Tempur-Pedic Reports Record Third Quarter 2011 Sales and Earnings

LEXINGTON, Ky., Oct. 20, 2011 /PRNewswire/ -- Tempur-Pedic International Inc. (NYSE: TPX), the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced financial results for the third quarter ended September 30, 2011. The Company also increased full year 2011 financial guidance and announced an increase to its existing share repurchase authorization.

Financial Summary

• Earnings per diluted share (EPS) increased 45% to $0.90 in the third quarter of 2011 as compared to $0.62 in the third quarter of 2010. The Company reported net income of $61.9 million in the third quarter of 2011 as compared to $44.2 million in the third quarter of 2010.

• Net sales increased 30% to $383.1 million in the third quarter of 2011 from $295.8 million in the third quarter of 2010. On a constant currency basis, net sales increased 26%. Net sales in the North American segment increased 30%, while International segment net sales increased 28%. On a constant currency basis, International segment net sales increased 15%.  

• Mattress sales increased 28% globally. Mattress sales increased 28% in the North American segment and 31% in the International segment. On a constant currency basis, International mattress sales increased 18%. Pillow sales increased 12% globally. Pillow sales increased 5% in North America and 21% in the International segment. On a constant currency basis, International pillow sales increased 9%.

• Gross profit margin was 52.4% as compared to 51.0% in the third quarter of 2010. The gross profit margin increased as a result of improved efficiencies in manufacturing, favorable mix and fixed cost leverage related to higher production volumes, partially offset by commodity costs and new product introductions.

• Operating profit margin was 25.2% as compared to 23.0% in the third quarter of 2010. The increase was driven by improved gross profit margin and operating expense leverage, partially offset by increased marketing investments.

• The Company generated $75.0 million of operating cash flow in the third quarter of 2011 as compared to $71.9 million in the third quarter of 2010. In addition, the Company increased its cash balance by $16.3 million to $103.0 million in the third quarter.

Chief Executive Officer Mark Sarvary commented, "We are pleased with our third quarter results globally. Our strategic investments in brand awareness and new products continue to deliver growth. We remain confident of the potential to grow sales and earnings over the long term."

Chief Financial Officer Dale Williams commented, "We are pleased with our sales and earnings in the quarter, and our continued improvement in margins. However, gross margins declined sequentially this quarter primarily related to a transitory productivity issue at our Danish manufacturing facility."

Share Repurchase Program

During the third quarter of 2011, the Company purchased 1.34 million shares of its common stock for a total cost of $80.0 million. During the first three quarters of 2011, the Company purchased 4.25 million shares of its common stock for a total cost of $240.0 million.

The Company announced the Board of Directors has expanded the Company's existing repurchase program by $80.0 million for a total authorization of up to $280.0 million. Reflecting share repurchases made during the third quarter, the Company currently has $200.0 million remaining under this authorization. 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 may be limited, suspended or terminated at any time without prior notice.

Updated Financial Guidance

The Company updated financial guidance for the full year 2011. The Company currently expects net sales for 2011 to range from $1.405 billion to $1.425 billion and EPS for 2011 to range from $3.12 to $3.17 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 further reduction in shares outstanding related to its share repurchase program.

Conference Call Information

Tempur-Pedic International will host a live conference call to discuss financial results today, October 20, 2011 at 5:00 p.m. Eastern Time. The dial-in number for the conference call is 800-850-2903. The dial-in number for international callers is 224-357-2399. The call is also available via webcast and can be accessed on the investor relations section of the Company's website, http://www.tempurpedic.com. After the conference call, a replay of the webcast 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 potential to grow sales and earnings over the long term and expectations for net sales and earnings per share for 2011. 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 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.

SOURCE Tempur-Pedic International Inc.