Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (March 2015)
31 slides from Somnigroup International's investor presentation, Mar 3, 2015
Slide 1: Tempur Sealy International, Inc.
Exhibit 99.1 Tempur Sealy International, Inc. March 3-4, 2015 “Improving the Sleep of More People Every Night, All Around the World ”
Slide 2: Forward-Looking Statements
Forward-Looking Statements This investor presentation contains "forward-looking statements,” within the meaning of the 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 informa
Slide 3: Mark Sarvary, President & Chief Executive Officer
Mark Sarvary President & Chief Executive Officer 3
Slide 4: Largest And Only Truly Global Bedding Company
Largest And Only Truly Global Bedding Company Comprehensive Portfolio of Iconic Brands Complete and Complementary Product Offering Strong Management Team, Executing A Compelling Strategy Significant Sales, Margin and Earnings Growth Opportunity Strong Cash Flow 4
Slide 5: The Industry's Only Truly Global Company
The Industry’s Only Truly Global Company Tempur Sealy Presence Note: Presence includes subsidiaries, joint ventures, third party, and licensee markets. 5
Slide 6: Complete and Complementary Portfolio of Brands
Complete and Complementary Portfolio of Brands Tempur-Pedic • #1 US Brand People Are Most Interested In Purchasing Luxury Stearns & Foster • #1 US Brand In Luxury Innerspring Sales Premium Sealy Mid-Price • #1 US Brand In Total Awareness • #1 US Brand People Are Most Likely To Buy Value Note 1: 2014
Slide 7: Complete Range Of Products
Complete Range Of Products Tempur Material Hybrid Innerspring TEMPUR-Cloud TEMPUR-Flex Stearns & Foster Other Specialty Adjustable Bases Pillows Memory Foam, Gel Visco, Latex Adjustable Comfort TEMPUR-Ergo Plus TEMPUR Pillows 7
Slide 8: Strong, Established Management Team
Strong, Established Management Team Prior Experience Years with Consumer Tempur Name Position Prior Experience Products Inter'l Sealy Mark Sarvary President and CEO President, Campbell Soup North America CEO, J. Crew Group 6 President, Stouffer's Frozen Food Division at Nestle Tim Yaggi COO Group Pr
Slide 9: Key Priorities 2012 – 2014
Key Priorities 2012 – 2014 Return Tempur North America to growth and improve operating margins Revamped entire product offering (2012-2014) and improved retailer economics (August 2012) Sales growth resumed and margins expanded significantly in 2H-2014 and expected to further expand in 2015 Maintain
Slide 10: Tempur Sealy Strategic Priorities
Tempur Sealy Strategic Priorities Leverage and Strengthen Our Comprehensive Portfolio Of Iconic Brands & Products Expand Distribution And Seek Highest Dealer Advocacy • Base Annual Targets: Sales Growth Of 6% And Adjusted Expand Margins With Focus On Driving EPS Growth Of 15% Significant Cost Improv
Slide 11: Growth Drivers By Geography
Growth Drivers By Geography Leveraging Product Distribution Opening Own Leverage Marketing Innovation Synergies Stores JV US (CR) Canada Europe Asia Pacific Latin America 11
Slide 12: Expand Margins With Focus On Driving Significant Cost Improvement
Expand Margins With Focus On Driving Significant Cost Improvement Annual Incremental 2015 -2018 Operating Initiative 2014 Objective Income 1 Sealy US Gross Margin Improvement 2 30% 33% $45 million Adjusted Operating Expense Leverage 3 29% 28% $30 million Cost Synergies 4 $45 million $70 million $25
Slide 13: Leverage Global Scale For Competitive Advantage
Leverage Global Scale For Competitive Advantage Product Development Distribution Brand • Procurement • Cloud and Breeze Beds • R&D • Stearns & Foster • Engineering and design • Posturepedic Hybrid Tempur Sealy Is Uniquely Positioned To Capitalize On Its Integrated Product And Brand Portfolio On A Gl
Slide 14: Dale Williams, Executive Vice President & Chief Financial Officer
Dale Williams Executive Vice President & Chief Financial Officer 14
Slide 15: Globally Diverse Bedding Provider Largely Sold In The Retail Channel
Globally Diverse Bedding Provider Largely Sold In The Retail Channel 2014 Net Sales By Geographic Region By Segment US 7% 20% Europe North America Canada 11% International Asia Pacific 73% 80% Latin America By Channel By Product Retail 8% 9% Bedding Other Other 92% 91% 15
Slide 16: Net Sales
Net Sales 2014 Net Sales increased 21% Estimated net sales growth would have been +8% had we owned Sealy for all of 2013 2015 Net Sales growth guidance of 2% to 5%, and includes unfavorable FX of 3.5% Net Sales ($ in millions) $2,990 $3,050-$3,150 $2,464 2013 2014 2015P Note 1: Please refer to “Forw
Slide 17: Operating Margin
Operating Margin 2014 GAAP operating margin includes $43.8 million of integration costs (1.5% of net sales) Adjusted operating margin is expected to be up 10bps to 80bps in 2015 On a constant currency basis, adjusted operating margin is expected to be up 75bps to 150bps in 2015 Operating Margin 10.8
Slide 18: Adjusted EPS
Adjusted EPS 2014 Adjusted EPS increased 11%; on a constant currency basis would have increased 18% 2015 Adjusted EPS is expected to grow 12% to 27% on a constant currency basis Adjusted EPS $2.70-$3.10 $2.65 $2.38 2013 2014 2015P Note 1: Adjusted EPS amounts for 2015 based on management estimates.
Slide 19: Strong Cash Flow Characteristics
Strong Cash Flow Characteristics Multi-year add back to net income as D&A should continue to exceed annual Capex by $30M+ Expect continued growth in operating and free cash flow in 2015 Operating and Free Cash Flow ($ in millions) $225.2 $177.7 $98.5 $58.5 2013 2014 Operating Cash Flow Free Cash Flo
Slide 20: Improving Capital Structure
Improving Capital Structure As a larger more stable company, our optimal capital structure is 3x 2014 credit agreement amendment allows cash utilization flexibility below 3.5x Value creation generated through deleverage and/or returning value to shareholders Consolidated Funded Debt Less Qualified C
Slide 21: Appendix
Appendix | 21 TEMPUR*#SEALY
Slide 22: Use of Non-GAAP Financial Measures
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 earnings per share, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted EBITDA
Slide 23: 2014 Adjusted EPS Reconciliation
2014 Adjusted EPS Reconciliation 2013 and 2014 Adjusted EPS Year Ended Year Ended (in millions, except per share amounts) December 31, December 31, 2013 2014 Net income $ 78.6 $ 108.9 Plus: (1) Loss on disposal of business, net of tax -- 16.7 (2) Transaction costs, net of tax 13.2 -- (2) Integration
Slide 24: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 2013 and 2014 Adjusted EBITDA Year Ended Year Ended (in millions) December 31, December 31, (1) 2013 2014 Net income attributable to Tempur Sealy International, Inc. $ 75.6 $ 108.9 Interest expense 133.2 91.9 Income taxes 39.0 64.9 Depreciation & amortization 98.6 89.7
Slide 25: Debt Reconciliation and Leverage Ratio Calculation
Debt Reconciliation and Leverage Ratio Calculation Reconciliation of Total Debt to Consolidated Funded Debt Less Qualified Cash As of (in millions, except ratio) December 31, 2014 Total debt $ 1,602.3 Plus: Letters of credit outstanding 18.2 Consolidated funded debt 1,620.5 Less: (1) Domestic qualif
Slide 26: Adjusted Operating Expenses
Adjusted Operating Expenses 2014 Adjusted Operating Expenses Tempur Sealy International, Inc. Year Ended (in millions, except percentage amounts) December 31, 2014 Consolidated net sales $2,989.8 Selling and marketing expenses 619.9 General, administrative and other expenses 280.6 Operating Expenses
Slide 27: Adjusted Operating Margin
Adjusted Operating Margin 2014 Adjusted Operating Income and Margin Tempur Sealy International, Inc. Year Ended (in millions, except percentage amounts) December 31, 2014 Operating Income, Tempur Sealy International, Inc. $276.3 Consolidated net sales 2,989.8 Operating Margin (GAAP) 9.2% Operating I
Slide 28: Sealy Corporation 2012 Adjusted Operating Margin
Sealy Corporation 2012 Adjusted Operating Margin 2012 Adjusted Operating Income and Margin Sealy Corporation Year Ended (in millions, except percentage amounts) December 2, 2012 Operating Income, Sealy Corporation $100.6 Consolidated net sales 1,347.9 Operating Margin (GAAP) 7.5% Operating Income, S
Slide 29: Sealy Adjusted Operating Margin – 2014
Sealy Adjusted Operating Margin – 2014 2014 Adjusted Operating Income and Margin Sealy Segment Year Ended (in millions, except percentage amounts) December 31, 2014 Operating Income, Sealy Segment $99.8 Consolidated net sales 1,524.6 Operating Margin (GAAP) 6.5% Operating Income, Sealy Segment $99.8
Slide 30: Free Cash Flow
Free Cash Flow 2014 Free Cash Flow Tempur Sealy International, Inc. Year Ended Year Ended (in millions) December 31, December 31, 2013 2014 Net cash provided by operating activities $98.5 $225.2 Less: Purchases of property, plant and equipment 40.0 47.5 Free Cash Flow $58.5 $177.7 30
Slide 31: Constant Currency Information
Constant Currency Information In this investor presentation the Company refers to, and in other press releases and other communications with investors the Company may refer to, net sales or earnings or other historical financial information on a “constant currency basis” or “excluding FX”, which is
Tempur Sealy International — Investor Presentation (March 2015) on 6ix