Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (November 2015)
27 slides from Somnigroup International's investor presentation, Nov 9, 2015
Slide 1: Tempur Sealy International, Inc. (TPX) Investor Presentation
1 November 2015 “Success is strengthening our Iconic Brands while driving higher ROIC through focused execution” Tempur Sealy International, Inc. (TPX)
Slide 2: Summary
2 Summary World’s Largest and Most Profitable Bedding Product Company 1 • Estimated 2015 Net Sales 2 $3.2 Billion • Estimated 2015 Adjusted EBITDA 3 $455 Million • Worldwide Employees 7,000 • Worldwide Manufacturing Facilities 26 North America International Tempur 2 1 Sealy 19 4 TPX New York Sto
Slide 3: Bedding Industry Market Opportunity
3 Bedding Industry Market Opportunity Matt ress es: $1… Mattre sses: $33 B Ba ses & … Bas es & … Mat tres s… Mattr esse s: $1… Ba s… Ba ses & … Total: $20 B Total: $44 B North America International Total: $10 B Retail Market Size $64 B6 Wholesale Market Size $32 B6 Tempur Sealy Net Sales7: $3.2 B To
Slide 4: Key Business Fundamentals
4 Consistently Solid Market Growth • Population growth • Replacement cycle High Margin Business Gross Margin % • Tempur Sealy ~40% • Bedding Retailers High 30s to Low 40s 9 Outstanding Free Cash Flow 10 • 4.5% of Net Sales 10 • 50% of Adjusted Pre-Tax Income 10 • Capital Expenditures represent
Slide 5: Long Term Strategic Plan
5 5 Global Market Leadership Consumer Preferred Products Broad Distribution and High Dealer Advocacy Strong Complementary Brands Ever Increasing Cost Competitiveness Improving the Sleep of More People Every Night, All around the World Committed, Capable People with Strong Shared Values Opportunistic
Slide 6: Well Established Global Brands
6 Well Established Global Brands Tempur-Pedic • Nothing precisely adapts, supports and aligns like Tempur-Pedic for the “Best Sleep of Your Life” Stearns & Foster • Traditional luxury, finest materials and unparalleled craftsmanship Sealy Posturepedic • Unsurpassed back support Sealy • Value, comfor
Slide 7: Customer Acceptance
7 Customer Acceptance Tempur Sealy Serta Simmons Select Comfort Brands Most Likely To Buy – Prospective US Buyers Tempur-Pedic 35% 15% 11% Sealy Simmons Serta Sleep Number 12 Please refer to the footnotes in the appendix at the end of the presentation.
Slide 8: Complete Portfolio of Products
8 Innerspring Hybrid Stearns & Foster TEMPUR-Flex TEMPUR-Cloud Memory Foam, Gel Visco, Latex Tempur Material Other Specialty Adjustable bases Pillows Complete Portfolio Of Products Focus on developing differentiated, consumer-preferred products Sealy Posturepedic Hybrid
Slide 9: Strong Marketing Campaign
9 Focused on improving the effectiveness of our marketing spend Increase direct advertising Improve quality and effectiveness of cooperative advertising TV Joint Marketing Print Catalog Digital Social Internet & Mobile Strong Marketing Campaign
Slide 10: Expanding Distribution
Expanding Distribution 10 Representative % of Net Sales 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 < 5% < 5% < 5% Hospitality and contract < 5% < 5% < 5% Direct Company-owne
Slide 11: Near Term Opportunities
Tempur Sealy International Product Innovation and Effective Brand Marketing New product introductions and enhanced creative Cost Productivity Initiatives Corporate, Sealy US manufacturing and International Working Capital Initiatives Investment of Cash Flow/Capital Allocation Acquisiti
Slide 12: Financial Overview – Net Sales
2012 2013 2014 2015P North America International Financial Overview – Net Sales 12 ($ in millions) 15 14 $1,403 $2,464 $2,990 $3,150 - $3,175 Please refer to the footnotes in the appendix at the end of the presentation.
Slide 13: Financial Overview – Adjusted EPS
Financial Overview – Adjusted EPS 13 $2.61 $2.38 $2.65 $3.10 - $3.20 2012 2013 2014 2015P GAAP EPS $1.70 GAAP EPS $1.28 GAAP EPS $1.75 16 18 17 Please refer to the footnotes in the appendix at the end of the presentation.
Slide 14: Financial Overview – Adjusted EBITDA
$303 $411 $405 $450 - $460 2012 2013 2014 2015P ($ in millions) Financial Overview – Adjusted EBITDA 14 EBITDA $290 EBITDA $346 EBITDA $355 21 20 Please refer to the footnotes in the appendix at the end of the presentation. 19
Slide 15: Outlook
Outlook 15 Guidance 2015 • Net Sales $3.150 billion to $3.175 billion 22 • Adjusted EPS $3.10 to $3.20 22 Targets • Debt 3x Leverage 23 (Under Review) • Market Share North America Stable International Growing Please refer to the footnotes in the appendix at the end of the presentation.
Slide 16: Aspirational Plan
Aspirational Plan 16 The Board has established an Aspirational Plan Achievement of the Aspirational Plan would create significant stockholder value Aspirational Plan Grants – Performance Restricted Stock Units (PRSUs) 1,340,000 PRSUs granted to 12 key executives 200 additional employees ha
Slide 17: Success
Success 17 “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” “Accelerate profitab
Slide 18: Thank you for your interest in Tempur Sealy
Thank you for your interest in Tempur Sealy 18 Improving the Sleep of More People Every Night, All around the World
Slide 19: Appendix
Appendix 19
Slide 20: Forward-Looking Statements
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,
Slide 21: Footnotes
Footnotes 1 Based on total annual EBITDA/adjusted EBITDA (where applicable) from publicly disclosed competitor financial information. 2 Based on the mid-point of the Company’s 2015 financial guidance provided on October 29, 2015. Please refer to “Forward Looking Statements” and “Limitations on Guida
Slide 22: Board Members
22 Board Members Name Year Joined Board Biography Scott L. Thompson 2015 Chairman, President and CEO of Tempur Sealy International, Inc. Former Chairman, CEO and President of Dollar Thrifty Automotive Group, founder and former Senior Executive Vice President and CFO of Group 1 Automotive and forme
Slide 23: 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, adjusted net income, adjusted earnings per share
Slide 24: 2012 – 2014 Adjusted Net Income and Adjusted EPS Reconciliation
2012 – 2014 Adjusted Net Income and Adjusted EPS Reconciliation 24 Note: 2013 includes Sealy only for the period from March 18, 2013 (the date the Sealy Acquisition was completed) to December 31, 2013. Accordingly, the information presented for 2012, 2013 and 2014 may not be comparable. (in millions
Slide 25: 2012 – 2014 Adjusted EBITDA Reconciliation
2012 – 2014 Adjusted EBITDA Reconciliation 25 ($ in millions) 2012 (1) 2013 (2,3) 2014 (4) GAAP net income $107 $76 $109 Interest expense 19 133 92 Income tax provision 122 39 65 Depreciation and amortization 42 99 90 EBITDA $290 $346 $355 Adjustments 13 65 49 Adjusted EBITDA (5) $303 $411 $405 (1)
Slide 26: Twelve Months Ended September 30, 2015 Adjusted EBITDA Reconciliation
Twelve Months Ended September 30, 2015 Adjusted EBITDA Reconciliation 26 Twelve Months Ended September 30, 2015 (in millions) Consolidated North America International Corporate GAAP net income $ 131.4 $ 261.9 $ 57.0 (187.5 ) Interest expense 95.5 7.1 5.4 83.0 Income taxes 64.8 33.4 22.4 9.0 Deprecia
Slide 27: Consolidated funded debt less qualified cash to adjusted EBITDA
Consolidated funded debt less qualified cash to adjusted EBITDA 27 1Q-14 2Q-14 3Q-14 4Q-14 1Q-15 2Q-15 3Q-15 Total Debt $1,845 $1,776 $1,647 $1,602 $1,603 $1,576 $1,486 Plus: Letters of credit outstanding 21 18 17 18 17 17 20 Consolidated funded debt $1,866 $1,794 $1,664 $1,621 $1,620 $1,593 $1,506
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