Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (November 2020)
37 slides from Somnigroup International's investor presentation, Nov 9, 2020
Slide 1: Tempur Sealy International, Inc. (TPX)
Tempur Sealy International, Inc. (TPX) “Our growth reflects strong industry demand, our worldwide leadership position, and the success of our omni- channel distribution strategy” Pictured above: Tempur-Pedic flagship store in Manhattan 1 © 2020 Tempur Sealy International, Inc.
Slide 2: Purpose and Background
PURPOSE To Improve the Sleep of More People, Every Night, All Around the World BACKGROUND Tempur Sealy is the world’s largest bedding Net Sales Net Sales manufacturer. We are a market-leading, Three Months Ended Twelve Months Ended vertically integrated global company that September 30, 2020 Decembe
Slide 3: Long-term initiatives and competitive advantages
Long-term initiatives: o Develop the highest quality bedding products in all the markets we serve o Promote our worldwide brands with compelling marketing o Optimize our powerful omni-distribution platform to be where consumers want to shop o Drive increases in EBITDA(1) o Committed to ESG Competiti
Slide 4: Tempur Sealy at a Glance
Tempur Sealy at a Glance o Annual unit sales of over 7.6 million o $300+ million global marketing budget o 65 manufacturing facilities* o 16 million sq. feet of manufacturing and distribution operations* o Servicing 100 countries* o 5,400+ retail partners selling though 25,000+ doors o 400+ company-
Slide 5: Portfolio of Global Brands
Portfolio of Global Brands Tempur-Pedic – Dominates worldwide premium bedding market • Tempur-Pedic uniquely adapts, supports and aligns to you to deliver truly life-changing sleep $1,999-$7,499 Stearns & Foster - Niche, high-end targeted brand • The world’s finest beds made with exceptional materia
Slide 6: Dominant Manufacturing Footprint
Dominant Manufacturing Footprint 28 North American Facilities 37 International Facilities Wholly owned Tempur-Pedic Facility Joint Venture Licensee 6 © 2020 Tempur Sealy International, Inc.
Slide 7: Successful International Joint Ventures
Successful International Joint Ventures Developing markets for Sealy® branded products ASIA • Founded in 2000 • Compound annual growth rate of 36% • Operates in 21 countries and territories • Top 3 international branded bedding manufacturer in China • Full time employees : 1,100+ UNITED KINGDOM • Ac
Slide 8: Innovative Product
Innovative Product TEMPUR-ERGO® SMART BASES Powered by With AUTOMATIC response to snoring 100% PASSIVE SENSORS •Heart Rate •Breathing Rate •Snore Detection 8 © 2020 Tempur Sealy International, Inc.
Slide 9: Powerful Omni-Channel
POWERFUL OMNI-CHANNEL 9 © 2020 Tempur Sealy International, Inc. © 2020 Tempur Sealy International, Inc.
Slide 10: Omni-Channel Consumer
Omni-Channel Consumer We have an industry-leading understanding of our consumers, generating about 4 trillion consumer data points to date. In-store 4 TRILLION Social Website CONSUMER Media DATA POINTS Advertising 10 © 2020 Tempur Sealy International, Inc.
Slide 11: Powerful Omni-Distribution Platform
Powerful Omni-Distribution Platform ➢ Largest part of worldwide distribution Wholesale ➢ Recent significant distribution gains ➢ Significant worldwide sales growth E-Commerce ➢ Highly profitable and expanding rapidly Company Owned ➢ Luxury Tempur-Pedic and multi-branded showroom experiences Stores ➢
Slide 12: Success in E-Commerce
Success in E-Commerce E-commerce as a percent of total omni-channel global sales* Current Historical 2020 2015 2% 20% 80% 98% *Based on Tempur Sealy Q3 YTD third quarter e-commerce sales and estimated third-party e-commerce sales. Total e-commerce sales are comprised of online and call center sales.
Slide 13: Winning Online: Wholesale and Direct
Winning Online: Wholesale and Direct CHANNEL TempurPedic.com Most profitable online bedding company in the world DIRECT TO High growth and high margins CONSUMER Compressed Bedding Products Traditional Bedding Products TEMPUR-Cloud® Tempur-Pedic® OMNI- COCOON by Sealy™ Stearns & Foster® CHANNEL Sealy
Slide 14: Tempur Sealy Compressed Offerings
Tempur Sealy Compressed Offerings Our compressed bedding products are a convenient option for consumers shopping online through our direct business or our third-party retail partners. Sealy-to-go COCOON by Sealy™ TEMPUR-Cloud® Value Mid-Level Premium Compressed bedding sales grew over 200% in Q3 202
Slide 15: U.S. Company-Owned Store Strategy
U.S. Company-Owned Store Strategy Tempur-Pedic® Retail Stores: Sleep Outfitters®: High-End Targeted Opportunity Broad-Based Opportunity Strategic Representation • Approximately 70 high-end retail destinations, with complementary co-tenants, in high demographic areas • Regional bedding retailer that
Slide 16: Q3 Results and 2020 Outlook
Q3 RESULTS AND 2020 OUTLOOK 16 © 2020© 2020 Tempur Tempur Sealy Sealy International, International, Inc. Inc.
Slide 17: Third Quarter 2020 Highlights
Third Quarter 2020 Highlights Three Months Ended September 30th ($ in millions, except for % Reported % Change Constant 2020 2019 values) (unaudited) % Change Currency(1) Net Sales $1,132.3 $821.0 37.9% 37.7% Net Income 121.4 73.3 65.6% 65.5% (1) EBITDA 279.9 150.7 85.7% 85.5% Net cash provided by o
Slide 18: Product Sales
Product Sales Three Months Ended Bedding Other September 30, 2020 Net Sales (unaudited) Products Products Consolidated $ 1,036.6M $ 95.7M $ 1,132.3M YoY Growth 37.8% 39.1% 37.9% North America $ 913.0M $ 63.5M $ 976.5M YoY Growth 42.5% 53.4% 43.2% International $ 123.6M $ 32.2M $ 155.8M YoY Growth 10
Slide 19: Direct to Consumer
Direct to Consumer Global Direct Sales • Distribution network made up of high growth, high margin, Intl NA Web, Call Center, and Company-owned stores $160 • Strong growth within the direct channel, growing 31% in $140 the third quarter of 2020 $120 • Long-term direct target: 25% of Tempur-Pedic net
Slide 20: Balanced Capital Allocation Strategy
Balanced Capital Allocation Strategy • Increased share repurchase authorization and expect to repurchase at least 3% of shares outstanding annually using operating cash flow • Intend to initiate a quarterly cash dividend in Q1 2021 with a target annual payout of 15% of net income • Maintain capacity
Slide 21: Strong Balance Sheet & Cash Flow
Strong Balance Sheet & Cash Flow Leverage(1) Q3 YTD Free Cash Flow(1) 4.00x $500 $400 3.00x $300 $200 2.00x $100 1.00x $0 4Q19 1Q20 2Q20 3Q20 2016 2017 2018 2019 2020 Q3 YTD Free Cash Flow(1) / Q3 YTD Adjusted EBITDA (1) 100% 80% 60% 40% 20% 0% 2016 2017 2018 2019 2020 21 © 2020 Tempur Sealy Interna
Slide 22: Fourth Quarter and Full Year Outlook
o Experienced strong demand for bedding in third quarter which has continued into the fourth quarter to-date Fourth Quarter and o U.S. Sealy and Sherwood supply chain is constrained and does not fully meet demand Full Year Outlook o Expect to be constrained through the next few quarters o Internal t
Slide 23: Environmental, Social and Corporate Governance
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE 23 © 2020 Tempur Sealy International, Inc. © 2020 Tempur Sealy International, Inc.
Slide 24: Environmental, Social, and Governance
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE Tempur Sealy is committed to protecting and improving our communities and environment Environmental • Committed to sourcing 100% renewable energy for our U.S. and European manufacturing operations in 2020 and future years • Installing solar panel technology at o
Slide 25: Corporate Social Value Highlights
Corporate Social Value Highlights Tempur Sealy has donated… Raymond James ranked Tempur Sealy in the top quartile for ESG out of all companies they consider - an estimated $100 million in mattresses over a ‘Strong Buy’ the last 10 years, - cash and stock valued at $9.5 million dollars over the last
Slide 26: Thank you for your interest in Tempur Sealy International
Thank you for your interest in Tempur Sealy International For more information please email: investor.relations@tempursealy.com 26 © 2020 Tempur Sealy International, Inc.
Slide 27: Appendix
Appendix 27 © 2020 Tempur Sealy International, Inc. © 2020 Tempur Sealy International, Inc.
Slide 28: Forward-Looking Statements
Forward-Looking Statements This investor presentation contains statements that may be characterized as "forward-looking" within the meaning of the federal securities laws, which includes information concerning one or more of the Company's plans, guidance, objectives, goals, strategies, and other inf
Slide 29: 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, EBITDA, adjusted EBITDA per credit facility, free cash flow, consolidated indebtedness
Slide 30: Debt Structure
Debt Structure o Leverage(1) lowest in Company’s history at 1.9x, slightly below the target range of 2.0-3.0x(4) o Capital structure contains long-dated maturities o Fixed rate debt represents around 2/3 of total debt Mandatory Maturity Profile(4) Term A Loan 2023 Bond 2026 Bond $600 $250 $330 $5 $2
Slide 31: Aspirational Program
Aspirational Program(5) • We have grown trailing 12-month adjusted EBITDA(1) for 7 quarters in a row and achieved trailing 12- month adjusted EBITDA(1) of $694 million this quarter, a 47% increase over prior years. • Our trailing twelve month performance triggered our long-term aspirational program,
Slide 32: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 32 © 2020 Tempur Sealy International, Inc.
Slide 33: TTM Adjusted EBITDA Reconciliation
TTM Adjusted EBITDA Reconciliation 33 © 2020 Tempur Sealy International, Inc.
Slide 34: Adjusted Net Income and Adjusted EPS
Adjusted Net Income and Adjusted EPS 34 © 2020 Tempur Sealy International, Inc.
Slide 35: Leverage Reconciliation
Leverage Reconciliation *For a reconciliation of leverage to total debt, net for reporting periods in the years 2016-2020, please refer to the Company’s SEC filings. 35 © 2020 Tempur Sealy International, Inc.
Slide 36: Free Cash Flow and Free Cash Flow / Adjusted EBITDA Reconciliation
Free Cash Flow and Free Cash Flow / Adjusted EBITDA Reconciliation *For a reconciliation of adjusted EBITDA per credit facility to net income for reporting periods in the years 2016-2020, please refer to the Company’s SEC filings. 36 © 2020 Tempur Sealy International, Inc.
Slide 37: Footnotes
Footnotes 1. Adjusted Net Income, EBITDA, adjusted EBITDA per credit facility, adjusted EPS, leverage free cash flow and constant currency are non-GAAP financial measures. Please refer to the "Use of Non-GAAP Financial Measures and Constant Currency Information" on a previous slide for more informat
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