Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Raymond James Investor Conference 2014
27 slides from Somnigroup International's conference presentation, Mar 4, 2014
Slide 1: Tempur Sealy International, Inc. – Raymond James Investor Conference
TEMPUR*#SEALY Tempur Sealy International, Inc. Raymond James Investor Conference March 4, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements ‘This investor presentation contains “forward-looking statements,” within the meaning of federal securities laws, which include information concerning one or more of the Company's plans, objectives, goals, strategies, and other information thatis not historical information
Slide 3: Investment Highlights
TEMPUR*SEALY v¥ Comprehensive Portfolio of Iconic Brands ¥ Complementary Product Offering ¥ Truly Global v Significant Value Creation from Synergies v Strong Management Team ¥ Strong Financial Characteristics ee (eae a @ OPTIMUM “TEMPUR-?PEDIC <°TEMPUR ee, Management estinates TEMPUR+#SEALY
Slide 4: Complete and Cohesive Portfolio of Brands
Complete and Cohesive Portfolio of Brands Luxury| x=. © TEMPUR-PEDIC Premium Mid-Price + Thebest sleep of your life + Specialty innovation leader + Unparalleled craftsmanship + Luxury innerspring and hybrids = Thebest gel memory foam = Specialty offering of visco and latex = Unsurpassed back support
Slide 5: Complete Range Of Mattress Technologies
Complete Range Of Mattress Technologies a_i Hybrid Adjustable Firmness = Optimum Ge! Visco <Tewpun rob <-TEMPUR 5 TEMPUR+SEALY
Slide 6: Complete Range Of Bases and Accessories
Complete Range Of Bases and Accessories Adjustable Bases and Foundations Pillows Accessories Tewpurece TEMPURO MasrersDelure Topper iow = a = nN vy t.) rerun Goud ior TEMPUR Slippers TEMPUR dione aurea RS ‘Seay Pillows ‘Seay Torre TEMPUR#SEALY
Slide 7: The Industry's Only Truly Global Company
The Industry’s Only Truly Global Company @ Global mattress industry is large and growing — exceeds $21 billion annually (wholesale) Il Tempur Sealy Presence Nee 2 Bonedon COI. WondhattersPepor 2019(Top20Matalhitresscansumeion 7 TEMPUR+#SEALY
Slide 8: Strong, Established Management Team
Strong, Established Management Team Prior Experience _Years with Consumer Tempur or Name Position Prior Experience Products _Inter'l___Sealy Mark Sarvary President and CEO President, Campbell Soup North America CEO, J. Crew Group qv qv 5 President, Stouffer's Frozen Food Division at Nestle David Mon
Slide 9: Key Strategic Growth Initiatives
Key Strategic Growth Initiatives @ Product Innovation = Research and development = Newproductcategories @ Marketing = Advertising = In-store marketing and direct sales @ New Market Expansion * Newinternational markets * Non-consolidated markets @ Supply Chain “Easier To Do Business With” = Build wor
Slide 10: Product Innovation
Product Innovation @ Significant investment in new products in 2014 across global brand portfolio 2014 Tempur Contour Collection 2014 SAF Lux Estate Hybrid X>=™. << TEMPUR-PEDIC a < 24 Optimum coleton sot4 Terriers rez atrezces| TEMPUR@EayCean™ Pow TEMPUR-Sreene™ Pow PTIMUM Las Se Ls ORTIMY <TEMPUR
Slide 11: Marketing
Marketing @ Commitment to advertising with increased impressions, as well as increased in-store marketing investment in 2014 APUR- PEDIC Tempur-Pedic Sealy Posturepedic “AskMe” “Life Before Your Eyes” ‘Tempur-Pedic U.S. Flagship Store [New Tempur-Pedic In-Store Marketing 1" TEMPUR*SEALY
Slide 12: New Market Expansion
New Market Expansion @ Non-consolidated branded JV, licensee and 3rd party revenue exceeds $500M annually IB wy, Third Party or Licensee Markets ‘Wanagemart edimata based on wholesale pricsferfullyear 2012 12 TEMPUR#*SEALY
Slide 13: Supply Chain "Easier To Do Business With"
Supply Chain “Easier To Do Business With” @ Significant opportunities to optimize service and support retail growth @ Distribution network to service national retailers with considerable efficiency opportunities 13 TEMPUR#*SEALY
Slide 14: Significant Long-Term Revenue Synergies
Significant Long-Term Revenue Synergies $500M+ Long-Term North America + Leverage IP Technologies + Channel Synergies + Category Management $200M+ International + Non-Consolidated Branded JV, Licensee and 34 Party Revenue + Consolidation of Asia JV + Channel Synergies + Expand Distribution of Brands
Slide 15: Significant Cost Synergies
Significant Cost Synergies @ Cost synergies are projected in excess of $100 million annually long-term Projected Cost Synergies A MS > Vw we el | ‘$70M+ Corporate / Other SG&A Expenses (Sinmiltions) ‘# Streamline corporate administration @ Professional fees @ Indirectcosts across organization Wareho
Slide 16: Globally Diverse With Large US Presence
Globally Diverse With Large US Presence 2013 Sales By Geographic Region By Business Segment Hus I Tempur North America IB canada I Tempur international I other international I sealy By Product Segment By Channel Segment I Bedding BE Retail gy Other Bl Direct Products © other ‘Note 12013 incudes Seal
Slide 17: Acquisition of Sealy Doubled Our Size
Acquisition of Sealy Doubled Our Size @ Completed acquisition of Sealy on March 18, 2013 @ Fullyear pro forma sales ~ $2.8 billion, including full year of Sealy results (Sin milions) Net Sales $2,464 $1,418 $1,403 $1,105 $831 if 2009 2010 2011 2012 2013 ‘Note 12013 incudes Sealy resulisfomMarch 18,
Slide 18: Operating Margin Targets
Operating Margin Targets @ Lower 2013 operating margin reflects acquisition of Sealy and related transaction and integration costs (GAAP Reported Operating Margin) Operating Margin 15.0%*+ 13.5% : 9.9% ' ' 2013 2016P Long-Term 3-YR Target Target ‘Note 1-201 operating margin ndudes Sealy fom March 18
Slide 19: Adjusted EBITDA
Adjusted EBITDA @ Strong free cash flow characteristics with multi-year add back to net income as D&A should continue to exceed Capex by $25M+ (Sin millions) Adjusted EBITDA $550 $411 2013 2016P 3-YR Target ‘Note 7 Managemant estimates Please raferto Fonvard Looting Staterani Note 2: Adjusted EBITDA
Slide 20: Adjusted Earnings Per Share
Adjusted Earnings Per Share Adjusted EPS (Sper share) $3.18 $2.61 $2.16 $2.38 $1.12 : 2009 2010 2011 2012 2013 ‘Nols 12013 ncudes Sealy romMarch 1810 December 31, 2013 Periods 2008-2012 do natincude Sealy. Note 2: Adjusted EPS is EPS adjusted for Sealy ransection and integration costs, interest and
Slide 21: Efficient Capital Structure
Efficient Capital Structure @ No significant debt maturities until 2016 @ Efficient tax structure allows for greater than $1.0 billion of future foreign cash flow to be used to reduce debt @ Leverage target ~2.0x [Note 1: Please referiothe Company's SEC ings for more information regarding the calcul
Slide 22: Our 3-Year Target
Our 3-Year Target 2016 Target Sales $3.3B 6% CAGR Adj.EBITDA $550M 10% CAGR Adj. EPS $4.00+ 15%+ CAGR Leverage <2.5x 2.0x+ Reduction ote 7 Managementesimater Pleazerelerto ‘Forward Lookng Ststenaris Note 2: CAGResloulated overperod of2013-2016, Solas and AdjustadEG/TDA CAGRs are based on the Company
Slide 23: Summary
Summary @ Comprehensive portfolio of iconic brands and products @ The largest bedding company and the only global one @ Significant growth potential @ Integration provides significant cost synergies @ Strong financial characteristics 23 TEMPUR+SEALY
Slide 24: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company provides information regarding adjusted net income, adjusted earings per share, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), adjusted EBITDA, and consolidated funded debt and consolidated funded debt less qualified cash, w
Slide 25: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation 2013 Adjusted EPS ‘Year Ended ‘Year Ended {in millions, except per share amounts) December 31, December 31, 2013 2012 Netincome $ 786 $ 105.8 Plus: Transaction costs, net of tax” 132 67 Integration costs, net of tax 372 25 Long term debt refinance, net of tax” 65 = Adjust
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 2013 Adjusted EBITDA (in mitions) Net income attributable to Tempur Sealy International, Inc. Interest expense Income taxes Depreciation & amortization EBITDA ‘Adjustments for financial covenant purposes: Transaction costs“? Integration costs Refinancing charges Non-ca
Slide 27: TEMPUR*SEALY
TEMPUR*SEALY
Tempur Sealy International — Raymond James Investor Conference 2014 on 6ix