Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (February 2022)
46 slides from Somnigroup International's investor presentation, Feb 22, 2022
Slide 1: Tempur Sealy International, Inc. (TPX)
© 2022 Tempur Sealy International, Inc. All rights reserved. These past two years have further solidified Tempur Sealy’s position as a market leading, vertically integrated, omni-channel, global company with solid fundamentals in a growing category. We enter 2022 well-positioned to continue to grow
Slide 2: Who We Are
To Improve the Sleep of More People, Every Night, All Around the World Who We Are Tempur Sealy is committed to improving the sleep of more people, every night, all around the world. As a leading designer, manufacturer, distributor and retailer of bedding products worldwide, we know how crucial a goo
Slide 3: TPX at a Glance
Industry • The global bedding industry of ~$120 billion1 has historically experienced consistent growth. • The U.S. market averages mid‐ single digit growth annually, driven by units and dollars.1 • The international market is highly fragmented and about 40% larger than the size of the U.S. market.1
Slide 4: Recent Consumer Spending Trends
• Since 2008, consumers have been consistently under‐ investing their discretionary income in home & furnishings. • In the last year, consumers have invested a slightly larger portion of their discretionary income in the category, although their spending as a percent of share of wallet has still not
Slide 5: Competitive Advantages
• Worldwide omni‐channel presence • Iconic brand and product portfolio • World‐class manufacturing capabilities • Industry‐leading balance sheet and free cash flow2 Adjusted earnings per share2 has grown at a CAGR of 40% over the last 5 years. Competitive Advantages $0.82 $0.74 $1.00 $1.94 $3.19 $‐
Slide 6: Brands and Capabilities
Product Brands Mattresses / Pillows / Accessories DTC Retailer Brands Online / Offline Manufacturing Branded / OEM Brands and Capabilities 6
Slide 7: Building Blocks to Future Growth
Increase total addressable market internationally through new product launches in Europe & APAC. Expand into OEM market to drive further sales growth. Grow wholesale through existing and new retail relationships. Invest in innovation to meet customer demand. Execute on capital allocation strategy. E
Slide 8: Worldwide Omni-Channel
TEMPUR#SEALY Worldwide Omni-Channel
Slide 9: Powerful Omni-Distribution Platform
• Significant worldwide sales growth • Highly profitable and expanding rapidly Ecommerce • Luxury Tempur‐Pedic®, Dreams, and multi‐branded showroom experiences • Operate over 650 stores worldwide with sales growth opportunity • Highly profitable Company- Owned Stores • Third‐party retailers are our
Slide 10: Wholesale
Third-Party Retailers • Dominant worldwide distribution and broadly diversified • Over 5,400 retail partners around the world selling through over 25,000 doors and ecommerce platforms • Global sales force of over 500 people supporting our portfolio of brands U.S. OEM Opportunity • OEM is about 20% o
Slide 11: Direct to Consumer
• High growth and high margin sales from web, call center, and company‐owned stores • Strong growth within the direct channel, growing 83% in 2021 Direct to Consumer 11 $‐ $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Global Direct Sales Intl NA
Slide 12: Company-Owned Store Strategy
TEMPUR® EuropeSealy® Gallery Asia SOVA® SwedenSleep Outfitters® U.S. Tempur‐Pedic® U.S. Tempur‐Pedic® MexicoDreams UK We see a potential opportunity to organically increase our store count through opening an average of 60 new stores per year over the next several years. Company-Owned Store Strategy
Slide 13: Brands & Products
TEMPUR*#SEALY Brands & Products 13
Slide 14: North America Markets
• The bedding market has historically experienced consistent growth. While our share has grown significantly over the last 5 years, the total market share of the largest three domestic bedding manufacturers has not materially changed.1 • Branded bedding represents the majority of products sold, espe
Slide 15: International Markets
• Highly fragmented with broad geographic diversity across Europe and Asia • Acquired Dreams, the leading bedding retailer in the UK in 2021 • Developing new TEMPUR® line of mattresses to expand addressable market in 2022 • Tempur Sealy customizes go‐to market approach by country • Europe: success w
Slide 16: Rapidly Growing International Joint Ventures
Rapidly Growing International Joint Ventures • Founded in 2000 • Operates in 21 countries and territories • Top 3 internationally branded bedding manufacturer in China • Full-time employees: 1,100+ Asia • Acquired in 2020 • Full-time employees: 250+ United Kingdom $340 MILLION OF JOINT VENTURE SALES
Slide 17: Expanding Global Licensing Sales
Expanding Global Licensing Sales Sealy Manufacturing Licensees: • Our 27 licensee manufacturing facilities generate high return on investment. • They represent a low-risk opportunity to introduce our brands and products in regions in which we do not currently operate, primarily across EMEA, APAC, an
Slide 18: Portfolio of Global Brands
Tempur-Pedic®: leading worldwide premium bedding industry position • Tempur‐Pedic® uniquely adapts, supports, and aligns to you to deliver truly life‐changing sleep. $2,399‐$7,999 Stearns & Foster®: high-end-targeted brand • The world’s finest beds that are made with exceptional materials, time‐hono
Slide 19: Solution-Driven Innovation for Today's Consumer
Natural Comfort Snoring Support Climate Sleep-Health Metrics Innovative Technologies S O L U T I O N - D R I V E N I N N O V A T I O N F O R T O D A Y ’ S C O N S U M E R 19
Slide 20: International 2022 TEMPUR Launch
• Expect to launch an entirely new product lineup for TEMPUR® in both the Europe and Asia‐Pacific markets beginning in 2022. • The underlying technology of the new lineup builds on the innovation that has already been very well received in North America. • This new lineup will also broaden the price
Slide 21: U.S. Product Launch Cycle
Our innovation cycle allows for the development of meaningful, consumer‐centric products, while also reducing floor conversion costs. Surface‐Guard Technology™ SealyChill™ Featuring Industry- Leading Technologies U.S. Product Launch Cycle POSTUREPEDIC ® PLUS POSTUREPEDIC® ESSENTIALS™ Launched in 202
Slide 22: World-Class Manufacturing Capabilities
World-Class Manufacturing Capabilities 22
Slide 23: World-Class Manufacturing Capabilities
Leading Manufacturing Capabilities • 67 manufacturing facilities • 16 million square feet of manufacturing & distribution operations R&D Innovation • 75,000 square feet of research & development • 4 state‐of‐the art product‐testing locations Wholly owned (30) Joint Venture (8) Licensee (27)Tempur‐Pe
Slide 24: Expanding Manufacturing Capacity
Specialty Foam-Pouring Facilities • Opening a new, state‐of‐the‐art Tempur‐Pedic® and OEM foam‐pouring facility in Indiana by 2023 • Expanding three existing foam facilities in the U.S. by 2023 • Increasing capacity to hold key chemical inputs and expand safety stock of certain products Assembly & W
Slide 25: Recent Performance
TEMPUR*SEALY Recent Performance
Slide 26: Fourth-Quarter and Full Year Performance
23% 77% Direct Wholesale Three Months Ended Year Ended (in millions, except percentages and per common share amounts) December 31, 2021 December 31, 2020 Reported % Change December 31, 2021 December 31, 2020 Reported % Change Net Sales $1,359.6 $1,057.0 28.6% $4,930.8 $3,676.9 34.1% Net Income $175.
Slide 27: 2022 Outlook
• Full‐year adjusted EPS2 between $3.65 and $3.85. This includes the expected benefit from strong year‐over‐ year sales growth of between 15% to 20%. • This includes investments of: • Approximately $50 million in expense related to new product launches • A record $550 million of advertising dollars
Slide 28: Industry-Leading Balance Sheet & Cash Flow
Industry-Leading Balance Sheet & Cash Flow 28
Slide 29: Balanced Capital Allocation Strategy
29 • Long‐term target leverage ratio of 2.0 – 3.0x2 • Continue to invest in the business, including a new domestic foam‐pouring plant to be operational in 2023 • Disciplined approach to shareholder returns includes a quarterly dividend and expected share repurchase of at least 10% of our shares outs
Slide 30: Strong Balance Sheet & Cash Flow
Credit ratings: Fitch: BB+ (August 2021) Moody’s: Ba1 (September 2021) S&P: BB+ (September 2021) $0 $200 $400 $600 $800 2016 2017 2018 2019 2020 2021 Full-Year Free Cash Flow2 $0 $200 $400 $600 $800 $1,000 $1,200 2016 2017 2018 2019 2020 2021 Full-Year Adjusted EBITDA2 Strong Balance Sheet & Cash Fl
Slide 31: Environmental, Social, & Corporate Governance
Environmental, Social, & Corporate Governance 31
Slide 32: Environmental, Social, & Governance
Environmental, Social, & Governance Tempur Sealy is committed to protecting and improving our communities and environment. 32
Slide 33: Environmental and Social Highlights
Environmental • Committed to achieving carbon neutrality for our wholly owned global operations by 2040 • Achieved an 8.4% reduction in greenhouse gas emissions per unit produced at our wholly owned manufacturing and logistics operations in 2020 • Improved the percentage of waste diverted from our N
Slide 34: Ranked Strong Buy with the Best ESG Score
Ranked a “Strong Buy with the Best ESG Score” by Raymond James Raymond James ranked Tempur Sealy in the top quartile for ESG out of all companies they consider a “Strong Buy” Source: Raymond James Strategy for ESG Investing, published February 10, 2020 Tempur Sealy has donated… ~$100M in product ove
Slide 35: 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 35
Slide 36: Appendix
TEMPUR*#SEALY Appendix 36
Slide 37: Forward-Looking Statements
This investor presentation contains statements relating to the Company’s quarterly cash dividend, the Company’s share repurchase targets, the Company’s expectations regarding net sales for 2022, adjusted EBITDA for 2022, and adjusted EPS for 2022 and subsequent periods and the Company’s expectations
Slide 38: Use of Non-GAAP Financial Measures
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, free cash flow, consolidated indebtedness less netted cash, and leverage, which are not recognized terms under U.S.
Slide 39: Full Year Adjusted Net Income and Adjusted EPS
Full Year Adjusted Net Income and Adjusted EPS 39
Slide 40: Full Year Adjusted Net Income and Adjusted EPS
40 Full Year Adjusted Net Income and Adjusted EPS
Slide 41: Q4 Adjusted Net Income and Adjusted EPS
Q4 Adjusted Net Income and Adjusted EPS 41
Slide 42: Full Year Adjusted EBITDA
Full Year Adjusted EBITDA Year Ended (in millions) December 31,2021 December 31, 2020 Net income G 624.5 s 348.8 Interest expense, net 611 770 Overlapping interest expense “"’ 52 -_ Loss on extinguishment of debt”? 23.0 51 Income tax provision 198.3 102.6 Depreciation and amortization 176.6 154.9 As
Slide 43: Full Year Adjusted EBITDA
Full Year Adjusted EBITDA (1) Inthe year ended December 31, 2021, we incurred $5.2 million of overlapping interest expense during the period between the issuance of the 2029 Senior Notes and the redemption of the 2026 Senior Notes. (2) In the year ended December 31, 2021, we recognized $23.0 million
Slide 44: Leverage Reconciliation
*For a reconciliation of leverage to total debt, net for reporting periods in the years 2016‐2021, please refer to the Company’s SEC filings. Leverage Reconciliation 44
Slide 45: Footnotes
© 2022 Tempur Sealy International, Inc. All rights reserved. 1 Management estimates 2 Adjusted net income, EBITDA, adjusted EBITDA, 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 Curr
Slide 46: Thank You
TEMPUR#SEALY Thank You
Tempur Sealy International — Investor Presentation (February 2022) on 6ix