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Tempur-Pedic Reports Record Fourth Quarter and Full Year Sales and Earnings
FOURTH QUARTER FINANCIAL SUMMARY
- Earnings per diluted share (EPS) were
$0.84 in the fourth quarter of 2011 as compared to EPS of$0.66 per diluted share in the fourth quarter of 2010. The Company reported net income of$56.3 million for the fourth quarter of 2011 as compared to net income of$46.3 million in the fourth quarter of 2010.
- Net sales increased 25% to
$366.8 million in the fourth quarter of 2011 from$292.7 million in the fourth quarter of 2010. On a constant currency basis, net sales increased 24%. Net sales in the North American segment increased 26% and international segment net sales increased 25%. On a constant currency basis, international segment net sales increased 21%.
- Mattress sales increased 26% globally. Mattress sales increased 24% in the North American segment and increased 33% in the international segment. On a constant currency basis, international mattress sales increased 29%. Pillow sales increased 16% globally. Pillow sales increased 15% in
North America and 17% internationally. On a constant currency basis, international pillow sales increased 13%.
- Gross profit margin was 52.1% as compared to 51.9% in the fourth quarter of 2010. The gross profit margin increased as a result of favorable mix, improved efficiencies in manufacturing and distribution, and fixed cost leverage related to higher production volumes, partially offset by higher commodity costs and costs associated with US shipments to support the Company's Danish manufacturing facility.
- Operating profit margin was 23.4% as compared to 24.5% in the fourth quarter of 2010 reflecting the Company's strategic investments to drive growth, including brand advertising.
- The Company generated
$69.7 million of operating cash flow as compared to$44.5 million in the fourth quarter of 2010.
- During the fourth quarter of 2011, the Company purchased 2.3 million shares of its common stock for a total cost of
$128.5 million .
FULL YEAR FINANCIAL SUMMARY
- Earnings per share (EPS) were
$3.18 per diluted share for the full year 2011 as compared to EPS of$2.16 per diluted share for the full year 2010. The Company reported net income of$219.6 million for the full year 2011 as compared to net income of$157.1 million for the full year 2010.
- Net sales increased 28% to
$1,417.9 million for the full year 2011 from$1,105.4 million for the full year 2010. On a constant currency basis, net sales increased 25%. Net sales in the North American segment increased 30% and international segment net sales increased 24%. On a constant currency basis, international segment net sales increased 16%.
- Gross profit margin was 52.4% for the full year 2011 as compared to 50.2% for the full year 2010. The gross profit margin increased as a result of favorable mix, improved efficiencies in manufacturing and distribution, and fixed cost leverage related to higher production volumes, partially offset by higher commodity costs, new product introductions, and costs associated with US shipments to support the Company's Danish manufacturing facility.
- Operating profit margin was 24.0% as compared to 22.2% for the full year 2010.
- The Company generated
$248.7 million of operating cash flow as compared to$184.1 million for the full year 2010.
- During 2011, the Company purchased 6.5 million shares of its common stock for a total cost of
$368.5 million .
Chief Executive Officer
Share Repurchase Program
The Company announced the Board of Directors has authorized a new share repurchase program of up to
Financial Guidance
The Company issued full year 2012 guidance for net sales and earnings per share. It currently expects net sales for 2012 to range from
Conference Call Information
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 plans to increase its rate of investment in areas to drive growth, the Company's R&D strategy and expected product launches and expectations for net sales and earnings per share for 2012. 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 retail channel, including the timing of opening or expanding within large retail accounts; the Company's ability to expand brand awareness, distribution and new products in 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; the effects of strategic investments on our operations; 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
About the Company
Consolidated Statements of Income (In thousands, except per common share amounts) | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
December 31, | ||||||||||||||||||
2011 | 2010 | Chg % | 2011 | 2010 | Chg % | |||||||||||||
Net sales | $ | 366,803 | $ | 292,703 | 25.3% | $ | 1,417,938 | $ | 1,105,421 | 28.3% | ||||||||
Cost of sales | 175,635 | 140,880 | 674,848 | 549,994 | ||||||||||||||
Gross profit | 191,168 | 151,823 | 25.9% | 743,090 | 555,427 | 33.8% | ||||||||||||
Selling and marketing expenses | 72,081 | 53,449 | 276,870 | 199,722 | ||||||||||||||
General, administrative and other expenses | 33,273 | 26,766 | 125,689 | 109,803 | ||||||||||||||
Operating income | 85,814 | 71,608 | 19.8% | 340,531 | 245,902 | 38.5% | ||||||||||||
Other expense, net: | ||||||||||||||||||
Interest expense, net | (3,498) | (3,458) | (11,948) | (14,501) | ||||||||||||||
Other income (expense), net | 758 | 32 | (192) | (536) | ||||||||||||||
Total other expense | (2,740) | (3,426) | (12,140) | (15,037) | ||||||||||||||
Income before income taxes | 83,074 | 68,182 | 21.8% | 328,391 | 230,865 | 42.2% | ||||||||||||
Income tax provision | 26,759 | 21,890 | 108,783 | 73,720 | ||||||||||||||
Net income | $ | 56,315 | $ | 46,292 | $ | 219,608 | $ | 157,145 | ||||||||||
Earnings per common share: | ||||||||||||||||||
Basic | $ | 0.86 | $ | 0.68 | $ | 3.27 | $ | 2.23 | ||||||||||
Diluted | $ | 0.84 | $ | 0.66 | $ | 3.18 | $ | 2.16 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||
Basic | 65,113 | 68,220 | 67,070 | 70,348 | ||||||||||||||
Diluted | 66,953 | 70,619 | 69,149 | 72,792 | ||||||||||||||
Consolidated Balance Sheets (In thousands) | ||||||||
December 31, | ||||||||
2011 | 2010 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 111,367 | $ | 53,623 | ||||
Accounts receivable, net | 142,412 | 115,630 | ||||||
Inventories | 91,212 | 69,856 | ||||||
Prepaid expenses and other current assets | 20,088 | 18,646 | ||||||
Deferred income taxes | 14,391 | 13,725 | ||||||
Total Current Assets | 379,470 | 271,480 | ||||||
Property, plant and equipment, net | 160,502 | 159,807 | ||||||
Goodwill | 213,273 | 212,468 | ||||||
Other intangible assets, net | 66,491 | 68,745 | ||||||
Other non-current assets | 8,904 | 3,503 | ||||||
Total Assets | $ | 828,640 | $ | 716,003 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 69,936 | $ | 48,288 | ||||
Accrued expenses and other current liabilities | 92,737 | 85,469 | ||||||
Income taxes payable | 20,506 | 12,477 | ||||||
Total Current Liabilities | 183,179 | 146,234 | ||||||
Long-term debt | 585,000 | 407,000 | ||||||
Deferred income taxes | 24,227 | 32,315 | ||||||
Other non-current liabilities | 5,443 | 4,421 | ||||||
Total Liabilities | 797,849 | 589,970 | ||||||
Stockholders' Equity: | ||||||||
Common stock, authorized; 99,215 shares issued as of | 992 | 992 | ||||||
Additional paid in capital | 361,807 | 320,952 | ||||||
Retained earnings | 742,480 | 522,872 | ||||||
Accumulated other comprehensive loss | (14,686) | (6,188) | ||||||
Treasury stock at cost; 35,445 and 30,731 shares as of December 31, 2011 and 2010, respectively | (1,059,802) | (712,595) | ||||||
Total Stockholders' Equity | 30,791 | 126,033 | ||||||
Total Liabilities and Stockholders' Equity | $ | 828,640 | $ | 716,003 | ||||
Consolidated Statements of Cash Flows (In thousands) | ||||||||
Twelve Months Ended | ||||||||
December 31, | ||||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 219,608 | $ | 157,145 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 34,295 | 32,361 | ||||||
Amortization of stock-based compensation | 16,693 | 11,608 | ||||||
Amortization of deferred financing costs | 1,034 | 690 | ||||||
Bad debt expense | 1,563 | 531 | ||||||
Deferred income taxes | (8,528) | 4,946 | ||||||
Foreign currency adjustments and other | 1,248 | (465) | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (30,198) | (12,752) | ||||||
Inventories | (18,473) | (6,710) | ||||||
Prepaid expense and other current assets | (2,772) | (6,519) | ||||||
Accounts payable | 21,675 | (1,145) | ||||||
Accrued expenses and other | 3,867 | (370) | ||||||
Income taxes payable | 8,694 | 4,802 | ||||||
Net cash provided by operating activities | 248,706 | 184,122 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisition of business, net of cash acquired | (4,566) | (18,692) | ||||||
Acquisition of trademarks and other | (2,044) | (684) | ||||||
Purchases of property, plant and equipment | (29,466) | (18,141) | ||||||
Net cash used by investing activities | (36,076) | (37,517) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from long-term revolving credit facility | 821,500 | 308,836 | ||||||
Repayments of long-term revolving credit facility | (643,500) | (197,813) | ||||||
Payments of deferred finance costs | (6,217) | - | ||||||
Proceeds from issuance of common stock | 26,256 | 28,551 | ||||||
Excess tax benefit from stock-based compensation | 19,192 | 5,590 | ||||||
Treasury shares repurchased | (365,928) | (250,000) | ||||||
Other | (173) | (1,540) | ||||||
Net cash used by financing activities | (148,870) | (106,376) | ||||||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (6,016) | (648) | ||||||
Increase in cash and cash equivalents | 57,744 | 39,581 | ||||||
CASH AND CASH EQUIVALENTS, beginning of period | 53,623 | 14,042 | ||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 111,367 | $ | 53,623 | ||||
Summary of Channel Sales The following table highlights net sales information, by channel and by segment: | |||||||||||||
(In thousands) | |||||||||||||
CONSOLIDATED | INTERNATIONAL | ||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||
December 31, | |||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||
Retail | $ | 319,334 | $ | 254,565 | $ | 225,197 | $ | 180,756 | $ | 94,137 | $ | 73,809 | |
Direct | 28,609 | 19,184 | 21,143 | 14,718 | 7,466 | 4,466 | |||||||
Healthcare | 8,987 | 9,212 | 2,953 | 3,090 | 6,034 | 6,122 | |||||||
Third Party | 9,873 | 9,742 | - | - | 9,873 | 9,742 | |||||||
$ | 366,803 | $ | 292,703 | $ | 249,293 | $ | 198,564 | $ | 117,510 | $ | 94,139 | ||
Summary of Product Sales The following table highlights net sales information, by product and by segment: | |||||||||||||
(In thousands) | |||||||||||||
CONSOLIDATED | INTERNATIONAL | ||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||
| | December 31, | |||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||
Mattresses | $ | 238,590 | $ | 188,732 | $ | 166,009 | $ | 134,186 | $ | 72,581 | $ | 54,546 | |
Pillows | 43,971 | 37,934 | 22,067 | 19,234 | 21,904 | 18,700 | |||||||
Other | 84,242 | 66,037 | 61,217 | 45,144 | 23,025 | 20,893 | |||||||
$ | 366,803 | $ | 292,703 | $ | 249,293 | $ | 198,564 | $ | 117,510 | $ | 94,139 | ||
Reconciliation of EBITDA to Net Income and Total debt to Funded debt | |
Non-GAAP Measures | |
(In thousands) | |
The Company provides information regarding Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) and Funded debt which are not recognized terms under U.S. 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 EBITDA to the Company's Net income and a reconciliation of Total debt to Funded debt are provided below. Management believes that the use of EBITDA and Funded debt provides investors with useful information with respect to the terms of the Company's credit facility. | |
Reconciliation of Net income to EBITDA | |
The following table sets forth the reconciliation of the Company's reported Net income to the calculation of EBITDA for the twelve months ended | |
Twelve Months Ended | |||
GAAP Net income | $ | 219,608 | |
Plus: | |||
Interest expense | 11,948 | ||
Income taxes | 108,783 | ||
Depreciation & Amortization | 50,988 | ||
EBITDA | $ | 391,327 | |
Reconciliation of Total debt to Funded debt | |
The following table sets forth the reconciliation of the Company's reported Total debt to the calculation of Funded debt as of | |
As of | |||
GAAP basis Total debt | $ | 585,000 | |
Plus: | |||
Letters of credit outstanding | 990 | ||
Funded debt | $ | 585,990 | |
Calculation of Funded debt to EBITDA | |
As of | |||
Funded debt | $ | 585,990 | |
EBITDA | 391,327 | ||
1.50 times | |||
SOURCE
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