Facebook
LinkedIn
Twitter
Tempur-Pedic Reports First Quarter 2010 Earnings
LEXINGTON, Ky., April 20, 2010 /PRNewswire via COMTEX News Network/ -- -- Completed Prior $100 Million Share Repurchase Authorization
-- Announces New $100 Million Share Repurchase Authorization
-- Company Raises Financial Guidance for 2010
Tempur-Pedic International Inc. (NYSE: TPX), the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced financial results for the first quarter ended March 31, 2010. The Company also announced a new $100 million share repurchase program and increased full year 2010 financial guidance.
Financial Summary
- Earnings per share (EPS) were $0.44 per diluted share in the first quarter of 2010 as compared to $0.18 per diluted share in the first quarter of 2009. The Company reported net income of $33.1 million for the first quarter of 2010 as compared to $13.3 million in the first quarter of 2009.
- Net sales increased 43% to $253.9 million in the first quarter of 2010 from $177.1 million in the first quarter of 2009. On a constant currency basis, net sales increased 40%. Net sales in the domestic segment increased 57%, while international segment net sales increased 24%. On a constant currency basis, international segment net sales increased 15%.
- Mattress sales increased 42% globally. Mattress sales increased 55% in the domestic segment and 19% in the international segment. On a constant currency basis, international mattress sales increased 10%. Pillow sales increased 33% globally. Pillow sales increased 44% domestically and 26% internationally. On a constant currency basis, international pillow sales increased 18%.
- Gross profit margin was 49.2% as compared to 46.2% in the first quarter of 2009. The gross profit margin increased as a result of fixed cost leverage related to higher production volumes and improved efficiencies in manufacturing, partially offset by geographic mix, new product introductions and higher commodity costs.
- Operating profit margin was 20.6% as compared to 14.6% in the first quarter of 2009. The increase was driven by improved gross profit margin and operating expense leverage driven by higher sales.
- The Company generated $23.3 million of operating cash flow in the first quarter of 2010.
Chief Executive Officer Mark Sarvary commented, "We are very pleased with our first quarter results - we have increased sales and grown our market share while improving both our gross and operating margins. Our investments in marketing and research and development are driving our sales momentum and we believe they will continue to do so in the future."
Current Share Repurchase Authorization Completed and New Authorization Announced
During the first quarter of 2010, the Company purchased 3.7 million shares of its common stock at an average price of $27.07 for a total cost of $100.0 million.
The Company announced that the Board of Directors has authorized a new share repurchase program of up to an incremental $100.0 million. Stock repurchases under this program may be made through open market transactions, negotiated purchases or otherwise, at times and in such amounts as management and a committee of the Board deem appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, financing and regulatory requirements and other market conditions. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. This share repurchase program replaces the Company's prior share repurchase authorization, and may be limited, suspended or terminated at any time without prior notice.
Chief Financial Officer Dale Williams stated, "In addition to our increased financial guidance for 2010 we believe we are well positioned for substantial growth in sales, earnings and cash flow, with limited capital expenditures, over the next several years. After considerable evaluation of our capital structure, we continue to view share repurchases as an excellent means to return value to shareholders over the long term."
Financial Guidance
The Company increased its full year 2010 guidance for net sales and earnings per share. It currently expects net sales for 2010 to range from $1.02 billion to $1.06 billion. It currently expects EPS for 2010 to range from $1.70 to $1.85 per diluted share. The Company noted its expectations are based on information available at the time of this release, and are subject to changing conditions, many of which are outside the Company's control. The Company noted its EPS guidance does not assume any benefit from a potential reduction in shares outstanding related to its new share repurchase program.
Conference Call Information
Tempur-Pedic International will host a live conference call to discuss financial results today, April 20, 2010 at 5:00 p.m. Eastern Time. The dial-in number for the conference call is 888-293-6960. The dial-in number for international callers is 719-325-2289. The call is also being webcast and can be accessed on the investor relations section of the Company's website, http://www.tempurpedic.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for 30 days.
Forward-looking Statements
This release contains "forward-looking statements," within the meaning of federal securities laws, which include information concerning one or more of the Company's plans, objectives, goals, strategies, and other information that is not historical information. When used in this release, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to the Company's belief that its investment in marketing and research and development will continue to drive its sales momentum in the future, the Company's expectations regarding substantial sales, earnings and cash flow growth and limited capital expenditures, and the Company's expectations for net sales and earnings per share for 2010. All forward looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct.
There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this release. Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from those expressed as forward-looking statements. These risk factors include general economic, financial and industry conditions, particularly in the retail sector, as well as consumer confidence and the availability of consumer financing; uncertainties arising from global events; the effects of changes in foreign exchange rates on the Company's reported earnings; consumer acceptance of the Company's products; industry competition; the efficiency and effectiveness of the Company's advertising campaigns and other marketing programs; the Company's ability to increase sales productivity within existing retail accounts and to further penetrate the Company's domestic retail channel, including the timing of opening or expanding within large retail accounts; the Company's ability to address issues in certain underperforming international markets; the Company's ability to continuously improve and expand its product line, maintain efficient, timely and cost-effective production and delivery of its products, and manage its growth; changes in foreign tax rates, including the ability to utilize tax loss carry forwards; and rising commodity costs. Additional information concerning these and other risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including without limitation the Company's annual report on Form 10-K under the headings "Special Note Regarding Forward-Looking Statements" and "Risk Factors." Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements for any reason, including to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
About the Company
Tempur-Pedic International Inc. (NYSE: TPX) manufactures and distributes mattresses and pillows made from its proprietary TEMPUR(R) pressure-relieving material. It is the worldwide leader in premium and specialty sleep. The Company is focused on developing, manufacturing and marketing advanced sleep surfaces that help improve the quality of life for people around the world. The Company's products are currently sold in over 80 countries under the TEMPUR(R) and Tempur-Pedic(R) brand names. World headquarters for Tempur-Pedic International is in Lexington, KY. For more information, visit http://www.tempurpedic.com or call 800-805-3635.
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per common share amounts)
Three Months
Ended
March 31,
---------
2010 2009 Chg%
---- ---- ----
Net sales $253,889 $177,104 43%
Cost of sales 129,080 95,243
------- ------
Gross profit 124,809 81,861 53%
Selling and marketing
expenses 46,231 33,872
General,
administrative and
other expenses 26,288 22,108
------ ------
Operating income 52,290 25,881 102%
Other expense, net:
Interest expense, net (3,189) (4,571)
Other income, net 163 348
--- ---
Total other expense (3,026) (4,223)
Income before income
taxes 49,264 21,658 128%
Income tax provision 16,021 8,320
------ -----
Net income 33,243 13,338
Less: Net income
attributable to the
noncontrolling
interest 95 -
--- ---
Net income
attributable to
common stockholders $33,148 $13,338 149%
======= =======
Earnings per common
share:
Basic $0.45 $0.18
===== =====
Diluted $0.44 $0.18
===== =====
Weighted average
common shares
outstanding:
Basic 73,313 74,874
====== ======
Diluted 75,678 74,959
====== ======
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
December
March 31, 31,
2010 2009
---- ----
ASSETS
Current Assets:
Cash and cash
equivalents $38,422 $14,042
Accounts receivable,
net 118,997 105,576
Inventories 68,111 57,686
Prepaid expenses and
other current assets 15,888 11,268
Deferred income taxes 20,276 20,411
------ ------
Total Current Assets 261,694 208,983
Property, plant and
equipment, net 165,880 172,497
Goodwill 193,155 193,391
Other intangible
assets, net 64,067 64,717
Other non-current
assets 4,392 3,791
----- -----
Total Assets $689,188 $643,379
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $52,647 $47,761
Accrued expenses and
other current
liabilities 81,256 81,452
Income taxes payable 14,362 7,312
Total Current
Liabilities 148,265 136,525
Long-term debt 392,695 297,470
Deferred income taxes 28,827 29,865
Other non-current
liabilities 6,222 7,226
----- -----
Total Liabilities 576,009 471,086
Equity attributable
to common
stockholders 111,859 172,293
Equity attributable
to the
noncontrolling
interest 1,320 -
Total Stockholders'
Equity 113,179 172,293
Total Liabilities and
Stockholders' Equity $689,188 $643,379
======== ========
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months
Ended
March 31,
---------
2010 2009
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $33,243 $13,338
Adjustments to reconcile
net income to net cash
provided
by operating activities:
Depreciation and
amortization 7,585 7,727
Amortization of stock-
based compensation 2,411 1,903
Amortization of deferred
financing costs 173 172
Bad debt expense 576 2,233
Deferred income taxes (1,534) (4,742)
Foreign currency
adjustments and other (844) (311)
Changes in operating
assets and liabilities (18,290) 5,679
Net cash provided by
operating activities 23,320 25,999
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property,
plant and equipment (2,671) (1,423)
Payments for other (87) (218)
Net cash used by
investing activities (2,758) (1,641)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term
revolving credit
facility 129,336 61,500
Repayments of long-term
revolving credit
facility (33,749) (79,721)
Proceeds from issuance of
Common stock 8,308 -
Excess tax benefit from
stock based compensation 1,289 -
Treasury shares
repurchased (100,000) -
-------- ---
Net cash provided (used)
by financing activities 5,184 (18,221)
NET EFFECT OF EXCHANGE
RATE CHANGES ON CASH (1,366) (395)
------ ----
Increase in cash and cash
equivalents 24,380 5,742
CASH AND CASH
EQUIVALENTS, beginning
of period 14,042 15,385
------ ------
CASH AND CASH
EQUIVALENTS, end of
period $38,422 $21,127
======= =======
Summary of Channel Sales
The Company generates sales through four distribution channels: retail, direct, healthcare and third party. The retail channel sells to furniture, specialty and department stores globally. The direct channel sells directly to consumers. The healthcare channel sells to hospitals, nursing homes, healthcare professionals and medical retailers. The third party channel sells to distributors in countries where Tempur-Pedic International does not operate its own distribution company.
The following table highlights net sales information, by channel and by segment, for the first quarter of 2010 compared to 2009:
(In thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months
Three Months Ended Three Months Ended Ended
March 31 March 31, March 31,
2010 2009 2010 2009 2010 2009
---- ---- ---- ---- ---- ----
Retail $212,740 $150,522 $143,217 $93,411 $69,523 $57,111
Direct 16,614 9,729 14,555 8,478 2,059 1,251
Healthcare 9,898 8,902 3,438 2,694 6,460 6,208
Third
Party 14,637 7,951 5,343 1,851 9,294 6,100
------ ----- ----- ----- ----- -----
$253,889 $177,104 $166,553 $106,434 $87,336 $70,670
======== ======== ======== ======== ======= =======
Summary of Product Sales
The following table highlights net sales information, by product and by segment, for the first quarter of 2010 compared to 2009:
(In thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months
Three Months Ended Three Months Ended Ended
March 31, March 31, March 31,
2010 2009 2010 2009 2010 2009
---- ---- ---- ---- ---- ----
Mattresses $169,073 $119,128 $117,386 $75,711 $51,687 $43,417
Pillows 30,746 23,061 14,129 9,845 16,617 13,216
Other 54,070 34,915 35,038 20,878 19,032 14,037
------ ------ ------ ------ ------ ------
$253,889 $177,104 $166,553 $106,434 $87,336 $70,670
======== ======== ======== ======== ======= =======
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Reconciliation of Adjusted EBITDA to Net Income and Funded debt to Total
debt
Non-GAAP Measures
(In thousands)
The Company provides information regarding Adjusted EBITDA and Funded debt which are not recognized terms under GAAP (Generally Accepted Accounting Principles) and do not purport to be alternatives to Net income as a measure of operating performance or Total debt. A reconciliation of Adjusted EBITDA to the Company's Net income and a reconciliation of Funded debt to Total debt are provided below. Management believes that the use of Adjusted EBITDA and Funded debt provides investors with useful information with respect to the terms of the Company's credit facility.
Reconciliation of Adjusted EBITDA to Net income
The following table sets forth the reconciliation of the Company's reported Net income to the calculation of Adjusted EBITDA for each of the three months ended June 30, 2009, September 30, 2009, December 31, 2009 and March 31, 2010, as well as the twelve months ended March 31, 2010:
Twelve Months
Three Months Ended Ended
June 30, September December 31, March 31, March 31,
2009 30, 2009 2009 2010 2010
--------- --------- ------------- ---------- ----------
GAAP Net
income
attributable
to common
stockholders $16,857 $25,684 $29,114 $33,148 $104,803
Plus:
Interest
expense 4,477 4,311 3,990 3,189 15,967
Income taxes 8,098 12,467 14,159 16,021 50,745
Depreciation
& 9,977 10,367 10,239 9,996 40,579
Amortization
Other (1) - - - 361 361
Adjusted
EBITDA $39,409 $52,829 $57,502 $62,715 $212,455
(1) Includes professional costs incurred in connection with the
acquisition of the Company's Canadian distributor, which closed on
April 1, 2010. In accordance with the Company's credit facility,
this amount is excluded from the calculation of Adjusted EBITDA for
purposes of calculating compliance with the ratio of Funded debt to
Adjusted EBITDA.
Reconciliation of Funded debt to Total debt
The following table sets forth the reconciliation of the Company's reported Total debt to the calculation of Funded debt as of March 31, 2010:
As of
March 31, 2010
--------------
GAAP basis Total debt $392,695
Plus:
Letters of credit
outstanding 11,262
------
Funded debt $403,957
========
Calculation of Funded debt to Adjusted EBITDA
As of
March 31, 2010
--------------
Funded debt $403,957
Adjusted EBITDA 212,455
-------
1.90 times
==========
SOURCE Tempur-Pedic International Inc.
Copyright (C) 2010 PR Newswire. All rights reserved