Tempur Sealy Earnings Dip in First Quarter, But Business Update is Bullish

In its first quarterly report since ending its business relationship with retailer Mattress Firm in January, mattress major Tempur Sealy International Inc.’s net income, under U.S. generally accepted accounting principles, decreased 14.4% to $33.9 million.

Adjusted net income increased 23.4% to $52.2 million.

Earnings before interest, tax, depreciation and amortization in the first quarter were $86.8 million, a 14.9% dip compared with the prior-year quarter.

Adjusted EBITDA in the first quarter, which ended March 31, increased 16.4% to $121.1 million. This excludes $34.3 million in charges related to the Mattress Firm termination.

Total net sales increased 0.2% to $722.1 million in the first quarter of 2017. On a constant currency basis, total net sales increased 0.7%, with an increase of 0.1% in the North America business segment and an increase of 3.2% in the international business segment.

The company provided an upbeat business update June 5, reporting that May orders increased by about 15% compared with May 2016, excluding its Mattress Firm sales. Orders for Tempur-Pedic products only in North America were up by 28% in May, again, excluding Mattress Firm orders in 2016.

In addition, Tempur Sealy said that in the first two months of its second 2017 fiscal quarter, domestic orders for all brands increased by about 7%, when excluding its former Mattress Firm business. The mattress maker said business was negatively impacted in April and to a lesser degree in May, by a large liquidation event held by Mattress Firm. International orders during the same period were slightly down due to the negative impact of foreign exchange rates and some weakness in the U.K. bedding market.

During the first quarter, GAAP operating income decreased 22.4% to $59.5 million. It included $25.9 million of net charges associated with the Mattress Firm termination. Adjusted operating income increased $4.8 million to $85.4 million.

GAAP gross margin was 39.7%, compared with 40.4% in the prior-year quarter. It included $11.5 million of charges associated with the termination of the Mattress Firm relationship. Adjusted gross margin was 41.3%, compared with 40.4% in the prior-year quarter.

GAAP earnings per diluted share decreased 1.6% to $0.62. Adjusted EPS increased 41.2% to $0.96.

In business segment results, North American sales were relatively flat at $582.3 million in the first quarter. International net sales decreased 0.9% to $139.8 million. On a constant currency basis, international sales increased by 3.2%.

Tempur Sealy reaffirmed its financial guidance for 2017, which predicts adjusted EBITDA to range from $400 million to $450 million.

“This represents the eighth consecutive quarter of double-digit adjusted EPS growth,” said Scott Thompson, chair and chief executive officer. “These solid first-quarter results are a byproduct of the team’s focus on our long-term initiatives and the overall positive worldwide economy underlying the bedding industry. We are pleased with the progress of our new product launches around the world and the positive early market reactions.”

In its first quarterly report since ending its business relationship with retailer Mattress Firm in January, mattress major Tempur Sealy International Inc.’s net income, under U.S. generally accepted accounting principles, decreased 14.4% to $33.9 million. Adjusted net income increased 23.4% to $52.2 million.

Earnings before interest, tax, depreciation and amortization in the first quarter were $86.8 million, a 14.9% dip compared with the prior-year quarter.

Adjusted EBITDA in the first quarter, which ended March 31, increased 16.4% to $121.1 million. This excludes $34.3 million in charges related to the Mattress Firm termination.

Total net sales increased 0.2% to $722.1 million in the first quarter of 2017. On a constant currency basis, total net sales increased 0.7%, with an increase of 0.1% in the North America business segment and an increase of 3.2% in the international business segment.

The company provided an upbeat business update June 5, reporting that May orders increased by about 15% compared with May 2016, excluding its Mattress Firm sales. Orders for Tempur-Pedic products only in North America were up by 28% in May, again, excluding Mattress Firm orders in 2016.

In addition, Tempur Sealy said that in the first two months of its second 2017 fiscal quarter, domestic orders for all brands increased by about 7%, when excluding its former Mattress Firm business. The mattress maker said business was negatively impacted in April and to a lesser degree in May, by a large liquidation event held by Mattress Firm. International orders during the same period were slightly down due to the negative impact of foreign exchange rates and some weakness in the U.K. bedding market.

During the first quarter, GAAP operating income decreased 22.4% to $59.5 million. It included $25.9 million of net charges associated with the Mattress Firm termination. Adjusted operating income increased $4.8 million to $85.4 million.

GAAP gross margin was 39.7%, compared with 40.4% in the prior-year quarter. It included $11.5 million of charges associated with the termination of the Mattress Firm relationship. Adjusted gross margin was 41.3%, compared with 40.4% in the prior-year quarter.

GAAP earnings per diluted share decreased 1.6% to $0.62. Adjusted EPS increased 41.2% to $0.96.

In business segment results, North American sales were relatively flat at $582.3 million in the first quarter. International net sales decreased 0.9% to $139.8 million. On a constant currency basis, international sales increased by 3.2%.

Tempur Sealy reaffirmed its financial guidance for 2017, which predicts adjusted EBITDA to range from $400 million to $450 million.

“This represents the eighth consecutive quarter of double-digit adjusted EPS growth,” said Scott Thompson, chair and chief executive officer. “These solid first-quarter results are a byproduct of the team’s focus on our long-term initiatives and the overall positive worldwide economy underlying the bedding industry. We are pleased with the progress of our new product launches around the world and the positive early market reactions.”

One Response to "Tempur Sealy Earnings Dip in First Quarter, But Business Update is Bullish"

  1. Pingback: Bullish outlook, despite a first quarter dip | freePress

Leave a Reply

Your email address will not be published.