October 15, 2009

Tempur-Pedic Reports Third Quarter Earnings


-- Reports EPS of $0.34
-- Gross Profit Margin Increases 590 Basis Points to 47.6%
-- Year-To-Date Debt Reduction Exceeds $100 Million
-- Company Raises Financial Guidance for 2009

LEXINGTON, Ky., Oct 15, 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 third quarter ended September 30, 2009. In addition, the Company increased full year 2009 financial guidance.

THIRD QUARTER FINANCIAL SUMMARY

    --  Earnings per share (EPS) were $0.34 per diluted share in the third
        quarter of 2009 as compared to $0.32 per diluted share in the third
        quarter of 2008. The Company reported net income of $25.7 million for
        the third quarter of 2009 as compared to net income of $24.1 million in
        the third quarter of 2008.

    --  Net sales declined 11% to $224.1 million in the third quarter of 2009
        from $252.8 million in the third quarter of 2008. On a constant currency
        basis, net sales declined 10%. Net sales in the domestic segment
        declined 12%, while international segment net sales declined 10%. On a
        constant currency basis, international segment net sales declined 7%.

    --  Mattress sales declined 14% globally. Mattress sales declined 15% in the
        domestic segment and 13% in the international segment. On a constant
        currency basis, international mattress sales declined 9%. Pillow sales
        declined 10% globally. Pillow sales declined 9% domestically and 10%
        internationally. On a constant currency basis, international pillow
        sales declined 9%.

    --  Gross profit margin was 47.6% as compared to 41.7% in the third quarter
        of 2008. The gross profit margin increased as a result of improved
        efficiencies in manufacturing, lower commodity costs, and improved
        pricing, partially offset by fixed cost de-leverage related to lower
        production volumes.

    --  Operating profit margin was 19.0% as compared to 17.0% in the third
        quarter of 2008.

    --  Reflecting the Company's continued focus on generating cash, the Company
        generated $55.0 million of operating cash flow in the third quarter of
        2009.

    --  During the quarter, the Company reduced Total debt by $54.0 million to
        $315.0 million. As of September 30, 2009, the Company's ratio of Funded
        debt to EBITDA was 1.96 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, "Our 2009 strategic initiatives continued to generate improved results during the third quarter. While the macro environment remains challenging, our sales have grown and our margins have improved. Our results continue to demonstrate the Company's strong cash flow. Through the first nine months, we have reduced debt by over $100 million. Our recent product introductions and our new advertising campaign combined with continued productivity improvements will allow us to build on this performance as we move into 2010."

2009 Financial Guidance

Given the Company's improving performance through the first three quarters of 2009 and its continued positive outlook for the year, the Company is increasing 2009 full year financial guidance. The Company expects EPS to range from $1.00 to $1.05 per diluted share. The Company expects net sales to range from $790 million to $805 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, October 15, 2009 at 5:00 p.m. Eastern Time. The dial-in number for the conference call is 877-857-6147. 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 webcast replay will be available for 30 days on the Company's website.

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 expectations on building on 2009 performance in 2010 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 80 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                  Nine Months
                           Ended                         Ended
                        September 30,                 September 30,
                        ------------                  ------------
                     2009        2008    Chg %     2009        2008   Chg %
                     ----        ----    -----     ----        ----   -----
    Net sales      $224,082    $252,814   (11%) $586,362    $738,697   (21%)
    Cost of sales   117,373     147,323          311,461     419,109
                    -------     -------          -------     -------

    Gross profit    106,709     105,491     1%   274,901     319,588   (14%)

    Selling and
     marketing
     expenses        39,272      39,956          108,335     137,906
    General,
     administrative
     and other
     expenses        24,761      22,644           68,847      73,139
                     ------      ------           ------      ------

    Operating
     income          42,676      42,891    (1%)   97,719     108,543   (10%)

    Other expense,
     net:
      Interest
       expense, net  (4,311)     (6,294)         (13,359)    (19,630)
      Other
       (expense)
       income, net     (214)         96              404        (995)
                        ---          --              ---        ----
        Total other
         expense     (4,525)     (6,198)         (12,955)    (20,625)

    Income before
     income taxes    38,151      36,693     4%    84,764      87,918    (4%)
    Income tax
     provision       12,467      12,622           28,885      30,105
                     ------      ------           ------      ------
        Net income  $25,684     $24,071     7%   $55,879     $57,813    (3%)
                    =======     =======          =======     =======

    Earnings per
     common share:
      Basic           $0.34       $0.32            $0.75       $0.77
                      =====       =====            =====       =====
      Diluted         $0.34       $0.32            $0.74       $0.77
                      =====       =====            =====       =====
    Weighted
     average
     common shares
     outstanding:
      Basic          74,938      74,815           74,902      74,704
                     ======      ======           ======      ======
      Diluted        76,166      74,992           75,396      74,944
                     ======      ======           ======      ======



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

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

    Current Assets:
         Cash and cash
          equivalents                  $20,003            $15,385
         Accounts receivable, net      105,397             99,811
         Inventories                    48,456             60,497
         Prepaid expenses and
          other current assets          11,456              9,233
         Deferred income taxes          19,839             11,888
                                        ------             ------
    Total Current Assets               205,151            196,814

         Property, plant and
          equipment, net               175,817            185,843
         Goodwill                      193,456            192,569
         Other intangible assets, net   65,318             66,823
         Other non-current assets        2,919              4,482
                                         -----              -----
    Total Assets                      $642,661           $646,531
                                      ========           ========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities:
         Accounts payable              $46,625            $41,355
         Accrued expenses and
          other current liabilities     87,824             65,316
         Income taxes payable           14,533              7,783
                                        ------              -----
    Total Current Liabilities          148,982            114,454

         Long-term debt                315,000            419,341
         Deferred income taxes          29,142             28,371
         Other non-current
          liabilities                    8,952             11,922
                                         -----             ------
    Total Liabilities                  502,076            574,088

    Total Stockholders' Equity         140,585             72,443
                                       -------             ------

    Total Liabilities and
     Stockholders' Equity             $642,661           $646,531
                                      ========           ========



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

                                                 Nine Months Ended
                                                   September 30,
                                                   -------------
                                                2009          2008
                                                ----          ----
    CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                             $55,879       $57,813
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
              Depreciation and amortization   23,526        24,847
              Amortization of stock-based
               compensation                    6,448         6,101
              Amortization of deferred
               financing costs                   518           888
              Bad debt expense                 4,659         5,859
              Deferred income taxes           (8,006)       (1,634)
              Foreign currency adjustments        53            74
              (Gain) Loss on sale of
               equipment and other               (19)          679
              Changes in operating assets
               and liabilities                37,345        74,287
                                              ------        ------
    Net cash provided by operating
     activities                              120,403       168,914

    CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of property, plant and
       equipment                              (8,961)       (7,844)
      Acquisition of business,
       net of cash acquired                        -        (1,529)
      Other                                      (87)         (428)
                                                 ---          ----
    Net cash used by investing
     activities                               (9,048)       (9,801)

    CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from long-term revolving
       credit facility                        85,797        65,429
      Repayments of long-term revolving
       credit facility                      (189,036)      (89,691)
      Repayments of long-term debt                 -        (1,359)
      Repayment of Series A Industrial
       Revenue Bonds                               -       (57,785)
      Proceeds from issuance of common stock     129           695
      Excess tax benefit from stock based
       compensation                                -           301
      Dividend paid to stockholders                -       (17,933)
      Other                                        -           (14)
                                                 ---           ---
    Net cash used by financing activities   (103,110)     (100,357)

    NET EFFECT OF EXCHANGE RATE CHANGES
     ON CASH                                  (3,627)       (4,394)
                                              ------        ------

    Increase in cash and cash equivalents      4,618        54,362

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

    CASH AND CASH EQUIVALENTS,
     end of period                           $20,003       $87,677
                                             =======       =======


    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 third quarter of 2009 compared to 2008:


    (In thousands)
                    CONSOLIDATED            DOMESTIC          INTERNATIONAL
                    ------------            --------          -------------
                 Three Months Ended    Three Months Ended  Three Months Ended
                   September 30,          September 30,       September 30,
                   -------------          -------------       -------------
                  2009        2008      2009        2008     2009       2008
                  ----        ----      ----        ----     ----       ----
    Retail      $191,012   $216,226   $129,883   $147,992  $61,129    $68,234
    Direct        12,245     11,230     10,600      9,169    1,645      2,061
    Healthcare     8,942     11,636      2,804      3,727    6,138      7,909
    Third Party   11,883     13,722      2,990      5,000    8,893      8,722
                  ------     ------      -----      -----    -----      -----
    Total       $224,082   $252,814   $146,277   $165,888  $77,805    $86,926
                ========   ========   ========   ========  =======    =======


    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
                   September 30,          September 30,       September 30,
                   -------------          -------------       -------------
                 2009        2008      2009        2008     2009       2008
                 ----        ----      ----        ----     ----       ----
    Mattresses  $149,810   $174,869   $103,122   $121,356  $46,688    $53,513
    Pillows       28,386     31,414     13,216     14,476   15,170     16,938
    Other         45,886     46,531     29,939     30,056   15,947     16,475
                  ------     ------     ------     ------   ------     ------
    Total       $224,082   $252,814   $146,277   $165,888  $77,805    $86,926
                ========   ========   ========   ========  =======    =======


                  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 December 31, 2008, March 31, 2009, June 30, 2009 and
    September 30, 2009 as well as the twelve months ended September 30, 2009:


                                                               Twelve Months
                                Three Months Ended                 Ended
                                ------------------             -------------
                  December 31, March 31, June 30, September 30, September 30,
                      2008      2009       2009      2009           2009
                      ----      ----       ----      ----           ----

    GAAP Net income  $1,055    $13,338   $16,857    $25,684        $56,934
    Plus:
      Interest
       expense        5,493      4,571     4,477      4,311         18,852
      Income taxes   18,449      8,320     8,098     12,467         47,334
      Depreciation &
       amortization   9,849      9,630     9,977     10,367         39,823
                      -----      -----     -----     ------         ------

    EBITDA          $34,846    $35,859   $39,409    $52,829       $162,943
                    =======    =======   =======    =======       ========



    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 September
    30, 2009:

                                              As of
                                       September 30, 2009
                                       ------------------
           GAAP basis Total debt               $315,000
           Plus:
             Letters of credit outstanding        3,748
                                                  -----
           Funded debt                         $318,748
                                               ========



    Calculation of Funded debt to EBITDA

                                              As of
                                       September 30, 2009
                                       ------------------
           Funded debt                         $318,748
           EBITDA                               162,943
                                                -------
                                             1.96 times
                                             ==========

SOURCE Tempur-Pedic International Inc.

http://www.tempurpedic.com

Copyright (C) 2009 PR Newswire. All rights reserved


Close window | Back to top

Copyright 2017 Tempur Sealy International, Inc.