Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (May 2023)
46 slides from Somnigroup International's investor presentation, May 9, 2023
Slide 1: Tempur Sealy International Investor Presentation
© 2023 Tempur Sealy International, Inc. All rights reserved. We continue to demonstrate the resilience of our business model as we generate profits, invest in our business, return capital to shareholders, and outperform the global bedding market. TEMPUR SEALY INTERNATIONAL, INC., TPX “ “
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: A Premium Leader in a Growing Bedding Industry
69% 10% 8% 13% TTM 1Q’23 Sales North America Wholesale North America Direct‐to‐ Consumer International Wholesale International Direct‐to‐ Consumer • Headquartered in Lexington, KY, Tempur Sealy International, Inc is the leading global bedding products company, with a portfolio of iconic brands inclu
Slide 4: Industry, Consumer and Tempur Sealy
Industry • The global bedding industry of ~$120 billion1 has historically experienced consistent growth. • The U.S. bedding averages mid‐ single digit growth annually, driven by units and dollars.1 • The international bedding is highly fragmented and about 40% larger than the size of the U.S. market
Slide 5: Investment Thesis
Investment Thesis 5 The leading vertically integrated global bedding company with iconic brands and extensive manufacturing capabilities History of market share gains across global omnichannel distribution Seasoned, well‐aligned management with proven track record Legacy of strong value creation via
Slide 6: Current TPX Management Track Record Since 2015
6 Current TPX Management Track Record Since 2015 ` (in millions, except percentages, multiples, and per common share amounts) Tailing Twelve Months Ended December 31, 2015 Trailing Twelve Months Ended March 31, 2023 CAGR Total Growth Net Sales $3,151 $4,890 6% 55% Net Income $65 $410 29% 536% Adjust
Slide 7: 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 is expected to grow at a CAGR of 30% between 2018-2023 Competitive Advantages 7 *2023 adjusted EPS based o
Slide 8: Product, Retail, and E-Comm Brands
Product, Retail, and E-Comm Brands 8 E-Commerce Retail Brands SOVA Product Brands Brick & Mortar Retail Brands SOVA * *Through our international Sealy joint venture operations
Slide 9: U.S. Bedding Industry Premiumization
9 U.S. Bedding Industry Premiumization1 U.S. Mattress Market Segmentation (Units) U.S. Mattress Market Segmentation (Dollars) • The $1,000+ ASP segment of the market has grown unit share by 8% and dollar share by 6% since 2015 • $2,000+ premium segment has grown more rapidly than $1,000 – $2,000 seg
Slide 10: Strategic Advantages
TEMPUR#SEALY Strategic Advantages
Slide 11: Portfolio of Global Brands
Tempur-Pedic®: leading worldwide premium bedding brand • Tempur‐Pedic® uniquely adapts, supports, and aligns to you to deliver truly life‐changing sleep. $2,200‐$9,000* Stearns & Foster®: high-end-targeted brand • The world’s finest beds that are made with exceptional materials, time‐honored craftsm
Slide 12: World-Class Manufacturing Capabilities
Leading Manufacturing Capabilities • 71 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 (32) Joint Venture (8) Licensee (27)Tempur‐Pe
Slide 13: 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 700 stores worldwide and expanding direct customer relationships • Highly profitable Company-
Slide 14: Vertical Integration
14 Tempur‐Pedic manufacturing Sealy / S&F manufacturing Private label manufacturing Dreams manufacturing Portfolio of Owned Brands Brick & Mortar & E‐Commerce RetailOwned Manufacturing Vertical Integration Multi‐brand retail Mono‐brand retail E‐commerce
Slide 15: Growth Potential
TEMPUR#SEALY Growth Potential 15
Slide 16: 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 17: Innovative Technologies
Natural Comfort Snoring Support Climate Sleep-Health Metrics Innovative Technologies 17
Slide 18: OEM and Wholesale Growth
18 • Expanded into OEM market through the acquisition of Sherwood Bedding in 2020; a 3rd generation American manufacturer of private label innerspring mattresses, and subsequently began exploring opportunities to leverage foam‐pouring capabilities to manufacture private label foam mattresses • Our O
Slide 19: Stearns & Foster Opportunity
19 Stearns & Foster Opportunity Product Investments • Launched new, innovative Stearns & Foster products in 4Q’22 Marketing Investments • Supported Stearns & Foster with record advertising in 2022 and continued investments in 2023 Opportunity to grow Stearns & Foster to be our next $1 BILLION BRAND,
Slide 20: Stearns & Foster Opportunity
<$500 M $1,000 M 20 • With more than 175 years of history, Stearns & Foster is a meaningful brand and can become the luxury leader in innerspring beds and grow to be our next billion‐dollar brand • After years of no direct advertising, Stearns & Foster began spending in 2021 and accelerated in 2022
Slide 21: Direct to Consumer
• Strong, long‐term growth of high‐margin sales from web, call center, and company‐owned stores. • Ability to own customer relationship allows for market insights that we leverage for innovation process and growth strategy Direct to Consumer 21 11% 12% 16% 25% 24% 5% 10% 15% 20% 25% 30% Q1 2019 Q1 2
Slide 22: 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. Company-Owned Store Strategy O P E R A T I N G O V E R 7
Slide 23: International Markets
• Highly fragmented with broad geographic diversity across Europe and Asia • TEMPUR sold in 90+ countries, 22 countries served through wholly owned subsidiaries, rest by distributors • Acquired Dreams, the leading bedding retailer in the UK in 2021 • Launching new TEMPUR® line of mattresses to expan
Slide 24: 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 ~$320 MILLION OF JOINT VENTURE SALE
Slide 25: 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 26: Recent Performance
TEMPUR*SEALY Recent Performance
Slide 27: First Quarter Performance
Three Months Ended Trailing Twelve Months Ended (in millions, except percentages and per common share amounts) March 31, 2023 March 31, 2022 % Change March 31, 2023 March 31, 2022 % Change Net Sales $1,208.1 $1,239.5 ‐2.5% $4,889.8 $5,126.5 ‐4.6% Net Income $85.3 $130.7 ‐34.7% $410.3 $624.7 ‐34.3% A
Slide 28: 2023 Outlook
Expect full-year adjusted EPS2 between $2.60 and $2.80 Other Modeling Assumptions Depreciation & Amortization $200M ‐ $210M Capital Expenditures ~$200M Interest Expense $135M ‐ $140M U.S. Federal Tax Rate 24% ‐ 25% Diluted Share Count 178M shares 2023 Outlook4 28 Our 2023 expectations include: • Sal
Slide 29: Flexible Cost Structure
Flexible Cost Structure1 29 • The business model is highly‐variable, with 85% of COGS and 45% of operating expenses flexing with sales • In total, the variability of our operating cost structure is approximately 70% • Our business model also provides opportunity for costs to further flex with sales
Slide 30: Leading Balance Sheet & Cash Flow
Leading Balance Sheet & Cash Flow 30
Slide 31: Strong Balance Sheet & Cash Flow
Credit ratings: Fitch: BB+ (January 2023) Moody’s: Ba1 (September 2021) S&P: BB+ (September 2021) Strong Balance Sheet & Cash Flow 31 1.00x 1.50x 2.00x 2.50x 3.00x 3.50x 1Q22 2Q22 3Q22 4Q22 1Q23 Leverage2 Target Range Leverage $0 $200 $400 $600 $800 $1,000 $1,200 2019 2020 2021 2022 TTM 1Q23 Full-Ye
Slide 32: Capital Structure
32 Capital Structure • Favorable borrowing rates, over $450 million of liquidity and no meaningful maturities until 2024 $350 $625 $153 $800 $800 2023 2024 2025 2026 2027 2028 2029 2030 2031 Revolving Credit Facility Term Loan Securitized Debt 2029 Senior Notes 2031 Senior Notes
Slide 33: Balanced Capital Allocation Strategy
• Long‐term target leverage ratio of 2.0 – 3.0x2, we anticipate returning to the midpoint of the range in 2023 • 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 o
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
Environmental • Improved the percent of waste diverted from landfills from our U.S. wholly owned manufacturing operations to 100% as of September 30, 2022, compared to 96% as of September 30, 2021 • Expanded our commitment to achieving zero landfill waste to include our corporate offices and our res
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 SOVA
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 and adjusted EPS for 2023 and subsequent periods and the Company’s expectations for increasing sales growth, produc
Slide 40: Use of Non-GAAP Financial Measures Information
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 Adjusted Net Income and Adjusted EPS
41 QTD Adjusted Net Income(2) and Adjusted EPS(2) *For a reconciliation net income to adjusted net income and adjusted EPS in prior reporting periods, please refer to the Company’s SEC filings.
Slide 42: TTM Adjusted Net Income and Adjusted EPS
42 TTM Adjusted Net Income(2) and Adjusted EPS(2) *For a reconciliation net income to adjusted net income and adjusted EPS in prior reporting periods, please refer to the Company’s SEC filings.
Slide 43: TTM Adjusted EBITDA
43 TTM Adjusted EBITDA(2) *For a reconciliation net income to EBITDA and Adjusted EBITDA in prior reporting periods, please refer to the Company’s SEC filings.
Slide 44: Leverage Reconciliation
44 Leverage(2) 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 45: Footnotes
© 2023 Tempur Sealy International, Inc. All rights reserved. 1 Management estimates 2 Adjusted net income, EBITDA, adjusted EBITDA, adjusted EPS, leverage, and free cash flow are non‐GAAP financial measures. Please refer to the “Use of Non‐GAAP Financial Measures Information” on a previous slide for
Slide 46: TEMPUR#SEALY
TEMPUR#SEALY
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