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Executives

Dave DeSonier - VP of Strategy and IR

Dave Haffner - President and CEO

Karl Glassman - EVP and COO

Felix Wright - Chairman of the Board

Matt Flanigan - SVP and CFO

Susan McCoy - Director of IR

Analysts

David MacGregor - Longbow Research

Budd Bugatch - Raymond James

Laura Champine - Morgan Keegan

Keith Hughes - SunTrust Robinson Humphrey

John Baugh - Stifel Nicolaus

Joel Havard - Hilliard Lyons

Barry Haimes - Sage Asset Management

Leggett & Platt Inc. (LEG) Q1 2008 Earnings Call April 17, 2008 9:00 AM ET

Operator

Welcome to the Leggett & Platt first quarter 2008 earnings conference call. (Operator Instructions). This conference is being recorded today, Thursday, April 17th of 2008.

Now I'd like to turn the conference over to Mr. David DeSonier. Please go ahead, sir.

Dave DeSonier

Hi. Good morning and thank you for taking part in Leggett & Platt's first quarter conference call. I am Dave DeSonier, the Vice President of Strategy and Investor Relations. And with me today are the following, Dave Haffner, our CEO and President; Karl Glassman, who is our Chief Operating Officer; Felix Wright, who is our Chairman of the Board; Matt Flanigan, our CFO; and Susan McCoy, our Director of Investor Relations.

The agenda for the call this morning is as follows. Dave Haffner will start with a summary of the major statements we made in yesterday's press release. Karl Glassman will then discuss trends in our various markets. Dave will address our outlook for 2008. And finally, the group will answer any questions you have.

This conference is being recorded for Leggett & Platt and is copyrighted material. This call may not be transcribed, recorded or broadcast without our express permission. A replay is available from the IR portion of Leggett's website.

In addition, I need to remind you that remarks today concerning future expectations, events, objectives, strategies, trends or results constitute forward-looking statements. Actual results or events may differ materially due to a number of risks and uncertainties, and the company undertakes no obligation to update or revise these statements. For a summary of these risk factors and additional information, please refer to yesterday's press release and the section in our 10-K entitled "Forward-Looking Statements."

I will now turn the call over to Dave Haffner.

Dave Haffner

Thanks, Dave. Good morning, everyone, and thank you for participating in our call.

Yesterday, we reported first quarter earnings per share of $0.25, including $0.02 per share of earnings from discontinued operations. In continuing operations, we incurred a $0.01 of restructuring-related costs, but that was offset by a gain from a small divestiture.

Versus the first quarter of 2007, earnings from continuing operations declined, primarily due to soft demand in the residential-related markets. Higher steel costs also impacted earnings in the quarter. But we have initiated, and continue to implement price increases to pass-along the higher cost.

Total sales from continuing operations decreased 5% versus first quarter 2007. Organic sales were down 6% in the quarter, primarily reflecting soft demand and our decision to exit specific sales volumes with unacceptable profit margins. Acquisitions completed in 2007 contributed 1% to first quarter sales.

Our financial profile remains very strong. We generated $53 million of cash from operations during the quarter. This is lower than in recent quarters, primarily due to an increase in working capital. For the year, we expect to generate at least $400 million of operating cash with working capital slightly positive.

Our balance sheet remains in excellent condition. We ended the quarter with net debt just over 30% of net capital, which is at the low end of our long-term targeted range of 30% to 40%.

We declared a first quarter dividend of $0.25 per share, representing a 47% increase over last year's first quarter dividend. The current dividend yield is approximately 7% based on a $14.30 stock price. This year marks the 37th consecutive annual dividend increase for Leggett at an average compound growth rate of over 14%. And we also repurchased 3 million shares during the quarter.

We made very good progress on several fronts during the quarter. The divestitures that we announced last fall are progressing well. We are in discussions with numerous potential buyers, both financial and strategic. Investment bankers are assisting with the sale of the Aluminum Products segment and four of the other business units. We continue to believe that all of the divestitures will occur during 2008, and expect after tax proceeds of at least $400 million.

Given the market's interest in small-to-mid size transactions and the tangible assets associated with these operations, we believe our expectations are reasonable. In early January, we launched a rigorous annual strategic planning process at the business unit level to continually assess each unit's role in our portfolio and ultimately drive investment decisions.

We also made progress during the first quarter, and are tracking in line with our expectations for improving performance of the Store Fixtures business unit. We are targeting returns in this business unit of at least the cost of capital levels by the fourth quarter of 2008.

We expect to generate significantly more free cash as we complete the divestitures, improve returns and reduce spending on capital expenditures in acquisitions, and we intend to return much of this cash to our shareholders. In the near-term, we will need about $300 million annually to cover capital expenditures and dividends, and expect annual cash from operations to routinely exceed those requirements.

We anticipate using much of our excess cash to repurchase shares. The Board recently increased our share repurchase authorization for 2008 to 30 million shares or about 18% of the share base. As the divestitures are completed, we plan to use the proceeds to repurchase shares. Given our strong consistent cash flow even during the soft economic cycles, we are confident we can meet these priorities.

With those comments, I'll turn the call over to Karl Glassman who will discuss the segments in little more detail. Karl?

Karl Glassman

Thank you, Dave. Good morning. In my comments, I will be addressing results related to our continuing operations. As a reminder, the businesses we plan to divest are reflected in the financial statements as discontinued operations, so their results are not included in this discussion.

In the Residential Furnishings Segment organic sales decreased 11% in the first quarter, primarily due to soft demand in our US markets. In relative terms, international demand continues to be stronger than domestic demand. First quarter EBIT and EBIT margins decreased versus the prior year, primarily reflecting lower sales. Higher steel costs also impacted earnings in the quarter. We have initiated, and continue to implement, price increases to recover the higher costs, but generally experience a lag in the recovery.

In Commercial Fixturing & Components, organic sales declined 4% in the first quarter, primarily due to lower demand for office furniture components, and our decision in the Store Fixtures business to walk away from sales with unacceptable margins. EBIT and EBIT margins were roughly flat with the prior year. A gain from a small divestiture was offset by restructuring-related costs during the quarter.

In Industrial Materials, organic sales grew 8% in the quarter, primarily from the past-through of the earliest portion of higher steel costs. Continued softness in the US residential and automotive markets led to slightly lower unit volume, which offset a portion of the sales gains. EBIT and EBIT margins increased versus first quarter 2007, primarily due to higher sales and operating improvements in a few locations.

In Specialized Products, organic sales increased slightly in the first quarter. Continued growth in our European and Asian automotive businesses was partially offset by lower volumes versus strong prior year comps in the fleet portion of Commercial Vehicle Products. EBIT and EBIT margins were roughly flat with the first quarter of last year.

With those comments, I will turn the call back over to Dave.

Dave Haffner

Thank you, Karl. As we announced in yesterday's press release we expect full year 2008 earnings from continuing operations to be between a $1 and a $1.30 per share. This includes approximately $0.05 per share in restructuring-related costs, but does not include earnings from discontinued operations, nor potential gains or losses from the divestitures. This guidance anticipates full utilization of the standing annual 10 million share repurchase authorization, but does not reflect additional purchases we expect to make with the divestiture proceeds due to the uncertain timing related to those proceeds.

Sales from continuing operations are projected to be about 2% lower than last year. This decrease reflects the planned elimination by the end of 2008 of approximately $100 million of revenue with unacceptable profit margin in the company's Store Fixtures business, minimum acquisition revenue, and essentially flat sales collectively from operations other than Store Fixtures.

Our quarterly sales and earnings normally reflect moderate seasonality. The second quarter typically reflects seasonal improvement over the first quarter. The third quarter is normally the strongest period of the year for us. And the fourth quarter is generally the lowest seasonal period.

We expect our cash requirements in 2008 for dividends and capital expenditures to be readily funded from operating cash. As I mentioned earlier, we plan to use excess cash from operations and divestiture proceeds primarily to repurchase those shares.

Despite the current market challenges, we feel very good about our strategic direction and the initiatives we unveiled last November. We are fully committed to the execution of our plan, and believe our actions will reestablish Leggett as a more profitable company, one that consistently generates total shareholder return of 12% to 15% per year on average.

And with those comments, I will turn the call back over to Dave DeSonier.

Dave DeSonier

That concludes our prepared remarks. We appreciate your attention, and we will be glad to answer your questions. In order to allow everyone an opportunity to participate as we typically do, we request that you ask your single best question and then voluntarily yield to the next participant. If you have additional questions, please re-enter the queue. Thence, we are ready to begin the Q&A.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question is from the line of David MacGregor with Longbow Research. Please go ahead.

David MacGregor - Longbow Research

Good morning, everyone.

Dave Haffner

Hi, David.

Karl Glassman

Hi, David.

David MacGregor - Longbow Research

Could you just talk a little bit about the pricing pass-throughs that you have undertaken, it seems that you're getting some traction in certain parts of your business, may be a little less than others. Where do you seem to be having greatest difficulty? And then, with respect to those areas where you are getting some traction, do you think you can maintain the space with what's happening in terms of inflation in that space?

Karl Glassman

David, this is Karl. It's a challenge. The rate of price increase announcements from our suppliers is unprecedented. We are almost afraid to open the mail at this point, but we've historically been a price leader. We will continue to do that. We've implemented price increases. They are painful. But frankly, it gets a little easier over time because of the severe magnitude of what we are attempting to pass-through.

So it ranges significantly from a percentage high increase in the wire side of our business. We will announce another increase there. It aggregates to 71% since the first of the year, with scrap and rod out of control. So, we get recovery, there is lag, usually gets 30 to 60 days in the majority of our business, but there is the cumulative effect of the inflation has not subsided. We haven't seen a sign of it subsiding.

Some industries, as you alluded to, were more difficult to pass-through. We don't generally have any long-term contracts. So, it's painful, but it's an ongoing process.

David MacGregor - Longbow Research

And you mentioned that you have no long-term contracts. I guess one of my concerns has been the Commercial Fixture business where you might be having some difficulty getting pass-through. There aren't any long-term contractual obligations then that would preclude success with price pass-throughs as more just sort of the balance of competition in the channel.

Dave Haffner

David, the management of that group has done a very good job, talking to those customers about material inflation, metrics. So, there are price change metrics in the majority of those contracts that -- there are not many of them that tend to be longer term. Most of that business is on an as-quoted sort of basis. So you get catch-up as soon as you re-quote. But we got hung a little bit in 2004, and that we weren't as mature in that business and had a lag that we will not experience in this round of raw material inflation.

David MacGregor - Longbow Research

Great. Thanks very much.

Dave Haffner

Welcome. Thanks.

Operator

Thank you. Our next question is from the line of Budd Bugatch with Raymond James. Please go ahead.

Budd Bugatch - Raymond James

Good morning, Dave. Good morning, Karl.

Dave Haffner

Good morning.

Budd Bugatch - Raymond James

Dave, let's talk a little bit about same location sales. I just want to make sure I understand the guidance, and maybe talk a little bit about what you saw through the quarter and what your expectations are to get granular by segment? The 11% in residential furniture is obviously a big number. So, hopefully, you go down the four segments and kind of give us a feel of what you're seeing and what you're likely to see for the rest of this year?

Karl Glassman

Great. Budd, this is Karl. And I'll start with the first quarter of '08 versus first quarter of '07, as I've done in the past give you the major groupings by segment. And this is all purely from a sales perspective, it is not units. US spring was down about 10%. International spring was up 7%. Furniture was actually the first negative quarter we've seen in a long time, lot of it having to do with, first, this softness we've seen in the Asian markets in a long time, but furniture was down 10%.

Also, consumer product was down 10%. The Hanes businesses or the soft goods business were down about 15%. That's reflective of us walking away from some business that wasn't very attractive from a margin perspective. And carpet cushion was down about 20%, and we have not quite anniversaried that dynamic that we spoke of in earlier quarters where we had extremely high scrap cost and reflective high selling prices. Our units in carpet were down about 4% in the quarter. So the carpet cushion business continues to perform extremely well, but it's impacted by falling raw material and reflective selling prices.

So, that's the big buckets of residential. In Commercial, F&D was collectively down about 3%. Office was flattish. That reflects though an acquisition. In our historic business, it was down in the 3% or 4% range. In industrial, good story. Wire and wire products up 14% having to do mostly inflation-driven. The tubing side of things, which is a much smaller business, was down about 10%. It's kind of a common theme there.

And specialized automotive was up 6%, reflective of extremely strong European and Asian demand. CVP, and this is the continuing operations part of CVP or the fleet side, was down 8%, and machinery was down 8%. That 8% to 10% in our base business is very much common with the outlier being the carpet underlay side of things and relative improved performance at fixture and displays.

Budd Bugatch - Raymond James

With so much movement in the quarter, is this relatively similar throughout the quarter?

Karl Glassman

The big area of movement was in U.S. spring and that's really is a good story in that. In January, we were up against our toughest comp that we will experience in 2008 and we were significantly negative to '07 units. In February, we were down just 2%. In March, we were positive on one fewer shipping day. There is a significant improving trend there as we gain market share in a decreasing market.

We believe that if the market continues to be negative on units in the 3% to 5% range, as with the kind of the industry consensus, that we will be positive on units throughout the year, that we have de-verticalized a marker user, who is a strong regional player, who is continuing to make some of their own springs that was done during the quarter. So that's good news.

We have seen a distinct decline in the low price imports since the Department of Commerce initiated in January the antidumping investigations on the innerspring imports from China, South Africa, and Vietnam. And then the International Trade Commission in February issued an Affirmative Preliminary Injury Determination. As a result of those declines in imports, we've regained market share and have been able to pass-through some of our higher raw material costs.

So that is a good trend. Lay on top of that our product development activities in the vertical of products, which the vinyl, in most people's mind in innerspring is a vinyl the kind of stereotypical innerspring knotted on both top and bottom round headed coil, spring people like that stuff. It is about 60 to 65 of the market. We have introduced a replacement for that category that we call VertiCoil. It is, simply put, a better use of raw material. And, as we roll that product out into the industry, it's been extremely well received. But we feel great about our U.S. spring operations. For the first time since 1999, we are running our factories totally flat-out full. It feels pretty darn good.

Budd Bugatch - Raymond James

And US spring, you also de-verticalized the major player in furniture, right?

Karl Glassman

That's correct. That was Berkline announced that during the quarter. So that is certainly a good trend at a time when the furniture industry feels a little softer than bedding. So to be able to bring that volume in-house through kind of a co-product development activity between the companies is extremely good news.

Budd Bugatch - Raymond James

And between U.S. spring and furniture, what percentage of residential does that typically account for?

Karl Glassman

That would be the vast majority. Susan how would you, two-thirds?

Susan McCoy

Yeah, that would be two-thirds.

Budd Bugatch - Raymond James

Two-thirds, and to both of those, do you think both of those will be positive for the year?

Karl Glassman

I think, no doubt in my mind the bedding will, furniture has a little tougher challenge, even we are taking that Berkline business in-house. I am not ready to say that, but I think they sure got a fighting chance. Business is so soft in China right now that we are up against some tough comps. So I believe that we will be positive, but I don't want to get too far out on that.

Dave Haffner

I appreciate you are asking the question, Budd, because I keep asking that too.

Budd Bugatch - Raymond James

Thank you.

Karl Glassman

And I didn't give him a very good answer either.

Budd Bugatch - Raymond James

Thank you very much. Somebody else go on.

Operator

Thank you. Our next question is from the line of Laura Champine with Morgan Keegan. Please go ahead.

Laura Champine - Morgan Keegan

Hi. I actually had a follow-up on Dave's question on inflation rate cost increases. You mentioned in the industrial materials there you've got some 70% price increases. What more average blended price increase that you are trying to push-through in the residential furnishings? And what do you think your success rate will be beyond that?

Karl Glassman

I'll start with the latter. Our success rate will be very high as is historically has been there. Laura, it's painful, but we don't have a choice. The rate of change is so extreme, we have to pass it through; our customers have to passage it through to retail. At the recent High Point Furniture market, there was lot of conversions by the furniture manufacturing the need to go to retail, the bedding manufacturers have to get in line and do the same. But, we've announced approximately a 20% increase on innerspring components. We've also announced that rates are a little higher on furniture hardware. It changes the dynamics of the long products and the flat products are different and then raw material content by product category is different.

So it's very much variable. But at this point 20% to 25% to 30% depending on the content is a good range. Those have not, all those been announced, they have not all been incurred, so that's the lag situation. I will also say that, historically, we've given a little bit longer time from announcement to implementation, we don't have that luxury. The end of last week, we were notified by our supplier of angle iron that they were raising their prices to us in five days. That is not typical.

Laura Champine - Morgan Keegan

Right.

Karl Glassman

So we've gone next bedding product, we have gone to our consumer products customers and have announced the price increase of 14% which is a second increase there because we do retail and it has a two-week time frame of implementation. So, we are kind of into uncharted waters in terms of time.

Laura Champine - Morgan Keegan

And then, just secondly, on inventories, it looks like inventories were up some 14% on 5% sales decline. Can you comment on what drove that increase?

Dave Haffner

Well, at this point, I would love to have as much inventory as we possibly could get a hold of in these times of rising raw material. So, yes, our inventories are a little bit long, and it generally feels pretty darn good. Those inventories are good and usable. They are tested with frequency. Laura, we feel good about that.

Felix Wright

Part of it is inflation, obviously, and part of it has to with opportunity purchases, Laura.

Laura Champine - Morgan Keegan

Got it. Thank you.

Operator

Thank you. Our next question is from the line of Keith Hughes with SunTrust Robinson Humphrey. Please go ahead.

Keith Hughes - SunTrust Robinson Humphrey

Thank you. In the industrial segment, you had mention earlier about the margin gain year-over-year, but volume is still down. What's going on that allows you to move that up?

Dave Haffner

The industrial, Keith, will benefit significantly by us pushing the spring plants that we weren't pushing as hard in January as we are now. That kind of a trickledown effect from strong demand in bedding to industrial is a very good thing. It's allowing us actually to use some additional melt capacity at Sterling all the way back to the rod mill to sell billets, which is a little bit opportunistic, but is a very good opportunity. So, we will see increased demand in industrial and future quarters.

Felix Wright

I might say too that the Industrial Materials guys not only do they periodically sell some extra melt capacity, they also worked arrangements with other rollers to roll that billet into rod for us to take advantage of that melt capacity and pushed the limit, if you will, of our internal ability to make rods. So, they do a really good job of working those opportunities.

Keith Hughes - SunTrust Robinson Humphrey

And finally, the commentary on US spring being up in March, is that primarily due to the de-verticalization you talked about earlier, or is that something going on in demand high-end to low-end in the bedding business?

Dave Haffner

Actually, I think it's more of an indicator of a higher percentage of these units that were once imported coming back to the United States. So, that's the primary driver. The de-verticalization was in full force. It happened middle of the first quarter, so we had full affected March. So that's some impact and we're gaining market shares. So, it's a combination of all those factors, but I think that the change in the import dynamics was probably the most notable.

Keith Hughes - SunTrust Robinson Humphrey

Okay. Thank you.

Dave Haffner

Welcome.

Operator

Thank you. Our next question is from the line of John Baugh with Stifel Nicolaus. Please go ahead.

John Baugh - Stifel Nicolaus

Good morning. Couple of things just to clear up. One, the guidance I think was for working cap to be up slightly for the year. So, I guess that mean in light of the inventory, now that its inflation, that inventories would be up somewhat, the receivables would be down, is that the right way to look at that?

Matt Flanigan

John, this is Matt. We, for the full year of '08, feel that working capital will provide a source of cash something between $0 to $50 million, and we hope that's conservative and we recognized what the use of cash was in the first quarter. And we've got initiatives on payables, receivables and inventory, all three of those key buckets to make us feel good about that continuing prediction on our part.

John Baugh - Stifel Nicolaus

Okay. And then, I want to be clear on the buyback. You've got the 10 million and you're going to kind of do that regardless. Is the other 20 million, does that not occur until divestiture of proceeds come in or sort of how would you think about spending that money in front of the cash coming in from divestitures?

Dave Haffner

Yeah. John, this is Dave. Generally speaking, that is correct. That extra tranche, if you will, of 20 million shares should be correlated to the divesture of proceeds.

John Baugh - Stifel Nicolaus

Great. Thank you. Good luck.

Operator

Thank you. Our next question is from the line of Joel Havard with Hilliard Lyons. Please go ahead.

Joel Havard - Hilliard Lyons

Thanks. Good morning, everybody.

Dave Haffner

Hi, Joel.

Karl Glassman

Hi, Joel.

Joel Havard - Hilliard Lyons

I don't know who wants to take it, but a comment on the SG&A improvement. Obviously, pretty significant headcount shift here at yearend. Is this kind of the base load for this volume or there are some nuances behind that we should be thinking about?

Matt Flanigan

Joel, this is Matt. I will take the first stab. That's about a 10%, and we think there is more room for improvement, there are obviously. Part of the challenge with getting our SG&A at the right level load is a function of continuing to have the operations we haven't yet divested still in the mix. So, I think you will see us in even trimmer shape as it should be the case near the end of the year, and certainly as we roll into 2009 once the divestures have occurred and the percent of sales the dollar represent will be less that 10%. If you recall, historically, it had been around that 9% range.

Joel Havard - Hilliard Lyons

All right. That's very encouraging. Thank you, guys. Good luck.

Operator

Thank you. (Operator Instructions)

We do have a follow up from the line of Budd Bugatch with Raymond James. Please go ahead.

Budd Bugatch - Raymond James

Yeah. A couple of shareholder-related questions. One question that I've gotten was, is this guidance and the prior guidance, both have been constructed on the 10 million share repurchase, which I guess would be like to the prior guidance. So that also had the 10 million share repurchase in it or not?

Dave Haffner

That's correct.

Budd Bugatch - Raymond James

Okay. I was just checking on that. The second kind of issue people are chatting about is the dividend which is awfully close to what the low end of the guidance is for this year. And you've raised dividend now for several decades. Can you kind of talk about your thought process on that even if you're just coming at the low end of guidance?

Dave Haffner

Thought process of continuing to raise the dividend?

Budd Bugatch - Raymond James

Yes, sir.

Dave Haffner

Absolutely, that's our plan.

Budd Bugatch - Raymond James

Okay. And I think Matt, you had said about 4% to 5% this year would be kind of the right expectation, is that, do I recall that properly?

Matt Flanigan

Well, I think for this year from our perspective, but now running rate for a full dollar $0.25 a quarter we feel we've brought four of the dividend increase for 2008. We look at it every quarter, obviously. But I think it's fair to assume that a quarter each, $0.25, each one of these quarters so that this year is kind of our expected gain plan in our guidance, in our cash flow expectations aren't sync with that.

Dave Haffner

And that's $0.72 last year.

Budd Bugatch - Raymond James

Yeah, I understand that Dave. I just then, but the next increase won't be of that magnitude, it will be…

Dave Haffner

That's all right. That's correct.

Budd Bugatch - Raymond James

It's a single digit kind a range.

Dave Haffner

Yes.

Budd Bugatch - Raymond James

And my last question, I heard something that I wasn't sure that I knew which was that you were selling billets out of sterling, I thought that all the production out of melt furnace was internally used. Is this new, or did I miss something before?

Dave Haffner

No, it's not an absolute new practice. There have been times in the past where we've generated billets and sold those billets into the trade. But we do so in a way that generates a nice return, if you will, on the assets that we've got employed because it's incremental volume going through that melt shop.

Budd Bugatch - Raymond James

And the tonnage going through melt shop is, refresh me was it 550,000 tons?

Dave Haffner

That's correct, 500,000 to 550,000 tons, right.

Budd Bugatch - Raymond James

And what percentage might you sale of that, Dave?

Dave Haffner

Well, I'd say the ability, that melt shop has the ability to make 900,000 to a million tons.

Budd Bugatch - Raymond James

Okay.

Dave Haffner

But I'm not sure if that was your question.

Budd Bugatch - Raymond James

But that's interesting, is that on the weekend, still on the weekend basis, the off-peak basis?

Dave Haffner

That's correct. We can't extend it, so I mean we could run more if we want to run it full out of course, it's not our plan. Their advantage is, I know you know this and David MacGregor and I have talked about it in the past too. Their advantage is to keep in a limited number of SKUs whether they would be melts or melting combination with rod size and thing. So you got to be careful that you don't just screw everything up with too many SKUs.

Budd Bugatch - Raymond James

Sure, you do that very well. Thank you very much. Great.

Dave Haffner

Okay.

Operator

Thank you. Our next question is also a follow-up from the line of Keith Hughes with SunTrust Robinson Humphrey. Please go ahead.

Keith Hughes - SunTrust Robinson Humphrey

Yes, regarding the extra 20 million shares that were approved by the Board. Once you get the divestitures done, are we looking at just a open market purchase share transaction, a Dutch tender offer? Have you made any kind of, have any thoughts on that topic?

Dave Haffner

Well, I mean, Matt, you may want to talk to. We've talked about an accelerated share repurchase that tender a normal daily maximum. And, at this point, we believe that we will go ahead and make those purchases on a daily basis up to what we feel is a prudent or limited. Now, that idea could change. We thought about all of those, Keith, and that's where we're at today. Matt?

Matt Flanigan

Yeah. That's exactly right, Keith.

Keith Hughes - SunTrust Robinson Humphrey

Okay. Thank you.

Operator

Thank you. And our next question is from the line of Barry Haimes with Sage Asset Management. Please go ahead.

Barry Haimes - Sage Asset Management

Good morning. I just had a question or two related to Commercial Fixturing, just trying to understand that part of your business a little bit better because we have seen some weak retails numbers at our FW Dodge. And I wonder if you could just give us a sense of how long does your backlog typically run in that business and has backlog been stable or is it starting to decline some?

And then, secondly, the second question, part of that is if retailers close stores, is there a secondary market for any of those fixtures or they typically get scrapped? Thanks.

Karl Glassman

Thanks, Barry. This is Karl. The backlog, so to speak, most of the fixture business that we do has a high degree of custom element to it, so there is a not a significant backlog. What we're doing is working with a retailer and talking about specific defined program rollouts. So there is some repeat business, but that's not the heavyweight portion of that industry.

Fortunately, in this tough retail demand environment, we've taken significant capacities offline. Our restructuring of that store fixture business is well ahead of schedule. On the previous call we had talked about a consolidation of our wood plant and our metal plant that are discretely different activities. Those are taking place. We have seen some softening demand trends. We think there might be a little bit of movement from the second quarter to the third quarter. We do not see any program cancellations whatsoever.

So, it's a challenging market, but fortunately we've taken capacity offline to better align ourselves with a forecasted demand of softness.

Barry Haimes - Sage Asset Management

Thanks. And then, its most of the discussion I might take it then there is not much of a secondary market, is that how that works?

Karl Glassman

No, there is really not. I mean there are not a lot of fixtures that get put in inventory. They are defined by a consumer poll, so that inherent in that industry there's a little bit of delay from time-to-time, but a walk away of fixtures is not common at all.

Barry Haimes - Sage Asset Management

Great. Thanks.

Karl Glassman

Jeopardize the inventory historically had not been a problem in that industry.

Barry Haimes - Sage Asset Management

Thank you.

Dave Haffner

You are welcome.

Operator

Thank you. And at this time, there are no additional questions. I will turn it back to management for any closing remarks.

Dave Haffner

We'll just say thank you and we'll talk to you again next quarter.

Operator

Ladies and gentlemen, that concludes the Leggett & Platt first quarter 2008 earnings conference call. I would like to thank you for your participation and for using ACT Teleconferencing. You may now disconnect.

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Source: Leggett & Platt Inc. Q1 2008 Earnings Call Transcript
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