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Actionable news in TPX: TEMPUR SEALY INTERNATIONAL Inc,

Tempur-pedic International: Tpx Nov 2015 Investor Presentation

The following excerpt is from the company's SEC filing.

tempursealy4q2015investo

1 November 2015 “Success is strengthening our Iconic Brands while driving higher ROIC through focused execution” Tempur Sealy International, Inc. (TPX)

2 Summary  World’s Largest and Most Profitable Bedding Product Company 1 • Estimated 2015 Net Sales 2 $3.2 Billion • Estimated 2015 Adjusted EBITDA 3 $455 Million • Worldwide Employees 7,000 • Worldwide Manufacturing Facilities 26 North America International Tempur 2 1 Sealy 19 4  TPX New York Stock Exchange • Equity Value 5 $5.2 B 78% • Debt Value, net 5 $1.4 B 22% • Enterprise Value $6.6 B 100% North Ameri ca 82% Interna tional 18% Net Sales 2 LTM Adjusted EBITDA 4 North America International Corporate $380 $126 ($67) ($ in millions) Forward-Looking Statements: this investor presentation contains “forward-looking statements” within the meaning of federal securities laws. Please review carefully the cautionary statements and other information included in the appendix under “Forward looking Statements”. Please refer to the footnotes in the appendix at the end of the presentation.

3 Bedding Industry Market Opportunity Matt ress es: $1… Mattre sses: $33 B Ba ses & … Bas es & … Mat tres s… Mattr esse s: $1… Ba s… Ba ses & … Total: $20 B Total: $44 B North America International Total: $10 B Retail Market Size $64 B6 Wholesale Market Size $32 B6 Tempur Sealy Net Sales7: $3.2 B Total: $22 B Total Market Opportunity Please refer to the footnotes in the appendix at the end of the presentation. North America7: $2.6 B International7: $0.6 B Non-Consolidated JVs & Licensees7: $0.4 B

4  Consistently Solid Market Growth • Population growth • Replacement cycle  High Margin Business Gross Margin % • Tempur Sealy ~40% • Bedding Retailers High 30s to Low 40s 9  Outstanding Free Cash Flow 10 • 4.5% of Net Sales 10 • 50% of Adjusted Pre-Tax Income 10 • Capital Expenditures represent ~2% of sales 9  Low Disruption Risk • Importance of product to customer • Ratio of costs • Customer returns $14.3 $15.8 $17.7 $18.4 $17.3 $18.9 $21.0 $21.9 $22.8 $24.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Key Business Fundamentals • Consumer Confidence • Housing Turnover Global Mattress Industry8 Cost of Goods Materials ~65% Manufacturing /Overhead ~15% Transportation ~15% Labor ~5% ($ in billions at wholesale) Please refer to the footnotes in the appendix at the end of the presentation.

5 5 Global Market Leadership Consumer Preferred Products Broad Distribution and High Dealer Advocacy Strong Complementary Brands Ever Increasing Cost Competitiveness Improving the Sleep of More People Every Night, All around the World Committed, Capable People with Strong Shared Values Opportunistic Acquisition of Complementary Companies Growing Shareholder Value Long Term Strategic Plan World Class Marketing / Product Development

6 Well Established Global Brands Tempur-Pedic • Nothing precisely adapts, supports and aligns like Tempur-Pedic for the “Best Sleep of Your Life” Stearns & Foster • Traditional luxury, finest materials and unparalleled craftsmanship Sealy Posturepedic • Unsurpassed back support Sealy • Value, comfort and durability Percentage of Revenue 50% 10% 25% 15% Brands are complementary and fully cover the market 11 Please refer to the footnotes in the appendix at the end of the presentation.

7 Customer Acceptance Tempur Sealy Serta Simmons Select Comfort Brands Most Likely To Buy – Prospective US Buyers Tempur-Pedic 35% 15% 11% Sealy Simmons Serta Sleep Number 12 Please refer to the footnotes in the appendix at the end of the presentation.

8 Innerspring Hybrid Stearns & Foster TEMPUR-Flex TEMPUR-Cloud Memory Foam, Gel Visco, Latex Tempur Material Other Specialty Adjustable bases Pillows Complete Portfolio Of Products Focus on developing differentiated, consumer-preferred products Sealy Posturepedic Hybrid

9  Focused on improving the effectiveness of our marketing spend  Increase direct advertising  Improve quality and effectiveness of cooperative advertising TV Joint Marketing Print Catalog Digital Social Internet & Mobile Strong Marketing Campaign

Expanding Distribution 10 Representative % of Net Sales Indirect USA Non-USA Total Bedding specialty retail 50% 25% 45% Furniture retail 25% 45% 30% Department stores 10% 10% 10% Warehouse/club stores 10% < 5% 7% Other retail < 5% < 5% < 5% Hospitality and contract < 5% < 5% < 5% Direct Company-owned stores < 5% 10% < 5% E-commerce/call center < 5% < 5% < 5% Total 100% 100% 100% Top 10 Customers % of Net Sales: ~49% 13 Please refer to the footnotes in the appendix at the end of the presentation.

Tempur Sealy International  Product Innovation and Effective Brand Marketing  New product introductions and enhanced creative  Cost Productivity Initiatives  Corporate, Sealy US manufacturing and International  Working Capital Initiatives  Investment of Cash Flow/Capital Allocation  Acquisition related businesses  Stock buyback  Dividends North America  Favorable Underlying Macro Trends  Expanding Distribution International  Market Share Gains  Expanding Distribution Near Term Opportunities 11 4.6x 4.3x 4.1x 3.9x 3.9x 3.8x 3.3x 1Q-14 2Q-14 3Q-14 4Q-14 1Q-15 2Q-15 3Q-15 Leverage Note: Represents the ratio of consolidated funded debt less qualified cash to adjusted EBITDA, which is a non-GAAP financial measure. For information on our use of this non-GAAP financial measure, please refer to “Use of Non-GAAP Financial Measures” at the end of this presentation and the Company’s SEC filings.

2012 2013 2014 2015P North America International Financial Overview – Net Sales 12 ($ in millions) 15 14 $1,403 $2,464 $2,990 $3,150 - $3,175 Please refer to the footnotes in the appendix at the end of the presentation.

Financial Overview – Adjusted EPS 13 $2.61 $2.38 $2.65 $3.10 - $3.20 2012 2013 2014 2015P GAAP EPS $1.70 GAAP EPS $1.28 GAAP EPS $1.75 16 18 17 Please refer to the footnotes in the appendix at the end of the presentation.

$303 $411 $405 $450 - $460 2012 2013 2014 2015P ($ in millions) Financial Overview – Adjusted EBITDA 14 EBITDA $290 EBITDA $346 EBITDA $355 21 20 Please refer to the footnotes in the appendix at the end of the presentation. 19

Outlook 15 Guidance 2015 • Net Sales $3.150 billion to $3.175 billion 22 • Adjusted EPS $3.10 to $3.20 22 Targets • Debt 3x Leverage 23 (Under Review) • Market Share North America Stable International Growing Please refer to the footnotes in the appendix at the end of the presentation.

Aspirational Plan 16  The Board has established an Aspirational Plan  Achievement of the Aspirational Plan would create significant stockholder value  Aspirational Plan Grants – Performance Restricted Stock Units (PRSUs)  1,340,000 PRSUs granted to 12 key executives  200 additional employees have performance equity  Aspirational Plan based on achievement of an increase of nearly $200 million, or over 40%, in Adjusted EBITDA from 2015 guidance levels  All PRSUs will vest if adjusted EBITDA of greater than $650 million is achieved for 2017  One-third of PRSUs will vest if achieved in 2018 (and not achieved in 2017), with remainder forfeited  No PRSUs will vest if not achieved in either 2017 or 2018 Please refer to the footnotes in the appendix at the end of the presentation. “Aspirational Pay for Aspirational Performance” 24

Success 17 “Achieve consistent, profitable growth” “Support our portfolio of brands with compelling marketing and product innovation” “Consistently deliver annual total cost improvements with excellent customer service” “Drive traffic and conversion with effective collaboration” “Accelerate profitable growth through the appropriate expansion of distribution, the levering of our global product innovation platform underpinned by investments to increase brand awareness” “Enhance our overall cost competitive position while safeguarding quality and assets” “Strengthen our Iconic Brands while driving higher ROIC through focused execution”

Thank you for your interest in Tempur Sealy 18 Improving the Sleep of More People Every Night, All around the World

Appendix 19

Forward-Looking Statements Note Regarding Trademarks, Trade Names and Service Marks: TEMPUR, Tempur-Pedic, TEMPUR-Cloud, TEMPUR-Choice, TEMPUR-Weightless, TEMPUR-Contour, TEMPUR-Rhapsody, TEMPUR-Flex, GrandBed, TEMPUR-Simplicity, TEMPUR- Ergo, TEMPUR-UP, TEMPUR-Neck, TEMPUR-Symphony, TEMPUR-Comfort, TEMPUR-Traditional, TEMPUR-Home, Sealy, Sealy Posturepedic, Stearns & Foster, and Optimum are trademarks, trade names or service marks of Tempur Sealy International, Inc. and/or its subsidiaries. All other trademarks, trade names and service marks in this presentation are the property of the respective owners. Limitations on Guidance. The guidance included herein is from the Company’s October 29, 2015 earnings release and was as of the date of the earnings release. The Company is neither reconfirming this guidance as of the date of this investor presentation nor assuming any obligation to update or revise such guidance. Please refer to “Forward Looking Statements”. This investor presentation 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 presentation, 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 net sales, adjusted net income, adjusted EPS, adjusted EBITDA and free cash flow for 2015 and performance generally for 2015 and subsequent years; plans to improve marketing; near-term opportunities in both the North America and International segments; market share; leverage and ROIC targets; creation of stockholder value; and the Company’s goals for defining success in various parts of its business. 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 increased debt level; the ability to successfully integrate Sealy Corporation (“Sealy”) into the Company’s operations and realize cost and revenue synergies and other benefits from the transaction; whether the Company will realize the anticipated benefits from its asset dispositions in 2014 and the acquisition of brand rights in certain...


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