the domestic mattress industry is expected to continue to experience some level of volatility resulting from industry bankruptcies and consolidations and import pressure.

Volatility related to the growth of Chinese EV manufacturers and multinational OEM market share challenges are expected to continue to impact the automotive industry. Delays in EV programs in Europe and changing expectations for internal combustion engines to EV program transitions in North America, along with consumer affordability issues, add additional uncertainty to OEM demand.

As a result of these uncertainties, we expect 2025 overall demand to be down modestly from 2024 levels.

Trends in Cost of Goods Sold

Our costs can vary significantly as market prices for raw materials (many of which are commodities) fluctuate. We typically have short-term commitments from our suppliers; accordingly, our raw material costs generally move with the market. We have also been impacted by fluctuations in transportation, energy, and labor costs. Our ability to recover higher costs (through selling price increases) is crucial. When we experience significant increases in costs, we typically implement price increases to recover the higher costs. Conversely, when costs decrease significantly, we generally pass those lower costs through to our customers. The timing of our price increases or decreases is important; we typically experience a lag in recovering higher costs, and we also realize a lag as costs decline.

Steel is our principal raw material. At various times in past years, we have experienced significant cost fluctuations in this commodity. In most cases, the major changes (both increases and decreases) were passed through to customers with selling price adjustments. Steel costs modestly declined throughout 2024 as U.S. steel markets continued to face soft demand and increased foreign competition.

As a producer of steel rod, we are also impacted by changes in metal margins (the difference in the cost of steel scrap and the market price for steel rod). Steel rod and steel scrap costs both declined modestly during 2024, leading to metal margin compression. As a result, we experienced lower metal margins in our Steel Rod business.

We have exposure to the cost of chemicals, including TDI, MDI, and polyol. The cost of these chemicals has fluctuated at times, but we have generally passed the changes through to our customers. Although pricing fluctuated throughout 2024, average costs for the year were flat versus 2023.

Our other raw materials include woven and nonwoven fabrics. We have experienced changes in the costs of these materials and generally have been able to pass them through to our customers.

When we raise our prices to recover higher raw material costs, this sometimes causes customers to modify their product designs and replace higher cost components with lower cost components. We must continue providing product options to our customers that enable them to improve the functionality of their products and manage their costs, while providing higher profits for our operations.

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Supply Chain Shortages and Disruptions

We have experienced supply chain disruptions related to freight challenges, including higher costs.

In recent years, drought conditions lowered water levels of the Mississippi River and Panama Canal, reducing traffic through these waterways, which impacted some of our shipments. Also, in late 2023 and early 2024, the conflict in the Red Sea caused delays with some of our shipments, while other shipments from China to the United States or Europe have been re-routed. Although these issues did not have a material impact on our results of operations, additional logistical disruptions including, but not limited to, labor availability, potential labor strikes, port congestion, and trade tensions, could result in additional costs and delays in our ability to deliver products timely to certain customers.

Competition

Many of our markets are highly competitive, with the number of competitors varying by product line. In general, our competitors tend to be smaller, private companies. Many of our competitors, both domestic and foreign, compete primarily on the basis of price. Our success has stemmed from the ability to remain price competitive while delivering innovation, product quality, and customer service.

We continue to face pressure from foreign competitors, as some of our customers source a portion of their components and finished products offshore. In addition to lower labor rates, foreign competitors benefit (at times) from lower raw material costs. They may also benefit from currency factors and more lenient regulatory climates. We typically compete in market segments that value product differentiation. When we do compete on cost, we typically remain price competitive in most of our business units, even versus many foreign manufacturers, as a result of our efficient operations, automation, vertical integration in steel rod and wire, logistics and distribution efficiencies, and large-scale purchasing of raw materials and commodities. To stay competitive with global steel costs, both contract and non-contract innerspring pricing was adjusted in the back half of 2023 and fully realized in 2024. We have also reacted to foreign competition in certain cases by developing new proprietary products that help our customers reduce total costs and by shifting production offshore to take advantage of lower input costs.

We produce innersprings for mattresses that are sold to bedding manufacturers. We produce steel wire rod for consumption by our wire mills (primarily used by our innerspring manufacturing facilities to produce innersprings) and to sell to third parties. We also produce and sell finished mattresses.

In response to petitions filed with the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC) generally alleging that innersprings, steel wire rod, and mattresses were being unfairly sold in the United States by certain foreign manufacturers at less than fair value (dumping) and that certain foreign manufacturers of steel wire rod and mattresses were unfairly benefiting from subsidies, antidumping and/or countervailing duties have been imposed on the imports of such products. The ITC is currently examining whether to extend a 2019 order on mattresses from China, following the DOC's February 2025 determination that revocation of the 2019 duty order would likely lead to the continuation or reoccurrence of dumping of mattresses from China.

In March 2020, the Company, along with other petitioners, filed petitions with the DOC and the ITC alleging that manufacturers of mattresses in seven different countries were unfairly selling their products in the United States at less than fair value and manufacturers of mattresses in China were benefiting from subsidies. These petitions resulted in antidumping and countervailing duty orders set to remain in effect for five years, through May 2026, at which time the DOC and ITC will conduct a sunset review to determine whether to extend the orders for an additional five years. Following certain appeals that were filed with the U.S. Court of International Trade (CIT), some of which remain ongoing, the CIT ruled in favor of the ITC and petitioners and sustained the ITC’s unanimous injury decision. In February 2024, one respondent filed an appeal of the CIT's decision to the U.S. Court of Appeals for the Federal Circuit, but that respondent agreed to dismiss the appeal on October 29, 2024. As a result, this particular appeal to the U.S. Court of Appeals for the Federal Circuit has been finally resolved.

In July 2023, the Company, along with other petitioners, filed petitions with the DOC and the ITC alleging that manufacturers of mattresses in twelve additional countries were unfairly selling their products in the United States at less than fair value and manufacturers of mattresses in Indonesia were unfairly benefiting from subsidies, causing harm to the U.S. industry and seeking the imposition of duties on mattresses imported from these countries. The ITC made a preliminary determination of injury in September 2023, and the DOC’s

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preliminary determination on dumping was issued in February 2024. With respect to eight of the countries, the DOC’s final dumping determinations were issued in May 2024, and the ITC's final injury determination was issued in June 2024. In June 2029, the DOC and ITC will conduct a sunset review to determine whether to extend those orders for an additional five years. With respect to the five remaining countries, the DOC’s final determinations were issued in July 2024, and the order evidencing the ITC’s final determination with respect to the four countries which were above the de minimis threshold was issued in September 2024. This case has been finally resolved with respect to the duties and injury findings, but an importer filed an appeal with respect to the ITC's critical circumstances determination imposing retroactive duties, which is still pending. In October 2029, the DOC and ITC will conduct a sunset review to determine whether to extend the orders for an additional five years.

See Item 3. Legal Proceedings on page 30 for more information.

If any of the foregoing existing or future antidumping and countervailing duties are overturned on appeal or not extended beyond their current terms and dumping and/or subsidization recurs, or manufacturers in the subject countries circumvent the existing duties through transshipment in other jurisdictions or otherwise, our market share, sales, profit margins, and earnings could be adversely affected.

RESULTS OF OPERATIONS—2024 vs. 2023

Consolidated Results

The following table shows the changes in sales and earnings during 2024 and identifies the major factors contributing to the changes from prior year. 

[[GREPCENT_TABLE]]
[["(Dollar amounts in millions, except per share data)","Amount","","%"],["Net trade sales:"],["Year ended December 31, 2023","$","4,725"],["Approximate volume declines","(205)","","","(4)"],["Approximate raw material-related deflation","(136)","","","(3)"],["Year ended December 31, 2024","$","4,384","","","(7)","%"],["Earnings:"],["(Dollar amounts, net of tax)"],["Year ended December 31, 2023","$","(137)"],["2024 goodwill impairment","(634)"],["Non-recurring 2023 long-lived asset impairment","341"],["2024 restructuring, restructuring-related, and impairment charges","(38)"],["Offsetting 2023 and 2024 net real estate gains","15"],["Offsetting 2023 and 2024 net insurance proceeds from tornado damage","(5)"],["2024 CEO transition costs","(4)"],["Special tax item","(5)"],["Other items, primarily lower volume and unfavorable sales mix, raw material-related pricing adjustments, metal margin compression, and higher expenses (bad debt, medical, etc.)","(45)"],["Year ended December 31, 2024","$","(512)"],["2023 Earnings (Loss) Per Diluted Share","$","(1.00)"],["2024 Earnings (Loss) Per Diluted Share","$","(3.73)"]]
[[/GREPCENT_TABLE]]

Full-year trade sales decreased 7%, to $4.38 billion. Organic sales decreased 7%, with volume declines of 4% and raw material-related price decreases of 3%.

Earnings decreased as a result of the items listed in the above table. The special tax item is associated with a deferred tax asset valuation allowance related to a 2022 acquisition in our Specialized Products segment.

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Interest and Income Taxes

Net interest expense in 2024 was lower by $4 million compared to 2023. Interest rates on borrowings were higher, reflecting the effect of the retirement of our $300 million Senior Notes in the fourth quarter of 2024 paid with commercial paper, but were more than offset by lower outstanding balances due to our deleveraging efforts.

Our worldwide effective income tax rate was approximately 0% in 2024 and 21% in 2023. The following table reflects how our effective income tax rate differs from the statutory federal income tax rate. See Note O on page 114 of the Notes to Consolidated Financial Statements for additional details.

[[GREPCENT_TABLE]]
[["","Year Ended December 31"],["","2024","","2023"],["Statutory federal income tax rate","21.0","%","","21.0","%"],["Increases (decreases) in rate resulting from:"],["State taxes, net of federal benefit",".1","","",".2"],["Tax effect of foreign operations",".8","","","(1.4)"],["Global intangible low-taxed income","(.4)","","","(1.5)"],["Current and deferred foreign withholding taxes","(1.9)","","","(7.3)"],["Goodwill and long-lived asset impairments","(19.5)","","","5.4"],["Stock-based compensation","(.2)","","",".1"],["Change in valuation allowance","(1.3)","","","(.4)"],["Change in uncertain tax positions, net","(.1)","","","(.3)"],["Other permanent differences, net","1.1","","","3.9"],["Other, net","\u2014","","","1.4"],["Effective tax rate","(.4)","%","","21.1","%"]]
[[/GREPCENT_TABLE]]

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Segment Results

In the following section we discuss 2024 sales and EBIT (earnings before interest and taxes) for each of our segments. We provide additional detail about segment results in Note C on page 89 of the Notes to Consolidated Financial Statements. We use EBIT to assess operational performance, and it is useful to investors as it aids in understanding of underlying operational profitability.

[[GREPCENT_TABLE]]
[["(Dollar amounts in millions)","2024","","2023","","Change in Sales","","% Change Organic"],["$","","%","","Sales 1"],["Trade sales"],["Bedding Products","$","1,751.7","","","$","1,964.7","","","$","(213.0)","","","(10.8)","%","","(10.8)","%"],["Specialized Products","1,239.1","","","1,279.8","","","(40.7)","","","(3.2)","","","(3.2)"],["Furniture, Flooring & Textile Products","1,392.8","","","1,480.8","","","(88.0)","","","(5.9)","","","(5.9)"],["Total trade sales","$","4,383.6","","","$","4,725.3","","","$","(341.7)","","","(7.2)","%","","(7.2)","%"],["","2024","","2023","","Change in EBIT","","EBIT Margins"],["$","","%","","2024","","2023"],["EBIT"],["Bedding Products","$","(549.0)","","","$","(344.2)","","","$","(204.8)","","","(59.5)","%","","(31.3)","%","","(17.5)","%"],["Specialized Products","64.4","","","125.0","","","(60.6)","","","(48.5)","","","5.2","","","9.8"],["Furniture, Flooring & Textile Products","58.2","","","128.6","","","(70.4)","","","(54.7)","","","4.2","","","8.7"],["Intersegment eliminations & other","(3.5)","","",".2","","","(3.7)"],["Total EBIT 2","$","(429.9)","","","$","(90.4)","","","$","(339.5)","","","(375.6)","%","","(9.8)","%","","(1.9)","%"],["","2024","","2023"],["Depreciation and amortization"],["Bedding Products","$","59.0","","","$","103.9"],["Specialized Products","43.0","","","41.1"],["Furniture, Flooring & Textile Products","21.7","","","22.5"],["Unallocated 3","12.3","","","12.4"],["Total depreciation and amortization","$","136.0","","","$","179.9"]]
[[/GREPCENT_TABLE]]

1 This is the change in sales not attributable to acquisitions or divestitures in the last 12 months.

2 Total 2024 EBIT of $(429.9) million less interest expense net of interest income of $79.3 million and income tax of $2.2 million equals 2024 Net earnings (loss) of $(511.4) million. Total 2023 EBIT of $(90.4) million less interest expense net of interest income of $83.0 million and and income tax of $(36.6) million equals 2023 Net earnings (loss) of $(136.8) million.

3 Unallocated consists primarily of depreciation and amortization on non-operating assets.

Bedding Products

Trade sales decreased 11%. Organic sales were down 11%, from volume declines of 6%, primarily due to demand softness in U.S. and European bedding markets and the expected exit of a customer in Specialty Foam, partially offset by higher trade rod sales. Raw material-related selling price decreases reduced sales 5%.

EBIT decreased $205 million, primarily from $588 million of non-cash goodwill impairment charges, $37 million of restructuring and impairment charges, raw material-related pricing adjustments, unfavorable sales mix in Steel Rod and Specialty Foam, metal margin compression, lower volume, and other expense items such as higher bad debt reserves and increased inventory write-downs/reserves. These decreases were partially offset

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by the non-recurrence of a $444 million long-lived asset impairment, lower amortization expense due to the 2023 long-lived asset impairment, gains on sales of real estate, restructuring benefit, and operational efficiency improvements in Specialty Foam.

 Specialized Products

Trade sales decreased 3%. Organic sales decreased 3%. Volume decreased 3% with soft demand in the second half of the year in Automotive and Hydraulic Cylinders partially offset by strong demand in Aerospace. Raw material-related price increases were offset by currency impact.

EBIT decreased $61 million, primarily from a $44 million non-cash goodwill impairment charge in Hydraulic Cylinders, lower volume, $10 million of restructuring and impairment charges, and less benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition, partially offset by disciplined cost management and operational efficiency improvements.

Furniture, Flooring & Textile Products

Trade sales decreased 6%. Organic sales were down 6%. Volume decreased 3% with continued weak demand in residential end markets and demand softness in Geo Components through the third quarter. Raw material-related selling price decreases reduced sales 3%.

EBIT decreased $70 million, primarily from a $44 million non-cash goodwill impairment charge in Work Furniture, lower volume, $2 million of restructuring charges, and the non-recurrence of a $5 million net gain on insurance proceeds from tornado damage ($7 million in 2023 and $2 million in 2024) and a $6 million gain from the sale of real estate.

RESULTS OF OPERATIONS—2023 vs. 2022

Consolidated Results

The following table shows the changes in sales and earnings during 2023, and identifies the major factors contributing to the changes from prior year.

[[GREPCENT_TABLE]]
[["(Dollar amounts in millions, except per share data)","Amount","","% 1"],["Net trade sales:"],["Year ended December 31, 2022","$","5,147"],["Divestitures","(1)","","","\u2014","%"],["2022 sales excluding divestitures","5,146"],["Approximate volume declines","(299)","","","(6)"],["Approximate raw material-related deflation and currency impact","(238)","","","(4)"],["Organic sales","(537)","","","(10)"],["Acquisition sales growth","116","","","2"],["Year ended December 31, 2023","$","4,725","","","(8)","%"],["Earnings:"],["(Dollar amounts, net of tax)"],["Year ended December 31, 2022","$","310"],["2023 long-lived asset impairment","(341)"],["2023 gain on sale of real estate","8"],["2023 gain from net insurance proceeds from tornado damage","7"],["Other items, primarily lower metal margin and lower volume","(121)"],["Year ended December 31, 2023","$","(137)"],["2022 Earnings Per Diluted Share","$","2.27"],["2023 Earnings (Loss) Per Diluted Share","$","(1.00)"]]
[[/GREPCENT_TABLE]]

  1 Calculations impacted by rounding

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Full-year trade sales decreased 8%, to $4.73 billion. Organic sales decreased 10%, with volume declines of 6% and combined raw material-related price decreases and currency impact of 4%. Acquisitions, net of divestitures, contributed 2% to sales growth. Volume declines were impacted by continued weak residential end market demand, partially offset by automotive and industrial end market demand strength.

Earnings decreased primarily from a long-lived asset impairment charge, metal margin compression in our Steel Rod business, and lower trade sales volume in residential end markets.

Interest and Income Taxes

Net interest expense in 2023 was higher by $2 million compared to 2022, primarily due to increased interest rates on higher average commercial paper balances, somewhat offset by the interest expense associated with our matured 2012 $300 million Senior Notes, which were fully paid in the third quarter of 2022.

Our worldwide effective income tax rate was approximately 21% in 2023 and 23% in 2022. The following table reflects how our effective income tax rate differs from the statutory federal income tax rate. See Note O on page 114 of the Notes to Consolidated Financial Statements for additional details.

[[GREPCENT_TABLE]]
[["","Year Ended December 31"],["","2023","","2022"],["Statutory federal income tax rate","21.0","%","","21.0","%"],["Increases (decreases) in rate resulting from:"],["State taxes, net of federal benefit",".2","","",".9"],["Tax effect of foreign operations","(1.4)","","","(.5)"],["Global intangible low-taxed income","(1.5)","","",".6"],["Current and deferred foreign withholding taxes","(7.3)","","","2.6"],["Long-lived asset impairment","5.4","","","\u2014"],["Stock-based compensation",".1","","","(.1)"],["Change in valuation allowance","(.4)","","","(.1)"],["Change in uncertain tax positions, net","(.3)","","","\u2014"],["Other permanent differences, net","3.9","","","(1.0)"],["Other, net","1.4","","","(.2)"],["Effective tax rate","21.1","%","","23.2","%"]]
[[/GREPCENT_TABLE]]

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 Segment Results

In the following section we discuss 2023 sales and EBIT for each of our segments. We provide additional detail about segment results in Note C on page 89 of the Notes to Consolidated Financial Statements. We use EBIT to assess operational performance, and it is useful to investors as it aids in understanding of underlying operational profitability.

[[GREPCENT_TABLE]]
[["(Dollar amounts in millions)","2023","","2022","","Change in Sales","","% Change Organic"],["$","","%","","Sales 1"],["Trade sales"],["Bedding Products","$","1,964.7","","","$","2,356.3","","","$","(391.6)","","","(16.6)","%","","(16.6)","%"],["Specialized Products","1,279.8","","","1,118.3","","","161.5","","","14.4","","","7.1"],["Furniture, Flooring & Textile Products","1,480.8","","","1,672.1","","","(191.3)","","","(11.4)","","","(13.5)"],["Total trade sales","$","4,725.3","","","$","5,146.7","","","$","(421.4)","","","(8.2)","%","","(10.4)","%"],["","2023","","2022","","Change in EBIT","","EBIT Margins"],["$","","%","","2023","","2022"],["EBIT"],["Bedding Products","$","(344.2)","","","$","219.6","","","$","(563.8)","","","(256.7)","%","","(17.5)","%","","9.3","%"],["Specialized Products","125.0","","","99.4","","","25.6","","","25.8","","","9.8","","","8.9"],["Furniture, Flooring & Textile Products","128.6","","","165.0","","","(36.4)","","","(22.1)","","","8.7","","","9.9"],["Intersegment eliminations & other",".2","","","1.0","","","(.8)"],["Total EBIT 2","$","(90.4)","","","$","485.0","","","$","(575.4)","","","(118.6)","%","","(1.9)","%","","9.4","%"],["","2023","","2022"],["Depreciation and amortization"],["Bedding Products","$","103.9","","","$","104.1"],["Specialized Products","41.1","","","40.5"],["Furniture, Flooring & Textile Products","22.5","","","23.2"],["Unallocated 3","12.4","","","12.0"],["Total depreciation and amortization","$","179.9","","","$","179.8"]]
[[/GREPCENT_TABLE]]

1 This is the change in sales not attributable to acquisitions or divestitures in the last 12 months. Refer to the respective segment discussion below for a reconciliation of the change in total segment sales to organic sales.

2 Total 2023 EBIT of $(90.4) million less interest expense net of interest income of $83.0 million and income tax of $(36.6) million equals 2023 Net earnings (loss) of $(136.8) million. Total 2022 EBIT of $485.0 million less interest expense net of interest income of $81.4 million and income tax of $93.7 million equals 2022 Net earnings (loss) of $309.9 million.

3 Unallocated consists primarily of depreciation and amortization on non-operating assets.

Bedding Products

Trade sales decreased 17%. Organic sales were down 17%, from volume declines of 8% and raw material-related selling price decreases, net of currency benefit, of 9%.

EBIT decreased $564 million, primarily from a $444 million non-cash long-lived asset impairment charge, lower metal margin in our Steel Rod business, and lower volume.

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 Specialized Products

Trade sales increased 14%. Organic sales were up 7%, from volume growth of 8% partially offset by currency impact, net of raw material-related price increases, of 1%. Acquisitions contributed 7% to sales growth.

EBIT increased $26 million, primarily from higher volume. 2023 also benefited from a $15 million reduction to a contingent purchase price liability associated with a prior year acquisition mostly offset by higher costs to support demand.

Furniture, Flooring & Textile Products

Trade sales decreased 11%. Organic sales were down 13% from volume declines of 11% and raw material-related selling price decrease, net of currency benefit, of 2%. Acquisitions contributed 2% to sales growth.

EBIT decreased $36 million, primarily from lower volume partially offset by pricing discipline, a $7 million gain on net insurance proceeds from tornado damage, and a $6 million gain on the sale of real estate.

LIQUIDITY AND CAPITALIZATION

Liquidity

Sources of Cash

Cash on Hand

At December 31, 2024, we had cash and cash equivalents of $350 million primarily invested in interest-bearing bank accounts and in bank time deposits with original maturities of three months or less. Substantially all of these funds are held in the international accounts of our foreign operations.

If we were to immediately bring back all our foreign cash to the United States in the form of dividends, we would pay foreign withholding taxes of approximately $20 million. Due to capital requirements in various jurisdictions, $70 million of this cash was inaccessible for repatriation at year end. Inaccessible cash balances can fluctuate from quarter to quarter based on the amount of foreign distributable profits available and the variability of our foreign cash balances.

Cash from Operations

The primary source of funds for our short-term cash requirements is our cash generated from operating activities. Earnings and changes in working capital levels are the two factors that generally have the greatest impact on our cash from operations.

        Cash from operations - 2022 $441 million, 2023 $497 million, 2024 $306 million            

Cash from operations decreased $191.5 million in 2024, primarily from lower earnings and less benefit from working capital versus last year.

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We ended 2024 with working capital at 20.0% and adjusted working capital at 13.0% of annualized sales.1 The table below explains this non-GAAP calculation. We eliminate cash, current debt maturities, and the current portion of operating lease liabilities from working capital to monitor our operating efficiency and performance related to trade receivables, inventories, and accounts payable. We believe this provides a more useful measurement to investors since cash and current maturities can fluctuate significantly from period to period. As discussed in Cash on Hand on page 49, substantially all of these funds are held by international operations and may not be immediately available to reduce debt on a dollar-for-dollar basis.

[[GREPCENT_TABLE]]
[["(Dollar amounts in millions)","2024","","2023"],["Current assets","$","1,690.5","","","$","1,881.4"],["Current liabilities","846.4","","","1,262.6"],["Working capital","844.1","","","618.8"],["Cash and cash equivalents","350.2","","","365.5"],["Current debt maturities and current portion of operating lease liabilities","54.7","","","365.3"],["Adjusted working capital","$","548.6","","","$","618.6"],["Annualized sales 1","$","4,225.6","","","$","4,460.4"],["Working capital as a percent of annualized sales","20.0","%","","13.9","%"],["Adjusted working capital as a percent of annualized sales","13.0","%","","13.9","%"]]
[[/GREPCENT_TABLE]]

1 Annualized sales equal fourth quarter sales ($1,056.4 million in 2024 and $1,115.1 million in 2023) multiplied by 4. We believe measuring our working capital against this sales metric is more useful, since efficient management of working capital includes adjusting those net asset levels to reflect current business volume.

[[GREPCENT_TABLE]]
[["Three Primary Components of our Working Capital"],["","Amount (in millions)","","","Days"],["","2024","","2023","","2022","","","2024","","2023","","2022"],["Trade Receivables","$","503.0","","","$","564.9","","","$","609.0","","","DSO 1","44","","45","","44"],["Inventories","$","722.6","","","$","819.7","","","$","907.5","","","DIO 2","77","","81","","83"],["Accounts Payable","$","497.7","","","$","536.2","","","$","518.4","","","DPO 3","52","","50","","50"]]
[[/GREPCENT_TABLE]]

1Days sales outstanding: ((beginning of year trade receivables + end of year trade receivables) ÷ 2) ÷ (net trade sales ÷ number of days in the period)

2Days inventory on hand: ((beginning of year inventory + end of year inventory) ÷ 2) ÷ (cost of goods sold ÷ number of days in the period)

3Days payables outstanding: ((beginning of year accounts payable + end of year accounts payable) ÷ 2) ÷ (cost of goods sold ÷ number of days in the period)

We continue to monitor all elements of working capital in order to optimize cash flow.

Trade Receivables - Our trade receivables decreased by $62 million at December 31, 2024 compared to the prior year and our DSO has been relatively consistent the last three years. The decrease in accounts receivable was primarily due to demand softness, lower pricing due to deflation, and restructuring plan impacts.

We recorded bad debt expense of $6 million during 2024 and a benefit of $7 million during 2023. Weak demand and changing market dynamics have created disruption and financial instability for some of our customers, particularly in the Bedding Products segment. A few customers began to exhibit slow payment and past-due trends during 2024. As a result, we increased our reserves for these customers

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and implemented payment plans where needed. The 2023 reduced expense is primarily related to adjustments to our allowance for certain reduced risk, including specifically-reserved accounts.

We monitor our receivable portfolio closely and make reserve decisions based upon individual customer credit risk reviews, aging of customer accounts, historical loss experience, and general macroeconomic and industry trends that could impact the expected collectability of all customers or pools of customers with similar risks. We obtain credit applications, credit reports, bank and trade references, and periodic financial statements from our customers to establish credit limits and terms as appropriate. In cases where a customer’s payment performance or financial condition begins to deteriorate or in the event of a customer bankruptcy, we tighten our credit limits and terms and make appropriate reserves based upon the facts and circumstances for each individual customer, as well as pools of similar customers.

Inventories - Our inventories decreased by $97 million at December 31, 2024 compared to the prior year, and our DIO decreased during 2024 primarily due to the impacts of the 2024 Restructuring Plan through write-downs, efforts to manage inventory to current demand, and deflation. Throughout 2022 and 2023, inventories decreased as we worked to manage inventories to levels needed to support current demand, while maintaining our ability to service customer requirements. In 2023, raw material deflation, primarily in our Bedding Products and Furniture, Flooring & Textile Products segments, was partially offset by currency impacts and increased inventories in the Specialized Products segment to support sales growth.

We continuously monitor our slower-moving and potentially obsolete inventory through reports on inventory quantities compared to usage within the previous 12 months. We also utilize cycle counting programs and complete physical counts of our inventory. When potential write-down of inventories is indicated by these controls, we will take charges for write-downs to maintain an adequate level of reserves. Additions to inventory reserves were $36 million, $9 million, and $17 million during 2024, 2023, and 2022, respectively. Reserves increased in 2024 primarily due to 2024 Restructuring Plan impacts.

Accounts Payable - Our accounts payable decreased by $38 million at December 31, 2024 compared to the prior year, and our DPO increased during 2024. The 2024 accounts payable decrease was related to lower purchasing volumes due to softening demand and efforts to lower inventory levels, partially offset by timing of payments. The 2023 increase in accounts payable was primarily related to working capital initiatives and currency. Our payment terms did not change meaningfully since last year, and we have continued to focus on optimizing payment terms with our vendors. We continue to look for ways to establish and maintain favorable payment terms through our significant purchasing power and also utilize third-party services that offer flexibility to our vendors, which in turn helps us manage our DPO as discussed below.

Accounts Receivable and Accounts Payable Programs - We participate in trade receivables sales programs in combination with third-party banking institutions and certain customers. Under each of these programs, we sell our entire interest in the trade receivable for 100% of face value, less a discount. Because control of the sold receivable is transferred to the buyer at the time of sale, accounts receivable balances sold are removed from the Consolidated Balance Sheets, and the related proceeds are reported as cash provided by operating activities in the Consolidated Statements of Cash Flows. We had approximately $45 million and $60 million of trade receivables that were sold and removed from our Consolidated Balance Sheets at December 31, 2024 and 2023, respectively. These sales reduced our quarterly DSO by roughly four and five days at December 31, 2024 and 2023, respectively. The impact to operating cash flow was an approximate $15 million decrease and $5 million decrease for the years ended December 31, 2024 and 2023, respectively.

For accounts payable, we have historically looked for ways to optimize payment terms through utilizing third-party programs that allow our suppliers to be paid earlier at a discount or for a fee. While these programs assist us in negotiating payment terms with our suppliers, we continue to make payments based on our customary terms. Contracts with our suppliers are negotiated independently of supplier participation in the programs, and we cannot increase payment terms pursuant to the programs. The primary program allows a supplier to elect to take payment from a third party earlier with a discount, and in that case, we pay the third party on the original due date of the invoice. As such, there is no direct impact on our DPO, accounts payable, operating cash flows, or liquidity. The accounts payable settled through the third-party programs, which remain on our Consolidated Balance Sheets, were approximately $120 million and $105 million at December 31, 2024 and 2023, respectively.

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The above items encompass multiple individual programs that are utilized as tools in our cash flow management, and we offer them as options to facilitate customer and vendor operating cycles. Because many of these programs operate independently, and a cessation of all these programs at the same time is not reasonably likely, we do not expect changes in these programs to have a material impact on our operating cash flows or liquidity.

Mexico Value-Added Taxes (VAT) Recoverable - We are subject to VAT in various jurisdictions. Where we are entitled to a refund of the VAT we have paid, we are required to make a claim for refund from the government authorities. We establish VAT receivables for these claims, but have been experiencing refund delays in Mexico. We believe these are fully collectible. The aggregate of current and long-term balances of Mexico VAT recoverable was $35 million and $48 million at December 31, 2024 and 2023, respectively, of which $6 million was classified as long-term as of December 31, 2024. We received $19 million of the December 31, 2024 balance in January 2025.

Commercial Paper Program

Another source of funds for our short-term cash requirements is our $1.2 billion commercial paper program. As of December 31, 2024, we had $443 million available under the program. For more information on our commercial paper program, see Commercial Paper Program on page 56.

Credit Facility

Our credit facility is a multi-currency facility providing us the ability, from time to time, to borrow, repay, and re-borrow up to $1.2 billion until the maturity date, at which time our ability to borrow under the facility will terminate. The credit facility matures in September 2026. Currently, there are no borrowings under the credit facility. For more information on our credit facility, see Credit Facility on page 57, and Note J on page 101 of the Notes to Consolidated Financial Statements.

Capital Markets

We also believe that we have the ability to raise debt in the capital markets, which acts as a source of funding of long-term cash requirements. Currently, we have $1.9 billion of total debt outstanding. The maturities of the long-term debt range from 2027 through 2051. We paid outstanding debt of $300 million senior notes which matured in November 2024 with commercial paper. For more information, please see Long-Term Debt on page 57, and Note J on page 101 of the Notes to Consolidated Financial Statements.

Uses of Cash

In 2024, the Board and our management team thoroughly evaluated our capital allocation priorities and determined to reduce our quarterly dividend. We expect to reallocate a large portion of cash spent on dividends to deleverage our balance sheet and enhance our financial position in the near term as weak demand continues to pressure earnings. In the longer term, we expect to use cash to grow our business both organically and through strategic acquisitions, while also returning cash to shareholders via a combination of dividends and share buybacks.

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Capital Expenditures

         Capital expenditures - 2022 $100 million, 2023 $114 million, 2024 $82 million

Total capital expenditures in 2024 were $82 million, reflecting a balance of investing for the future while controlling our spending. We are making investments to support expansion in businesses and product lines where sales are profitably growing, for efficiency improvement and maintenance, and for system enhancements. We expect capital expenditures to approximate $100 million in 2025. For the periods covered, our employee incentive plans emphasized returns on capital, including capital expenditures and working capital. This emphasis focuses our management on asset utilization and helps ensure that we are investing additional capital dollars where attractive return potential exists.

Dividends

Dividends Paid-2022 $229 million, 2023 $239 million, 2024 $136 million; Dividends Declared-2022 $1.74, 2023 $1.82, 2024 $.61

In the last two quarters of 2024, we paid a quarterly dividend of $.05 per share compared to $.46 per share in the last two quarters of 2023. The decision to reduce the dividend was made following a thorough evaluation by the Board and our management team. This action frees up capital to accelerate the deleveraging of our balance sheet and solidify our long-held financial strength.

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Acquisitions

In 2022, we acquired four businesses for total consideration of $112 million ($83 million cash and $29 million additional contingent consideration). In August, we acquired a global manufacturer of hydraulic cylinders for heavy construction equipment with manufacturing locations in Germany and China and a distribution facility in the United States for a total final purchase price of $88 million ($61 million cash plus $27 additional contingent consideration, including a $2 million 2023 subsequent measurement period adjustment). Also in August, we acquired a small U.S. textiles business that converts and distributes construction fabrics for the furniture and bedding industries for a cash purchase price of $2 million. In early October and mid-December, we acquired two Canadian-based distributors of products used for erosion control, stormwater management, and various other applications for a cash purchase price of $7 million and $13 million, respectively.

In 2023 and 2024, we acquired no businesses.

Additional details about acquisitions can be found in Note R on page 119 of the Notes to Consolidated Financial Statements.

Stock Repurchases

Stock repurchases are the other means by which we return cash to shareholders. We have been authorized by the Board to repurchase up to 10 million shares each calendar year, but we have established no specific repurchase commitment or timetable. The amount of future repurchases is dependent upon price of the stock, the amount of discretionary cash flow generated by the Company, alternative uses for the cash (including debt reduction, organic growth opportunities, and acquisitions) and other factors. We expect stock repurchases to be minimal in 2025.

During the last three years, we repurchased a total of 2 million shares of our stock and issued 3 million shares (through employee benefit plans and stock option exercises). Our net stock repurchases were $60 million, $6 million, and $5 million in 2022, 2023, and 2024, respectively. In 2024, we repurchased .3 million shares (at an average price of $19.17) and issued 1 million shares.

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Short-Term and Long-Term Cash Requirements

In addition to the expected uses of cash discussed above, we have various material short-term (12 months or less) and long-term (more than 12 months) cash requirements as of December 31, 2024 as listed below:

[[GREPCENT_TABLE]]
[["Cash Requirements","","Short-Term","","Long-Term"],["(Dollar amounts in millions)"],["Current and long-term debt, excluding finance leases 1","","$","\u2014","","","$","1,860"],["Operating and finance leases 2","","60","","","143"],["Purchase obligations 3","","340","","","12"],["Interest payments 4","","57","","","566"],["Deemed repatriation tax payable 5","","12","","","\u2014"],["Liability for pension benefits 6","","1","","","6"],["Contingent consideration 7","","5","","","\u2014"]]
[[/GREPCENT_TABLE]]

1The long-term debt presented above could be accelerated if we were not able to make the principal and interest payments when due. See Note J on page 101 in the Notes to Consolidated Financial Statements for more information regarding scheduled maturities of our long-term debt.

2See Note K on page 103 in the Notes to Consolidated Financial Statements for additional information on leases.

3Purchase obligations primarily include open short-term (30-120 days) purchase orders that arise in the normal course of operating our facilities.

4Interest payments assume debt outstanding remains constant with amounts at December 31, 2024 and at rates in effect at the end of the year.

5In addition to the deemed repatriation tax payable, we also have deferred income taxes and other reserves for tax contingencies included in our Consolidated Balance Sheets. The resolution or settlement of these tax positions with the taxing authorities is subject to significant uncertainty. We are therefore unable to make a reliable estimate of the amount or timing of cash that may be required to settle these matters, or whether the matters will require cash to settle or resolve.

6See Note M on page 110 in the Notes to Consolidated Financial Statements for additional information on pension benefit plans.

7See Note R on page 119 in the Notes to Consolidated Financial Statements for more information on contingent consideration liabilities related to acquisitions.

See Note I on page 101 of the Notes to Consolidated Financial Statements for details regarding the accrued expenses and other liabilities reflected on our Consolidated Balance Sheets.

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Capitalization

Capitalization Table

This table presents key debt and capitalization statistics at the end of the three most recent years:

[[GREPCENT_TABLE]]
[["(Dollar amounts in millions)","2024","","2023","","2022"],["Total debt excluding credit facility/commercial paper","$","1,496.1","","","$","1,801.6","","","$","1,801.1"],["Less: Current maturities of long-term debt and short-term debt","1.3","","","308.0","","","9.4"],["Scheduled maturities of long-term debt","1,494.8","","","1,493.6","","","1,791.7"],["Average interest rates 1","3.8","%","","3.8","%","","3.8","%"],["Average maturities in years 1","11.4","","","10.5","","","11.5"],["Credit facility/commercial paper 2","368.0","","","186.0","","","282.5"],["Weighted average interest rate on year-end balance","5.1","%","","5.6","%","","4.8","%"],["Average interest rate during the year","5.6","%","","5.2","%","","3.2","%"],["Total long-term debt","1,862.8","","","1,679.6","","","2,074.2"],["Deferred income taxes and other liabilities","262.2","","","358.3","","","502.4"],["Total equity","690.2","","","1,334.0","","","1,641.4"],["Total capitalization","$","2,815.2","","","$","3,371.9","","","$","4,218.0"],["Unused committed credit: 2"],["Long-term","$","832.0","","","$","1,014.0","","","$","917.5"],["Short-term","\u2014","","","\u2014","","","\u2014"],["Total unused committed credit","$","832.0","","","$","1,014.0","","","$","917.5"],["Cash and cash equivalents","$","350.2","","","$","365.5","","","$","316.5"]]
[[/GREPCENT_TABLE]]

1 These rates include current maturities, but exclude commercial paper to reflect the averages of outstanding debt with scheduled maturities.

2 The unused committed credit amount is based on our revolving credit facility and commercial paper program which, during all periods presented, had a total authorized program amount of $1.2 billion. However, our borrowing capacity is limited by covenants to our credit facility. Reference is made to the discussion under Commercial Paper Program below on page 56 and Credit Facility on page 57 for more details about our borrowing capacity at December 31, 2024.

Commercial Paper Program

Details of our commercial paper program at December 31 are presented in the table below: 

[[GREPCENT_TABLE]]
[["(Dollar amounts in millions)","2024","","2023","","2022"],["Total authorized program","$","1,200.0","","","$","1,200.0","","","$","1,200.0"],["Commercial paper outstanding (classified as long-term debt)","368.0","","","186.0","","","282.5"],["Letters of credit issued under the credit agreement","\u2014","","","\u2014","","","\u2014"],["Amount limited by restrictive covenants of credit facility 1","388.8","","","682.1","","","200.9"],["Total program available","$","443.2","","","$","331.9","","","$","716.6"]]
[[/GREPCENT_TABLE]]

1 Our borrowing capacity is limited by covenants in our credit facility. Reference is made to the discussion under Credit Facility on page 57 for more details about our borrowing capacity at December 31, 2024.

The average and maximum amounts of commercial paper outstanding during 2024 were $290 million and $428 million, respectively. During the fourth quarter, the average and maximum amounts outstanding were $311 million and $428 million, respectively. At year end, we had no letters of credit outstanding under the credit

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facility, but we had issued $61 million of stand-by letters of credit under other bank agreements to take advantage of better pricing.

Over the long-term, and subject to our credit ratings, market conditions, capital needs, and alternative capital market opportunities, we expect to maintain the indebtedness under the commercial paper program by continuously repaying and reissuing the commercial paper notes. We view the notes as a source of long-term funds and have classified the borrowings under the commercial paper program as long-term borrowings on our balance sheet. We have the intent to roll over such obligations on a long-term basis and have the ability to refinance these borrowings on a long-term basis as evidenced by our $1.2 billion revolving credit facility maturing in 2026 discussed below. Recently, our credit ratings have been lowered and could be lowered further. Lower credit ratings could adversely affect our borrowing capacity and our financial arrangements, including access to the commercial paper market, our lending agreements, and supply chain financing arrangements. If we are unable to meet our short-term borrowing needs in the commercial paper market, we may rely on bank debt to fund short-term working capital needs at higher interest costs.

Credit Facility

Our multi-currency credit facility matures in September 2026. It provides us the ability, from time to time, subject to certain restrictive covenants and customary conditions, to borrow, repay, and re-borrow up to $1.2 billion. Capitalized terms used in this section but not defined herein have the meanings set forth in the Credit Agreement.

To provide additional borrowing capacity and financial flexibility, we amended our credit agreement in March 2024 to increase the Leverage Ratio from 3.50 to 1.00 to 4.00 to 1.00. After the amendment, our credit facility contains restrictive covenants which include (a) an amended Leverage Ratio requiring us to maintain, as of the last day of each fiscal quarter, or when we borrow under the credit facility (i) Consolidated Funded Indebtedness minus the lesser of: (A) Unrestricted Cash, or (B) $750 million to (ii) Consolidated EBITDA for the four consecutive trailing quarters, such ratio not being greater than 4.00 to 1.00 as of March 31, 2024 through June 30, 2025, and not greater than 3.50 to 1.00 beginning September 30, 2025 through maturity, provided however, subject to certain limitations, if we make a Material Acquisition in any fiscal quarter after June 30, 2025, at our election, the maximum Leverage Ratio shall be 4.00 to 1.00 for the fiscal quarter during which such Material Acquisition is consummated and the next three consecutive fiscal quarters; (b) a limitation of the amount of total secured obligations to 15% of our total consolidated assets; and (c) a limitation on our ability to sell, lease, transfer, or dispose of all or substantially all of our assets and the assets of our subsidiaries, taken as a whole (other than accounts receivable sold in a Permitted Securitization Transaction, products sold in the ordinary course of business and our ability to sell, lease, transfer, or dispose of any of our assets or the assets of one of our subsidiaries to us or one of our subsidiaries, as applicable) at any given point in time. We were in compliance with all of our debt covenants at the end of 2024. For more information about long-term debt, please see Note J on page 101 of the Notes to Consolidated Financial Statements.

Our credit facility serves as back-up for our commercial paper program. At December 31, 2024, we had $368 million commercial paper outstanding and had no borrowing under the credit facility. As our trailing 12-month Consolidated EBITDA, Unrestricted Cash, and debt levels change, our borrowing capacity increases or decreases. Based on our trailing 12-month Consolidated EBITDA, Unrestricted Cash, and debt levels at December 31, 2024, our borrowing capacity under the credit facility was $443 million. However, this may not be indicative of the actual borrowing capacity moving forward, which may be materially different depending on our Consolidated EBITDA, Unrestricted Cash, debt levels, and leverage ratio requirements at that time.

Long-Term Debt

We have total debt of $1.9 billion. The maturities of the long-term debt range from 2027 through 2051. We paid outstanding debt of $300 million senior notes which matured in November 2024 with commercial paper. We expect lower interest expense as we deleverage. For more details on long-term debt see Note J on page 101 of the Notes to Consolidated Financial Statements.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. To do so, we must make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosures. If we used different estimates or judgments, our financial statements could change. Some of these changes could be significant. Our estimates are frequently based upon historical experience and are considered by management, at the time they are made, to be reasonable and appropriate. Estimates are adjusted for actual events as they occur. 

Critical accounting estimates are those that are: (a) subject to uncertainty and change and (b) of material impact to our financial statements. Listed below are the estimates and judgments which we believe could have the most significant effect on our financial statements. 

We provide additional details regarding our significant accounting policies in Note A on page 82 of the Notes to Consolidated Financial Statements.

[[GREPCENT_TABLE]]
[["Description","","Judgments and Uncertainty","","Changes in Estimate and Effect if Actual Results Differ from Assumptions"],["Goodwill"],["Goodwill is assessed for impairment annually as of June 30 and as triggering events occur.","","Goodwill is evaluated annually for impairment as of June 30 using a quantitative analysis at the reporting unit level, which is one level below our operating segments. Judgment is required in the quantitative analysis. We estimate fair value using a combination of: (a) A discounted cash flow model that contains uncertainties related to the forecast of future results, as many outside economic and competitive factors can influence future performance as discussed in Note A on page 82 of the Notes to Consolidated Financial Statements. (b) A market approach, using price to earnings ratios for comparable publicly traded companies that operate in the same or similar industry and with characteristics similar to the reporting unit.","","In 2024, we had total goodwill impairments of $676 million. We had no goodwill impairments in 2023 and 2022. Four reporting units had fair values in excess of carrying value of less than 100% in 2024 as discussed in Note F on page 96 of the Notes to Consolidated Financial Statements. At December 31, 2024, we had $794 million of goodwill. Information regarding material assumptions used to determine if a goodwill impairment exists can be found in Note A on page 82 and Note F on page 96 of the Notes to Consolidated Financial Statements. Our assumptions are based on our current business strategy in light of present industry and economic conditions, as well as future expectations. If we are not able to achieve projected performance levels, future non-cash impairments could be possible. For additional information regarding uncertainties, see discussions in Goodwill and Long-Lived Asset Impairments starting on page 36."]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["Description","","Judgments and Uncertainty","","Changes in Estimate and Effect if Actual Results Differ from Assumptions"],["Other Long-Lived Assets"],["Other long-lived assets are tested for recoverability at year end and whenever events or circumstances indicate the carrying value may not be recoverable. For other long-lived assets we estimate fair value at the lowest level where cash flows can be measured.","","Impairments of other long-lived assets usually occur when industry trends reduce our forecasted sales and earnings, major restructuring activities take place, or we decide to discontinue selected products. Our impairment assessments have uncertainties because they require estimates of future cash flows to determine if undiscounted cash flows are sufficient to recover carrying values of these assets. For assets where undiscounted cash flows are not expected to recover carrying value, fair value is estimated using discounted cash flow models for intangibles and right-of-use assets or estimated replacement cost for fixed assets.","","In 2024, we had non-cash pretax impairment charges of $6 million, partially related to the 2024 Restructuring Plan. We had a triggering event to review long-lived assets for impairment late in the fourth quarter of 2023, which resulted in non-cash pretax impairment charges of $444 million in our Bedding Products segment.We had no impairment charges in 2022. For additional information, see Note F on page 96 of the Notes to Consolidated Financial Statements and Goodwill and Long-Lived Asset Impairments starting on page 36. At December 31, 2024, net property, plant and equipment was $724 million, net intangible assets (other than goodwill) were $140 million, and operating lease right-of-use assets were $176 million."],["Inventory Reserves"],["We reduce the carrying value of inventories to reflect an estimate of net realizable value for slow-moving (i.e., not selling very quickly) and obsolete inventory. Generally, a reserve is required when we have more than a 12-month supply of the product. The calculation also uses an estimate of the ultimate recoverability of items identified as slow-moving, based upon historical experience. If we have had no sales of a given product for 12 months, those items are generally deemed to be obsolete with no value and are written down completely.","","Our inventory reserve contains uncertainties because the calculation requires management to make assumptions about the value of products that are obsolete or slow-moving. Purchases of inventories in excess of quantities ultimately sold and/or changes in customer behavior and requirements can cause inventory to become obsolete or slow-moving. Restructuring activity and decisions to narrow product offerings also impact the estimated net realizable value of inventories.","","At December 31, 2024, the reserve for obsolete and slow-moving inventory was $58 million (approximately 8% of inventories). This is slightly higher than the reserves at December 31, 2023 and 2022, representing approximately 6% of inventories for both years. Additions to inventory reserves in 2024 were $36 million, which is higher than our $19 million three-year average. Reserves increased in 2024 primarily due to 2024 Restructuring Plan impacts and write-downs of selected products primarily in our Bedding Products segment. There have been no changes to our policies for establishing reserves, and we expect to return to our historical obsolescence levels. For additional information, see discussions of our inventories in the working capital section starting on page 50."]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["Description","","Judgments and Uncertainty","","Changes in Estimate and Effect if Actual Results Differ from Assumptions"],["Income Taxes"],["In the ordinary course of business, we must make estimates of the tax treatment of many transactions, even though the ultimate tax outcome may remain uncertain for some time. These estimates become part of the annual income tax expense reported in our financial statements. Subsequent to year end, we finalize our tax analysis and file income tax returns. Tax authorities periodically audit these income tax returns and examine our tax filing positions, including (among other things) the timing and amounts of deductions, and the allocation of income among tax jurisdictions. If necessary, we adjust income tax expense in our financial statements in the periods in which the actual outcome becomes more certain.","","Our tax liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures related to our various filing positions. Our effective tax rate is also impacted by changes in tax laws, the current mix of earnings by taxing jurisdiction, and the results of current tax audits and assessments. At December 31, 2024 and 2023, we had $148 million and $134 million, respectively, of net deferred tax assets on our balance sheet. The ultimate realization of these deferred tax assets is dependent upon the amount, source, and timing of future taxable income. In cases where we believe it is more likely than not that we may not realize the future potential tax benefits, we establish a valuation allowance against them.","","Changes in U.S. and foreign tax laws could impact assumptions related to the taxation and repatriation of certain foreign earnings. Audits by various taxing authorities continue as governments look for ways to raise additional revenue. Based upon past audit experience, we do not expect any material changes to our tax liability as a result of this audit activity; however, we could incur additional tax expense if we have audit adjustments higher than recent historical experience. We believe that appropriate valuation allowances have been recorded as necessary. However, if earnings expectations or other assumptions change such that additional valuation allowances are required, we could incur additional tax expense. Likewise, if fewer valuation allowances are needed, we could incur reduced tax expense."]]
[[/GREPCENT_TABLE]]

CONTINGENCIES

Litigation

Accruals for Probable Losses

We are exposed to litigation contingencies that, if realized, could have a material negative impact on our financial condition, results of operations, and cash flows. Although we deny liability in all currently threatened or pending litigation proceedings, we have recorded an immaterial aggregate litigation contingency accrual of $1.4 million, $1.4 million, and $.9 million at December 31, 2024, 2023, and 2022, respectively. The accruals do not include accrued expenses related to workers’ compensation, vehicle-related personal injury, product and general liability claims, taxation issues, and environmental matters, some of which may contain a portion of litigation expense. However, any litigation expense associated with these categories is not anticipated to have a material effect on our financial condition, results of operations, or cash flows. For more information regarding accrued expenses, see “Accrued expenses” under Note I on page 101 of the Notes to Consolidated Financial Statements.

Reasonably Possible Losses in Excess of Accruals

Although there are a number of uncertainties and potential outcomes associated with all of our pending or threatened litigation proceedings, we believe, based on current known facts, that additional losses, if any, are not expected to materially affect our consolidated financial position, results of operations, or cash flows. However, based upon current known facts, as of December 31, 2024, aggregate reasonably possible (but not probable, and therefore not accrued) losses in excess of the accruals for litigation contingencies are estimated

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to be $13 million. If our assumptions or analyses regarding any of our contingencies are incorrect, or if facts change, we could realize losses in excess of the recorded accruals (including losses in excess of the $13 million referenced above), which could have a material negative impact on our financial condition, results of operations, and cash flows. Also, we could be subject to future litigation of various types (including, but not limited to, litigation related to employment, intellectual property, environmental, taxation, vehicle-related personal injury, antitrust, climate change, and others) that could negatively impact our financial condition, results of operations, and cash flows.

For more information regarding our litigation contingencies, see Item 3. Legal Proceedings on page 30 and Note T on page 121 of the Notes to Consolidated Financial Statements, which is incorporated herein by reference.

Climate Change

Transition Risks

Change in Laws, Policies, and Regulations. Many scientists, legislators, and others attribute climate change to increased levels of greenhouse gas (GHG) emissions, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit such emissions. At December 31, 2024, we had 119 manufacturing facilities in 18 countries. We also maintain a fleet of over-the-road tractor trailers that emit GHG emissions. Our manufacturing facilities are primarily located in North America, Europe, and Asia. There are certain transition risks (meaning risks related to the process of reducing our carbon footprint) that could materially affect our business, capital expenditures, results of operations, financial condition, competitive position, and reputation. One of these transition risks is the change in treaties, laws, policies, and regulations that could impose significant operational and compliance burdens. If our customers (who may be subject to climate change regulatory requirements or similarly proposed or newly-enacted laws and regulations) incur additional costs to comply with such laws and regulations, which in turn, impact their ability to operate at similar levels in certain jurisdictions, the demand for our products could be adversely affected. Also, overall, there continues to be a lack of consistent climate legislation in the jurisdictions in which we operate, which creates economic and regulatory uncertainty. If these laws or regulations (including the SEC’s rule regarding climate-related disclosures, if upheld) impose significant operational restrictions and compliance requirements on us, they could increase costs associated with our operations, including costs for raw materials and transportation. Non-compliance with climate change treaties, legislative, and regulatory requirements could also negatively impact our reputation. To date, however, we have not experienced a material impact from such legislative and regulatory efforts.

Market Transition. We are engaged in the manufacture of various automotive components, including lumbar supports and massage systems for seating, seat suspension systems, motors and actuators, and cables. For several decades, automotive manufacturers have sought lightweight components designed to increase fuel efficiency in the automobiles they manufacture. Replacing traditional steel components with lightweight alternative components can directly reduce the weight of a vehicle's body and chassis and therefore reduce a vehicle's fuel consumption. This increased fuel efficiency also indirectly reduces GHG emissions.

These long-standing market transitions have negatively impacted our market share, although not materially because of our technological competitiveness. However, if we are unable to continue to react to changes in technology, successfully develop new and innovative products, or successfully respond to evolving business trends, including continuing to produce comparatively lightweight components, our share in these markets could be materially negatively impacted.

Physical Climate Change Risks

Direct Physical Effects. The acute and chronic physical effects of severe weather-related events, natural disasters, and/or significant changes in climate patterns, could have an increasingly adverse impact on our business and customers. As mentioned above, at December 31, 2024, we had 119 manufacturing facilities in 18 countries, primarily in North America, Europe, and Asia. We serve thousands of customers worldwide. In 2024, our largest customer represented less than 8% of our sales, and our customers were located in approximately 100 countries. Although our diverse geographical manufacturing footprint and our broad geographical customer base mitigates the potential physical risks of any local or regional severe weather-related event having a material effect on our operations and results, the increased frequency and severity of such weather-related

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events could result in potential damage to our physical assets, local infrastructure, transportation systems, water delivery systems, our customers’ or suppliers’ operations, as well as prolonged disruptions in our manufacturing operations (including, but not limited to, our steel rod mill and wire drawing mills), all of which could harm our business, results of operations, and financial condition.

Indirect Physical Effects. The physical effects of climate change could continue to have an adverse impact on our supply chain. In prior years, we experienced (due, in part, to severe weather-related impacts) supply shortages in chemicals, which restricted foam supply and constrained overall mattress production in the bedding industry. This reduced our production levels and increased the cost of chemicals and foam. Severe weather impacts could also reduce supply of other products in our supply chain that could result in higher prices for our products and the resources needed to produce them. If we are unable to secure an adequate and timely supply of products in our supply chain, or the cost of these products materially increases, it could have a negative impact on our business, results of operations, and financial condition.

In recent years, drought conditions lowered water levels of the Mississippi River and Panama Canal, reducing traffic through these waterways, which impacted some of our shipments. Although these issues did not have a material impact on our results of operations, additional logistical disruptions could result in additional costs and delays in our ability to deliver products timely to certain customers.

In addition, although the cost has not been material to our business, results of operations, and financial condition, severe weather-related incidents have resulted and may, in the future, result in increased costs of property insurance.

GHG Reduction Strategy and Compliance Costs

To date, we have not experienced material climate-related compliance costs. However, evaluating opportunities to reduce our carbon footprint, setting goals for carbon reduction, and measuring performance in achieving those goals are part of our sustainability and corporate governance strategy. We have completed our GHG emissions inventory covering 2019 through 2023. To ensure our information is complete and accurate, we engaged a third-party limited assurance provider for all years. Our emissions inventory includes Scope 1 and Scope 2 carbon dioxide equivalent emissions. We considered the principles and guidance of the GHG Protocol Corporate Accounting and Reporting Standard. As of the end of 2023, our total GHG emissions, measured using a market-based approach, were approximately 25% less than our combined Scope 1 and 2 GHG emissions over our baseline year of 2019, which was due in significant part, to the decrease in production over the same time period.

Our baseline measurement will inform a long-term GHG reduction strategy, including setting reduction targets and other key performance areas. Our key initiatives as we move through 2025 and into 2026 include: developing our emissions reduction pathways to reduce GHG emissions, undertaking our first Scope 3 emissions inventory, assessing where emission reduction opportunities lie within our value chain, and preparing for and complying with new reporting requirements. We anticipate setting a climate reduction target in line with climate science by the end of 2025. We currently do not have an estimate of the capital expenditures or operating costs that may be required to implement our GHG reduction strategy. However, we do not expect that such capital expenditures or operating costs will be material to our financial condition or results of operations. Our GHG reduction strategy is expected to be published in our 2025 Sustainability Report. Our current Sustainability Report can be found at www.leggett.com/sustainability. Neither our Sustainability Report nor the Leggett website constitute part of this Annual Report on Form 10-K.

Cybersecurity Risk

We rely on information systems to obtain, process, analyze, and manage data, as well as to facilitate the manufacture and distribution of inventory to and from our facilities. We receive, process, and ship orders, manage the billing of and collections from our customers, and manage the accounting for and payment to our vendors. We also manage our production processes with certain industrial control systems. Consequently, we are subject to cybersecurity risk.

Although we have purchased broad form cyber insurance coverage and strive to provide a balanced level of cybersecurity protections, cybersecurity risk has increased due to remote access and increased sophistication of cybersecurity adversaries, as well as the increased frequency of cybersecurity attacks. As such, information technology failures or cybersecurity breaches could still create system disruptions or

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unauthorized disclosure or alterations of confidential information and disruptions to the systems of our third-party suppliers and providers. We cannot be certain that the attacker’s capabilities will not compromise our technology protecting information systems or bypass our detection capabilities, including those resulting from ransomware attached to our industrial control systems. If these systems are interrupted or damaged by any incident or fail for any extended period of time, then our results of operations could be adversely affected. We may incur remediation costs, increased cybersecurity protection costs, lost revenues resulting from unauthorized use of proprietary information, litigation and legal costs, increased insurance premiums, reputational damage, damage to our competitiveness, and negative impact on our stock price and long-term shareholder value. We may also be required to devote significant management resources and expend significant additional resources to address problems created by any such interruption, damage, or failure.

For more information regarding cybersecurity risks, refer to Information Technology and Cybersecurity Risk Factors on page 23 and Item 1C. Cybersecurity on page 27.

NEW ACCOUNTING STANDARDS

The FASB has issued accounting guidance effective for current and future periods. See Note A on page 82 of the Notes to Consolidated Financial Statements for a more complete discussion.

TERMINATION OF PENSION PLAN

In September 2024, the Board of Directors approved a resolution to merge two of our domestic defined benefit pension plans and terminate the resulting merged plan effective December 31, 2024. Participants in the plan have stopped earning benefits. The distribution of plan assets and settlement of benefit obligations will occur after the plan termination satisfies all regulatory requirements, which is expected to be completed by mid-2026. The plan was underfunded by $4 million and $6 million as of December 31, 2024 and 2023, respectively. Upon completion, we expect to recognize a pretax pension settlement charge that will include a non-cash charge for the recognition of pretax actuarial losses in Accumulated other comprehensive loss ($22 million as of December 31, 2024) and any additional cash contributions that may be needed to settle the plan's obligations. The actual amount of the settlement charge and any potential cash contribution will depend on various factors. For more information on the termination of the merged plan, see Note M beginning on page 110 of the Notes to Consolidated Financial Statements.

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