Somnigroup International Inc. · NYSE:SGI

Somnigroup International — Tempur Sealy International — Q2 2015 Earnings Presentation

29 slides from Somnigroup International's earnings presentation, Jul 30, 2015

  1. Slide 1: Tempur Sealy International 2Q 2015 Earnings Call Presentation

    1 Tempur Sealy International, Inc. July 30, 2015 Earnings Call Presentation 2Q 2015

  2. Slide 2: Forward-Looking Statements

    2 Forward-Looking Statements Note Regarding Trademarks, Trade Names and Service Marks: TEMPUR, Tempur-Pedic, TEMPUR-Cloud, TEMPUR-Choice, TEMPUR-Weightless, TEMPUR-Contour, TEMPUR-Rhapsody, TEMPUR-Flex, GrandBed, TEMPUR-Simplicity, TEMPUR-Ergo, TEMPUR-UP, TEMPUR-Neck, TEMPUR-Symphony, TEMPUR-Comfort

  3. Slide 3: 2Q 2015 – Overall Key Takeaways

    2Q 2015 – Overall Key Takeaways Note 1: Management estimates. Please refer to “Forward Looking Statements”. Note 2: Adjusted EPS (which is a non-GAAP financial measure) is EPS adjusted for the Sealy Acquisition and integration costs, including the transition of manufacturing facilities in North Amer

  4. Slide 4: Tempur Sealy Strategic Overview

    4 Tempur Sealy Strategic Overview Building Strong Brands Best Channel Management Delivering Product Innovation  Building the most recognized brands in the industry  Complementary brands with distinct roles and messaging  Delivering a cadence of innovation  Solving all key consumer needs  Drivin

  5. Slide 5: Building Strong Brands

    5 Building Strong Brands  Focused on improving the effectiveness of our marketing spend to:  Strengthen brand preference  Drive traffic and conversion  Improve return on investment TV Joint Marketing PrintCatalog Digital Social Internet & Mobile

  6. Slide 6: TEMPUR-Flex – Significant Growth Opportunity

    6 TEMPUR-Flex – Significant Growth Opportunity Responsive support that moves with you, with the personalized comfort of TEMPUR • Prima ($2,299) • Supreme ($2,899) • Elite ($3,499) Note: Retail list price point for queen set.

  7. Slide 7: 2015 Posturepedic – Recommitted To Back Support

    7 2015 Posturepedic – Recommitted To Back Support POSTUREPEDIC POSTUREPEDIC PLUS POSTUREPEDIC PREMIER HYBRID HYBRID experience TRADITIONAL experience ($999-$1,399) ($699-$999) ($1,299-$1,999) Note: Retail list price point for queen set. Significantly improved value proposition with enhanced aestheti

  8. Slide 8: International – 2015 Product Launches

    8 International – 2015 Product Launches Robust Pipeline, With Significant Introductions Planned for 2016 TEMPUR NorthStearns & Foster (Europe)Sealy Hybrid (Europe)

  9. Slide 9: Best Channel Management: Integrated Sales Team and Dealer Support

    9 Integrated Sales Team Best Dealer Support Best Partner To Deliver Gross Profit $ Category Management Integrated Product Portfolio Best Brands In-Store Marketing & Training Best Channel Management Tempur, Sealy, Stearns & Foster Innerspring, Hybrid, Tempur material, Adjustable bases, Pillows Fully

  10. Slide 10: Cost Productivity – Sealy US Margin Initiatives

    10 Cost Productivity – Sealy US Margin Initiatives  Factory Productivity  Standardize best practices  Improve forecasting and demand planning, smooth production, reduce overtime

  11. Slide 11: Cost Productivity – Across The Company

    11 Cost Productivity – Across The Company  Product Design  Materials (cost basis is largely in materials)  Lower complexity  Procurement  Cost productivity  Competitive tension  Operating Expenses  Selling and marketing  General and administrative Eliminating waste, driving greater efficien

  12. Slide 12: Summary

    12 Summary Note: Management estimates. Please refer to “Forward Looking Statements”.  2Q performance was strong and results were ahead of plan  Key pillars of our strategy (brand building, product innovation, channel management and cost productivity) are working  Opportunity is significant and ou

  13. Slide 13: 2Q Financials and Guidance

    13 2Q Financials and Guidance

  14. Slide 14: 2Q 2015 – Consolidated Performance Summary

    14 2Q 2015 – Consolidated Performance Summary $715.0 37.6% 7.8% $0.39 $77.7 4.3x $764.4 39.4% 9.2% $0.53 $90.3 3.8x Net Sales Adjusted Gross Margin Adjusted Operating Margin Adjusted EPS Adjusted EBITDA Leverage 2Q-14 2Q-15  Net sales of $764.4 million were ahead of expectations and on a constant c

  15. Slide 15: 2Q 2015 – North America Key Takeaways

    15 2Q 2015 – North America Key Takeaways  Strong 2Q performance with net sales, margins and operating income ahead of plan  Tempur-Pedic US sales up high-teens, Sealy sales up mid-single digits  TEMPUR-Flex is off to a very strong start with favorable reaction from customers and consumers; also s

  16. Slide 16: 2Q 2015 – North America Performance Summary

    16 2Q 2015 – North America Performance Summary $577.9 33.7% 33.8% 8.4% 8.9% $630.3 36.1% 36.6% 10.2% 11.2% Net Sales GAAP Gross Margin Adjusted Gross Margin GAAP Operating Margin Adjusted Operating Margin North America 2Q-14 2Q-15  North America net sales increased 9.1% to $630.3 million and on a c

  17. Slide 17: 2Q 2015 – International Key Takeaways

    17 2Q 2015 – International Key Takeaways Note 1: Management estimates. Please refer to “Forward Looking Statements”. Note 2: For information on the methodology used to present constant currency basis please refer to “Constant Currency Information” at the end of this presentation.  International bus

  18. Slide 18: 2Q 2015 – International Performance Summary

    18 2Q 2015 – International Performance Summary $137.1 53.7% 53.7% 17.7% 19.0% $134.1 52.3% 52.3% 17.7% 18.1% Net Sales GAAP Gross Margin Adjusted Gross Margin GAAP Operating Margin Adjusted Operating Margin International 2Q-14 2Q-15 -2.2% Actual +14.1% Constant Currency  International net sales dec

  19. Slide 19: Raising FY 2015 Guidance

    19 Raising FY 2015 Guidance1 FY 2015 Guidance New Guidance Range Y/Y Chg. Constant Currency2 Y/Y Chg. Old Guidance Range Net Sales $3.125 to $3.175 Billion +4.5% to +6% +8% to 10% $3.100 to $3.175 Billion Adjusted EPS3 $3.00 to $3.20 +13% to +21% +25% to +32% $2.80 to $3.15 Note 1: Management estima

  20. Slide 20: Appendix

    Appendix | TEMPUR*SEALY

  21. Slide 21: 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 EPS, adjusted gross profit, adjusted gross margin, adjusted operating income (loss), adjusted operating margin, EBITDA, EBITDA in ac

  22. Slide 22: 2Q 2015 Adjusted EPS Reconciliation

    2Q 2015 Adjusted EPS Reconciliation 2Q 2014 and 2Q 2015 Adjusted EPS 22 (1) CEO transition represents severance and related benefits costs associated with the transition of the Company's CEO. Excluding the tax effect, the CEO transition cost is $7.1 million. In future periods, additional adjustments

  23. Slide 23: 2Q Adjusted EBITDA Reconciliation

    2Q Adjusted EBITDA Reconciliation 2Q 2014 and 2Q 2015 Adjusted EBITDA Reconciliation 23 (1) Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs related to the continue

  24. Slide 24: Twelve Months Ended June 30, 2015 Adjusted EBITDA Reconciliation

    Twelve Months Ended June 30, 2015 Adjusted EBITDA Reconciliation 24 (1) Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs related to the continued alignment of the N

  25. Slide 25: Twelve Months Ended June 30, 2014 Adjusted EBITDA Reconciliation

    (in millions) Twelve Months Ended June 30, 2014 Net income $ 92.9 Interest expense 92.4 Income taxes 59.0 Depreciation & amortization 97.3 EBITDA $ 341.6 Adjustments for financial covenant purposes: Loss on disposal of business 20.4 Transaction costs 1.5 Integration costs 25.3 Adjusted EBITDA $ 388.

  26. Slide 26: Debt Reconciliation and Leverage Ratio Calculation

    (in millions) As of June 30, 2014 Consolidated funded debt less qualified cash $ 1,688.2 Adjusted EBITDA 388.8 4.3 times Debt Reconciliation and Leverage Ratio Calculation Reconciliation of Total Debt to Consolidated Funded Debt Less Qualified Cash 26 (1) Qualified cash as defined in the credit agre

  27. Slide 27: 2Q 2015 Adjusted Gross And Operating Margin Reconciliation

    2Q 2015 Adjusted Gross And Operating Margin Reconciliation 2Q 2015 Adjusted Gross And Operating Margin 27 (1) Adjustments for the North America business segment represent integration costs, which include compensation costs, professional fees and other charges related to the transition of manufacturi

  28. Slide 28: 2Q 2014 Adjusted Gross And Operating Margin Reconciliation

    28 2Q 2014 Adjusted Gross And Operating Margin Reconciliation 2Q 2014 Adjusted Gross And Operating Margin (1) Adjustments for the North America business segment represent integration costs, which include severance and benefits costs, professional fees and other charges related to the transition of m

  29. Slide 29: 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”, which is a non-GAAP financi

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