Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (February 2019)
31 slides from Somnigroup International's investor presentation, Feb 25, 2019
Slide 1: Tempur Sealy International, Inc. (TPX)
Tempur Sealy International, Inc. (TPX) “Success is strengthening our Iconic Brands while driving higher ROIC through focused execution” 1 © 2019 Tempur Sealy International, Inc.
Slide 2: Tempur Sealy International, Inc. Overview
Tempur Sealy International, Inc. Overview: (TPX) • Strong global brands serving all price points • Omni-channel distribution balanced between wholesale and direct to consumer • Global manufacturing footprint • Structural growth industry, with high ROIC and robust free cash flow • Industry is relativ
Slide 3: Delivering Shareholder Value
Delivering Shareholder Value Focus on long-term initiatives: • Develop the most innovative bedding products in all the markets we serve • Invest significant marketing dollars to promote our worldwide brands • Optimize worldwide distribution to be where consumers want to shop • Drive increases in EBI
Slide 4: Global Manufacturing Foot Print
Global Manufacturing Foot Print 35 International Facilities 22 North American Facilities Wholly owned and Joint Venture Tempur-Pedic Facility Joint Venture Licensee 4 © 2019 Tempur Sealy International, Inc.
Slide 5: Worldwide Direct Business
Worldwide Direct Business • Distribution network made up of Web, Call Center, and Company-owned stores 300 Global Direct Sales • Experienced continued strong growth within the direct channel, growing 25% for the full year 2018. 250 200 150 NORTH AMERICAN INTERNATIONAL SALES CHANNEL SALES CHANNEL 100
Slide 6: Tempur North America Retail Store Expansion
Tempur North America Retail Store Expansion ➢ 2017 ended with 13 Tempur Sealy retail doors, expanded to 40 doors by end of 2018 ➢ We currently expect to have at least 60 company-owned retail stores by end of 2019 ➢ Long term outlook of expansion may lead to approximately 150 company-owned stores 201
Slide 7: Flexible Operating Model with a Variable Cost Structure
COST OF GOODS SOLD Fixed ~15% Flexible Operating Model with a Variable Cost Structure(2) Variable ~85% • Tempur Sealy’s total cost structure is highly variable; approximately 75% in total OPERATING EXPENSES • Tempur Sealy’s cost structure can be quickly aligned with sales trends Fixed ~45% Variable
Slide 8: Brands & Products
BRANDS & PRODUCTS 8 © 2019 Tempur Sealy International, Inc.
Slide 9: Complete Portfolio of Products
Complete Portfolio of Products TEMPUR MATERIAL HYBRID INNERSPRING MEMORY FOAM TEMPUR® STEARNS & FOSTER® SEALY CONFORM® SEALY HYBRID® COCOON BY TEMPUR BREEZE® SEALY SEALY (BED IN A BOX) (BED IN A BOX) TEMPUR ADAPT™ STEARNS & FOSTER® SEALY RESPONSE® OTHER SPECIALTY ADJUSTABLE BASES PILLOWS 9 © 2019 Te
Slide 10: Tempur-Pedic Breeze Launch
TEMPUR-PEDIC Launching the innovative, new breeze°, …designed to improve product mix, completes the largest rollout in Tempur history… with all night cooling. 10 © 2019 Tempur Sealy International, Inc.
Slide 11: Stronger Tempur-Pedic Product Offering
STRONGER TEMPUR-PEDIC PRODUCT OFFERING TEMPUR-ADAPT FAMILY TEMPUR-BREEZE FAMILY ADAPT PROADAPT LUXEADAPT PRObreeze° LUXEbreeze° SOFT SOFT SOFT MEDIUM MEDIUM MEDIUM FIRM FIRM FIRM HYBRID HYBRID HYBRID $2,199 $2,999 $3,999 $3,799 $4,499 Product Launched in 2018 Product Launching in 2019 11 © 2019 Temp
Slide 12: New Tempur-LUXEbreeze
NEW TEMPUR-LUXEbreeze° NEXT LEVEL COOLING COMFORT - 8° cooler OUTSIDE SMARTCLIMATE MAX DUAL COVER SYSTEM An enhanced zip-off cover with double the cool- to-touch power combined with a super-stretch inner layer so you feel cooler when you lie down. INSIDE PURECOOL+ Phase Change Material Exclusive, ne
Slide 13: New Tempur-PRObreeze
NEW TEMPUR-PRObreeze° ADVANCED ALL-NIGHT COOLING - 3° cooler OUTSIDE SMARTCLIMATE DUAL COVER SYSTEM A zip-off, cool-to-touch outer layer combined with a super-stretch inner layer so you feel cooler when you lie down INSIDE PURECOOL+ Phase Change Material Exclusive, next-generation technology absorbs
Slide 14: 2019
2019 14 © 2019 Tempur Sealy International, Inc.
Slide 15: Stearns & Foster Reinvented
Stearns & Foster Reinvented ALL-NEW & EXCLUSIVE Coil Technologies PROPRIETARY and EXCLUSIVE Memory Foam engineered by: ALL-NEW Natural + Cooling System 15 © 2019 Tempur Sealy International, Inc.
Slide 16: New Stearns & Foster Collection
NEW Stearns & Foster Collection: ESTATE Starting at $1,499 LUX ESTATE Starting at $2,299 LUX ESTATE HYBRID Starting at $2,799 RESERVE Starting at $3,999 16 © 2019 Tempur Sealy International, Inc.
Slide 17: Management Comments
MANAGEMENT COMMENTS TEMPUR+SEALY
Slide 18: Fourth Quarter 2018 Highlights
• Net sales increased 7.1% Fourth Quarter 2018 • Global Direct Sales increased 23% Highlights • North American Tempur-Pedic mattress units grew 36% Three Months Ended December 31st %Change 2018 2017 %Change Constant Currency(1) Net Sales $676.1 $631.4 7.1% 8.2% Net Income 12.3 48.4 (74.6%) (72.1%) E
Slide 19: Full Year 2018 Highlights
Full Year 2018 • Global Direct Sales increased 25% Highlights • International Net Sales increased 8% Twelve Months Ended December 31st %Change 2018 2017 %Change Constant Currency(1) Net Sales $2,702.9 $2,700.6 0.1% (0.3%) Net Income 100.5 151.4 (33.6%) (32.7%) EBITDA(1) 356.1 376.5 (5.4%) (5.0%) Adj
Slide 20: Update on Mattress Firm
Update on Mattress Recent Updates: • In early January, both parties had discussions and Firm agreed to a thirty day stay of all litigation. • The parties have now agreed to a settlement of all litigation matters between them in consideration of full mutual releases of all claims. • As mentioned on t
Slide 21: Debt Structure
• Leverage ratio midpoint(3): 3.5x with a range of 3.0x to 4.0x Debt Structure • Fixed rate debt represent ~60% of total debt; capital structure contains long dated maturities LEVERAGE(1) MANDATORY MATURITY PROFILE(4) 5.00x $600 $450 4.05x $435 3.87x 3.50x $47 $53 2.50x 3Q18 4Q18 Target 2019 2020 20
Slide 22: 2019 Targets and Outlook Assumptions
Outlook Assumptions 2019 Targets and • Continued Tempur-Pedic growth Near Term Priorities • Pricing tailwinds of $30 million • Improved merchandising mix • Continued slight headwinds from Sealy • Normalized incentive compensation headwind of $20 million • Incremental innovation investments of $15 mi
Slide 23: 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 23 © 2019 Tempur Sealy International, Inc.
Slide 24: Appendix
TEMPUR#SEALY APPENDIX
Slide 25: Aspirational Plan
Aspirational Plan(5) ➢ On August 7, 2017, the Company implemented a new Aspirational Program in the form of performance restricted stock units tied to challenging performance targets. This Aspirational Program builds on the challenging goals and the structure established in our original Aspirational
Slide 26: Forward-Looking Statements
Forward-Looking Statements This investor 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, guidance, objectives, goals, strategie
Slide 27: Footnotes
Footnotes 1. Adjusted Net Income, EBITDA, adjusted EBITDA, leverage, leverage ratio, and constant currency are a non-GAAP financial measures. Please refer to the "Use of Non- GAAP Financial Measures and Constant Currency Information" on slide 28 for more information regarding the definitions of adju
Slide 28: Use of Non-GAAP Financial Measures and Constant Currency Information
Use of Non-GAAP Financial Measures and Constant Currency Information In this investor presentation and certain of its press releases and SEC filings, the Company provides information regarding adjusted net income, EBITDA, adjusted EBITDA, consolidated funded debt less qualified cash, leverage and le
Slide 29: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three Months Ended Trailing Twelve Months Ended (in millions) December 31, 2018 December 31, 2017 December 31, 2018 GAAP Net income $ 12.3 $ 48.4 $ 100.5 Interest expense, net 22.8 21.9 92.3 Income taxes 15.2 (2.7) 49.6 Depreciation and amortization 27.6 25.4 113.7 EBI
Slide 30: Adjusted Net Income and Adjusted EPS
Adjusted Net Income and Adjusted EPS Three Months Ended (in millions, except per share amounts) December 31, 2018 December 31, 2017 GAAP net income $ 12.3 $ 48.4 Loss from discontinued operations, net of tax (1) 6.9 17.9 Customer-related charges (2) 21.2 - Restructuring Costs (3) 9.1 - Supply Chain
Slide 31: Leverage Reconciliation
Leverage Reconciliation (in millions, except ratio) 3Q18 4Q18 Total debt $ 1,689.0 $ 1,646.2 Plus: Deferred financing costs(1) $ 8.1 7.6 Plus: Letters of credit outstanding 23.1 23.7 Consolidated funded debt $ 1,720.2 $ 1,677.5 Less: Domestic qualified cash(2) 12.8 13.6 Less: Foreign qualified cash(
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