Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Q2 2019 Earnings Presentation
32 slides from Somnigroup International's earnings presentation, Aug 28, 2019
Slide 1: Tempur Sealy International, Inc. (TPX)
Tempur Sealy International, Inc. (TPX) “Success is strengthening our Iconic Brands while driving higher ROIC through focused execution” 1 © 2019 Tempur Sealy International, Inc.
Slide 2: Tempur Sealy International, Inc. Overview
Tempur Sealy International, Inc. Overview: (TPX) • Strong global brands serving all price points • Omni-channel distribution balanced between wholesale and direct to consumer • Global manufacturing footprint • Structural growth industry, with high ROIC and robust free cash flow • Industry is relativ
Slide 3: Long-term Focused
Long-term Focused Key initiatives: • Develop the highest quality bedding products in all the markets we serve • Promote our worldwide brands with compelling marketing • Optimize our powerful omni-distribution platform to be where consumers want to shop • Drive increases in EBITDA(1) (1) This financi
Slide 4: Global Manufacturing Footprint
Global Manufacturing Footprint 35 International Facilities 22 North American Facilities Wholly owned and Joint Venture Tempur-Pedic Facility Joint Venture Licensee 4 © 2019 Tempur Sealy International, Inc.
Slide 5: Powerful Omni-Distribution Platform
Powerful Omni-Distribution Platform ➢ Largest pillar of world-wide distribution Wholesale ➢ Recently announced significant distribution gains DTC ➢ Significant worldwide revenue growth Web ➢ Highly profitable and expanding gross margins DTC Company ➢ Luxury showroom experience Owned ➢ Significant wo
Slide 6: Direct to Consumer
Direct to Consumer • Distribution network made up of high growth, high Global Direct Revenue margin, Web, Call Center, and Company-owned stores $100 $90 • Strong growth within the direct channel, growing 55% $80 in the second quarter of 2019 $70 • Long-term direct target: 25% of consolidated net sal
Slide 7: Winning Online
Winning Online TempurPedic.com Most profitable online bedding company in the world High growth and high margins Alternative Channels (Web-based Retailers) Dedicated sales team with focus on eMarketplace sales growth High growth and stable margins Traditional Retailers Online TPX proprietary Retail E
Slide 8: Company-Owned North American Store Strategy
Company-Owned North American Store Strategy High-End Targeted Opportunity Broad Based Opportunity – Strategic Representation Sleep Outfitters: o Regional bedding retailer that is strategically important to the markets it serves for Tempur Sealy o Store count: 98 o Tempur, Sealy and Stearns & Foster
Slide 9: Brands & Products
BRANDS & PRODUCTS 9 © 2019 Tempur Sealy International, Inc.
Slide 10: Product Segments
Product Segments Three Months Bedding Other Ended Net Sales Products Products June 30, 2019 Consolidated $ 663M $ 60M $ 723M YoY Growth 10.2% 2.7% 9.5% North America $ 554M $ 34M $ 588M YoY Growth 11.4% 11.5% 11.4% International $ 108M $ 26M $ 135M YoY Growth 4.3% -6.7% 2.0% Six Months Bedding Other
Slide 11: U.S. Portfolio of Products
U.S. Portfolio of Products TEMPUR MATERIAL HYBRID INNERSPRING MEMORY FOAM TEMPUR® STEARNS & FOSTER® SEALY CONFORM® SEALY HYBRID® COCOON BY TEMPUR BREEZE® SEALY SEALY (BED IN A BOX) (BED IN A BOX) TEMPUR ADAPT™ STEARNS & FOSTER® SEALY RESPONSE® OTHER SPECIALTY ADJUSTABLE BASES PILLOWS 11 © 2019 Tempu
Slide 12: Tempur-Pedic
TEMPUR-PEDIC Launched the innovative, new breeze°, …designed to improve product mix, completes the largest rollout in Tempur history… with all night cooling. 12 © 2019 Tempur Sealy International, Inc.
Slide 13: Strongest Tempur-Pedic Product Offering
STRONGEST TEMPUR-PEDIC PRODUCT OFFERING TEMPUR-ADAPT FAMILY TEMPUR-BREEZE FAMILY ADAPT PROADAPT LUXEADAPT PRObreeze° LUXEbreeze° SOFT SOFT SOFT MEDIUM MEDIUM MEDIUM FIRM FIRM FIRM HYBRID HYBRID HYBRID $2,199 $2,999 $3,999 $3,799 $4,499 Product Launched in 2018 Product Launched early 2019 13 © 2019 T
Slide 14: New Tempur-LUXEbreeze
NEW TEMPUR-LUXEbreeze° NEXT LEVEL COOLING COMFORT - 8° cooler OUTSIDE SMARTCLIMATE MAX DUAL COVER SYSTEM An enhanced zip-off cover with double the cool- to-touch power combined with a super-stretch inner layer so you feel cooler when you lie down INSIDE PURECOOL+ Phase Change Material Exclusive, nex
Slide 15: New Tempur-PRObreeze
NEW TEMPUR-PRObreeze° ADVANCED ALL-NIGHT COOLING - 3° cooler OUTSIDE SMARTCLIMATE DUAL COVER SYSTEM A zip-off, cool-to-touch outer layer combined with a super-stretch inner layer so you feel cooler when you lie down INSIDE PURECOOL+ Phase Change Material Exclusive, next-generation technology absorbs
Slide 16: 2019 New Products
2019 New Products 16 © 2019 Tempur Sealy International, Inc.
Slide 17: Stearns & Foster Reinvented
Stearns & Foster Reinvented ALL-NEW & EXCLUSIVE Coil Technologies PROPRIETARY and EXCLUSIVE Memory Foam engineered by: ALL-NEW Natural + Cooling System 17 © 2019 Tempur Sealy International, Inc.
Slide 18: New Stearns & Foster Collection
NEW Stearns & Foster Collection: ESTATE Starting at $1,499 LUX ESTATE Starting at $2,299 LUX ESTATE HYBRID Starting at $2,799 RESERVE Starting at $3,999 18 © 2019 Tempur Sealy International, Inc.
Slide 19: Recent Management Comments
RECENT MANAGEMENT COMMENTS 19
Slide 20: Second Quarter 2019 Highlights
Second Quarter 2019 ➢ Net Sales Increased 10%, Direct Channel Sales Increased 55% ➢ Margins Expanded, Net Income, EBITDA(1) and EPS Up Significantly Highlights Versus Second Quarter 2018 ➢ Announced Share Repurchase Program Three Months Ended June 30th Reported %Change 2019 2018 Constant %Change Cur
Slide 21: Debt Structure
Debt Structure ➢ Target leverage ratio midpoint(3): 3.5x with a range of 3.0x to 4.0x ➢ Fixed rate debt represent ~60% of total debt; capital structure contains long dated maturities ➢ Expect to deploy excess cash flow to repurchase shares LEVERAGE(3) MANDATORY MATURITY PROFILE(4) 4.00x 3.84x $600 3
Slide 22: Revised 2019 Targets
Revised 2019 Targets 2019 Financial Targets(3) and Assumptions Adjusted EBITDA(1) $450 to $480 M Depreciation & Amortization $115 to $120 M Capital Expenditures $70 to $75 M ($60 M Maintenance) Interest Expense $90 to $95 M U.S. Federal Tax Rate Range 27% to 28% Diluted Share Count 56 to 57 M Shares
Slide 23: Environmental, Social, and Governance
Environmental, Social, and Governance Tempur Sealy is committed to protecting and improving our environment and communities. • In 2018, 72% of our North • Community Engagement • Majority of Directors on American facility waste • Since 2011, donated nearly the Board are Independent was recycled $300M
Slide 24: 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 24 © 2019 Tempur Sealy International, Inc.
Slide 25: Tempur Sealy
TEMPUR*SEALY
Slide 26: Aspirational Plan
Aspirational Plan(5) ➢ On August 7, 2017, the Company implemented a new Aspirational Program in the form of performance restricted stock units tied to challenging performance targets. This Aspirational Program builds on the challenging goals and the structure established in our original Aspirational
Slide 27: Forward-Looking Statements
Forward-Looking Statements This investor presentation contains statements that may be characterized as “forward-looking” within the meaning of the federal securities laws. Such statements might include those containing information concerning one or more of the Company’s plans; guidance; objectives;
Slide 28: Footnotes
Footnotes 1. Adjusted Net Income, EBITDA, adjusted EBITDA, leverage, leverage ratio, and constant currency are non-GAAP financial measures. Please refer to the "Use of Non- GAAP Financial Measures and Constant Currency Information" on slide 29 for more information regarding the definitions of adjust
Slide 29: Use of Non-GAAP Financial Measures and Constant Currency Information
Use of Non-GAAP Financial Measures and Constant Currency Information In this investor presentation and certain of its press releases and SEC filings, the Company provides information regarding adjusted net income, EBITDA, adjusted EBITDA, consolidated funded debt less qualified cash, leverage and le
Slide 30: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three Months Ended Trailing Twelve Months Ended (in millions) June 30, 2019 June 30, 2018 June 30, 2019 GAAP Net income $ 41.6 $ 22.8 $ 124.6 Interest expense, net 22.5 23.2 91.3 Income taxes 15.8 8.8 63.5 Depreciation and amortization 29.1 27.8 116.5 EBITDA 109.0 82.6
Slide 31: Adjusted Net Income and Adjusted EPS
Adjusted Net Income and Adjusted EPS Three Months Ended (in millions, except per share amounts) June 30, 2019 June 30, 2018 GAAP net income $ 41.6 $ 22.8 Loss from discontinued operations, net of tax (1) 1.2 5.4 Acquisition-related costs and other (2) 2.8 - Other Income (3) - 5.4 Tax adjustments (4)
Slide 32: Leverage Reconciliation
Leverage Reconciliation (in millions, except ratio) 1Q19 2Q19 Total debt $ 1,659.6 $ 1,645.6 Plus: Deferred financing costs(1) 7.2 6.9 Plus: Letters of credit outstanding 23.2 23.2 Consolidated funded debt $ 1,690.0 $ 1,675.7 Less: Domestic qualified cash(2) 19.4 20.7 Less: Foreign qualified cash(2)
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