Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Day (September 2013)
100 slides from Somnigroup International's investor day presentation, Sep 10, 2013
Slide 1: Tempur Sealy International, Inc. 2013 Investor Day
* * Tempur Sealy International, Inc. 2013 Investor Day September 10, 2013
Slide 2: Mark Rupe, Vice President
Mark Rupe Vice President TEMPUR*SEALY
Slide 3: Agenda
* Agenda Webcast participants may email questions to: investor.relations@tempursealy.com September 10, 2013
Slide 4: Forward-Looking Statements
* Forward-Looking Statements This investor presentation contains "forward-looking statements,” within the meaning of federal securities laws, which include information concerning one or more of the Company's plans, objectives, goals, strategies, and other information that is not historical informati
Slide 5: Mark Sarvary, President & Chief Executive Officer
* Mark Sarvary President & Chief Executive Officer
Slide 6: Key Topics
* Introduction and Context Macro-Industry Update Tempur Sealy Overview Vision Growth Targets 2014 – 2016 Drivers of Growth Revenue Synergies Summary Key Topics
Slide 7: A Lot Has Happened In The Last Months
* A Lot Has Happened In The Last 18 Months February 2012 Investor Day: Tempur-Pedic was a highly specialized, single technology company growing rapidly Two Major Events: Significant change in the US specialty segment competitive environment Major strategic acquisition Today: Tempur Sealy is the larg
Slide 8: Update On Current Trends
* Update On Current Trends As previously outlined, we are implementing strategic initiatives to drive improved performance in Tempur North America Ask Me ad campaign New product rollouts More effective promotions Recent trends have been in line with our expectations We are encouraged by our brand po
Slide 9: Tempur Sealy Company Thesis
* Tempur Sealy Company Thesis Comprehensive Portfolio of Iconic Brands And Products The Largest Bedding Company And The Only Global One Integration Provides Significant Cost Synergies Significant Growth Potential 2016 Target Assumes 3-Year Sales CAGR of 6% We believe there is $500M+ Revenue Synergie
Slide 10: Key Topics
* Introduction and Context Macro-Industry Update Tempur Sealy Overview Vision Growth Targets 2014 – 2016 Drivers of Growth Revenue Synergies Summary Key Topics
Slide 11: US Bedding Industry Sales
* US Bedding Industry Sales Based on ISPA 2012 Mattress Industry Report of Sales & Trends, with ISPA revised representative sample for 2006 and 20011. 20 Year CAGR: +5% ($ in billions at wholesale)
Slide 12: US Mattress Industry Sales At Prior Peak
US Mattress Industry Sales At Prior Peak * 20 Year CAGR: +6% ($ in billions at wholesale) Based on ISPA 2012 Mattress Industry Report of Sales & Trends, with ISPA revised representative sample for 2006 and 20011.
Slide 13: US Mattress Industry Units Well Below Prior Peak
US Mattress Industry Units Well Below Prior Peak * Units (units in thousands) ($ in billions at wholesale) Based on ISPA 2012 Mattress Industry Report of Sales & Trends, with ISPA revised representative sample for 2006 and 20011.
Slide 14: Specialty Mattresses Have Led Recent Industry Growth
Specialty Mattresses Have Led Recent Industry Growth (units in thousands) * Units ($ in billions at wholesale) Based on ISPA 2012 Mattress Industry Report of Sales & Trends, with ISPA revised representative sample for 2006 and 2011. Specialty data not available prior to 2004.
Slide 15: Growth In Industry Mattress Average Unit Price
* Growth In Industry Mattress Average Unit Price ($ at wholesale) Based on ISPA 2012 Mattress Industry Report of Sales & Trends, with ISPA revised representative sample for 2006 and 20011.
Slide 16: $2,000+ Industry Price Points Under Pressure
* $2,000+ Industry Price Points Under Pressure Note 1: ISPA 2012 Mattress Industry Report of Sales & Trends Note 2: Average Retail ASP calculated by marking up 100% from wholesale. Industry Average Retail Selling Price $2,000 and Above (Queen Flat Set Price)
Slide 17: Tempur's $2,000+ Price Points Are Increasing
* Tempur’s $2,000+ Price Points Are Increasing Average Retail Selling Price $2,000 and Above (Queen Flat Set Price) Industry Tempur North America Note 1: ISPA 2012 Mattress Industry Report of Sales & Trends Note 2: Average Retail ASP calculated by marking up 100% from wholesale.
Slide 18: Global Mattress Industry: A Growth Industry
Global Mattress Industry: A Growth Industry Note: CSIL World Mattress Report, 2013 (Top 30 Markets Mattress Consumption) * 10 Year CAGR: +8% ($ in billions at wholesale)
Slide 19: 2012 Wholesale Bedding Sales by Region
10 Year CAGR: 2012 Wholesale Bedding Sales by Region $7,072 $7,514 $4,970 $1,564 * Large Global Mattress Industry +3% +16% +11% +6% Note 1: Based on CSIL World Mattress Report, 2013 (Top 30 Markets Mattress Consumption) and management estimates. Note 2: CAGR calculation 2002 – 2012 ($ in millions at
Slide 20: Global Mattress Industry Continues to Evolve
* Global Mattress Industry Continues to Evolve Manufacturer consolidation Retailer consolidation Accelerating rate of innovation
Slide 21: Key Topics
Introduction and Context Macro-Industry Update Tempur Sealy Overview Vision Growth Targets 2014 – 2016 Drivers of Growth Revenue Synergies Summary Key Topics *
Slide 22: Comprehensive Portfolio of Iconic Brands
* Comprehensive Portfolio of Iconic Brands Complementary Product Offering Truly Global Significant Value Creation from Synergies Strong Management Team Strong Financial Characteristics Management estimates
Slide 23: Complete and Cohesive Portfolio of Brands
Complete and Cohesive Portfolio of Brands Value Innerspring and specialty Support Innerspring and hybrids Optimum Rest Specialty offering of gel visco and latex Craftsmanship Luxury innerspring and specialty The Best Sleep of Your Life Specialty innovation leader Luxury Premium Mid-Price Value *
Slide 24: Strongest Brands in the US
Strongest Brands in the US Source: 2012 Mattress Industry Consumer Research – U.S. Market *
Slide 25: Driven by Sustained Investment in Advertising
2004 2006 2008 2010 2012 2004 2006 2008 2010 2012 2004 2006 2008 2010 2012 2004 2006 2008 2010 2012 2004 2006 2008 2010 2012 2004 2006 2008 2010 2012 2004 2006 2008 2010 2012 2004 2006 2008 2010 2012 Driven by Sustained Investment in Advertising * ($ in millions) Tempur North America Advertising Thr
Slide 26: Complete Range Of Mattress Technologies
Complete Range Of Mattress Technologies Innerspring Hybrid Stearns & Foster Posturepedic Hybrid TEMPUR-Choice TEMPUR-Rhapsody Breeze Optimum Gel Visco Optimum Latex Visco Latex Tempur Material Adjustable Firmness *
Slide 27: Complete Price Range
Retail list price point for queen set. Complete Price Range * $1799 $599 $3799 $1299 $7999 $1799 $4499 $1399 $899 $399 $5000 $3500 $2000 $1000 $500
Slide 28: Complete Range Of Bases and Accessories
Complete Range Of Bases and Accessories Sealy Foundation TEMPUR-Neck Pillow TEMPUR-Traditional Pillow TEMPUR® Mattress Deluxe Topper TEMPUR Slippers TEMPUR-Cloud Pillow TEMPUR-Flat Foundation TEMPUR-Ergo Premier TEMPUR-UP TEMPUR-Ergo Plus Adjustable Bases and Foundations Accessories Pillows Sealy Ad
Slide 29: The Industry's Only Truly Global Company
The Industry’s Only Truly Global Company ` Tempur Sealy Presence Presence includes subsidiaries, joint ventures, third party, and licensee markets. *
Slide 30: Majority of Business from Wholly Owned Markets
Majority of Business from Wholly Owned Markets Wholly Owned Markets Note 1: Wholly owned markets are markets in which a wholly owned subsidiary of Tempur or Sealy sells mattresses. Note 2: Total sales represents a mathematical combination of Tempur for 2012 and Sealy for its fiscal year ending Decem
Slide 31: Total Branded Sales Including JVs, Licensees & 3rd Parties
` Tempur Sealy Presence Note: Total branded sales represent sales recognized under the Company’s brands whether owned or licensed, and are based on actual wholesale Tempur and Sealy sales and management estimates for sales by JVs, Licensees and Third Parties for 2012. Sales figures for regions are a
Slide 32: Significant Value Creation from Integration
Significant Value Creation from Integration Current Projection $40M+ by end of 2014 $70M+ by end of 2016 $100M+ Annually Long-Term Prior Projection $40M+ by end of 2015 * Warehouse and distribution Sourcing and manufacturing Corporate/Other SG&A expenses Note 1: Cost synergies reflect annualized cos
Slide 33: Strong, Established Management Team
Strong, Established Management Team Prior Experience Prior Experience Years with Name Position Prior Experience Consumer Products Inter'l Tempur or Sealy Mark Sarvary President and CEO President, Campbell Soup North America CEO, J. Crew Group √ √ 5 President, Stouffer's Frozen Food Division at Nestl
Slide 34: Key Topics
Introduction and Context Macro-Industry Update Tempur Sealy Overview Vision Growth Targets 2014 – 2016 Drivers of Growth Revenue Synergies Summary Key Topics *
Slide 35: Vision: Leading the Transformation of the Global Bedding Industry
Vision: Tempur Sealy International Leading the Transformation of the Global Bedding Industry *
Slide 36: The Three Promises
The Three Promises Driving Sustained Profitable Growth to Enhance Stockholder Value *
Slide 37: Core Values
We are passionate people We believe in our company, our brands and our team – and we have a bias for action We think big We have high expectations of ourselves and our company We think differently We seek innovation in every area of our business We are focused on our consumers’ needs and our custome
Slide 38: Key Topics
Introduction and Context Macro-Industry Update Tempur Sealy Overview Vision Growth Targets 2014 – 2016 Drivers of Growth Revenue Synergies Summary Key Topics *
Slide 39: Our 3-Year Target
Our 3-Year Target Note 1: Management estimates. Please refer to “Forward Looking Statements”. Note 2: CAGR calculated over period of 2013-2016. Sales and Adjusted EBITDA CAGRs are based on the mid-point of the Company’s 2013 full year guidance adjusted for Sealy results during the pre-acquisition pe
Slide 40: Cost Synergies Being Used to Support Growth
Cost Synergies Being Used to Support Growth Warehouse and distribution Sourcing and manufacturing Corporate/Other SG&A expenses * $70M - $100M $40M Margin Expansion $30M – $60M Growth Investment Marketing Product Innovation Supply Chain “Easier To Do Business With” Management estimates
Slide 41: Key Topics
Introduction and Context Macro-Industry Update Tempur Sealy Overview Vision Growth Targets 2014 – 2016 Drivers of Growth Revenue Synergies Summary Key Topics *
Slide 42: Drivers of Growth
Drivers of Growth * North America Marketing Advertising and promotions In-store marketing Direct Innovation New products New categories Supply Chain “Easier To Do Business With” International Marketing Advertising and promotions Distribution Direct Innovation New products New categories New Market E
Slide 43: Tempur-Pedic Advertising Investment
Tempur-Pedic Advertising Investment ($ in millions) * Note 1: Represents Tempur North America advertising expenses Note 2: Expected increase in advertising investment for 2H-2013 is based on management estimates.
Slide 44: Tempur-Pedic and Sealy Advertising
* Sealy Posturepedic “Life Before Your Eyes” Tempur-Pedic “Ask Me” Tempur-Pedic and Sealy Advertising
Slide 45: Promotions and In-Store Marketing
* Promotions and In-Store Marketing
Slide 46: Direct Marketing – Online
Tempurpedic.com Direct Marketing – Online * Sealy.com
Slide 47: Direct Marketing – Flagship Stores
Direct Marketing – Flagship Stores *
Slide 48: Tempur Product Innovation
Tempur Product Innovation TEMPUR-Cloud Luxe Breeze $4999 TEMPUR-Rhapsody Breeze $3999 TEMPUR-Cloud Supreme Breeze $3499 TEMPUR-Choice™ Supreme $3499 TEMPUR-Choice™ Luxe $3999 * Retail list price point for queen set.
Slide 49: Innovation Drives Sales…And We Have A Track Record
Innovation Drives Sales…And We Have A Track Record * 2012 2010 2006 2008 2009 2011 2013 Future Quickly Becoming A Top Seller Strong Potential $500M+ Sales Since Launch $1B+ Sales Since Launch $1B+ Sales Since Launch Note 1: For a discussion of the Company’s performance, please refer to the Company’s
Slide 50: Sealy Product Innovation
* Latex Hybrid Sealy Product Innovation Sealy Posturepedic Hybrid Collection $1299-$1799 Optimum Latex $1699-$2999 A $300M Brand Note 1: Retail list price point for queen set Note 2: Based on wholesale price
Slide 51: Innovation Beyond Mattresses
TEMPUR-Ergo™ Premier $1999 TEMPUR-UP™ Foundation $799 Adjustable Bases TEMPUR-Traditional Pillow $99 Pillows TEMPUR-Cloud Pillow $159 * Sealy Adjustable Base $1699 Innovation Beyond Mattresses Adjustable base prices represent retail list price point for queen size
Slide 52: In House R&D Expertise
In House R&D Expertise * Multi-faceted R&D facilities in Denmark, Virginia, North Carolina, and Kentucky We have significantly increased our investment in R&D since 2008
Slide 53: Easier To Do Business With
“Easier To Do Business With” Sealy Distribution Points Tempur Warehouses * Significant opportunities to optimize service and support retail growth Distribution network to service national retailers with considerable efficiency opportunities
Slide 54: International Opportunity is Significant
Latin America International Opportunity is Significant Asia/Australia ` Europe $5.0 Billion $7.5 Billion $1.5 Billion * Note: Based on CSIL World Mattress Report, 2013 (Top 30 Markets Mattress Consumption) and management estimates.
Slide 55: International - Europe
International - Europe Tempur UK Flagship Store * Tempur Holland Store Tempur International outperforming the industry in a difficult European bedding market Germany – Investment in advertising continues France – Benefiting from expanded distribution and increased advertising UK – Strengthening dist
Slide 56: International – Asia/Australia
International – Asia/Australia Tempur Tokyo Store * Tempur Korea (Lotte Jamsil) China “Weightless” Campaign Tempur Australia (Harvey Norman) Tempur International outperforming the industry, which is rapidly growing Japan – Sales have returned to prior peak levels Korea – Rapid growth driven by incre
Slide 57: International – Latin America
International – Latin America Sealy Argentina Store * Tempur Brazil Store Ribeirão Preto $1.5B Bedding Market, +6% CAGR since 2009 ~$0.1B Tempur Sealy Sales, +15.1% CAGR since 2009 Sealy is outperforming the industry in key markets of Argentina and Mexico Argentina – Strong market position driven by
Slide 58: International Advertising
International Advertising ($ in millions) Tempur International Advertising * Tempur International Sales Will continue to focus advertising investments in Europe and Asia For a discussion of the Company’s performance, please refer to the Company’s SEC filings.
Slide 59: International Direct
International Direct China Japan Holland Singapore Norway Tempur International Direct Sales +50% CAGR 100+ Company-owned stores across Europe, Asia and Latin America – And Growing 100+ JV/Licensee/Third Party company branded stores E-Commerce also growing rapidly and represents a significant opportu
Slide 60: Key Topics
Introduction and Context Macro-Industry Update Tempur Sealy Overview Vision Growth Targets 2014 – 2016 Drivers of Growth Revenue Synergies Summary Key Topics *
Slide 61: Significant Long-Term Revenue Synergies
Significant Long-Term Revenue Synergies International North America Non-Consolidated Branded JV, Licensee and 3rd Party Revenue Consolidation of Asia JV Channel Synergies Leverage IP Technologies Channel Synergies $500M+ Long-Term * $300M+ $200M+ Management estimates. Please refer to “Forward Lookin
Slide 62: Leverage IP Technologies
Leverage IP Technologies * Cross pollinate technologies to drive innovation Specialty Enhanced specialty offerings Traditional Enhanced traditional offerings Adjustables Increase adjustable attach rates Other New product categories
Slide 63: Leverage IP Technologies – $100M+ Opportunity
Leverage IP Technologies * Cross pollinate technologies to drive innovation Specialty Enhanced specialty offerings Traditional Enhanced traditional offerings Adjustables Increase adjustable base attach rates Other New product categories $100M+ Opportunity Management estimates. Please refer to “Forwa
Slide 64: North America Revenue – Channel Synergies
* Canada Sealy’s Canadian business is five times larger than Tempur’s Club, Department Stores and Hospitality Sealy has a $300M+ annual business in Club, Department Stores, and Hospitality Leverage capabilities to increase channel penetration North America Revenue – Channel Synergies Supply Chain “E
Slide 65: North America Revenue – Channel Synergies, $100M+ Opportunity
* Canada Sealy’s Canadian business is five times larger than Tempur’s Club, Department Stores and Hospitality Sealy has a $300M+ annual business in Club, Department Stores, and Hospitality Leverage capabilities to increase channel penetration North America Revenue – Channel Synergies Supply Chain “E
Slide 66: Non-Consolidated Branded JV, Licensee And 3rd Party Revenue
Non-Consolidated Branded JV, Licensee And 3rd Party Revenue ` JV, Third Party or Licensee Markets * Est. Sales $500M+ Management estimates based on wholesale price.
Slide 67: JV, Licensee And 3rd Party Revenue – $200M+ Opportunity
` JV, Third Party or Licensee Markets * Non-Consolidated Branded JV, Licensee And 3rd Party Revenue $200M+ Long Term Opportunity Management estimates. Please refer to “Forward Looking Statements”.
Slide 68: Consolidation of Asia JV
Consolidation of Asia JV * Asia JV Markets China Hong Kong India S. Korea Taiwan Malaysia Singapore Indonesia New Zealand Sealy China Own 50% of Asia JV with option to purchase in 2020 JV Partner is Sealy of Australia, a Sealy brand Licensee ~$70 million in annual 2012 sales, with +30.5% CAGR since
Slide 69: We Have A Track Record
We Have A Track Record * Australia (2007) China (2010) Korea (2011) Poland (2012) Brazil (2012) Ecuador (2012) Portugal (2012) Canada (2010) Austria (2007) New Zealand (2008) In certain markets where there is no current option to purchase, we would need to negotiate and complete acquisitions of dist
Slide 70: We Have A Track Record
We Have A Track Record * Poland (2012) Brazil (2012) Ecuador (2012) Portugal (2012) New Zealand (2008) And in several of these markets have more than doubled sales Australia (2007) Canada (2010) Korea (2011) China (2010) Austria (2007) More than 3x More than 2x More than 2x More than 2x More than 3x
Slide 71: International Revenue – Channel Synergies
* Mexico Sealy is #1 in Mexico Direct and eCommerce Tempur has established eCommerce capability and 60+ company owned stores Leverage existing infrastructures International Revenue – Channel Synergies Argentina and Uruguay Sealy has a large and rapidly growing business in South America Broaden Distr
Slide 72: International Revenue – Channel Synergies, $100M+ Opportunity
* Mexico Sealy is #1 in Mexico Direct and eCommerce Tempur has established eCommerce capability and 60+ company owned stores Leverage existing infrastructures Argentina and Uruguay Sealy has a large and rapidly growing business in South America Broaden Distribution of Secondary Brands Tempur has est
Slide 73: Key Topics
Introduction and Context Macro-Industry Update Tempur Sealy Overview Vision Growth Targets 2014 – 2016 Drivers of Growth Revenue Synergies Summary Key Topics *
Slide 74: Tempur Sealy Company Thesis
Tempur Sealy Company Thesis Comprehensive Portfolio of Iconic Brands And Products The Largest Bedding Company And The Only Global One Integration Provides Significant Cost Synergies Significant Growth Potential Strong Financial Characteristics *
Slide 75: Dale Williams, Executive Vice President & Chief Financial Officer
Dale Williams Executive Vice President & Chief Financial Officer *
Slide 76: Key Topics
Financial Overview Synergies Our 3-Year Target Capital Structure and Cash Flow Summary Key Topics *
Slide 77: Acquisition of Sealy Doubled Our Size
* Acquisition of Sealy Doubled Our Size ($ in millions) Net Sales Completed acquisition of Sealy on March 18, 2013. Full year pro forma sales over $2.7 billion, including full year of Sealy results. Mid-Point Guidance Note 1: 2013P is mid-point of Company’s FY 2013 net sales guidance of $2.425 billi
Slide 78: Globally Diverse With Large US Presence
* Globally Diverse With Large US Presence By Geographic Region Canada US Other International By Business Segment 2Q 2013 Sales Sealy Tempur North America Tempur International For a discussion of the Company’s performance, please refer to the Company’s SEC filings. 2Q 2013 Sales
Slide 79: Principally Distribute Through Retail Channel
* Principally Distribute Through Retail Channel Consolidated Tempur International Tempur North America Sealy Direct Retail Other For a discussion of the Company’s performance, please refer to the Company’s SEC filings. 2Q 2013 Sales
Slide 80: Bedding Products Represent Majority Of Business
* Bedding Products Represent Majority Of Business Consolidated Tempur International Tempur North America Sealy Other Products Bedding For a discussion of the Company’s performance, please refer to the Company’s SEC filings. 2Q 2013 Sales
Slide 81: Key Topics
Financial Overview Synergies Our 3-Year Target Capital Structure and Cash Flow Summary Key Topics *
Slide 82: Cost Synergies Update
Cost Synergies Update * Prior Projection by end of 2015 Current Projection by end of 2016 ($ in millions) Sourcing/Manufacturing Raw material purchase synergies Other purchase synergies Manufacturing synergies Warehouse/Distribution Backhaul/returns Logistics network optimization – distribution & ro
Slide 83: Cost Synergies – Timing and Composition
Cost Synergies – Timing and Composition * ($ in millions) Sourcing/Manufacturing Raw material purchase synergies biggest driver in 2013 Other synergies achieved in 2013 Additional RM and other synergies in 2014-2016 Warehouse/Distribution Backhaul/returns account for majority of 2013 synergies Minim
Slide 84: Key Topics
Financial Overview Synergies Our 3-Year Target Capital Structure and Cash Flow Summary Key Topics *
Slide 85: Our 3-Year Target
Our 3-Year Target Note 1: Management estimates. Please refer to “Forward Looking Statements”. Note 2: CAGR calculated over period of 2013-2016. Sales and Adjusted EBITDA CAGRs are based on the mid-point of the Company’s 2013 full year guidance adjusted for Sealy results during the pre-acquisition pe
Slide 86: Target Implies Accelerating Growth Through 2016
Target Implies Accelerating Growth Through 2016 $3.3B * Tempur North America Tempur International Sealy 2013 – 2016 Est. CAGR 5% 6% 10% 2016 target assumes 6% consolidated sales CAGR over three year period 2016 Sales Target Note 1: CAGR calculated over period of 2013-2016. Sales CAGRs are based on t
Slide 87: Key EBITDA Assumptions
Key EBITDA Assumptions Synergies Expect $40M of the cost synergies to flow through to operating earnings Volume Leverage / Scale +6% net sales CAGR will drive operating leverage Productivity Annual productivity improvements International Mix International growth expected to outpace domestic + ’s Inv
Slide 88: Gross Margin
* Gross Margin Acquisition of Sealy, which has lower margins, transformed consolidated margin profile Expect gross margin to benefit from cost synergies and volume leverage Note 1: 2013 YTD gross margin includes Sealy from March 18 to June 30, 2013. Note 2: Management estimates. Please refer to “For
Slide 89: Balanced Cost Of Goods Sold Mix
* Balanced Cost Of Goods Sold Mix Consolidated Other Materials Commodities (Foam/Steel) Logistics Manufacturing/Overhead Labor Note 1: For a discussion of the Company’s performance, please refer to the Company’s SEC filings. Note 2: Management estimates.
Slide 90: Operating Margin Targets
* Operating Margin Targets Lower 2013 YTD operating margin reflects acquisition of Sealy and related transaction and integration costs (GAAP Reported Operating Margin). Establishing long-term operating margin target of 15.0%+ Through June 30 Note 1: 2013 YTD operating margin includes Sealy from Marc
Slide 91: Adjusted Earnings Per Share
* Adjusted Earnings Per Share ($ per share) Adjusted EPS Mid-Point Guidance Note 1: 2013P is mid-point of Company’s FY 2013 adjusted EPS guidance of $2.25-$2.40. Note 2: 2013P includes Sealy from March 18 to June 30, 2013. Periods 2008-2012 do not include Sealy. Note 3: Adjusted EPS is EPS adjusted
Slide 92: Key Topics
Financial Overview Synergies Our 3-Year Target Capital Structure and Cash Flow Summary Key Topics *
Slide 93: Efficient Capital Structure
Efficient Capital Structure * Note 1: Sealy 8% Notes outstanding is based on present value of notes still outstanding using a market discount rate. The principal amount of the notes accrete 8% per annum accruing semi-annually and mature on July 15, 2016. Note holders can convert the notes into cash
Slide 94: No Significant Debt Maturities Until 2016
No Significant Debt Maturities Until 2016 * $160 $35 $62 $186 $62 $337 $7 $1,067 ($ in millions) Maturity profile shown assumes no Sealy 8% Note holders convert into cash prior to maturity in 2016. Holders can convert the notes at any time until maturity.
Slide 95: Strong Cash Flow Characteristics
Strong Cash Flow Characteristics * Multi-year add back to net income as D&A should continue to exceed Capex by $30M+ 2016 Target assumes free cash flow in excess of $250M Efficient tax structure allows for greater than $1 billion of future foreign cash flow to be used to reduce debt Management estim
Slide 96: Adjusted EBITDA
* Adjusted EBITDA Mid-Point Guidance 2013 adjusted EBITDA guidance reflects a stub year (partial year results for Sealy) 3-YR Target Adjusted EBITDA ($ in millions) Note 1: Adjusted EBITDA represents EBITDA adjusted for Sealy transaction and integration costs, and a purchase price allocation (“PPA”)
Slide 97: Key Topics
Financial Overview Synergies Our 3-Year Target Capital Structure and Cash Flow Summary Key Topics *
Slide 98: Summary
Summary Sealy Acquisition Doubled Size Of Business And Transformed Margin Structure Cost Synergies Are Expected To Be Larger Than Initially Anticipated 3-Year Target Assumes Significant Investments To Drive Growth Establishing 15.0%+ Long-Term Operating Margin Target Strong Cash Flow Characteristics
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