Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (March 2015)
30 slides from Somnigroup International's investor presentation, Mar 18, 2015
Slide 1: Schedule 14A Proxy Statement – Tempur Sealy International, Inc.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant x Filed by a Party other than the Registrant ¨ Check the appropriate box: ¨ Preliminary Proxy
Slide 2: Slide 2
Slide 3: Explanatory Note
Explanatory Note: Filed herewith is an updated investor presentation to be used by Tempur Sealy International, Inc. in connection with meetings with investors on or after March 18, 2015. 2
Slide 4: Tempur Sealy International, Inc.
Tempur Sealy International, Inc. March 18, 2015 “Improving the Sleep of More People Every Night, All Around the World”
Slide 5: 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 is not historical informati
Slide 6: Largest And Only Truly Global Bedding Company
Largest And Only Truly Global Bedding Company Comprehensive Portfolio of Iconic Brands Complete and Complementary Product Offering Strong Management Team, Executing A Compelling Strategy Significant Sales, Margin and Earnings Growth Opportunity Strong Cash Flow 3
Slide 7: The Industry's Only Truly Global Company
The Industry’s Only Truly Global Company ` Tempur Sealy Presence Note: Presence includes subsidiaries, joint ventures, third party, and licensee markets. 4
Slide 8: Complete and Complementary Portfolio of Brands
Complete and Complementary Portfolio of Brands Tempur-Pedic • #1 US Brand People Are Most Interested In Purchasing Luxury Stearns & Foster • #1 US Brand In Luxury Innerspring Sales Premium Sealy • #1 US Brand In Total Awareness Mid-Price • #1 US Brand People Are Most Likely To Buy Value Note 1: 2014
Slide 9: Complete Range Of Products
Complete Range Of Products Tempur Material Hybrid Innerspring TEMPUR-Cloud TEMPUR-Flex Stearns & Foster Other Specialty Adjustable Bases Pillows Memory Foam, Gel Visco, Latex Adjustable Comfort TEMPUR-Ergo Plus TEMPUR Pillows 6
Slide 10: Strong, Established Management Team
Strong, Established Management Team Prior Experience Years with Consumer Tempur Name Position Prior Experience Products Inter'l Sealy Mark Sarvary President and CEO President, Campbell Soup North America CEO, J. Crew Group 6 President, Stouffer's Frozen Food Division at Nestle Tim Yaggi COO Group Pr
Slide 11: Key Priorities 2012 – 2014
Key Priorities 2012 – 2014 Return Tempur North America to growth and improve operating margins Revamped entire product offering (2012-2014) and improved retailer economics (August 2012) Sales growth resumed and margins expanded significantly in 2H-2014 and expected to further expand in 2015 Maintain
Slide 12: Tempur Sealy Strategic Priorities
Tempur Sealy Strategic Priorities Leverage and Strengthen Our Comprehensive Portfolio Of Iconic Brands & Products Expand Distribution And Seek Highest Dealer Advocacy • Base Annual Targets: Net Sales Growth Of 6% And Expand Margins With Focus On Driving Adjusted EPS Growth Of 15% Significant Cost Im
Slide 13: Growth Drivers By Geography
Growth Drivers By Geography Leveraging Product Distribution Opening Own Leverage Marketing Innovation Synergies Stores JV US (CR) Canada Europe Asia Pacific Latin America 10
Slide 14: Expand Margins With Focus On Driving Significant Cost Improvement
Expand Margins With Focus On Driving Significant Cost Improvement Annual Incremental 2015 -2018 Operating Initiative 2014 Objective Income 1 Sealy US Gross Margin Improvement 2 30% 33% $45 million Adjusted Operating Expense Leverage 3 29% 28% $30 million Cost Synergies 4 $45 million $70 million $25
Slide 15: Leverage Global Scale For Competitive Advantage
Leverage Global Scale For Competitive Advantage Product Development Distribution Brand • Procurement • Cloud and Breeze Beds • R&D • Stearns & Foster • Engineering and design • Posturepedic Hybrid Tempur Sealy Is Uniquely Positioned To Capitalize On Its Integrated Product And Brand Portfolio On A Gl
Slide 16: Globally Diverse Bedding Provider Largely Sold In The Retail Channel
Globally Diverse Bedding Provider Largely Sold In The Retail Channel 2014 Net Sales By Geographic Region By Segment US Europe North America Canada International Asia Pacific Latin America By Channel By Product Retail Bedding Other Other 13
Slide 17: Net Sales
Net Sales 2014 Net Sales increased 21% Estimated net sales growth would have been +8% had we owned Sealy for all of 2013 2015 Net Sales growth guidance of 2% to 5%, and includes unfavorable FX of 3.5% Net Sales ($ in millions) Note 1: Please refer to “Forward Looking Statements”. Note 2: Estimated n
Slide 18: Operating Margin
Operating Margin 2014 GAAP operating margin includes $43.8 million of integration costs (1.5% of net sales) Adjusted operating margin is expected to be up 10bps to 80bps in 2015 On a constant currency basis, adjusted operating margin is expected to be up 75bps to 150bps in 2015 (GAAP Reported Operat
Slide 19: Adjusted EPS
Adjusted EPS 2014 Adjusted EPS increased 11%; on a constant currency basis would have increased 18% 2015 Adjusted EPS is expected to grow 12% to 27% on a constant currency basis Note 1: Adjusted EPS amounts for 2015 based on management estimates. On February 5, 2015, the Company issued guidance for
Slide 20: Strong Cash Flow Characteristics
Strong Cash Flow Characteristics Multi-year add back to net income as D&A should continue to exceed annual Capex by $30M+ Expect continued growth in operating and free cash flow in 2015 Operating and Free Cash Flow ($ in millions) Note 1: Operating and free cash flow for 2013 only include Sealy from
Slide 21: Improving Capital Structure
Improving Capital Structure As a larger more stable company, our optimal capital structure is 3x 2014 credit agreement amendment allows cash utilization flexibility below 3.5x Value creation generated through deleverage and/or returning value to shareholders Consolidated Funded Debt Less Qualified C
Slide 22: Appendix
Appendix 19 TEMPUR#SEALY
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 adjusted net income, adjusted earnings per share, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted EBITDA
Slide 24: 2014 Adjusted EPS Reconciliation
2014 Adjusted EPS Reconciliation 2013 and 2014 Adjusted EPS Year Ended Year Ended (in millions, except per share amounts) December 31, December 31, 2013 2014 Net income $ 78.6 $ 108.9 Plus: Loss on disposal of business, net of tax (1) -- 16.7 Transaction costs, net of tax (2) 13.2 -- Integration cos
Slide 25: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 2013 and 2014 Adjusted EBITDA Year Ended Year Ended (in millions) December 31, December 31, (1) 2013 2014 Net income attributable to Tempur Sealy International, Inc. $ 75.6 $ 108.9 Interest expense 133.2 91.9 Income taxes 39.0 64.9 Depreciation & amortization 98.6 89.7
Slide 26: Debt Reconciliation and Leverage Ratio Calculation
Debt Reconciliation and Leverage Ratio Calculation Reconciliation of Total Debt to Consolidated Funded Debt Less Qualified Cash As of (in millions, except ratio) December 31, 2014 Total debt $ 1,602.3 Plus: Letters of credit outstanding 18.2 Consolidated funded debt 1,620.5 Less: (1) Domestic qualif
Slide 27: Adjusted Operating Expenses
Adjusted Operating Expenses 2014 Adjusted Operating Expenses Tempur Sealy International, Inc. Year Ended (in millions, except percentage amounts) December 31, 2014 Consolidated net sales $2,989.8 Selling and marketing expenses 619.9 General, administrative and other expenses 280.6 Operating Expenses
Slide 28: Adjusted Operating Margin
Adjusted Operating Margin 2014 Adjusted Operating Income and Margin Tempur Sealy International, Inc. Year Ended (in millions, except percentage amounts) December 31, 2014 Operating Income, Tempur Sealy International, Inc. $276.3 Consolidated net sales 2,989.8 Operating Margin (GAAP) 9.2% Operating I
Slide 29: Free Cash Flow
Free Cash Flow 2014 Free Cash Flow Tempur Sealy International, Inc. Year Ended Year Ended (in millions) December 31, December 31, 2013 2014 Net cash provided by operating activities $98.5 $225.2 Less: Purchases of property, plant and equipment 40.0 47.5 Free Cash Flow $58.5 $177.7 26
Slide 30: Constant Currency Information
Constant Currency Information In this investor presentationthe Company refers to, and in other press releases and other communications with investors the Company may refer to, net sales or earnings or other historical financial information on a “constant currency basis” or “excluding FX”, which is a
Tempur Sealy International — Investor Presentation (March 2015) on 6ix