Tempur Sealy Reports First Quarter Results

First Quarter 2024 Net Sales of $1.2 Billion, Consistent with Prior Year

Strong Consolidated Gross Margins up 1.7% to 43.1%

EPS of $0.43 and Adjusted EPS⁽¹⁾ of $0.50

Record First Quarter Cash Flow from Operations of  $130 Million

Tempur Sealy International, Inc. announced financial results for the first quarter ended March 31, 2024 and reaffirmed financial guidance for the full year 2024.

First Quarter 2024 Financial Summary

• Total net sales decreased 1.5% to $1,189.4 million as compared to $1,208.1 million in the first quarter of 2023, with a decrease of 2.0% in the North America business segment and consistent sales in the International business segment. On a constant currency basis⁽¹⁾, total net sales decreased 2.1%, with a decrease of 2.3% in the North America business segment and a decrease of 1.6% in the International business segment.
• Gross margin was 43.1% as compared to 41.4% in the first quarter of 2023. Adjusted gross margin⁽¹⁾ was 43.4% as compared to 41.8% in the first quarter of 2023.
• Operating income decreased 8.2% to $131.5 million as compared to $143.3 million in the first quarter of 2023. Adjusted operating income⁽¹⁾ decreased 2.6% to $149.4 million as compared to $153.4 million in the first quarter of 2023.
• Net income decreased 10.6% to $76.3 million as compared to $85.3 million in the first quarter of 2023. Adjusted net income⁽¹⁾ decreased 3.4% to $89.7 million as compared to $92.9 million in the first quarter of 2023.
• Earnings per diluted share (“EPS”) decreased 10.4% to $0.43 as compared to $0.48 in the first quarter of 2023. Adjusted EPS⁽¹⁾ decreased 5.7% to $0.50 as compared to $0.53 in the first quarter of 2023.
• Leverage based on the ratio of consolidated indebtedness less netted cash⁽¹⁾ to adjusted EBITDA⁽¹⁾ was 2.85 times as compared to 3.24 times in the trailing twelve months ended March 31, 2023.

Company Chairman and CEO Scott Thompson commented, “We are pleased to report solid first quarter sales, earnings and record operating cash flow against a global backdrop which appears to be at a historical nadir. The strong reception to our newly launched innovative products and our ongoing investment in compelling marketing to support the industry, combined with our broad-based omni-channel reach and our commitment to driving operational efficiencies, drove our industry outperformance in the first quarter. Although we look forward to the market’s recovery, this recessionary environment provides opportunity to highlight  the strength of our global business model and our leading competitive position. We continue to invest in our key initiatives and expect to emerge from the current downturn positioned well for long term success.

Thompson continued, “Regarding the pending Mattress Firm transaction, which we have been working on for two and half years, we believe it will unlock benefits for customers and shareholders. We continue to work closely with the FTC to advance the transaction approval process. As previously disclosed, we anticipate the FTC will complete its review in the second quarter and we are targeting closing the transaction in 2024. We look forward to bringing the Mattress Firm team onboard.”

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 2.0% to $901.1 million as compared to $919.6 million in the first quarter of 2023. On a constant currency basis⁽¹⁾, North America net sales decreased 2.3% as compared to the first quarter of 2023. Gross margin was 39.2% as compared to 37.4% in the first quarter of 2023. Adjusted gross margin⁽¹⁾ was 39.5% as compared to 37.9% in the first quarter of 2023. Operating margin was 14.9% as compared to 14.8% in the first quarter of 2023. Adjusted operating margin⁽¹⁾ was 15.3%, consistent with the first quarter of 2023.

North America net sales through the wholesale channel decreased $27.4 million, or 3.4%, to $776.9 million as compared to the first quarter of 2023, primarily driven by macroeconomic pressures impacting U.S. consumer behavior. North America net sales through the direct channel increased $8.9 million, or 7.7%, to $124.2 million as compared to the first quarter of 2023. The increase in the direct channel was driven by strength in our e-commerce business.

North America adjusted gross margin⁽¹⁾ improved 160 basis points as compared to the first quarter of 2023. The improvement was primarily driven by favorable commodity costs and operational efficiencies. These improvements were partially offset by production line changeover costs to support new OEM distribution and product launch costs. North America adjusted operating margin⁽¹⁾ was flat as compared to the first quarter of 2023.

International net sales decreased 0.1% to $288.3 million as compared to $288.5 million in the first quarter of 2023. On a constant currency basis⁽¹⁾, International net sales decreased 1.6% as compared to the first quarter of 2023. Gross margin was 55.4% as compared to 54.0% in the first quarter of 2023. Operating margin was 15.5% as compared to 15.3% in the first quarter of 2023.

International net sales through the wholesale channel increased $0.6 million, or 0.6%, to $108.9 million as compared to the first quarter of 2023. International net sales through the direct channel decreased $0.8 million, or 0.4%, to $179.4 million as compared to the first quarter of 2023.

International gross margin improved 140 basis points as compared to the first quarter of 2023. The improvement was primarily driven by favorable commodity costs and operational efficiencies. International operating margin improved 20 basis points as compared to the first quarter of 2023. The improvement was primarily driven by the improvement in gross margin, partially offset by operating expense deleverage.

Corporate operating expense increased to $47.7 million as compared to $36.9 million in the first quarter of 2023, primarily driven by transaction costs of $14.8 million related to the pending acquisition of Mattress Firm. Corporate adjusted operating expense⁽¹⁾ was $32.9 million as compared to $31.7 million in the first quarter of 2023.

Consolidated net income decreased 10.6% to $76.3 million as compared to $85.3 million in the first quarter of 2023. Adjusted net income⁽¹⁾ decreased 3.4% to $89.7 million as compared to $92.9 million in the first quarter of 2023. EPS decreased 10.4% to $0.43 as compared to $0.48 in the first quarter of 2023. Adjusted EPS⁽¹⁾ decreased 5.7% to $0.50 as compared to $0.53 in the first quarter of 2023.

The Company ended the first quarter of 2024 with total debt of $2.6 billion and consolidated indebtedness less netted cash⁽¹⁾ of $2.5 billion. Leverage based on the ratio of consolidated indebtedness less netted cash⁽¹⁾ to adjusted EBITDA⁽¹⁾ was 2.85 times for the trailing twelve months ended March 31, 2024.

Financial Guidance

For the full year 2024, the Company reaffirmed its expectations for an adjusted EPS⁽¹⁾ range of $2.60 to $2.90. This contemplates the Company’s current sales outlook for low to mid-single digit year-over-year growth. At the midpoint, this adjusted EPS⁽¹⁾ guidance represents a 15 percent increase from the prior year.

The Company noted that its expectations are based on information available at the time of this release, and are subject to changing conditions and risks, many of which are outside the Company’s control. The Company is unable to reconcile forward–looking adjusted EPS, a non–GAAP financial measure, to EPS, its most directly comparable forward–looking GAAP financial measure, without unreasonable efforts, because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact EPS in 2024.

For full first quarter results click here.

About Tempur Sealy

Tempur Sealy is committed to improving the sleep of more people, every night, all around the world. As a leading designer, manufacturer, distributor, and retailer of bedding products worldwide, we know how crucial a good night of sleep is to overall health and wellness. Utilizing over a century of knowledge and industry-leading innovation, we deliver award-winning products that provide breakthrough sleep solutions to consumers in over 100 countries.

Our highly recognized brands include Tempur-Pedic®, Sealy® and Stearns & Foster® and our popular non-branded offerings consist of value-focused private label and OEM products. At Tempur Sealy we understand the importance of meeting our customers wherever and however they want to shop and have developed a powerful omni-channel retail strategy. Our products allow for complementary merchandising strategies and are sold through third-party retailers, our 700+ Company-owned stores worldwide and our e-commerce channels. With the range of our offerings and variety of purchasing options, we are dedicated to continuing to turn our mission to improve the sleep of more people, every night, all around the world into a reality. 

Importantly, we are committed to carrying out our global responsibility to protect the environment and the communities in which we operate. As part of that commitment, we have established the goal of achieving carbon neutrality for our global wholly owned operations by 2040.

Contact:

Aubrey Moore – Investor Relations – investor.relations@tempursealy.com – (800) 805-3635

Source: Tempur Sealy International, Inc.