Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (March 2018)
34 slides from Somnigroup International's investor presentation, Mar 5, 2018
Slide 1: Tempur Sealy International, Inc. (TPX) Investor Presentation
© 2018 Tempur Sealy International, Inc. “Success is strengthening our Iconic Brands while driving higher ROIC through focused execution” Tempur Sealy International, Inc. (TPX) 1
Slide 2: Forward-Looking Statements and Non-GAAP Information
© 2018 Tempur Sealy International, Inc. 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
Slide 3: Delivering Shareholder Value
© 2018 Tempur Sealy International, Inc. • Develop the most innovative bedding products in all the markets we serve • Invest significant marketing dollars to promote our worldwide brands • Optimize worldwide distribution to be where consumers want to shop • Drive increases in EBITDA(1)(7) 3 Deliverin
Slide 4: Growing Global Mattress Industry
© 2018 Tempur Sealy International, Inc. Growing Global Mattress Industry • US mattress sales grew at a 7% CAGR and Non-US mattress sales grew at a 4% CAGR since 2009, driven by consumer shift to higher priced mattresses and population growth • Tempur Sealy is at the center of global trend toward hig
Slide 5: Tempur Sealy Brands and Products
TEMPUR#SEALY BRANDS AND PRODUCTS A Oe Soaly NG a hosts nl TEMPUR?P Re
Slide 6: Tempur Sealy Has Well Established Global Brands
© 2018 Tempur Sealy International, Inc. Tempur Sealy Has Well Established Global Brands • Brands are complementary and fully cover the market • Tempur-Pedic is the premium market leader 6
Slide 7: Complementary Brands
© 2018 Tempur Sealy International, Inc.7 Complementary Brands Percentage of Revenue(4) Tempur-Pedic Nothing precisely adapts, supports and aligns like Tempur-Pedic for life- changing sleep Stearns & Foster Finest beds made with exceptional materials and unparalleled craftsmanship 50% 20% 30% Sealy F
Slide 8: Complete Portfolio of Products
© 2018 Tempur Sealy International, Inc. Complete Portfolio of Products TEMPUR BREEZE® TEMPUR ADAPT™ SEALY HYBRID® STEARNS & FOSTER® STEARNS & FOSTER® SEALY RESPONSE® ADJUSTABLE BASES PILLOWS SEALY CONFORM® COCOON BY SEALY (BED IN A BOX) TEMPUR MATERIAL HYBRID INNERSPRING MEMORY FOAM 8 OTHER SPECIALT
Slide 9: Tempur-Pedic 2018 Product Offering
© 2018 Tempur Sealy International, Inc.9 The most integrated product offering in the brand’s history… …to improve SKU productivity and increase unit market share TEMPUR-PEDIC 2018
Slide 10: © 2018 Tempur Sealy International, Inc.10
© 2018 Tempur Sealy International, Inc.10
Slide 11: Sealy Hybrid 2018
© 2018 Tempur Sealy International, Inc.11 SEALY HYBRID 2018 Leveraging the Best of Both Worlds. Sealy’s coolest hybrid utilizing the latest in Posturepedic Technology.
Slide 12: Tempur-Adapt Pillows and New Adjustable Bases
© 2018 Tempur Sealy International, Inc.12 TEMPUR-Adapt™ Pillows • Pillows with Premium Knit Covers with New Cooling Technology • Streamlined, upgraded range of Adjustable Bases Supporting Tempur-Pedic, Stearns & Foster, and Sealy Bedding System New Adjustable Bases and Pillows: Tempur Sealy Adjustab
Slide 13: Global Manufacturing Foot Print
© 2018 Tempur Sealy International, Inc. 23 North American Facilities 35 International Facilities Wholly owned and Joint Venture Joint Venture Licensee 13 Global Manufacturing Foot Print Tempur-Pedic Facility
Slide 14: Flexible Operating Model with a Variable Cost Structure
© 2018 Tempur Sealy International, Inc. Fixed ~15% Variable ~85% COST OF GOODS SOLD Fixed ~45% Variable ~55% OPERATING EXPENSES Flexible Operating Model with a Variable Cost Structure(4) • Tempur Sealy’s total cost structure is highly variable; approximately 75% in total • Tempur Sealy cost structur
Slide 15: Global Manufacturing Foot Print
© 2018 Tempur Sealy International, Inc. Global Manufacturing Foot Print • North American and International operating models support demand • Driving for operational improvements on key metrics like product quality and on-time delivery • Record Adjusted Gross Margin despite significant volume delever
Slide 16: Latest Results
LATEST RESULTS 16
Slide 17: Fourth Quarter Highlights
© 2018 Tempur Sealy International, Inc. Fourth Quarter Highlights(5) • Tempur-Pedic Sales In North America Increased 19% Excluding Mattress Firm • Direct Sales in North America Increased 56% • International Sales Increased 10% • Adjusted gross margin expanded 100 basis points versus prior year THREE
Slide 18: Full Year 2017 Highlights
© 2018 Tempur Sealy International, Inc. Full Year 2017 Highlights • Full Year Financial Results at High End of Guidance Range • North American Sales Increased 9% excluding Mattress Firm TWELVE MONTHS ENDED DECEMBER 31 18 2017 2016 %Change %Change Constant Currency(1) Net Sales $2,754.4 $3,128.9 -12.
Slide 19: North America Direct Channel
© 2018 Tempur Sealy International, Inc. E-commerce & Call Center Worldwide Direct Business Company-Owned Stores 19 $ in millions NORTH AMERICA DIRECT CHANNEL North America Direct Channel grew 56% in the fourth quarter 2017 Direct Wholesale Direct Wholesale NORTH AMERICAN SALES CHANNEL INTERNATIONAL
Slide 20: US Company Owned Stores
© 2018 Tempur Sealy International, Inc.20 US Company Owned Stores • 24 Stores Currently Open • Average Sales per Store in 2017 of Approximately $2.2M • New Stores have a payback of approximately 6 to 9 months(4)
Slide 21: Leverage and Debt Structure
© 2017 Tempur Sealy International, Inc. 2.98x 3.60x 3.91x 3.50x 4Q 15 4Q16 4Q17 Target LEVERAGE(6) Debt Structure • We expect to pay down debt to enter a normalized range for leverage • Then consider share repurchase program / acquisition • Leverage ratio target: 3.5x with a range of 3.0x to 4.0x •
Slide 22: Near Term Outlook
TEMPUR#SEALY NEAR TERM OUTLOOK A | Seas Sealy ARNS @ Fosteal TEMPUR-PE
Slide 23: Growing Revenues in North America
© 2018 Tempur Sealy International, Inc. Growing Revenues in North America • Increased velocity of our products in our current customers • Increased balance of share with current customers • Increased presence of new retailers in markets that are currently underpenetrated • Capture fair share of dire
Slide 24: 2018 Targets and Near Term Priorities
© 2018 Tempur Sealy International, Inc. 2018 Targets and Near Term Priorities 2018 Financial Targets (8) and Assumptions Adjusted EBITDA(1)(7) $450 to $500 M Capital Expenditures $65 to $75 M Depreciation & Amortization $110 to $120 M Interest Expense $90 to $95 M U.S. Federal Tax Rate Range 26% to
Slide 25: Thank you for your interest in Tempur Sealy International
© 2018 Tempur Sealy International, Inc. Thank you for your interest in Tempur Sealy International For more information please email: investor.relations@tempursealy.com 25
Slide 26: Appendix
26 APPENDIX
Slide 27: Aspirational Plan
Aspirational Plan(10) On August 7, 2017, the Company implemented a new Aspirational Program in the form of performance restricted stock units tied to challenging performance targets. This Aspirational Program builds on the challenging goals and the structure established in our original Aspirationa
Slide 28: Forward-Looking Statements
Forward-Looking Statements This investor presentation contains "forward-looking statements," within the meaning of the federal securities laws, which include information concerning one or more of the Company's plans, objectives, goals, strategies, and other information that is not historical informa
Slide 29: Footnotes
Footnotes 1. This is a non-GAAP financial measure. Please refer to “Use of Non-GAAP Financial Measures and Constant Currency Information”. 2. According to 2016 Mattress Industry Report of Sales & Trends provided by the International Sleep Products Association (“ISPA”). 3. CSIL World Mattress Report,
Slide 30: Use of Non-GAAP Financial Measures and Constant Currency Information
Use of Non-GAAP Financial Measures and Constant Currency Information In this investor presentation and certain of its press releases and SEC filings, the Company provides information regarding adjusted net income, adjusted EPS, EBITDA, adjusted EBITDA, and consolidated funded debt less qualified cas
Slide 31: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 31 (in millions) December 31, 2017 December 31, 2016 December 31, 2017 GAAP Net income 48.4$ 51.9$ 151.4$ Interest expense, net 31.8 26.6 108.0 Income taxes (0.3) 26.6 47.7 Depreciation and amortization 25.4 19.9 94.6 EBITDA 105.3 125.0 401.7 Adjustments Customer termi
Slide 32: Leverage Reconciliation
Leverage Reconciliation 32 (in millions, except ratio) 4Q 15 4Q16 4Q17 Total debt(1) 1,479.6$ 1,901.0$ 1,762.5$ Plus: Letters of credit outstanding 19.8 23.0 23.1 Consolidated funded debt 1,499.4 1,924.0 1,785.6 Less: Domestic qualified cash(2) 121.8 12.7 18.4 Less: Foreign qualified cash(2) 19.3 31
Slide 33: Adjusted Net Income and Adjusted EPS
Adjusted Net Income and Adjusted EPS 33 (in millions, except per share amounts) December 31, 2017 December 31, 2016 GAAP net income 48.4$ 51.9$ Latin American subsidiary charges (1) 14.0 11.5 Other costs (2) 0.4 - Restructuring costs (3) - 8.3 Stock compensation benefit (4) - (3.8) Tax adjustments (
Slide 34: Adjusted Gross Margin
34 Adjusted Gross Margin Consolidated Margin Consolidated Margin Consolidated Margin Net sales $648.20 $771.10 $770.80 Gross profit 273.3 42.2% 317.5 41.2% 313.5 40.7% Adjustments (1) 3.2 3.7 2.1 Adjusted gross profit 276.5 42.7% 321.2 41.7% 315.6 40.9% (1) For additional information regarding the c
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