Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (May 2018)
33 slides from Somnigroup International's investor presentation, May 10, 2018
Slide 1: Tempur Sealy International, Inc. (TPX) Investor Presentation
Tempur Sealy International, Inc. (TPX) “Success is strengthening our Iconic Brands while driving higher ROIC through focused execution” 1 © 2018 Tempur Sealy International, Inc.
Slide 2: Tempur Sealy Overview
Tempur Sealy • Strong global brands serving all price points International, Inc. • Omni-channel distribution balanced between wholesale (TPX) and direct to consumer • Global manufacturing footprint “Success is strengthening • Structural growth industry, with high ROIC and robust our Iconic Brands fr
Slide 3: Delivering Shareholder Value
Focus on long-term initiatives: • Develop the most innovative bedding products in all Delivering the markets we serve • Invest significant marketing dollars to promote our Shareholder Value worldwide brands • Optimize worldwide distribution to be where consumers want to shop • Drive increases in EBI
Slide 4: Growing Global Mattress Industry
• US mattress sales grew at a 7% CAGR and Non-US mattress sales grew at a 4% CAGR since 2009, driven by consumer Growing Global shift to higher priced mattresses and population growth • Tempur Sealy is at the center of global trend toward higher Mattress Industry quality and more innovation, driving
Slide 5: Brands and Products
BRANDS AND PRODUCTS 5
Slide 6: Tempur Sealy Has Well Established Global Brands
Tempur Sealy Has • Brands are complementary and fully cover the market Well Established • Tempur-Pedic is the premium market leader Global Brands 6 © 2018 Tempur Sealy International, Inc.
Slide 7: Complementary Brands
Complementary Brands Percentage of Revenue(4) Tempur-Pedic Nothing precisely adapts, supports and aligns like Tempur-Pedic for life- 50% changing sleep Stearns & Foster Finest beds made with exceptional 20% materials and unparalleled craftsmanship Sealy Featuring Posturepedic Technology™ providing s
Slide 8: Complete Portfolio of Products
Complete Portfolio of Products TEMPUR MATERIAL HYBRID INNERSPRING MEMORY FOAM TEMPUR BREEZE® SEALY HYBRID® SEALY CONFORM® STEARNS & FOSTER® COCOON BY SEALY (BED IN A BOX) TEMPUR ADAPT™ STEARNS & FOSTER® SEALY RESPONSE® OTHER SPECIALTY PILLOWS ADJUSTABLE BASES 8 © 2018 Tempur Sealy International, Inc
Slide 9: Tempur-Pedic 2018
TEMPUR-PEDIC 2018 The most integrated product …to improve SKU productivity offering in the brand’s history… and increase unit market share 9 © 2018 Tempur Sealy International, Inc.
Slide 10: 10 © 2018 Tempur Sealy International, Inc.
10 © 2018 Tempur Sealy International, Inc.
Slide 11: Sealy Hybrid 2018
SEALY HYBRID 2018 Leveraging the Best of Sealy’s coolest hybrid utilizing the latest Both Worlds. in Posturepedic Technology. 11 © 2018 Tempur Sealy International, Inc.
Slide 12: Pillows and Adjustable Bases
• Pillows with Premium Knit Covers with New Cooling Bedding System Technology New Adjustable Bases and • Streamlined, upgraded range of Adjustable Bases Pillows: Supporting Tempur-Pedic, Stearns & Foster, and Sealy TEMPUR-Adapt™ Tempur Sealy Adjustable Bases Pillows TEMPUR-PEDIC ERGO EXTEND TEMPUR-P
Slide 13: Global Manufacturing Footprint
Global Manufacturing Foot Print 35 International Facilities 23 North American Facilities Wholly owned and Joint Venture Tempur-Pedic Facility Joint Venture Licensee 13 © 2018 Tempur Sealy International, Inc.
Slide 14: Flexible Operating Model with a Variable Cost Structure
COST OF GOODS SOLD Fixed ~15% ~10% of total costs Flexible Operating Model with a Variable Variable ~85% Cost Structure(4) ~55% of total costs • Tempur Sealy’s total cost structure is highly variable; approximately 75% in total OPERATING EXPENSES • Tempur Sealy cost structure can be quickly aligned
Slide 15: Global Manufacturing Footprint and Adjusted Gross Margin
• North American and International operating Global models support demand • Driving for operational improvements on Manufacturing key metrics such as product quality and on- time delivery Foot Print • Adjusted Gross Margins consistent with prior year despite significant volume deleverage CONSOLIDATE
Slide 16: Latest Results
LATEST RESULTS 16
Slide 17: First Quarter 2018 Highlights
First Quarter 2018 • Total Net Sales Increased 3% Excluding Mattress Firm Highlights • North American Direct Sales Increased Approximately 30% Three MONTHS ENDED March 31 %Change 2018 2017 %Change Constant Currency(6) Net Sales $648.0 $722.1 -10.3% -12.2% Net Income 23.1 33.9 -31.9% -39.5% EPS 0.42
Slide 18: Worldwide Direct Business
Worldwide Direct Business NORTH AMERICA DIRECT CHANNEL E-commerce & Call Center Company-Owned Stores $30 $- 1Q17 1Q18 $ in millions North America Direct Channel grew NORTH AMERICAN INTERNATIONAL approximately 30% in the first quarter 2018 SALES CHANNEL SALES CHANNEL 18 © 2018 Tempur Sealy Internatio
Slide 19: US Company-Owned Stores
US Company • 31 Stores Currently Open • Average Sales per Store in 2017 of Approximately $2.2M Owned Stores • New Stores have a payback of approximately 6 to 9 months(4) 19 © 2018 Tempur Sealy International, Inc. Please Note: average sales per store includes stores open from Jan 1, 2017 through Dec
Slide 20: Debt Structure
• We expect to pay down debt to enter a normalized range for leverage • Then consider share repurchase program / acquisition Debt Structure • Leverage ratio target(7): 3.5x with a range of 3.0x to 4.0x • Fixed rate debt represent ~60% of total debt; capital structure contains long dated maturities •
Slide 21: Near Term Outlook
NEAR TERM OUTLOOK 1 HYBRID STE ‘ Oe Seal ARNS g FOsteR| TEMPUR-PE
Slide 22: Growing Revenues
Growth strategy, key recapture methods: • Increased velocity of our products in our current Growing Revenues customers • Increased balance of share with current customers in North America • Increased presence of new retailers in markets that are currently underpenetrated • Capture fair share of dire
Slide 23: 2018 Targets and Near Term Priorities
Long-Term Goals • Develop the most innovative bedding products in all the markets we serve 2018 Targets and • Invest significant marketing dollars to promote our worldwide brands Near Term Priorities • Optimize worldwide distribution to be where consumers want to shop • Drive increases in EBITDA(1)
Slide 24: 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 24 © 2018 Tempur Sealy International, Inc.
Slide 25: Appendix
APPENDIX 25
Slide 26: Aspirational Plan
Aspirational Plan(9) ➢ 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 27: 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 28: Footnotes
Footnotes 1. EBITDA and adjusted EBITDA are a non-GAAP financial measures. Please refer to the "Use of Non-GAAP Financial Measures and Constant Currency Information" beginning on slide 29 for more information regarding the definitions of EBITDA and adjusted EBITDA, including the adjustments from the
Slide 29: 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, adjusted gross margin, adjusted EPS, EBITDA, adjusted EBITDA, and consolidated funded
Slide 30: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 30
Slide 31: Leverage Reconciliation
Leverage Reconciliation (in millions, except ratio) 1Q16 1017 1918 Total debt $ 1496.2 $ 1,869.1 $ 1,783.8 Plus: Letters of credit outstanding 18.8 29 234 Consolidated funded debt 1515.0 18920 1,806.9 omestic qualified cash!” 63 15 14.3 ‘oreign qualified cash” 18.5 18.6 241 Consoldiated funded debt
Slide 32: Adjusted Net Income and Adjusted EPS
Adjusted Net Income and Adjusted EPS 32
Slide 33: Adjusted Gross Margin
Adjusted Gross Margin 1Q 2018 1Q 2017 1Q 2016 Consolidated Margin Consolidated Margin Consolidated Margin Net sales 648.0 722.1 721.0 Gross profit 267.9 41.3% 286.6 39.7% 291.0 40.4% Adjustments (1) - 11.5 0.2 Adjusted gross profit 267.9 41.3% 298.1 41.3% 291.2 40.4% Adjustments include $11.5 millio
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