Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (March 2016)
27 slides from Somnigroup International's investor presentation, Mar 7, 2016
Slide 1: Tempur Sealy International, Inc. (TPX) – March 2016
1 March 2016 “Success is strengthening our Iconic Brands while driving higher ROIC through focused execution” Tempur Sealy International, Inc. (TPX)
Slide 2: Forward-Looking Statements / World's Largest Bedding Products Company
Forward-Looking Statements: This investor presentation contains “forward-looking statements” within the meaning of federal securities laws. Please review carefully the cautionary statements and other information included in the appendix under “Forward looking Statements”. This presentation includes
Slide 3: Bedding Industry Market Opportunity
3 Bedding Industry Market Opportunity Please refer to the footnotes in the appendix at the end of the presentation. Total: $20 B Total: $44 B North America International Total: $10 B Retail Market Size $64 B(5) Wholesale Market Size $32 B(5) Tempur Sealy 2015 Net Sales $3.2 B(2) Total: $22 B Total M
Slide 4: Growing Global Mattress Industry
4 Growing Global Mattress Industry $ in billions Please refer to the footnotes in the appendix at the end of the presentation. US mattress sales growing at a 6% CAGR over last twenty years driven by consumer shift to higher priced mattresses Non-US mattress sales have nearly doubled over the las
Slide 5: US Wholesale Bedding Industry
5 US Wholesale Bedding Industry(15) Please refer to the footnotes in the appendix at the end of the presentation. The US wholesale bedding market has recently consolidated Tempur Sealy 32% Serta Simmons 39% All Other 24% Select Comfort 5%
Slide 6: Tempur Sealy Has Well Established Global Brands
6 Luxury Premium Mid-Price Value Tempur Sealy Has Well Established Global Brands Tempur-Pedic • Nothing precisely adapts, supports and aligns like Tempur-Pedic for life-changing sleep Stearns & Foster • Finest beds made with exceptional materials and unparalleled craftsmanship Sealy Posturepedic • P
Slide 7: Complete Portfolio Of Products
7 InnerspringHybrid Stearns & FosterTEMPUR-FlexTEMPUR-Cloud Memory Foam, Gel Visco, Latex Tempur Material Other Specialty Adjustable bases Pillows Complete Portfolio Of Products Sealy Posturepedic Hybrid Online Bed In A Box Focused on developing differentiated, consumer-preferred products
Slide 8: Entering bed-in-a-box distribution channel
8 Entering bed-in-a-box distribution channel to serve the online consumer Online bed-in-a-box currently represents ~2% of US bedding retail industry(5) Tempur Sealy advantages: brand, product expertise and cost (i.e. scale) Retailers to participate through online affiliate marketing COCOON b
Slide 9: Customer Preference
9 Customer Preference Please refer to the footnotes in the appendix at the end of the presentation. 44% of prospective US buyers are most likely to buy Tempur Sealy brands(9) Brands supported by large advertising investments >$1 billion of direct advertising spent on the Tempur-Pedic brand in
Slide 10: World Class Marketing Campaign
10 World Class Marketing Campaign TV Digital Social Print & CatalogsJoint Marketing Web/Mobile Focused on improving the effectiveness of our marketing spend Increase direct advertising Improve quality and effectiveness of cooperative advertising
Slide 11: World Class Marketing Campaign
11 World Class Marketing Campaign
Slide 12: Expanding Distribution
Expanding Distribution(8) Indirect USA Non-USA Total Bedding specialty retail 50% 25% 45% Furniture retail 25% 45% 30% Department stores 10% 10% 10% Warehouse/club stores 10% < 5% 7% Other retail / E-commerce < 5% < 5% < 5% Hospitality and contract < 5% < 5% < 5% Direct Company-owned stores < 5% 10%
Slide 13: Tempur Sealy's Variable Cost Structure
13 Tempur Sealy’s Variable Cost Structure(5) Materials ~65% Manufacturing/ Overhead ~15% Transportation ~15% Labor ~5% Please refer to the footnotes in the appendix at the end of the presentation. Tempur Sealy’s cost of goods sold is approximately 85% variable In addition, a considerable portion
Slide 14: Near Term Opportunities
• Product innovation and effective brand marketing • Cost productivity initiatives •Working capital initiatives • Investment of cash flow/capital allocation (stock buyback) Tempur Sealy • Favorable underlying macro trends • Stable market share • Brand expansion North America • Market share gains • B
Slide 15: 2016 Guidance and Targets
• Adjusted EBITDA(4): $500 million - $550 million • Debt: 3.5x leverage ratio(11) • Net Sales: Mid-single digit growth •Market share • Capital Expenditures: approximately $75 million • Depreciation and Amortization: $95 million – $100 million • Tax rate: ~30.5% 2016 Guidance and Targets(3) Near Term
Slide 16: Financial Overview: Net Sales
2014 2015 North America International Financial Overview: Net Sales(2) ($ in millions) $2,990 $3,151 2016 Target Net Sales Growth(3): Mid-Single Digits Includes the assumed negative impact of foreign exchange Expect to maintain North America market share Expect to grow International market s
Slide 17: Financial Overview: Aspirational Plan
Financial Overview: Aspirational Plan The Board has established an Aspirational Plan Achievement of the Aspirational Plan would likely create significant stockholder value Aspirational Plan Grants – Performance Restricted Stock Units (PRSUs) Equity awards representing approximately 2% of the
Slide 18: Financial Overview: Adjusted EBITDA
Financial Overview: Adjusted EBITDA (4) GAAP Net Income $108.9 GAAP Net Income $73.5 Please refer to the footnotes in the appendix at the end of the presentation. $405 $456 $525 $650 2014 2015 2016 Guidance Mid-Point 2017 Aspirational Target ($ in millions) (14) 2016 Adjusted EBITDA Guidance: $500
Slide 19: We Define Success As
We Define Success As “Achieve consistent, profitable growth” “Support our portfolio of brands with compelling marketing and product innovation” “Consistently deliver annual total cost improvements with excellent customer service” “Drive traffic and conversion with effective collaboration” “Accelerat
Slide 20: Thank you for your interest in Tempur Sealy International
Thank you for your interest in Tempur Sealy International Improving the Sleep of More People Every Night, All Around the World 20
Slide 21: Appendix
Appendix 21
Slide 22: 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 are not historical inform
Slide 23: Financial Overview: Capital Structure
Financial Overview: Capital Structure $167 $56 $311 $4 $458 $450 2016 2017 2018 2019 2020 2021 2022 2023 Mandatory Maturity Profile(13) Term A Term B 6.875% Senior Notes 5.625% Senior Notes 8.0% Sealy Notes ($ in millions) Leverage ratio target: 3.5x Fixed rate debt represents ~64% of total debt
Slide 24: Footnotes
Footnotes 1. Based on total annual EBITDA/adjusted EBITDA (where applicable) from publicly disclosed competitor financial information. 2. Based on the Company's results for fiscal 2014 or 2015, as applicable. For more information please refer to the Annual Report on Form 10-K for the year ended Dece
Slide 25: 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 earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted EBITDA and consolidated funded debt less qualified cash
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (in millions) Adjusted EBITDA 2014 2015 GAAP net income 108.9$ 73.5$ Interest expense 91.9 96.1 Income tax provision 64.9 125.4 Depreciation and amortization 89.7 93.9 EBITDA 355.4$ 388.9$ Adjustments for financial covenant purposes: Integration costs(1) 40.3 28.6 Rest
Slide 27: Leverage Reconciliation
Leverage Reconciliation (in millions, except ratio) 4Q 13 4Q 14 4Q 15 Total debt(1) 1,836.5$ 1,602.3$ 1,479.6$ Plus: Letters of credit outstanding 22.9 18.2 19.8 Consolidated funded debt 1,859.4 1,620.5 1,499.4 Less: Domestic qualified cash(2) 30.9 25.9 121.8 Less: Foreign qualified cash(2) 30.1 21.
Tempur Sealy International — Investor Presentation (March 2016) on 6ix