| BRIEFLY | |
| Tempur Sealy full-year results | |
| Net sales | $2.990 billion |
| Net income | $108.9 million |
| Adjusted earnings per share | $2.65 |
| Gross profit margin | 38.5% |
| Fourth-quarter results | |
| Net sales | $745.5 million |
| Net income | $46.6 million |
| Earnings per share | $0.86 |
| Gross profit margin | 39.5% |
Mattress major Tempur Sealy International Inc., with headquarters in Lexington, Kentucky, reported net income (using generally accepted accounting principles) for full-year 2014 of $108.9 million, an increase of 38.5%, compared with GAAP net income of $78.6 million in 2013. 2014 net sales grew to $2.990 billion, a 21.3% increase compared with full-year 2013.
The increases were driven by Sealy’s results being reflected for the full year—2013 results include Sealy from the March 18 acquisition date—as well as growth in each of Tempur Sealy’s three business segments.
Earnings per share (GAAP) for the full year were $1.75, a 37% improvement, compared with EPS of $1.28 in the prior year. The 2014 EPS results reflect the loss incurred with the sale of Sealy’s innerspring component facilities to Leggett & Platt, integration costs, and some non-recurring items—including financing costs and income from a partial settlement of a legal dispute.
Adjusted EPS was $2.65 for the full year, compared with $2.38 in 2013. Unfavorable foreign exchange in 2014 impacted adjusted EPS by $0.15, Tempur Sealy said.
Gross margins in 2014 were 38.5%, compared with 41.2% in 2013. The decrease resulted from lower gross margins in each of the company’s three business segments, and the inclusion of Sealy, which has lower margins than Tempur-Pedic.
“In 2014, strong sales growth was driven by new products and effective marketing, particularly in the U.S., and we broadened our distribution throughout the world,” said Mark Sarvary, Tempur Sealy chief executive officer. “We generated operating cash flow of $225 million and significantly reduced our total debt. We are confident that 2015 will be another year of solid sales and earnings growth, although unfavorable foreign exchange will be even more significant in 2015 than it was in 2014.”
Fourth-quarter results included GAAP net income of $46.6 million, compared with $27.5 million in the prior-year quarter. Adjusted net income was $53.2 million, compared with $41.1 million for the fourth quarter of 2013.
Net sales in the quarter increased 9.9% to $745.5 million. On a constant currency basis, net sales increased 12.8%. The increase was driven by growth in each of the three business segments.
GAAP earnings per diluted share in the fourth quarter were $0.75 compared to $0.44 in the prior-year quarter. The 2014 results reflect integration costs, and certain non-recurring items. Adjusted EPS increased 30% to $0.86 in the fourth quarter of 2014 as compared to adjusted EPS of $0.66 in the fourth quarter of 2013.
Fourth-quarter gross margins were 39.5%, compared with 40.2% in the fourth quarter of 2013, with slightly lower margins in each business segment.
Net sales for the Tempur North America business segment increased 16% to $262.3 million in the quarter. Tempur International net sales increased 3.3% to $122.3 million.
Fourth-quarter net sales for Sealy increased 8.2% to $360 million.
Tempur Sealy’s full-year 2015 guidance expects net sales to range from $3.050 billion to $3.150 billion, and adjusted EPS from $2.70 to $3.10 per diluted share.
According to Dale Williams, Tempur Sealy chief financial officer, the guidance “assumes growth of approximately 2% to 5% compared to the full year 2014. We expect our adjusted EPS to increase 2% to 17% driven by a slight improvement in operating margin, partially offset by unfavorable foreign exchange.”
