July 16, 2009

Tempur-Pedic Reports Second Quarter Earnings


--- Reports EPS of $0.22 --- Gross Profit Margin Increases 220 Basis Points to 46.6%

LEXINGTON, Ky., July 16, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Tempur-Pedic International Inc. (NYSE: TPX), the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced financial results for the second quarter ended June 30, 2009. The Company also confirmed its financial guidance for 2009.

SECOND QUARTER FINANCIAL SUMMARY

    --  Earnings per share (EPS) were $0.22 per diluted share in the second
        quarter of 2009 as compared to $0.27 per diluted share in the second
        quarter of 2008. The Company reported net income of $16.9 million for
        the second quarter of 2009 as compared to net income of $20.2 million in
        the second quarter of 2008.

    --  Net sales declined 22% to $185.2 million in the second quarter of 2009
        from $238.7 million in the second quarter of 2008. On a constant
        currency basis, net sales declined 19%. Net sales in the domestic
        segment declined 19%, while international segment net sales declined
        29%. On a constant currency basis, international segment net sales
        declined 19%.

    --  Mattress sales declined 24% globally. Mattress sales declined 20% in the
        domestic segment and 31% in the international segment. On a constant
        currency basis, international mattress sales declined 21%. Pillow sales
        declined 17% globally. Pillow sales declined 12% domestically and 20%
        internationally. On a constant currency basis, international pillow
        sales declined 12%.

    --  Gross profit margin was 46.6% as compared to 44.4% in the second quarter
        of 2008. The gross profit margin increased as a result of lower
        commodity costs, improved efficiencies in manufacturing and improved
        pricing, partially offset by fixed cost de-leverage related to lower
        production volumes.

    --  Operating profit margin was 15.7% as compared to 15.2% in the second
        quarter of 2008. The Company reduced operating expenses by $12.5 million
        to $57.2 million in the second quarter of 2009 from $69.7 million in the
        second quarter of 2008.

    --  Reflecting the Company's continued focus on generating cash, the
        Company generated $39.5 million of operating cash flow in the second
        quarter of 2009.

    --  During the quarter, the Company reduced Total debt by $31.0 million to
        $369.0 million and increased cash by $3.8 million to $25.0. As of June
        30, 2009, the Company's ratio of Funded debt to EBITDA was 2.29
        times, well within the covenant in its credit facility, which requires
        that this ratio not exceed 3.00 times. For additional information about
        EBITDA and Funded debt (which are non-GAAP measures), please refer to
        the reconciliation and other information included in the attached
        schedule.

Chief Executive Officer Mark Sarvary commented, "During the second quarter, our initiatives to drive sales and margins continued to show progress. Our productivity projects helped us expand gross margins with improvement compared to last year and last quarter. Our focus on cash flow continued to display the strength of our business model as we lowered debt $31 million during the quarter. We believe we are well positioned for growth when the economy recovers."

2009 Financial Guidance

The Company confirmed its prior guidance ranges for EPS and net sales for full year 2009. The Company continues to expect EPS to range from $0.70 to $0.90 per diluted share. The Company continues to expect net sales to range from $700 million to $740 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-Pedic International will host a live conference call to discuss financial results today, July 16, 2009 at 5:00 p.m. Eastern Time. The dial-in number for the conference call is 877-419-6593. The call is also being webcast and can be accessed on the investor relations section of the Company's website, www.tempurpedic.com.

For those who cannot listen to the live broadcast, a telephone replay of the call will be available from July 16, 2009 at 8:00 p.m. Eastern Time through July 23, 2009. To listen to the replay, dial 888-203-1112, participant code 7809604.

Forward-looking Statements

This release contains "forward-looking statements," within the meaning of 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," "anticipates," "projects," "plans," "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 positioning for future growth and the Company's expectations regarding net sales and earnings per share for 2009. 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.

There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this release. 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 general economic, financial and industry conditions, particularly in the retail sector, as well as consumer confidence and the availability of consumer financing; the Company's ability to reduce expenses to align with reduced sales levels; 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 domestic retail channel, including the timing of opening or expanding within large retail accounts; the Company's ability to address issues in certain underperforming international markets; 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; changes in foreign tax rates, including the ability to utilize tax loss carry forwards; and rising commodity costs. Additional information concerning these and other risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including without limitation the Company's annual report on Form 10-K under the headings "Special Note Regarding Forward-Looking Statements" and "Risk Factors." Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements for any reason, including to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

About the Company

Tempur-Pedic International Inc. (NYSE: TPX) manufactures and distributes mattresses and pillows made from its proprietary TEMPUR(R) pressure-relieving material. It is the worldwide leader in premium and specialty sleep. The Company is focused on developing, manufacturing and marketing advanced sleep surfaces that help improve the quality of life for people around the world. The Company's products are currently sold in over 70 countries under the TEMPUR(R) and Tempur-Pedic(R) brand names. World headquarters for Tempur-Pedic International is in Lexington, KY. For more information, visit http://www.tempurpedic.com or call 800-805-3635.

                      TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
                        Condensed Consolidated Statements of Income
                      (In thousands, except per common share amounts)


                          Three Months                   Six Months
                             Ended                          Ended
                           June 30,                        June 30,
                           --------                        --------
                       2009        2008  Chg %      2009       2008  Chg %
                       ----        ----  ----       ----       ----  ----
    Net sales      $185,176    $238,661  (22)%  $362,280   $485,883  (25)%
    Cost of sales    98,845     132,645          194,088    271,786
                    -------     -------          -------    -------

    Gross profit     86,331     106,016  (19)%   168,192    214,097  (21)%

    Selling and
     marketing
     expenses        35,191      44,787           69,063     97,950
    General,
     administrative
     and other
     expenses        21,978      24,910           44,086     50,495
                    -------     -------          -------    -------

    Operating
     income          29,162      36,319  (20)%    55,043     65,652  (16)%

    Other income
     (expense),
     net:
      Interest
       expense, net  (4,477)     (5,645)          (9,048)   (13,336)
      Other income
       (expense),
       net              270         (72)             618     (1,091)
                    -------     -------          -------    -------
        Total other
         expense     (4,207)     (5,717)          (8,430)   (14,427)

    Income before
     income taxes    24,955      30,602  (19)%    46,613     51,225   (9)%
    Income tax
     provision        8,098      10,374           16,418     17,483
                    -------     -------          -------    -------
        Net income  $16,857     $20,228  (17)%   $30,195    $33,742  (11)%
                    =======     =======          =======    =======

    Earnings per
     common share:
        Basic         $0.23       $0.27            $0.40      $0.45
                      =====       =====            =====      =====
        Diluted       $0.22       $0.27            $0.40      $0.45
                      =====       =====            =====      =====
    Weighted
     average
     common shares
     outstanding:
        Basic        74,894      74,740           74,884     74,665
                     ======      ======           ======     ======
        Diluted      75,493      74,931           75,036     74,872
                     ======      ======           ======     ======



             TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
                 Condensed Consolidated Balance Sheets
                              (In thousands)

                                      June 30,          December 31,
                                        2009                2008
                                        ----                ----
    ASSETS

    Current Assets:
         Cash and cash
          equivalents                  $24,974             $15,385
         Accounts receivable, net       91,002              99,811
         Inventories                    51,570              60,497
         Prepaid expenses and
          other current assets          11,675               9,233
         Deferred income taxes          18,043              11,888
                                        ------              ------
    Total Current Assets               197,264             196,814

         Property, plant and
          equipment, net               176,867             185,843
         Goodwill                      192,998             192,569
         Other intangible assets,
          net                           65,820              66,823
         Other non-current assets        3,758               4,482
                                         -----               -----
    Total Assets                      $636,707            $646,531
                                      ========            ========

    LIABILITIES AND
     STOCKHOLDERS' EQUITY

    Current Liabilities:
         Accounts payable              $38,496             $41,355
         Accrued expenses and
          other current
          liabilities                   78,365              65,316
         Income taxes payable            3,061               7,783
                                         -----               -----
    Total Current
     Liabilities                       119,922             114,454

         Long-term debt                369,000             419,341
         Deferred income taxes          28,888              28,371
         Other non-current
          liabilities                    9,711              11,922
                                         -----              ------
    Total Liabilities                  527,521             574,088

    Total Stockholders'
     Equity                            109,186              72,443
                                       -------              ------

    Total Liabilities and
     Stockholders' Equity             $636,707            $646,531
                                      ========            ========



               TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
               Condensed Consolidated Statements of Cash Flows
                               (In thousands)

                                                  Six Months
                                                    Ended
                                                   June 30,
                                                   --------
                                               2009        2008
                                               ----        ----
    CASH FLOWS FROM OPERATING
     ACTIVITIES:
       Net income                             $30,195     $33,742
       Adjustments to reconcile
        net income to net cash
        provided by operating
        activities:
              Depreciation and
               amortization                    15,514      16,685
              Amortization of
               stock-based compensation         4,093       4,041
              Amortization of deferred
               financing costs                    345         714
              Bad debt expense                  3,864       3,439
              Deferred income taxes            (6,148)       (958)
              Foreign currency
               adjustments                        193         524
              (Gain) Loss on sale of
               equipment and other                (45)        345
              Changes in operating
               assets and liabilities          17,439      37,776
                                               ------      ------
    Net cash provided by
     operating activities                      65,450      96,308

    CASH FLOWS FROM INVESTING
     ACTIVITIES:
       Purchases of property,
        plant and equipment                    (4,728)     (6,328)
       Acquisition of business,
        net of cash acquired                        -      (1,522)
       Other                                     (155)       (411)
                                                 ----        ----
    Net cash used by investing
     activities                                (4,883)     (8,261)

    CASH FLOWS FROM FINANCING
     ACTIVITIES:
       Proceeds from long-term
        revolving credit facility              83,797      70,732
       Repayments of long-term
        revolving credit facility            (133,036)    (57,244)
       Repayments of long-term
        debt                                        -      (1,359)
       Repayment of Series A
        Industrial Revenue Bonds                    -     (57,785)
       Proceeds from issuance of
        common stock                                -         695
       Excess tax benefit from
        stock based compensation                    -         366
       Dividend paid to
        stockholders                                -     (11,946)
       Other                                        -         (14)
                                                 ----        ----
    Net cash used by financing
     activities                               (49,239)    (56,555)

    NET EFFECT OF EXCHANGE
     RATE CHANGES ON CASH                      (1,739)      3,546
                                               ------       -----

    Increase in cash and cash
     equivalents                                9,589      35,038

    CASH AND CASH EQUIVALENTS,
     beginning of period                       15,385      33,315
                                               ------      ------

    CASH AND CASH EQUIVALENTS,
     end of period                            $24,974     $68,353
                                              =======     =======

Summary of Channel Sales

The Company generates sales through four distribution channels: retail, direct, healthcare and third party. The retail channel sells to furniture, specialty and department stores globally. The direct channel sells directly to consumers. The healthcare channel sells to hospitals, nursing homes, healthcare professionals and medical retailers. The third party channel sells to distributors in countries where Tempur-Pedic International does not operate its own distribution company.

The following table highlights net sales information, by channel and by segment, for the second quarter of 2009 compared to 2008:

                     (In thousands)
                     CONSOLIDATED           DOMESTIC           INTERNATIONAL
                     ------------           --------           -------------
                  Three Months Ended   Three Months Ended   Three Months Ended
                       June 30,             June 30,             June 30,
                       --------             --------             --------
                    2009      2008       2009      2008       2009      2008
                    ----      ----       ----      ----       ----      ----
    Retail      $155,575  $199,323   $105,576  $130,069     $49,999   $69,254
    Direct        10,785    13,527      9,428    11,328       1,357     2,199
    Healthcare     8,261    12,556      2,686     4,501       5,575     8,055
    Third Party   10,555    13,255      3,054     2,603       7,501    10,652
                  ------    ------      -----     -----       -----    ------
    Total       $185,176  $238,661   $120,744  $148,501     $64,432   $90,160
                ========  ========   ========  ========     =======   =======



    Summary of Product Sales
    A summary of net sales by product is reported below:

    (In thousands)
                     CONSOLIDATED           DOMESTIC           INTERNATIONAL
                     ------------           --------           -------------
                  Three Months Ended   Three Months Ended   Three Months Ended
                       June 30,             June 30,             June 30,
                       --------             --------             --------
                    2009      2008       2009      2008       2009      2008
                    ----      ----       ----      ----       ----      ----
    Mattresses  $124,344  $163,634    $86,300  $108,369     $38,044   $55,265
    Pillows       24,006    28,877     11,029    12,583      12,977    16,294
    Other         36,826    46,150     23,415    27,549      13,411    18,601
                  ------    ------     ------    ------      ------    ------
    Total       $185,176  $238,661   $120,744  $148,501     $64,432   $90,160
                ========  ========   ========  ========     =======   =======

                  TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
                 EBITDA to Net Income and Funded debt to Total debt
                                   Non-GAAP Measures
                                    (In thousands)

The Company provides information regarding EBITDA and Funded debt which are not recognized terms under GAAP (Generally Accepted Accounting Principles) and do not purport to be alternatives to Net income as a measure of operating performance or Total debt. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies. A reconciliation of EBITDA to the Company's Net income and reconciliation of Funded debt to Total debt are provided below. Management believes that the use of EBITDA and Funded debt provides investors with useful information with respect to the terms of the Company's credit facility.

Reconciliation of EBITDA to Net income

The following table sets forth the reconciliation of the Company's reported Net income to the calculation of EBITDA for each of the three months ended September 30, 2008, December 31, 2008, March 31, 2009 and June 30, 2009, as well as the twelve months ended June 30, 2009:

                                    Three Months                Twelve Months
                                     Ended                        Ended
                 -------------------------------------------  --------------
                 September  December 31,  March 31,  June 30,
                 30, 2008       2008        2009      2009    June 30, 2009
                 -------------------------------------------  --------------
    GAAP Net
     income       $24,071      $1,055     $13,338   $16,857      $55,321
    Plus:
      Interest
       expense      6,294       5,493       4,571     4,477       20,835
      Income taxes 12,622      18,449       8,320     8,098       47,489
      Depreciation
       & amorti-
       zation      10,222       9,849       9,630     9,977       39,678
                  -------     -------     -------   -------     --------

    EBITDA        $53,209     $34,846     $35,859   $39,409     $163,323
                  =======     =======     =======   =======     ========



    Reconciliation of Funded debt to Total debt

    The following table sets forth the reconciliation of the Company's
    reported Total debt to the calculation of Funded debt as of June 30, 2009:



                                                   As of
                                              June 30, 2009
                                              -------------

    GAAP basis Total debt                         $369,000
    Plus:
       Letters of credit outstanding                 4,995
                                                     -----
    Funded debt                                   $373,995
                                                  ========



    Calculation of Funded debt to EBITDA

                                                   As of
                                              June 30, 2009
                                              -------------


    Funded debt                                   $373,995
    EBITDA                                         163,323
                                                   -------
                                                2.29 times
                                                ==========

SOURCE Tempur-Pedic International Inc.

http://www.tempurpedic.com

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