Tempur Sealy Sees Total Sales Rise in Second Quarter

Sealy International reported total net sales increased 5.2% to $804.4 million in its second fiscal quarter of 2016, compared with the same quarter last year.

On a constant-currency basis, the Lexington, Kentucky-based mattress major’s total net sales rose 6.6%, with a 6.4% increase in North America and a 7.6% increase in the international segment.

Second-quarter net income (using generally accepted accounting principles) was relatively flat at $21.3 million in the second quarter, compared with $21.2 million in the previous year. The company said it incurred a $47.2 million expense paying off existing debt related to implementing a new credit facility and issuing new senior notes.

BRIEFLY
Second-quarter results
Net sales $804.4 million
Net income $21.3 million
Earnings per share $0.35
Gross margin 41.9%
Operating income $100.2 million

Tempur Sealy’s adjusted net income (earnings before interest, tax, depreciation and amortization) rose 67.3% to $55.7 million, compared with $33.3 million in the second quarter of 2015.

Earnings per diluted share (GAAP) were $0.35, compared with $0.34 in the second quarter of 2015. Adjusted EPS increased 73.6% to $0.92, compared with adjusted EPS of $0.53 in the previous year.

Gross margin (GAAP) was 41.9%, compared with 38.9% in the second quarter of 2015.

Operating income (GAAP) increased 92.7% to $100.2 million. Operating income in the second quarter included $1 million in integration costs. In the prior-year quarter, the company had $6.7 million in integration costs and $11.7 million of additional costs related to its 2015 annual meeting and related management transition and retention compensation.

Adjusted operating income increased 43.8% to $101.2 million, or 12.6% of net sales, compared with $70.4 million, or 9.2% of net sales in the prior-year quarter.

Tempur Sealy ended the quarter with consolidated funded debt, less qualified cash, of $1.6 billion. It repurchased 2.1 million shares of its common stock for a total cost of $122 million. As of June 30, it had $178 million available under its share repurchase authorization. In a separate news release, the company announced the addition of $200 million to its existing share repurchase authorization.

“Thanks to the hard work of our more than 7,000 associates worldwide, the company had an excellent quarter,” said Scott Thompson, Tempur Sealy chair and chief executive officer. “We are gaining traction toward the goals we have set. Adjusted EBITDA and gross margins have increased for the third consecutive quarter, adjusted EPS is up 74%. We are improving operating leverage, continuing to invest heavily in our brands, expanding distribution, and successfully servicing our retailers and direct customers. By continuing to strengthen our iconic brands, drive higher return on invested capital and enhance our competitive cost position, we are positioning the company well to deliver for our investors and other stakeholders for years to come.”

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