Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (September 2016)
28 slides from Somnigroup International's investor presentation, Sep 27, 2016
Slide 1: Tempur Sealy International, Inc. (TPX) September 2016
1 September 2016 “Success is strengthening our Iconic Brands while driving higher ROIC through focused execution” Tempur Sealy International, Inc. (TPX)
Slide 2: World's Largest Bedding Products Company: Investment Merits
2 World’s Largest Bedding Products Company(1) Investment Merits Tempur Sealy is the premium market leader… • Strong brands, complete product portfolio • Distinct near-term opportunities to drive cash flow • Shareholder-focused company • High aspirational goals with new senior leadership putting emph
Slide 3: Bedding Industry Market Opportunity
3 Bedding Industry Market Opportunity
Slide 4: Growing Global Mattress Industry
4 Growing Global Mattress Industry $ in billions US mattress sales growing at a 6% CAGR over last twenty years driven by consumer shift to higher priced mattresses Non-US mattress sales grew 7% CAGR over the last decade, also driven by average price and units Tempur Sealy is at the center of g
Slide 5: US Wholesale Bedding Industry
5 US Wholesale Bedding Industry(5) The US wholesale bedding market has recently consolidated
Slide 6: Tempur Sealy Has Well Established Global Brands
6 Luxury Premium Mid-Price Value Tempur Sealy Has Well Established Global Brands 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 Sealy Posturepedic • P
Slide 7: Complete Portfolio Of Products
7 InnerspringHybrid Stearns & FosterTEMPUR-FlexTEMPUR-Cloud Memory Foam, Gel Visco, Latex Tempur Material Other Specialty Adjustable bases Pillows Complete Portfolio Of Products Sealy Posturepedic Hybrid Online Bed In A Box
Slide 8: New Tempur-Breeze
New Tempur-Breeze eS ] TEMPUR-BREEZE™ Sa a = A Tempur-Pedic” for everyone. 8 TEMPUR*#SEALY
Slide 9: New Stearns & Foster
New Stearns & Foster STEARNS & FOSTER STEARNS & FOSTER 9 TEMPUR+#SEALY
Slide 10: Broad Distribution
10 Broad Distribution (6) Indirect USA Non-USA Total Industry Comments Bedding specialty retail 50% 25% 45% Sector gaining share Furniture retail 25% 45% 30% Sector losing share Department stores 10% 10% 10% Sector losing share Warehouse/club stores 10% < 5% 7% Sector gaining share Other retail / E-
Slide 11: Tempur Sealy's Variable Cost Structure
11 Tempur Sealy’s Variable Cost Structure(7) Tempur Sealy’s total cost structure is highly variable; approximately 75% in total In a recession scenario, Tempur Sealy cost structure can be quickly aligned with sales
Slide 12: Manufacturing Operations
12 Manufacturing Operations Tempur Sealy has differentiated manufacturing to support brand and customer needs
Slide 13: Debt Structure
13 Debt Structure Leverage ratio target: 3.5x Fixed rate debt represent ~60% of total debt; capital structure contains long dated maturities $600M share repurchase program announced; $200M in February, increased by $200M in June and $200M in July(9) $282 million remaining under authorization
Slide 14: Business Update
14 Business Update • On September 27, 2016 the Company issued a press release providing a business update, including revised full year financial guidance • In the third quarter, net sales are below our prior expectations • Our operational initiatives are going well and continuing to drive considerab
Slide 15: We Define Success As
15 We Define Success As “Achieve consistent, profitable growth” “Support our portfolio of brands with compelling marketing and product innovation” “Consistently deliver annual total cost improvements with excellent customer service” “Drive traffic and conversion with effective collaboration” “Accele
Slide 16: Thank you for your interest in Tempur Sealy International
16 Thank you for your interest in Tempur Sealy International Improving the Sleep of More People Every Night, All Around the World For more information please email: investor.relations@tempursealy.com
Slide 17: Appendix
17 Appendix
Slide 18: Forward-Looking Statements
18 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 are not historical inf
Slide 19: World Class Marketing Campaigns
19 World Class Marketing Campaigns
Slide 20: World Class Marketing Campaigns
20 World Class Marketing Campaigns
Slide 21: Financial Overview: Aspirational Plan
21 Financial Overview: Aspirational Plan The Board has established an Aspirational Plan Achievement of the Aspirational Plan would likely create significant stockholder value Aspirational Plan Grants – Performance Restricted Stock Units (PRSUs) Equity awards representing approximately 2% of
Slide 22: Financial Targets
22 Financial Targets (12) 2014 GAAP Net Income $108.9 2015 GAAP Net Income $73.5
Slide 23: Footnotes
23 Footnotes 1. Based on total annual EBITDA/adjusted EBITDA (where applicable) from publicly disclosed competitor financial information. 2. Based on the Company's results for fiscal 2014 or 2015 or Q2 2016 or the first half of 2016, as applicable. For more information please refer to the Annual Rep
Slide 24: Use of Non-GAAP Financial Measures
24 Use of Non-GAAP Financial Measures In this investor presentation and certain of its press releases and SEC filings, the Company provides information regarding earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted net income, adjusted EPS, adjusted EBITDA and consoli
Slide 25: Adjusted EBITDA Reconciliation
25 Adjusted EBITDA Reconciliation (in millions) Adjusted EBITDA 2014 2015 GAAP net income 108.9$ 73.5$ Interest expense 91.9 96.1 Income tax provision 64.9 125.4 Depreciation and amortization 89.7 93.9 EBITDA 355.4$ 388.9$ Adjustments for financial covenant purposes: Integration costs(1) 40.3 28.6 R
Slide 26: Adjusted EBITDA Reconciliation
26 Adjusted EBITDA Reconciliation (in millions) June 30, 2016 June 30, 2015 Net income 21.3$ 21.2$ Interest expense 23.1 20.5 Loss on extinguishment of debt 47.2 - Income taxes 9.2 8.3 Depreciation and amortization 22.9 26.5 EBITDA 123.7 76.5 Adjustments Integration costs (1) 1.0 6.7 2015 Annual Mee
Slide 27: Leverage Reconciliation
Leverage Reconciliation (in millions, except ratio) Total debt" ‘Consolidated funded debt Less: Domestic qualified cash 5 a Consoldiated funded debt less qualified cash Adjusted EBITDA! $ 3888 $ 4163 $ 503.7 Leverage 43x 3.8 3.2% notes ‘cipmmnened 2014 2015 2016 GAAP net income S 285 1835 898 Intere
Slide 28: Adjusted Net Income and EPS Reconciliation
28 (in millions, except per share amounts) June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 GAAP net income 21.3 21.2 60.9 44.6 Loss on extinguishment of debt (1) 47.2 - 47.2 - Interest expense (2) 2.1 - 2.1 - Integration costs (3) 1.0 6.7 2.0 18.4 Executive management transition and retentio
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