Tempur Sealy Announces Termination Of Mattress Firm Contracts
Chairman and CEO
Thompson continued, "
The Company expects to report record financial results for the fourth quarter of 2016 and for the full year. For the fourth quarter 2016, the Company expects to report total net sales of approximately
For the full year 2016, the Company expects to report total net sales of approximately
For the full year 2016, the Company's net sales to Mattress Firm were approximately 21% on a worldwide basis which includes sales to
Excluding sales to Mattress Firm and Sleepy's, the Company expects that its net sales increased as compared to the prior year by approximately 4% and 2% in the fourth quarter and full year 2016, respectively.
As previously announced,
(1) This is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures and Constant Currency Information" below.
Non-GAAP Financial Measures and Constant Currency Information
For additional information regarding adjusted EBITDA, which is a non-GAAP financial measure, please refer to the reconciliations and other information included in the attached schedules. For information on the methodology used to present information on a constant currency basis, please refer to "Constant Currency Information" included in the attached schedules.
Forward-looking Statements
This press release contains "forward-looking statements," within the meaning of the federal securities laws, which include information concerning the termination of the relationship with Mattress Firm, anticipated financial results for the fourth quarter and full year 2016 and other information that is not historical information. When used in this release, the words "estimates," "expects," "guidance," "anticipates," "projects," "plans," "proposed," "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 termination of the relationship with Mattress Firm and the Company's anticipated financial results for the fourth quarter and full year 2016. 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.
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 risks associated with the termination of the relationship with Mattress Firm, including any adverse impact on sales and profitability, and risks associated with the Company's capital structure and debt level; general economic, financial and industry conditions, particularly in the retail sector, as well as consumer confidence and the availability of consumer financing; changes in product and channel mix and the impact on the Company's gross margin; changes in interest rates; the impact of the macroeconomic environment in both the
Other potential risk factors include the risk factors discussed under the heading "Risk Factors" under ITEM 1A of Part 1 of the Company's Annual Report on Form 10-K for the year ended
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Reconciliation of Non-GAAP Measures
(in millions)
The Company provides information regarding EBITDA and adjusted EBITDA, which are not recognized terms under GAAP and do not purport to be alternatives to net income and earnings per share as a measure of operating performance. The Company believes these non-GAAP measures provide investors with performance measures that better reflect the Company's underlying operations and trends. The adjustments management makes to derive the non-GAAP measures include adjustments to exclude items that may cause short-term fluctuations in the nearest GAAP measure, but which management does not consider to be the fundamental attributes or primary drivers of its business.
The Company believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying results from continuing operations and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company's business, to evaluate its consolidated and business segment performance compared to prior periods and the marketplace, to establish operational goals and to provide continuity to investors for comparability purposes. Limitations associated with the use of these non-GAAP measures include that these measures do not present all of the amounts associated with our results as determined in accordance with GAAP and these non-GAAP measures should be considered supplemental in nature and should not be construed as more significant than comparable measures defined by GAAP. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies. For more information about these non-GAAP measures and a reconciliation to the nearest GAAP measure, please refer to the reconciliations on the following pages.
Constant Currency Information
In this press release the Company refers to, and in other press releases and other communications with investors the Company may refer to, net sales or earnings or other historical financial information on a "constant currency basis", which is a non-GAAP financial measure. These references to constant currency basis do not include operational impacts that could result from fluctuations in foreign currency rates. To provide information on a constant currency basis, the applicable financial results are adjusted based on a simple mathematical model that translates current period results in local currency using the comparable prior corresponding period's currency conversion rate. This approach is used for countries where the functional currency is the local country currency. This information is provided so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby facilitating period-to-period comparisons of business performance.
EBITDA and Adjusted EBITDA
A reconciliation of GAAP net income to EBITDA and adjusted EBITDA is below.
The following table sets forth the reconciliation of the Company's anticipated GAAP net income to the calculations of EBITDA and adjusted EBITDA for the three months and twelve months ended December 31, 2016:
Three Months Ended | ||
| ||
(in millions) |
LOW |
HIGH |
GAAP net income |
|
|
Interest expense |
20.2 |
20.2 |
Income taxes |
25.7 |
26.6 |
Depreciation and amortization |
19.9 |
19.9 |
EBITDA |
|
|
Adjustments: |
||
Restructuring costs (1) |
7.8 |
7.8 |
Adjusted EBITDA |
|
|
Year Ended | ||
| ||
(in millions) |
LOW |
HIGH |
GAAP net income |
|
|
Interest expense |
85.2 |
85.2 |
Loss on extinguishment of debt (2) |
47.2 |
47.2 |
Income taxes |
85.9 |
86.8 |
Depreciation and amortization |
89.5 |
89.5 |
EBITDA |
|
|
Adjustments: |
||
Restructuring costs (1) |
7.8 |
7.8 |
Integration costs (3) |
2.0 |
2.0 |
Executive management transition and retention compensation (4) |
1.0 |
1.0 |
Adjusted EBITDA |
|
|
Footnotes: | |
(1) |
Restructuring costs represent costs associated principally with international headcount reduction and international store closures. |
(2) |
Loss on extinguishment of debt represents costs associated with the completion of a new credit facility and senior notes offering in the second quarter of 2016. |
(3) |
Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs associated with the continued alignment of the |
(4) |
Executive management transition and retention compensation represents certain costs associated with the transition of certain of the Company's executive officers. |
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