Tempur Sealy raises guidance after profitable quarter


Tempur Sealy raises guidance after profitable quarter

BRIEFLY
Tempur Sealy’s 2nd quarter
Net sales $764.4 million
Gross margin 38.9%
Net income $21.2 million
Earnings per share $0.34

Tempur Sealy International Inc., with headquarters in Lexington, Kentucky, reported that its total net sales increased 6.9% to $764.4 million in the second quarter of fiscal 2015. On a constant-currency basis, total net sales increased 10.9%.

The company’s North America net sales increased 9.1% to $630.3 million. On a constant-currency basis, North America net sales increased 10.2%. International net sales decreased 2.2% to $134.1 million in the second quarter. On a constant-currency basis, international net sales increased 14.1%.

Gross margin (under generally accepted accounting principles) was 38.9%, compared with 37.5% in the second quarter of 2014. Adjusted gross margin was 39.4%, up from 37.6% in the same quarter last year.

Earnings before interest, tax, depreciation and amortization increased 46.8% to $76.5 million, compared with $52.1 million in the prior-year quarter. Adjusted EBITDA increased 16.2% to $90.3 million.

GAAP operating income was $52 million, compared with $50.3 million in the second quarter of 2014. Operating income in the second-quarter of this year included $6.7 million of integration costs and $11.7 million of additional costs related to the company’s 2015 annual stockholder meeting and related issues, the chief executive officer transition and related retention compensation. Operating income in the second quarter of last year included $5.6 million of integration costs. Adjusted operating income was $70.4 million, or 9.2% of net sales, compared with $55.9 million, or 7.8% of net sales in the prior-year quarter.

GAAP net income increased to $21.2 million, compared with a loss of $2.2 million in the second quarter of 2014 (which included a $20.4 million loss on the disposal of the company’s innerspring component production facilities). Tempur Sealy reported adjusted net income of $33.3 million, an increase of 38.8% over $24 million in the second quarter of 2014. On a constant-currency basis, adjusted net income increased 49.2%.

GAAP earnings per diluted share increased to $0.34, compared with a loss of $0.04 in second-quarter 2014. Adjusted EPS increased 35.9% to $0.53, up from $0.39 in the second quarter last year. On a constant-currency basis, adjusted EPS increased 46.2%.

“We are pleased with our second-quarter performance as sales and earnings were ahead of plan, and we achieved a 29% adjusted contribution margin,” said Tim Yaggi, interim CEO. “Our products and advertising are clearly resonating with consumers. Given our strong sales momentum and our enhanced focus on costs, we are confident that we will further build on our performance during the balance of 2015 and beyond.”

Tempur Sealy raised its 2015 financial guidance. For the full year, it expects net sales to range from $3.125 billion to $3.175 billion and adjusted EPS to range from $3 to $3.20 per diluted share.