Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (April 2022)
45 slides from Somnigroup International's investor presentation, Apr 28, 2022
Slide 1: Tempur Sealy International, Inc., TPX
© 2022 Tempur Sealy International, Inc. All rights reserved. We are continuing to invest in expanding our manufacturing capabilities, our direct-to-consumer channel both online and in-store, and in an enhanced ERP system, all of which are all designed to drive long term growth and shareholder value.
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: Consumer Spending Trends
Source: Economic Research Division of the Federal Reserve Bank of St. Louis Consumer Spending Trends 4 $154 billion $212 billion $291 billion $378 billion Last 60 years Last 40 years Last 20 years Last 5 years Average Annual Discretionary Income Directed Into Home & Furnishings $323 billion $346 bil
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% between 2016 - 2021 Competitive Advantages 5 $0.82 $0.74 $1.00 $1.94 $3.19 $3.3
Slide 6: Product Brands
Product Brands Mattresses / Pillows / Accessories Product and Retail Brands DTC Retailer Brands Online / Offline 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: Successful Omni-Distribution Platform
• Significant worldwide sales growth • Highly profitable and expanding rapidly • Direct customer relationships Ecommerce • Luxury Tempur‐Pedic®, Dreams, and multi‐branded showroom experiences • Operate over 650 stores worldwide and expanding • Own the end customer and highly profitable Company- Owne
Slide 10: Wholesale
Third-Party Retailers • Win‐win relationships • Broad‐based 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 Oppor
Slide 11: Direct to Consumer
$‐ $50 $100 $150 $200 $250 $300 $350 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Global Direct Sales Intl NA • High growth and high margin sales from web, call center, and company‐owned stores • Strong growth within the direct channel, growing 94% in Q1’22, primarily driven by the acquisition of Dreams
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 2023 • 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, and
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 2023 TEMPUR Launch
• Expect to launch an entirely new product lineup for TEMPUR® in both the Europe and Asia‐Pacific markets beginning in the first quarter of 2023. • 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 a
Slide 21: Industry-Leading Technologies and Product Launch Cycle
Leading research and development process to deliver meaningful innovation that meets consumer needs Surface‐Guard Technology™ SealyChill™ Featuring Industry- Leading Technologies U.S. Product Launch Cycle POSTUREPEDIC ® PLUS POSTUREPEDIC® ESSENTIALS™ Launched in 2021 Launching in 2022 21
Slide 22: Stearns & Foster Opportunity
22 Channel Investments • Expanding Stearns & Foster presence through new e‐commerce platform launched in 2Q’22 Stearns & Foster Opportunity Product Investments • Launching new, innovative Stearns & Foster products in 4Q’22 Marketing Investments • Supporting Stearns & Foster with record advertising i
Slide 23: World-Class Manufacturing Capabilities
World-Class Manufacturing Capabilities 23
Slide 24: World-Class Manufacturing Capabilities
Leading Manufacturing Capabilities • 69 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 25: 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 26: Recent Performance
TEMPUR*SEALY Recent Performance
Slide 27: First Quarter and Trailing Twelve Month Performance
Three Months Ended Trailing Twelve Months Ended (in millions, except percentages and per common share amounts) March 31, 2022 March 31, 2021 % Change March 31, 2022 March 31, 2021 % Change Net Sales $1,239.5 $1,043.8 18.7% $5,126.5 $3,898.3 31.5% Net Income $130.7 $130.5 0.2% $624.7 $419.6 48.9% EBI
Slide 28: 2022 Outlook
Expect full-year adjusted EPS between $3.20 and $3.40. 2022 Other Modeling Assumptions Depreciation & Amortization ~$200M Capital Expenditures $250M–$280M Interest Expense ~$90M U.S. Federal Tax Rate 25% Diluted Share Count 183M shares 2022 Outlook1 28 Our 2022 expectations include investments of: •
Slide 29: Historical Industry Performance
Historical Industry Performance Source: ISPA Reports, includes domestic manufactured units 2001 – 2021, import units 2016‐2021 • Industry unit growth is generally consistent over a cycle, growing low‐ single digits in the average year, growing at a 2% CAGR from 2001‐2021 • Industry is typically resi
Slide 30: Flexible Cost Structure
Flexible Cost Structure1 30 Variable 45% Fixed 55% Operating Expenses Variable 70% Fixed 30% Total Cost Structure Variable 85% Fixed 15% Cost of Goods Sold
Slide 31: Industry-Leading Balance Sheet & Cash Flow
Industry-Leading Balance Sheet & Cash Flow 31
Slide 32: Balanced Capital Allocation Strategy
32 • 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 repurchase of at least 10% of our shares outstandin
Slide 33: Strong Balance Sheet & Cash Flow
Credit ratings: Fitch: BB+ (August 2021) Moody’s: Ba1 (September 2021) S&P: BB+ (September 2021) Strong Balance Sheet & Cash Flow 33 1.00x 1.50x 2.00x 2.50x 3.00x 1Q21 2Q21 3Q21 4Q21 1Q22 Leverage2 Target Range Leverage $0 $200 $400 $600 $800 $1,000 $1,200 2018 2019 2020 2021 TTM 2022 Full-Year Adju
Slide 34: Environmental, Social, & Corporate Governance
Environmental, Social, & Corporate Governance 34
Slide 35: Environmental, Social, & Governance
Environmental, Social, & Governance Tempur Sealy is committed to protecting and improving our communities and environment. 35
Slide 36: Environmental and Social Initiatives
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 2021 • Improved the percentage of waste diverted from our N
Slide 37: 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 37
Slide 38: Appendix
TEMPUR*#SEALY Appendix 38
Slide 39: 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 and adjusted EPS for 2022 and subsequent periods and the Company’s expectations for increasing sales growt
Slide 40: 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 41: QTD EBITDA
QTD EBITDA Three Months Ended (in millions) March 31, 2022 March 31, 2021 Net income $ 130.7 $ 130.5 Interest expense, net 20.9 123 Loss on extinguishment of debt “? = 5.0 Income taxes 38.1 40.5 Depreciation and amortization 44.8 418 EBITDA $ 2345 $ 230.1 Adjustments: Loss from discontinued operatio
Slide 42: TTM Adjusted EBITDA
42 TTM Adjusted EBITDA *For a reconciliation net income to EBITDA and Adjusted EBITDA in prior reporting periods, please refer to the Company’s SEC filings.
Slide 43: Leverage Reconciliation
43 Leverage Reconciliation *For a reconciliation of leverage to consolidated indebtedness less netted cash in prior reporting periods, please refer to the Company’s SEC filings.
Slide 44: 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 45: Thank You
TEMPUR#SEALY Thank You
Tempur Sealy International — Investor Presentation (April 2022) on 6ix