Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (July 2022)
46 slides from Somnigroup International's investor presentation, Jul 27, 2022
Slide 1: Tempur Sealy International, Inc. (TPX)
© 2022 Tempur Sealy International, Inc. All rights reserved. We continue to demonstrate the resilience of our business model as we generate profits, invest in our business, return capital to shareholders, and outperform the market. The team remains focused on delivering on our initiatives to drive c
Slide 2: Who We Are: Improving the Sleep of More People
To Improve the Sleep of More People, Every Night, All Around the World Who We Are Tempur Sealy is committed to improving the sleep of more people, every night, all around the world. As a leading designer, manufacturer, distributor and retailer of bedding products worldwide, we know how crucial a goo
Slide 3: TPX at a Glance
Industry • The global bedding industry of ~$120 billion1 has historically experienced consistent growth. • The U.S. market averages mid‐ single digit growth annually, driven by units and dollars.1 • The international market is highly fragmented and about 40% larger than the size of the U.S. market.1
Slide 4: Competitive Advantages
• Worldwide omni‐channel presence • Iconic brand and product portfolio • World‐class manufacturing capabilities • Industry‐leading balance sheet and free cash flow2 Adjusted earnings per share2 is expected to grow at a CAGR of 27% between 2017-2022 Competitive Advantages 4 *2022 adjusted EPS based o
Slide 5: Product Brands
Product Brands Mattresses / Pillows / Accessories Product and Retail Brands DTC Retailer Brands Online / Offline 5
Slide 6: Building Blocks to Future Growth
Increase total addressable market internationally through new product launches in Europe & APAC. Expand into OEM market to drive further sales growth. Grow wholesale through existing and new retail relationships. Invest in innovation to meet customer demand. Execute on capital allocation strategy. E
Slide 7: Worldwide Omni-Channel
TEMPUR#SEALY Worldwide Omni-Channel
Slide 8: Successful Omni-Distribution Platform
• Significant worldwide sales growth • Highly profitable and expanding rapidly • Direct customer relationships Ecommerce • Luxury Tempur‐Pedic®, Dreams, and multi‐branded showroom experiences • Operate over 650 stores worldwide and expanding • Own the end customer and highly profitable Company- Owne
Slide 9: Wholesale
Third-Party Retailers • Win‐win relationships • Broad‐based worldwide distribution and broadly diversified • Over 5,400 retail partners around the world selling through over 25,000 doors and ecommerce platforms • Global sales force of over 500 people supporting our portfolio of brands U.S. OEM Oppor
Slide 10: Direct to Consumer
• Strong, long‐term growth of high‐margin sales from web, call center, and company‐owned stores • Strong growth within the direct channel, growing 66% in Q2’22, primarily driven by the acquisition of Dreams in the UK • Less than one‐third of our direct channel sales utilize financing. We believe our
Slide 11: Company-Owned Store Strategy
TEMPUR® EuropeSealy® Gallery Asia SOVA® SwedenSleep Outfitters® U.S. Tempur‐Pedic® U.S. Tempur‐Pedic® MexicoDreams UK We see a potential opportunity to organically increase our store count through opening an average of 60 new stores per year. Company-Owned Store Strategy O P E R A T I N G O V E R 6
Slide 12: Brands & Products
TEMPUR*#SEALY Brands & Products 12
Slide 13: North America Markets
• The bedding market has historically experienced consistent growth. While our share has grown significantly over the last 5 years, the total market share of the largest three domestic bedding manufacturers has not materially changed.1 • Branded bedding represents the majority of products sold, espe
Slide 14: International Markets
• Highly fragmented with broad geographic diversity across Europe and Asia • Acquired Dreams, the leading bedding retailer in the UK in 2021 • Developing new TEMPUR® line of mattresses to expand addressable market in 2023 • Tempur Sealy customizes go‐to market approach by country • Europe: success w
Slide 15: Rapidly Growing International Joint Ventures
Rapidly Growing International Joint Ventures • Founded in 2000 • Operates in 21 countries and territories • Top 3 internationally branded bedding manufacturer in China • Full-time employees: 1,100+ Asia • Acquired in 2020 • Full-time employees: 250+ United Kingdom $340 MILLION OF JOINT VENTURE SALES
Slide 16: Expanding Global Licensing Sales
Expanding Global Licensing Sales Sealy Manufacturing Licensees: • Our 27 licensee manufacturing facilities generate high return on investment • They represent a low-risk opportunity to introduce our brands and products in regions in which we do not currently operate, primarily across EMEA, APAC, and
Slide 17: Portfolio of Global Brands
Tempur-Pedic®: leading worldwide premium bedding industry position • Tempur‐Pedic® uniquely adapts, supports, and aligns to you to deliver truly life‐changing sleep. $2,449‐$7,999 Stearns & Foster®: high-end-targeted brand • The world’s finest beds that are made with exceptional materials, time‐hono
Slide 18: Solution-Driven Innovation for Today's Consumer
Natural Comfort Snoring Support Climate Sleep-Health Metrics Innovative Technologies S O L U T I O N - D R I V E N I N N O V A T I O N F O R T O D A Y ’ S C O N S U M E R 18
Slide 19: International 2023 TEMPUR Launch
• Expect to launch an entirely new product lineup for TEMPUR® in both the Europe and Asia‐Pacific markets beginning in the first quarter of 2023. • The underlying technology of the new lineup builds on the innovation that has already been very well received in North America. • This new lineup will a
Slide 20: Research and Development Process and Technologies
Leading research and development process to deliver meaningful innovation that meets consumer needs Surface‐Guard Technology™ SealyChill™ Featuring Industry- Leading Technologies U.S. Product Launch Cycle POSTUREPEDIC ® PLUS POSTUREPEDIC® ESSENTIALS™ Launched in 2021 Launching in 2022 20
Slide 21: Stearns & Foster Opportunity
21 Stearns & Foster Opportunity Product Investments • Launching new, innovative Stearns & Foster products in 4Q’22 Marketing Investments • Supporting Stearns & Foster with record advertising in 2022 Opportunity to grow Stearns & Foster to be our next $1 BILLION BRAND, more than doubling its size tod
Slide 22: World-Class Manufacturing Capabilities
World-Class Manufacturing Capabilities 22
Slide 23: Leading Manufacturing Capabilities
Leading Manufacturing Capabilities • 69 manufacturing facilities • 16 million square feet of manufacturing & distribution operations R&D Innovation • 75,000 square feet of research & development • 4 state‐of‐the art product‐testing locations Wholly owned (30) Joint Venture (8) Licensee (27)Tempur‐Pe
Slide 24: Expanding Manufacturing Capacity
Non-Recurring Investments • Opening a new, state‐of‐the‐art Tempur‐Pedic® and OEM foam‐ pouring facility in Indiana by 2023 • Expanding three existing foam facilities in the U.S. by 2023 • Increasing capacity to hold key chemical inputs and expand safety stock of certain products • Expanding our tot
Slide 25: Recent Performance
TEMPUR*SEALY Recent Performance
Slide 26: Second Quarter and Trailing Twelve Month Performance
Three Months Ended Trailing Twelve Months Ended (in millions, except percentages and per common share amounts) June 30, 2022* June 30, 2021 % Change June 30, 2022* June 30, 2021 % Change Net Sales $1,211.0 $1,169.1 3.6% $5,168.4 $4,402.2 17.4% Net Income $90.6 $140.8 ‐35.7% $574.5 $537.4 6.9% Adjust
Slide 27: 2022 Outlook
Expect full-year adjusted EPS between $2.60 and $2.80 2022 Other Modeling Assumptions Depreciation & Amortization $185M Capital Expenditures >$250M Interest Expense $100M U.S. Federal Tax Rate 24.5% Diluted Share Count 180M shares 2022 Outlook1 27 Our 2022 expectations include investments of: • Appr
Slide 28: Historical Industry Performance
Historical Industry Performance Source: ISPA Reports, includes domestic manufactured units 2001 – 2021, import units 2016‐2021 • Industry unit growth is generally consistent over a cycle, growing low‐ single digits in the average year, growing at a 2% CAGR from 2001‐2021 • Industry is typically resi
Slide 29: Flexible Cost Structure
0% 20% 40% 60% 80% Enhanced +10% Natural 70% Flexible Cost Structure1 29 • The business is naturally highly‐variable, with 85% of COGS and 45% of operating expenses naturally flexing with sales • In total, the natural variability of our operating cost structure is approximately 70% • Our business mo
Slide 30: Industry-Leading Balance Sheet & Cash Flow
Industry-Leading Balance Sheet & Cash Flow 30
Slide 31: Balanced Capital Allocation Strategy
31 • Long‐term target leverage ratio of 2.0 – 3.0x2 • Continue to invest in the business, including a new domestic foam‐pouring plant to be operational in 2023 • Disciplined approach to shareholder returns includes a quarterly dividend and expected repurchase of at least 10% of our shares outstandin
Slide 32: Strong Balance Sheet & Cash Flow
$0 $200 $400 $600 $800 2018 2019 2020 2021 TTM 2022 Full-Year Operating Cash Flow Credit ratings: Fitch: BB+ (August 2021) Moody’s: Ba1 (September 2021) S&P: BB+ (September 2021) Strong Balance Sheet & Cash Flow 32 1.00x 1.50x 2.00x 2.50x 3.00x 2Q21 3Q21 4Q21 1Q22 2Q22 Leverage2 Target Range Leverag
Slide 33: Environmental, Social, & Corporate Governance
Environmental, Social, & Corporate Governance 33
Slide 34: Environmental, Social, & Governance
Environmental, Social, & Governance Tempur Sealy is committed to protecting and improving our communities and environment. 34
Slide 35: Environmental, Social and Governance Highlights
Environmental • Committed to achieving carbon neutrality for our wholly owned global operations by 2040 • Achieved an 8.4% reduction in greenhouse gas emissions per unit produced at our wholly owned manufacturing and logistics operations in 2021 • Improved the percentage of waste diverted from our N
Slide 36: 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 36
Slide 37: Appendix
TEMPUR*#SEALY Appendix 37
Slide 38: Forward-Looking Statements
This investor presentation contains statements relating to the Company’s quarterly cash dividend, the Company’s share repurchase targets, the Company’s expectations regarding net sales for 2022 and adjusted EPS for 2022 and subsequent periods and the Company’s expectations for increasing sales growt
Slide 39: 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 EPS, EBITDA, adjusted EBITDA, free cash flow, consolidated indebtedness less netted cash, and leverage, which are not recognized terms under U.S.
Slide 40: QTD Adjusted Net Income and Adjusted EPS
40 QTD Adjusted Net Income(2) and Adjusted EPS(2) *For a reconciliation net income to adjusted net income and adjusted EPS in prior reporting periods, please refer to the Company’s SEC filings.
Slide 41: TTM Adjusted Net Income and Adjusted EPS
41 TTM Adjusted Net Income(2) and Adjusted EPS(2) *For a reconciliation net income to adjusted net income and adjusted EPS in prior reporting periods, please refer to the Company’s SEC filings.
Slide 42: QTD EBITDA
42 QTD EBITDA(2) *For a reconciliation net income to EBITDA and Adjusted EBITDA in prior reporting periods, please refer to the Company’s SEC filings.
Slide 43: TTM Adjusted EBITDA
43 TTM Adjusted EBITDA(2) *For a reconciliation net income to EBITDA and Adjusted EBITDA in prior reporting periods, please refer to the Company’s SEC filings.
Slide 44: Leverage Reconciliation
44 Leverage(2) Reconciliation *For a reconciliation of leverage to consolidated indebtedness less netted cash in prior reporting periods, please refer to the Company’s SEC filings.
Slide 45: Footnotes
© 2022 Tempur Sealy International, Inc. All rights reserved. 1 Management estimates 2 Adjusted net income, EBITDA, adjusted EBITDA, adjusted EPS, leverage and constant currency are non‐GAAP financial measures. Please refer to the “Use of Non‐GAAP Financial Measures and Constant Currency Information”
Slide 46: Tempur Sealy
TEMPUR#SEALY
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