Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Tempur Sealy International — Investor Presentation (November 2022)
46 slides from Somnigroup International's investor presentation, Nov 3, 2022
Slide 1: Tempur Sealy International, Inc.
© 2022 Tempur Sealy International, Inc. All rights reserved. We continue to demonstrate the resilience of our business model as we generate profits, invest in our business, return capital to shareholders, and outperform the market. The team remains focused on delivering on our initiatives to drive c
Slide 2: Who We Are
To Improve the Sleep of More People, Every Night, All Around the World Who We Are Tempur Sealy is committed to improving the sleep of more people, every night, all around the world. As a leading designer, manufacturer, distributor and retailer of bedding products worldwide, we know how crucial a goo
Slide 3: A Premium Leader in a Growing Bedding Industry
Revenue by Type 69% 10% 8% 13% TTM 3Q’22 Sales North America Wholesale North America Direct-to- Consumer International Wholesale International Direct-to- Consumer Brand Portfolio Tempur-Pedic $2,199 – $8,998 Stearns & Foster $ 1,799 – $6,449 Sealy $229 – $3,499 Private Label • Headquartered
Slide 4: Industry, Consumer and Tempur Sealy
Industry • The global bedding industry of ~$120 billion1 has historically experienced consistent growth. • The U.S. bedding averages mid- single digit growth annually, driven by units and dollars.1 • The international bedding is highly fragmented and about 40% larger than the size of the U.S. market
Slide 5: Investment Thesis
Investment Thesis 5 A leading premium global bedding manufacturer with strengths in branding and vertical integration Drives above industry growth across wholesale and DTC with expansion opportunities in under-penetrated areas Well-aligned management with proven track record History of strong value
Slide 6: Competitive Advantages
• Worldwide omni-channel presence • Iconic brand and product portfolio • World-class manufacturing capabilities • Industry-leading balance sheet and free cash flow2 Adjusted earnings per share2 is expected to grow at a CAGR of 20% between 2016-2022 Competitive Advantages 6 *2022 adjusted EPS based o
Slide 7: Product Brands
Product Brands Mattresses / Pillows / Accessories Product and Retail Brands DTC Retailer Brands Online / Offline 7
Slide 8: Strategic Advantages
TEMPUR#*#SEALY Strategic Advantages
Slide 9: Portfolio of Global Brands
Tempur-Pedic®: leading worldwide premium bedding brand • Tempur-Pedic® uniquely adapts, supports, and aligns to you to deliver truly life-changing sleep. $2,199-$8,998 Stearns & Foster®: high-end-targeted brand • The world’s finest beds that are made with exceptional materials, time-honored craftsma
Slide 10: World-Class Manufacturing Capabilities
Leading Manufacturing Capabilities • 69 manufacturing facilities • 16 million square feet of manufacturing & distribution operations R&D Innovation • 75,000 square feet of research & development • 4 state-of-the art product-testing locations Wholly owned (30) Joint Venture (8) Licensee (27)Tempur-Pe
Slide 11: Successful Omni-Distribution Platform
• Significant worldwide sales growth • Highly profitable and expanding rapidly • Direct customer relationships Ecommerce • Luxury Tempur-Pedic®, Dreams, and multi-branded showroom experiences • Operate over 650 stores worldwide and expanding direct customer relationships • Highly profitable Company-
Slide 12: Vertical Integration
12 Tempur-Pedic manufacturing Sealy / S&F manufacturing Private label manufacturing Dreams manufacturing Portfolio of Owned Brands Brick & Mortar & E-Commerce RetailOwned Manufacturing Vertical Integration Portfolio of owned brands Multi-brand retail Mono-brand retail E-commerce
Slide 13: Growth Potential
TEMPUR*SEALY Growth Potential 13
Slide 14: Building Blocks to Future Growth
Increase total addressable market internationally through new product launches in Europe & APAC. Expand into OEM market to drive further sales growth. Grow wholesale through existing and new retail relationships. Invest in innovation to meet customer demand. Execute on capital allocation strategy. E
Slide 15: Innovative Technologies
Natural Comfort Snoring Support Climate Sleep-Health Metrics Innovative Technologies 15
Slide 16: Wholesale
Third-Party Retailers • Win-win relationships • Broad-based worldwide distribution and broadly diversified • Over 5,400 retail partners around the world selling through over 25,000 doors and ecommerce platforms • Global sales force of over 500 people supporting our portfolio of brands U.S. OEM Oppor
Slide 17: OEM Expansion
$150M $600M 2020A 2025E 17 • Expanded into OEM market through the acquisition of Sherwood Bedding in 2020; a 3rd generation American manufacturer of private label innerspring mattresses, subsequently began exploring opportunities to leverage foam-pouring capabilities to manufacture private label foa
Slide 18: Stearns & Foster Opportunity
18 Stearns & Foster Opportunity Product Investments • Launching new, innovative Stearns & Foster products in 4Q’22 Marketing Investments • Supporting Stearns & Foster with record advertising in 2022 Opportunity to grow Stearns & Foster to be our next $1 BILLION BRAND, more than doubling its size tod
Slide 19: Stearns & Foster Opportunity: Dual-Approach to Luxury Bedding
<$500 M $1,000 M 19 • With more than 175 years of history, Stearns & Foster is a meaningful brand and can become the luxury leader in innerspring beds and grow to be our next billion-dollar brand • After years of no direct advertising, Stearns & Foster began spending in 2021 and accelerated in 2022
Slide 20: Direct to Consumer
$- $50 $100 $150 $200 $250 $300 $350 Q3 2018 Q3 2019 Q3 2020 Q3 2021 Q3 2022 Global Direct Sales Intl NA • Strong, long-term growth of high-margin sales from web, call center, and company-owned stores. • Ability to own customer relationship allows for market insights that we leverage for innovation
Slide 21: Company-Owned Store Strategy
TEMPUR® EuropeSealy® Gallery Asia SOVA® SwedenSleep Outfitters® U.S. Tempur-Pedic® U.S. Tempur-Pedic® MexicoDreams UK We see a potential opportunity to organically increase our store count through opening an average of 60+ new stores per year. Company-Owned Store Strategy O P E R A T I N G O V E R 6
Slide 22: International Markets
• Highly fragmented with broad geographic diversity across Europe and Asia • Acquired Dreams, the leading bedding retailer in the UK in 2021 • Developing new TEMPUR® line of mattresses to expand addressable market in 2023 • Tempur Sealy customizes approach by country • Europe: success with high-qual
Slide 23: Rapidly Growing International Joint Ventures
Rapidly Growing International Joint Ventures • Founded in 2000 • Operates in 21 countries and territories • Top 3 internationally branded bedding manufacturer in China • Full-time employees: 1,100+ Asia • Acquired in 2020 • Full-time employees: 250+ United Kingdom $340 MILLION OF JOINT VENTURE SALES
Slide 24: Expanding Global Licensing Sales
Expanding Global Licensing Sales Sealy Manufacturing Licensees: • Our 27 licensee manufacturing facilities generate high return on investment • They represent a low-risk opportunity to introduce our brands and products in regions in which we do not currently operate, primarily across EMEA, APAC, and
Slide 25: Recent Performance
TEMPUR*#SEALY Recent Performance
Slide 26: Third Quarter and Trailing Twelve Month Performance
22% 78% Direct Wholesale Three Months Ended Trailing Twelve Months Ended (in millions, except percentages and per common share amounts) September 30, 2022 September 30, 2021 % Change September 30, 2022 September 30, 2021 % Change Net Sales $1,283.3 $1,358.3 -5.5% $5,093.4 $4,628.2 10.1% Net Income $
Slide 27: 2022 Outlook
Expect full-year adjusted EPS between $2.50 and $2.60 Other Modeling Assumptions Depreciation & Amortization ~$180M Capital Expenditures $275M - $300M Interest Expense ~$100M U.S. Federal Tax Rate ~23.5% Diluted Share Count 180M shares 2022 Outlook1 27 Our 2022 expectations include: • Approximately
Slide 28: Current TPX Management Track Record Since 2015
28 Current TPX Management Track Record Since 2015 (in millions, except percentages, multiples, and per common share amounts) Tailing Twelve Months Ended December 31, 2015 Trailing Twelve Months Ended September 30, 2022 CAGR Total Growth Net Sales $3,151 $5,093 7% 62% Adjusted EBITDA2 $400 $987 14% 1
Slide 29: Flexible Cost Structure
0% 20% 40% 60% 80% Enhanced +10% Business Model 70% Flexible Cost Structure 1 29 • The business model is highly-variable, with 85% of COGS and 45% of operating expenses flexing with sales • In total, the variability of our operating cost structure is approximately 70% • Our business model also provi
Slide 30: Leading Balance Sheet & Cash Flow
Leading Balance Sheet & Cash Flow 30
Slide 31: Balanced Capital Allocation Strategy
• Long-term target leverage ratio of 2.0 – 3.0x2 • Continue to invest in the business, including a new domestic foam-pouring plant to be operational in 2023 • Disciplined approach to shareholder returns includes a quarterly dividend and expected repurchase of at least 10% of our shares outstanding i
Slide 32: Strong Balance Sheet & Cash Flow
Credit ratings: Fitch: BB+ (August 2021) Moody’s: Ba1 (September 2021) S&P: BB+ (September 2021) Strong Balance Sheet & Cash Flow 32 1.00x 1.50x 2.00x 2.50x 3.00x 3Q21 4Q21 1Q22 2Q22 3Q22 Leverage2 Target Range Leverage $0 $200 $400 $600 $800 2018 2019 2020 2021 TTM 2022 Full-Year Operating Cash Flo
Slide 33: Environmental, Social, & Corporate Governance
Environmental, Social, & Corporate Governance 33
Slide 34: Environmental, Social, & Governance
Environmental, Social, & Governance Tempur Sealy is committed to protecting and improving our communities and environment. 34
Slide 35: Environmental, Social and Governance Highlights
Environmental • Committed to achieving carbon neutrality for our wholly owned global operations by 2040 • Achieved an 8.4% reduction in greenhouse gas emissions per unit produced at our wholly owned manufacturing and logistics operations in 2021 • Improved the percentage of waste diverted from our N
Slide 36: 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 36
Slide 37: Appendix
TEMPUR*#SEALY Appendix 37
Slide 38: Forward-Looking Statements
This investor presentation contains statements relating to the Company’s quarterly cash dividend, the Company’s share repurchase targets, the Company’s expectations regarding net sales for 2022 and adjusted EPS for 2022 and subsequent periods and the Company’s expectations for increasing sales growt
Slide 39: 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 EPS, EBITDA, adjusted EBITDA, free cash flow, consolidated indebtedness less netted cash, and leverage, which are not recognized terms under U.S.
Slide 40: QTD Adjusted Net Income and Adjusted EPS
40 QTD Adjusted Net Income(2) and Adjusted EPS(2) *For a reconciliation net income to adjusted net income and adjusted EPS in prior reporting periods, please refer to the Company’s SEC filings.
Slide 41: TTM Adjusted Net Income and Adjusted EPS
41 TTM Adjusted Net Income(2) and Adjusted EPS(2) *For a reconciliation net income to adjusted net income and adjusted EPS in prior reporting periods, please refer to the Company’s SEC filings.
Slide 42: QTD EBITDA
42 QTD EBITDA(2) *For a reconciliation net income to EBITDA and Adjusted EBITDA in prior reporting periods, please refer to the Company’s SEC filings.
Slide 43: TTM Adjusted EBITDA
43 TTM Adjusted EBITDA(2) *For a reconciliation net income to EBITDA and Adjusted EBITDA in prior reporting periods, please refer to the Company’s SEC filings.
Slide 44: Leverage Reconciliation
44 Leverage(2) Reconciliation *For a reconciliation of leverage to consolidated indebtedness less netted cash in prior reporting periods, please refer to the Company’s SEC filings.
Slide 45: Footnotes
© 2022 Tempur Sealy International, Inc. All rights reserved. 1 Management estimates 2 Adjusted net income, EBITDA, adjusted EBITDA, adjusted EPS, leverage, free cash flow, and constant currency are non-GAAP financial measures. Please refer to the “Use of Non-GAAP Financial Measures and Constant Curr
Slide 46: TEMPUR#*#SEALY
TEMPUR#*#SEALY
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