Actionable news
0
All posts from Actionable news
Actionable news in TPX: TEMPUR SEALY INTERNATIONAL Inc,

Tempur Sealy Reports First Quarter 2016 Results

LEXINGTON, Ky., April 28, 2016 /PRNewswire/ -- Tempur Sealy International, Inc. TPX, -0.37% today announced financial results for the first quarter ended March 31, 2016. The Company also reaffirmed financial guidance for the full year 2016.

FIRST QUARTER 2016 FINANCIAL SUMMARY

  • Total net sales decreased 2.5% to $721.0 million from $739.5 million in the first quarter of 2015. On a constant currency basis [(1)] , total net sales were flat, with a decrease of 1.6% in the North America business segment and an increase of 5.9% in the International business segment.
  • Gross margin under U.S. generally accepted accounting principles ("GAAP") was 40.4% as compared to 37.7% in the first quarter of 2015. Adjusted gross margin [(1)] was 40.4% as compared to 38.5% in the first quarter of 2015.
  • GAAP operating income increased 41.0% to $76.7 million as compared to $54.4 million in the first quarter of 2015. Operating income included $3.0 million of additional costs related to executive management transition and $0.9 million of integration costs. Operating income in the first quarter of 2015 included $11.7 million of integration costs and $2.1 million of additional costs related to the Company's 2015 Annual Meeting. Adjusted operating income [(1)] increased 18.2% to $80.6 million, or 11.2% of net sales, as compared to $68.2 million, or 9.2% of net sales, in the first quarter of 2015.
  • Earnings before interest, tax, depreciation and amortization ("EBITDA") [(1)] increased 34.4% to $102.0 million as compared to $75.9 million for the first quarter of 2015. Adjusted EBITDA [(1)] increased 14.9% to $104.0 million as compared to $90.5 million in the first quarter of 2015.
  • Adjustments to EBITDA totaled $2 million, as compared to $15 million in the first quarter of 2015.
  • GAAP net income increased 69.2% to $39.6 million as compared to $23.4 million in the first quarter of 2015. Adjusted net income [(1)] increased 24.0% to $42.3 million as compared to $34.1 million in the first quarter of 2015.
  • GAAP earnings per diluted share ("EPS") was $0.63 as compared to $0.38 in the first quarter of 2015. Adjusted EPS [(1)] increased 23.6% to $0.68 as compared to adjusted EPS of $0.55 in the first quarter of 2015. On a constant currency basis, adjusted EPS increased 25.5%.
  • The Company ended the first quarter of 2016 with consolidated funded debt less qualified cash [(1)] of $1.5 billion. Leverage based on the ratio of consolidated funded debt less qualified cash to Adjusted EBITDA [(1)] was 3.18 times for the trailing twelve months ended March 31, 2016 as compared to 3.93 times for the trailing twelve months ended March 31, 2015.
  • During the first quarter of 2016, the Company purchased 1.7 million shares of its common stock for a total cost of $100 million. As of March 31, 2016, the Company had $100 million available under its existing share repurchase authorization.

Tempur Sealy International, Inc. Chairman and CEO Scott Thompson commented, "We are very pleased with our results as we grew adjusted EBITDA 15% and adjusted EPS 24% while increasing direct advertising and marketing investments, and launching new industry leading products worldwide. Overall, plant operations improved and adjusted operating margin expanded 200 basis points. The Team is focused on continuing to improve operations, and we are all striving to achieve our targets."

FIRST QUARTER KEY HIGHLIGHTS


(in millions, except percentages and per common share amounts)

Three Months Ended


% Change


% Change Constant Currency(1)

March 31, 2016


March 31, 2015



Net sales

$

721.0



$

739.5



(2.5)

%


(0.1)

%

Adjusted EBITDA(1)

104.0



90.5



14.9

%


16.7

%

Adjusted EPS(1)

$

0.68



$

0.55



23.6

%


25.5

%

(1) This is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures and Constant Currency Information" below.

Business Segment Highlights

The Company's business segments include North America and International. Corporate operating expenses are not included in either of the business segments and are presented separately as a reconciling item to consolidated results.

North America net sales decreased 2.4% to $580.0 million from $594.1 million in the first quarter of 2015. On a constant currency basis, North America net sales decreased 1.6%. GAAP gross margin was 37.0% as compared to 34.2% in the first quarter of 2015. GAAP operating margin was 13.3% as compared to 9.7% in the first quarter of 2015. In the first quarter, net sales declined as the North American bedding market performed below expectations and the scope of our product launch transitions impacted sales.

North America adjusted gross margin(1) improved 190 basis points to 37.0% as compared to 35.1% in the first quarter of 2015, primarily driven by improved operations, pricing actions, and a decrease in commodity costs, partially offset by product mix and new product launches. The increase in North America adjusted gross margin [(1)] as well as an improvement in the Company's selling and marketing leverage drove a 220 basis point increase in the Company's North America adjusted operating margin [(1)] to 13.4% as compared to 11.2% in the first quarter of 2015.

International net sales decreased 3.0% to $141.0 million from $145.4 million in the first quarter of 2015. On a constant currency basis, International net sales increased 5.9%. GAAP gross margin was 54.3% as compared to 52.0% in the first quarter of 2015. GAAP operating margin was 19.4% as compared to 17.4% in the first quarter 2015. In the first quarter, net sales declined due to the negative effects of foreign exchange on a year over year basis.

International adjusted gross margin [(1) ] improved 190 basis points to 54.3% as compared to 52.4% in the first quarter of 2015, primarily driven by channel mix, improvements in plant efficiency and a decrease in commodity costs, partially offset by an increase in sales of Sealy products relative to sales of Tempur products. The increase in International adjusted gross margin [(1)] drove a 110 basis point increase in the Company's International adjusted operating margin [(1)] to 19.4% as compared to 18.3% in the first quarter of 2015.

Corporate GAAP operating expense decreased 3.1% to $27.9 million from $28.8 million in the first quarter of 2015. The decrease in operating expense was primarily driven by a $3.0 million reduction in Corporate legal and professional fees in the first quarter of 2016 as compared to the same period in 2015 (which included $2.1 million of additional 2015 Annual Meeting expenses), as well as a reduction in Corporate overhead expenses in the first quarter of 2016. These decreases were partially offset by $3.0 million of executive transition costs incurred in the first quarter of 2016, and increases in employee-related compensation.

Corporate adjusted operating expense [(1)] decreased 2.0% to $24.3 million from $24.8 million in the first quarter of 2015. The decrease in Corporate adjusted operating expense was primarily related to a reduction in Corporate overhead expenses, partially offset by increases in employee-related compensation.

(1) This is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures and Constant Currency Information" below.

Balance Sheet

As of March 31, 2016, the Company reported $37.1 million in cash and cash equivalents and $1.5 billion in total debt, as compared to $153.9 million in cash and cash equivalents and $1.5 billion in total debt as of December 31, 2015.

Financial Guidance

The Company also today reaffirmed its financial guidance for 2016. For the full year 2016, the Company currently expects Adjusted EBITDA to range from $500 million to $550 million. The Company noted its expectations are based on information available at the time of this release, and are subject to changing conditions, many of which are outside the Company's control.

Conference Call Information

Tempur Sealy International, Inc. will host a live conference call to discuss financial results today, April 28, 2016 at 8:00 a.m. Eastern Time. The dial-in number for the conference call is 800-850-2903. The dial-in number for international callers is 224-357-2399. The call is also being webcast and can be accessed on the investor relations section of the Company's website, http://www.tempursealy.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for 30 days.

Non-GAAP Financial Measures and Constant Currency Information.

For additional information regarding adjusted net income, adjusted EPS, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, EBITDA, adjusted EBITDA, consolidated funded debt, and consolidated funded debt less qualified cash (all of which are non-GAAP financial measures), please refer to the reconciliations and other information included in the attached schedules. For information on the methodology used to present information on a constant currency basis, please refer to "Constant Currency Information" included in the attached schedules.

Forward-looking Statements

This press release contains "forward-looking statements," within the meaning of the federal securities laws, which include information concerning one or more of the Company's plans, objectives, goals, strategies, and other information that is not historical information. When used in this release, the words "estimates," "expects," "guidance," "anticipates," "projects," "plans," "proposed," "intends," "believes," and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to the Company's expectations regarding adjusted EBITDA for 2016 and performance generally for 2016. All forward-looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct.

Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from those expressed as forward-looking statements. These risk factors include risks associated with the Company's capital structure and debt level; general economic, financial and industry conditions, particularly in the retail sector, as well as consumer confidence and the availability of consumer financing; changes in product and channel mix and the impact on the Company's gross margin; changes in interest rates; the impact of the macroeconomic environment in both the U.S. and internationally on the Company's business segments; uncertainties arising from global events; the effects of changes in foreign exchange rates on the Company's reported earnings; consumer acceptance of the Company's products; industry competition; the efficiency and effectiveness of the Company's advertising campaigns and other marketing programs; the Company's ability to increase sales productivity within existing retail accounts and to further penetrate the Company's retail channel, including the timing of opening or expanding within large retail accounts and the timing and success of product launches; the effects of consolidation of retailers on revenues and costs; the Company's ability to expand brand awareness, distribution and new products; the Company's ability to continuously improve and expand its product line, maintain efficient, timely and cost-effective production and delivery of its products, and manage its growth; the effects of strategic investments on the Company's operations; changes in foreign tax rates and changes in tax laws generally, including the ability to utilize tax loss carry forwards; the outcome of various pending tax audits or other tax, regulatory or investigation proceedings; changing commodity costs; the effect of future legislative or regulatory changes; and disruptions to the implementation of the Company's strategic priorities and business plan caused by abrupt changes in the Company's senior management team and Board of Directors.

There...


More