Tempur Sealy Reports Third Quarter Results

Consolidated Sales Growth of 2%

Consolidated Gross Margins Expands

EPS Growth of 14% and Adjusted EPS⁽¹⁾ Growth of 7%

Robust Third Quarter Cash Flow from Operations of $257 Million

Tempur Sealy International, Inc. announced financial results for the third quarter ended September 30, 2024 and narrowed financial guidance for the full year 2024.

Third Quarter 2024 Financial Summary

• Total net sales increased 1.8% to $1,300.0 million as compared to $1,277.1 million in the third quarter of 2023, with a decrease of 0.8% in the North America business segment and an increase of 12.4% in the International business segment. On a constant currency basis⁽¹⁾, total net sales increased 1.7%, with a decrease of 0.4% in the North America business segment and an increase of 10.5% in the International business segment.
• Gross margin was 45.4% as compared to 44.9% in the third quarter of 2023. Adjusted gross margin⁽¹⁾ was 46.2% as compared to 45.9% in the third quarter of 2023.
• Operating income increased 10.2% to $201.8 million as compared to $183.2 million in the third quarter of 2023. Adjusted operating income⁽¹⁾ increased 4.2% to $223.7 million as compared to $214.7 million in the third quarter of 2023.
• Net income increased 14.7% to $130.0 million as compared to $113.3 million in the third quarter of 2023. Adjusted net income⁽¹⁾ increased 7.1% to $146.5 million as compared to $136.8 million in the third quarter of 2023.
• Earnings per diluted share (“EPS”) increased 14.1% to $0.73 as compared to $0.64 in the third quarter of 2023. Adjusted EPS⁽¹⁾ increased 6.5% to $0.82 as compared to $0.77 in the third quarter of 2023.
• Leverage based on the ratio of consolidated indebtedness less netted cash⁽¹⁾ to adjusted EBITDA⁽¹⁾ was 2.41 times for the trailing twelve months ended September 30, 2024 compared to 2.89 times for the trailing twelve months ended September 30, 2023.

Company Chairman and CEO Scott Thompson commented, “We are pleased with our performance in the third quarter. Our global market outperformance, led by double-digit growth in our international segment, resulted in consolidated sales growth year-over-year despite the global bedding industry continuing to perform significantly below historical trends. Sales growth coupled with our operational efficiency initiatives and diverse business platform resulted in solid growth in both adjusted EBITDA and adjusted EPS. We continue to see our investments in product, people, and advertising as foundational to our long-term success.”

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 0.8% to $1,015.3 million as compared to $1,023.7 million in the third quarter of 2023, primarily driven by continued macroeconomic pressures impacting U.S. consumer behavior. Net sales through the wholesale channel decreased $6.7 million, or 0.8%, to $878.4 million as compared to the third quarter of 2023. Net sales through the direct channel decreased $1.7 million, or 1.2%, to $136.9 million as compared to the third quarter of 2023.

North America gross margin was 42.0%, consistent with the third quarter of 2023. Adjusted gross margin⁽¹⁾ declined 10 basis points to 43.1% as compared to 43.2% in the third quarter of 2023. The decline was primarily driven by the mix impact of the new distribution win for our OEM business, partially offset by favorable commodity costs and operational efficiencies.

North America operating margin was 19.0% as compared to 19.1% in the third quarter of 2023. Adjusted operating margin⁽¹⁾ declined 20 basis points to 20.1% as compared to 20.3% in the third quarter of 2023. The decline was primarily driven by the decline in gross margin and operating expense deleverage.

International net sales increased 12.4% to $284.7 million as compared to $253.4 million in the third quarter of 2023, primarily driven by the success of new product launches. On a constant currency basis⁽¹⁾, International net sales increased 10.5% as compared to the third quarter of 2023. Net sales through the wholesale channel increased $13.9 million, or 15.5%, to $103.4 million as compared to the third quarter of 2023. Net sales through the direct channel increased $17.4 million, or 10.6%, to $181.3 million as compared to the third quarter of 2023.

International gross margin improved 70 basis points to 57.3% as compared to 56.6% in the third quarter of 2023. The improvement was primarily driven by operational efficiencies.

International operating margin was 18.2% as compared to 15.8% in the third quarter of 2023. Operating margin improved 200 basis points as compared to adjusted operating margin⁽¹⁾ of 16.2% in the third quarter of 2023. There were no adjustments to operating margin in the third quarter of 2024. The improvement was primarily driven by operating expense leverage and the improvement in gross margin, partially offset by Asia joint venture performance.

Corporate operating expense decreased to $43.2 million as compared to $52.3 million in the third quarter of 2023. Adjusted operating expense⁽¹⁾ was $32.0 million as compared to $34.2 million in the third quarter of 2023, primarily driven by reduced variable compensation expense.

Consolidated net income increased 14.7% to $130.0 million as compared to $113.3 million in the third quarter of 2023. Adjusted net income⁽¹⁾ increased 7.1% to $146.5 million as compared to $136.8 million in the third quarter of 2023. EPS increased 14.1% to $0.73 as compared to $0.64 in the third quarter of 2023. Adjusted EPS⁽¹⁾ increased 6.5% to $0.82 as compared to $0.77 in the third quarter of 2023.

The Company ended the third quarter of 2024 with total debt of $2.3 billion and consolidated indebtedness less netted cash⁽¹⁾ of $2.2 billion. Leverage based on the ratio of consolidated indebtedness less netted cash⁽¹⁾ to adjusted EBITDA⁽¹⁾ was 2.41 times for the trailing twelve months ended September 30, 2024.

Financial Guidance

For the full year 2024, the Company narrowed its expectations for an adjusted EPS⁽¹⁾ range of $2.45 to $2.55, which represents a 4% increase in adjusted EPS⁽¹⁾ from the prior year at the midpoint. This contemplates the Company’s current outlook that 2024 sales will be slightly below 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.

Dividend Declared

The Company’s Board of Directors declared a quarterly cash dividend of $0.13 per share, payable on December 5, 2024, to shareholders of record at the close of business on November 21, 2024.

For full 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.