Mattress major Tempur Sealy International Inc., with headquarters in Lexington, Ky., announced its full-year and fourth-quarter results for fiscal 2013, ended Dec. 31. The 2013 results reflect transaction and integration costs related to the acquisition of Sealy Corp., which was completed in March 2013. The company’s 2012 results do not include Sealy.
Tempur Sealy net sales increased 75.7% to $2,464.3 million for the full year 2013, from $1,402.9 million for the full year 2012. The net sales increase was due to the inclusion of $1,114.7 million of Sealy net sales from March 18 to Dec. 31.
Adjusted net income for 2013 was $146.4, as compared with adjusted net income of $164.1 million for full-year 2012. Net income (using generally accepted accounting principles) for full-year 2013 was $74 million as compared with GAAP net income of $106.8 million for 2012.
Operating income for the fiscal year was $243.8 million as compared with $248.3 million for the full year 2012. Full-year operating in 2013 included $44.6 million of transaction and integration costs related to the Sealy acquisition. Excluding these costs, the higher operating income reflects the inclusion of Sealy.
Turning to the fourth quarter of 2013, net sales increased 98.8% to $678.1 million from $341.1 million in the fourth quarter of 2012. The net sales increase was due to the inclusion of $333.5 million of Sealy net sales for the fourth quarter of 2013.
Adjusted net income was $41.1 million for the fourth quarter of 2013 as compared with adjusted net income of $36.4 million for the fourth quarter of 2012. Net income in the fourth quarter of 2013 (using generally accepted accounting principles) was $22.9 million as compared to $23.5 million for the fourth quarter of 2012.
Looking at Tempur Sealy fourth-quarter results by business segment, Tempur North America net sales decreased 0.7% to $226.2 million in the fourth quarter of 2013 as compared with $227.8 million in the fourth quarter of 2012. Bedding net sales decreased 0.7% to $205.7 million in the fourth quarter of 2013 from $207.2 million in the fourth quarter of 2012. Net sales of other products decreased 0.5% to $20.5 million from $20.6 million in the fourth quarter of 2012.
Tempur International net sales increased 4.5% to $118.4 million in the fourth quarter of 2013 from $113.3 million in the fourth quarter of 2012. Bedding net sales increased 4.5% to $88 million in the fourth quarter of 2013 from $84.2 million in the fourth quarter of 2012. Net sales of other products increased 4.5% to $30.4 million in the fourth quarter of 2013 from $29.1 million in the fourth quarter of 2012.
Sealy total net sales for the fourth quarter of 2013 were $333.5 million, an increase of 14% as compared with total net sales of $291.8% in fourth-quarter 2012. Fourth-quarter 2013 bedding net sales were $305.3 million and net sales of other products were $28.2 million.
Tempur Sealy operating income for the quarter was $74.1 million as compared with $51.3 million in the fourth quarter of 2012. Fourth-quarter operating income included $8.2 million of transaction and integration costs related to the Sealy acquisition. The higher operating income reflects the inclusion of Sealy.
Gross profit margin in the quarter was 40.2%, compared with 50% in the prior-year quarter. The company attributed the decline to the inclusion of Sealy, which has lower margins than the Tempur North America and Tempur International segments, as well as changes in product mix, partially offset by lower sourcing costs.
“Overall our fourth quarter was in line with our expectations,” said Mark Sarvary, Tempur Sealy chief executive officer. “Sealy’s fourth quarter sales were above our expectations and Tempur International returned to growth with sales increases in Europe, Asia and Latin America. Tempur North America showed continued stability with sales down 1% as compared to last year. Our company accomplished a great deal in 2013—we successfully completed the Sealy acquisition in March and since then have integrated all of the key functions, which has led to greater cost synergies than initially projected. We enter 2014 unified and coordinated and expect to further execute on each of our four key strategic growth initiatives.”
Tempur Sealy issued full year 2014 guidance for net sales. It expects net sales to range from $2.800 billion to $2.900 billion; adjusted EBITDA from $415 million to $435 million; and adjusted earnings per share to range from $2.60 to $2.85, including $0.19 per share associated with the Sealy purchase price allocation.
Chief Financial Officer Dale Williams said, “Our full year 2014 net sales guidance range assumes growth of approximately 1% to 5% compared to 2013, had we owned Sealy for all of 2013. We expect our margins to improve in 2014 resulting from cost synergies and leverage, offset partially by investments in new products, marketing and R&D. In addition, our adjusted EBITDA and adjusted EPS guidance reflects forecasted unfavorable foreign exchange, which is expected to have a negative earnings impact of approximately $9 million, or $0.10 per share.”
