Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Merger or Acquisition (May 2023)
32 slides from Somnigroup International's merger presentation, May 9, 2023
Slide 1: Tempur Sealy International (TPX) to Acquire Mattress Firm
1 + May 9, 2023 Tempur Sealy International (TPX) to Acquire Mattress Firm
Slide 2: Transaction Summary
2 Consideration • Total purchase price of approximately $4.0B comprising: • $2.7B of cash consideration • $1.3B of stock consideration, based on 34.2M shares issued at $37.62 per share as of the closing share price on May 8, 2023 Pro Forma Ownership1 • 83.4% TPX shareholders • 16.6% Mattress Firm sh
Slide 3: TPX Go-Forward Investment Thesis
3 TPX Go-Forward Investment Thesis Leading, vertically-integrated global company with iconic brands and extensive manufacturing and direct-to-consumer capabilities Proven historical growth through organic and inorganic initiatives Proven ability to successfully operate worldwide omni- channel distri
Slide 4: Mattress Firm Overview
MATTRESSFIRM Overview
Slide 5: Mattress Firm Business Highlights
5 Leading Omni-Channel U.S. Retailer 2,300+ brick-and-mortar retail stores integrated with e-commerce and sleep education platforms to enable a seamless consumer purchase journey Exceptional Retail Talent 6,200+ highly-trained retail sales associates facilitate an educational and effective end-to-en
Slide 6: Mattress Firm Overview and Geographic Footprint
6 Geographic footprint4 TX MT CA ID NV AZ OR IL NM CO WY MN SD IA ND UT KS NE WA WI OK MI MO NY PA FL IN AL GA AR LA NC VA TN KY OH MS ME SC MI WV VT NH MA CT NJ MD DE RI DC AK 73 32 205 22 11 22 60 50 6 14 11 12 34 10 100 276 25 7 21 46 240 91 97 27 29 37 44 44 16 72 2 70 92 121 6 23 10 57 8 42 89
Slide 7: Mattress Firm's Diversified Product Offerings
7 Mattress Firm’s Diversified Product Offerings • A leading retailer of Tempur-Pedic®, Sealy®, and Stearns & Foster® branded products • Retails Sleepy’s® private label bedding manufactured by Tempur Sealy • A leading retailer of Beautyrest®, Nectar®, Serta®, Simmons®, Tuft & Needle®, and Purple® bra
Slide 8: Transaction Rationale
8 Transaction Rationale
Slide 9: Accelerates Direct Sales Channel Expansion
9 TPX North America TTM 3/31/23 Sales by Channel Pre-Acquisition Post Acquisition7 Wholesale 87% 35% Direct 13% 65% TPX Consolidated TTM 3/31/23 Sales by Channel Pre-Acquisition Post Acquisition7 Wholesale 77% 35% Direct 23% 65% Accelerates Direct Sales Channel Expansion
Slide 10: Transaction Rationale
10 Transaction Rationale Expands consumer touchpoints to enhance ability to keep pace with evolving consumer preferences Accelerates U.S. omni-channel strategy, enabling a seamless consumer experience Simplifies consumer purchase journey, reducing friction at each touchpoint Aligns new product devel
Slide 11: Expands Consumer Touchpoints
11 Combined consumer touchpoints enhance opportunities to keep pace with evolving consumer preferences, drive brand awareness, and broaden avenues for developing lifetime relationships with consumers 1 Expands Consumer Touchpoints MattressMatcherSleep.com StearnsandFoster.com Tempurpedic.com Mattres
Slide 12: Accelerates Omnichannel Retail Strategy
12 North America Direct Channel Direct channel sales TTM 3/31/23 $491M $4.2B +849% Brick & mortar stores As of 3/31/23 227 2,329 +1,026% Retail sales associates As of 3/31/23 558 6,267 +1,123% Brick- & mortar and e-commerce traffic8 TTM 3/31/23 29M 65M 225% Accelerates Omnichannel Retail Strategy2 A
Slide 13: Simplifies Consumer Purchase Journey
13 • Drives awareness through blended advertising share of voice • Facilitates more targeted marketing efforts • Enhances consumer understanding of bedding innovation • Accelerates continuous feedback loop through sleep tracking and education apps and other platforms to enhance ongoing engagement •
Slide 14: Facilitates Consumer-Centric Innovation
14 Snoring Support Climate Sleep Tracking Natural Comfort • Increased consumer touchpoints drive ability to bring targeted, cutting-edge innovation to market that better aligns to consumer needs • Provides opportunity to invest in, test and refine product nationwide, driving further refinement of ne
Slide 15: Streamlines Operations and Enhances Supply Chain Management
15 Streamlines Operations and Enhances Supply Chain Management $100M of run-rate synergies by Year 43 35% 45% 20% Logistics Product Lifecycle Management Sourcing Expected Run Rate Synergies 5 Enhanced visibility to consumer demand creates opportunities for agile and fortified supply chain management
Slide 16: Drives Adjusted EPS Accretion
16 Consolidated Sales7 $4.9B $4.2B $8.2B Adjusted EBITDA2 $855M $432M $1,287M Capex $298M $106M $404M TTM ended 3/31/23 TTM ended 3/28/23 TTM ended 3/31/23 Drives Adjusted EPS Accretion Adjusted for the impact of run-rate synergies, this acquisition is expected to deliver low double digit adjusted E
Slide 17: Transaction Valuation & Capital Allocation
17 Transaction Valuation & Capital Allocation
Slide 18: Transaction Valuation
18 Pre-Synergies TTM ended 3/28/2023 Post Synergies TTM ended 3/28/2023 Purchase Price $4.0B $4.0B Adjusted EBITDA2 $432M $432M Run-Rate Synergies $0M $100M Pro Forma Adjusted EBITDA2 $432M $532M Multiple 9.3x 7.5x Historical Adjusted EBITDA2 Pricing • Acquisition represents 9.3x multiple pre-synerg
Slide 19: Historical Leverage
19 Historical Leverage • Legacy of flexing our capital allocation strategy to align to market opportunities and macroeconomic conditions • Timeline • 2013 – Tempur-Pedic acquired Sealy • 2015 – Scott Thompson joined TPX as Chairman and CEO • 2016 – Established target leverage range1.00x 2.00x 3.00x
Slide 20: Capital Allocation Focus Areas
20 Capital Allocation Focus Areas Deleveraging supported by increased earnings and free cash flow outlook Continued core investment to drive long-term growth objectives Expect to return to target net leverage range2 per TPX credit agreement of 2.0x-3.0x adjusted EBITDA2 within 12 months post close M
Slide 21: TPX Go-Forward Investment Thesis
21 TPX Go-Forward Investment Thesis Leading, vertically-integrated global company with iconic brands and extensive manufacturing and direct-to-consumer capabilities Proven historical growth through organic and inorganic initiatives Proven ability to successfully operate worldwide omni- channel distr
Slide 22: Appendix
22 Appendix
Slide 23: U.S. Industry Historical Volume Trends
23 U.S. Industry Historical Volume Trends • U.S. produced units declined -24% y/y to 18.7M in 2022 • 2022 saw trough unit demand, with units well below the industry 10-year average of 22.6M • 2022 unit demand is a significant deviation from the U.S. produced mattress unit CAGR of 2.5% between 2011 -
Slide 24: Mattress Firm Historical Financial Performance
24 Mattress Firm Historical Financial Performance (in millions) FY 202010 FY 202111 FY 2022 Average FY 2020-2022 TTM 3/28/23 Ending Storecount 2,419 2,353 2,342 2,329 Net sales $ 3,257 $ 4,393 $ 4,379 $4,010 $4,171 % Growth 9.9% 34.9% (0.3%) (8.9%) % Comparable Growth 13.0% 36.1% (0.2%) (8.2%) Adjus
Slide 25: Mattress Firm Non-GAAP Reconciliations
25 Mattress Firm Non-GAAP Reconciliations Mattress Firm’s fiscal years ended 9/29, 9/28, and 9/27 for FY 2020, FY 2021 and FY 2022, respectively
Slide 26: Mattress Firm Non-GAAP Reconciliations
26 Mattress Firm Non-GAAP Reconciliations Mattress Firm’s fiscal years ended 9/29, 9/28, and 9/27 for FY 2020, FY 2021 and FY 2022, respectively
Slide 27: Tempur Sealy Non-GAAP Reconciliations
27 Tempur Sealy Non-GAAP Reconciliations
Slide 28: Forward-Looking Statements
28 This presentation contains statements that may be characterized as “forward-looking” within the meaning of the federal securities laws. Such statements might include information concerning one or more of the Company’s plans, objectives, goals, strategies, and other information that is not histori
Slide 29: Use of Non-GAAP Financial Information – Tempur Sealy
29 Use of Non-GAAP Financial Information – Tempur Sealy In this investor presentation and certain of its press releases and SEC filings, the Company provides information regarding adjusted EBITDA, adjusted EPS, net debt, and net leverage, which are not recognized terms under U.S. Generally Accepted
Slide 30: Use of Non-GAAP Financial Information – Mattress Firm
30 Use of Non-GAAP Financial Information – Mattress Firm While the presentation of non-GAAP financial measures is not in accordance with, or preferable to, GAAP financial data, Mattress Firm's management, board of directors and major stakeholders, as well as securities analysts and ratings agencies,
Slide 31: Footnotes
31 Footnotes 1) Pro forma ownership is based on shares outstanding at signing. 2) Adjusted EBITDA, adjusted EBITDA margin, adjusted EPS, net debt, and leverage are non-GAAP financial measures. Please refer to the “Use of Non-GAAP Financial Measures Information” on previous slides for more informatio
Slide 32: TEMPUR+SEALY | MATTRESSFIRM
TEMPUR+SEALY | MATTRESSFIRM
Tempur Sealy International — Merger or Acquisition (May 2023) on 6ix