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LEXINGTON, Ky., July 16, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Tempur-Pedic International Inc. (NYSE: TPX), the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced financial results for the second quarter ended June 30, 2009. The Company also confirmed its financial guidance for 2009.
SECOND QUARTER FINANCIAL SUMMARY
-- Earnings per share (EPS) were $0.22 per diluted share in the second
quarter of 2009 as compared to $0.27 per diluted share in the second
quarter of 2008. The Company reported net income of $16.9 million for
the second quarter of 2009 as compared to net income of $20.2 million in
the second quarter of 2008.
-- Net sales declined 22% to $185.2 million in the second quarter of 2009
from $238.7 million in the second quarter of 2008. On a constant
currency basis, net sales declined 19%. Net sales in the domestic
segment declined 19%, while international segment net sales declined
29%. On a constant currency basis, international segment net sales
declined 19%.
-- Mattress sales declined 24% globally. Mattress sales declined 20% in the
domestic segment and 31% in the international segment. On a constant
currency basis, international mattress sales declined 21%. Pillow sales
declined 17% globally. Pillow sales declined 12% domestically and 20%
internationally. On a constant currency basis, international pillow
sales declined 12%.
-- Gross profit margin was 46.6% as compared to 44.4% in the second quarter
of 2008. The gross profit margin increased as a result of lower
commodity costs, improved efficiencies in manufacturing and improved
pricing, partially offset by fixed cost de-leverage related to lower
production volumes.
-- Operating profit margin was 15.7% as compared to 15.2% in the second
quarter of 2008. The Company reduced operating expenses by $12.5 million
to $57.2 million in the second quarter of 2009 from $69.7 million in the
second quarter of 2008.
-- Reflecting the Company's continued focus on generating cash, the
Company generated $39.5 million of operating cash flow in the second
quarter of 2009.
-- During the quarter, the Company reduced Total debt by $31.0 million to
$369.0 million and increased cash by $3.8 million to $25.0. As of June
30, 2009, the Company's ratio of Funded debt to EBITDA was 2.29
times, well within the covenant in its credit facility, which requires
that this ratio not exceed 3.00 times. For additional information about
EBITDA and Funded debt (which are non-GAAP measures), please refer to
the reconciliation and other information included in the attached
schedule.
Chief Executive Officer Mark Sarvary commented, "During the second quarter, our initiatives to drive sales and margins continued to show progress. Our productivity projects helped us expand gross margins with improvement compared to last year and last quarter. Our focus on cash flow continued to display the strength of our business model as we lowered debt $31 million during the quarter. We believe we are well positioned for growth when the economy recovers."
2009 Financial Guidance
The Company confirmed its prior guidance ranges for EPS and net sales for full year 2009. The Company continues to expect EPS to range from $0.70 to $0.90 per diluted share. The Company continues to expect net sales to range from $700 million to $740 million. 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.
Conference Call Information
Tempur-Pedic International will host a live conference call to discuss financial results today, July 16, 2009 at 5:00 p.m. Eastern Time. The dial-in number for the conference call is 877-419-6593. The call is also being webcast and can be accessed on the investor relations section of the Company's website, www.tempurpedic.com.
For those who cannot listen to the live broadcast, a telephone replay of the call will be available from July 16, 2009 at 8:00 p.m. Eastern Time through July 23, 2009. To listen to the replay, dial 888-203-1112, participant code 7809604.
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 positioning for future growth and the Company's expectations regarding net sales and earnings per share for 2009. 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; the Company's ability to reduce expenses to align with reduced sales levels; 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 70 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 Six Months
Ended Ended
June 30, June 30,
-------- --------
2009 2008 Chg % 2009 2008 Chg %
---- ---- ---- ---- ---- ----
Net sales $185,176 $238,661 (22)% $362,280 $485,883 (25)%
Cost of sales 98,845 132,645 194,088 271,786
------- ------- ------- -------
Gross profit 86,331 106,016 (19)% 168,192 214,097 (21)%
Selling and
marketing
expenses 35,191 44,787 69,063 97,950
General,
administrative
and other
expenses 21,978 24,910 44,086 50,495
------- ------- ------- -------
Operating
income 29,162 36,319 (20)% 55,043 65,652 (16)%
Other income
(expense),
net:
Interest
expense, net (4,477) (5,645) (9,048) (13,336)
Other income
(expense),
net 270 (72) 618 (1,091)
------- ------- ------- -------
Total other
expense (4,207) (5,717) (8,430) (14,427)
Income before
income taxes 24,955 30,602 (19)% 46,613 51,225 (9)%
Income tax
provision 8,098 10,374 16,418 17,483
------- ------- ------- -------
Net income $16,857 $20,228 (17)% $30,195 $33,742 (11)%
======= ======= ======= =======
Earnings per
common share:
Basic $0.23 $0.27 $0.40 $0.45
===== ===== ===== =====
Diluted $0.22 $0.27 $0.40 $0.45
===== ===== ===== =====
Weighted
average
common shares
outstanding:
Basic 74,894 74,740 74,884 74,665
====== ====== ====== ======
Diluted 75,493 74,931 75,036 74,872
====== ====== ====== ======
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2009 2008
---- ----
ASSETS
Current Assets:
Cash and cash
equivalents $24,974 $15,385
Accounts receivable, net 91,002 99,811
Inventories 51,570 60,497
Prepaid expenses and
other current assets 11,675 9,233
Deferred income taxes 18,043 11,888
------ ------
Total Current Assets 197,264 196,814
Property, plant and
equipment, net 176,867 185,843
Goodwill 192,998 192,569
Other intangible assets,
net 65,820 66,823
Other non-current assets 3,758 4,482
----- -----
Total Assets $636,707 $646,531
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $38,496 $41,355
Accrued expenses and
other current
liabilities 78,365 65,316
Income taxes payable 3,061 7,783
----- -----
Total Current
Liabilities 119,922 114,454
Long-term debt 369,000 419,341
Deferred income taxes 28,888 28,371
Other non-current
liabilities 9,711 11,922
----- ------
Total Liabilities 527,521 574,088
Total Stockholders'
Equity 109,186 72,443
------- ------
Total Liabilities and
Stockholders' Equity $636,707 $646,531
======== ========
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
Six Months
Ended
June 30,
--------
2009 2008
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $30,195 $33,742
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 15,514 16,685
Amortization of
stock-based compensation 4,093 4,041
Amortization of deferred
financing costs 345 714
Bad debt expense 3,864 3,439
Deferred income taxes (6,148) (958)
Foreign currency
adjustments 193 524
(Gain) Loss on sale of
equipment and other (45) 345
Changes in operating
assets and liabilities 17,439 37,776
------ ------
Net cash provided by
operating activities 65,450 96,308
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property,
plant and equipment (4,728) (6,328)
Acquisition of business,
net of cash acquired - (1,522)
Other (155) (411)
---- ----
Net cash used by investing
activities (4,883) (8,261)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term
revolving credit facility 83,797 70,732
Repayments of long-term
revolving credit facility (133,036) (57,244)
Repayments of long-term
debt - (1,359)
Repayment of Series A
Industrial Revenue Bonds - (57,785)
Proceeds from issuance of
common stock - 695
Excess tax benefit from
stock based compensation - 366
Dividend paid to
stockholders - (11,946)
Other - (14)
---- ----
Net cash used by financing
activities (49,239) (56,555)
NET EFFECT OF EXCHANGE
RATE CHANGES ON CASH (1,739) 3,546
------ -----
Increase in cash and cash
equivalents 9,589 35,038
CASH AND CASH EQUIVALENTS,
beginning of period 15,385 33,315
------ ------
CASH AND CASH EQUIVALENTS,
end of period $24,974 $68,353
======= =======
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 second quarter of 2009 compared to 2008:
(In thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
------------ -------- -------------
Three Months Ended Three Months Ended Three Months Ended
June 30, June 30, June 30,
-------- -------- --------
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Retail $155,575 $199,323 $105,576 $130,069 $49,999 $69,254
Direct 10,785 13,527 9,428 11,328 1,357 2,199
Healthcare 8,261 12,556 2,686 4,501 5,575 8,055
Third Party 10,555 13,255 3,054 2,603 7,501 10,652
------ ------ ----- ----- ----- ------
Total $185,176 $238,661 $120,744 $148,501 $64,432 $90,160
======== ======== ======== ======== ======= =======
Summary of Product Sales
A summary of net sales by product is reported below:
(In thousands)
CONSOLIDATED DOMESTIC INTERNATIONAL
------------ -------- -------------
Three Months Ended Three Months Ended Three Months Ended
June 30, June 30, June 30,
-------- -------- --------
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Mattresses $124,344 $163,634 $86,300 $108,369 $38,044 $55,265
Pillows 24,006 28,877 11,029 12,583 12,977 16,294
Other 36,826 46,150 23,415 27,549 13,411 18,601
------ ------ ------ ------ ------ ------
Total $185,176 $238,661 $120,744 $148,501 $64,432 $90,160
======== ======== ======== ======== ======= =======
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
EBITDA to Net Income and Funded debt to Total debt
Non-GAAP Measures
(In thousands)
The Company provides information regarding 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. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies. A reconciliation of EBITDA to the Company's Net income and reconciliation of Funded debt to Total 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 EBITDA to Net income
The following table sets forth the reconciliation of the Company's reported Net income to the calculation of EBITDA for each of the three months ended September 30, 2008, December 31, 2008, March 31, 2009 and June 30, 2009, as well as the twelve months ended June 30, 2009:
Three Months Twelve Months
Ended Ended
------------------------------------------- --------------
September December 31, March 31, June 30,
30, 2008 2008 2009 2009 June 30, 2009
------------------------------------------- --------------
GAAP Net
income $24,071 $1,055 $13,338 $16,857 $55,321
Plus:
Interest
expense 6,294 5,493 4,571 4,477 20,835
Income taxes 12,622 18,449 8,320 8,098 47,489
Depreciation
& amorti-
zation 10,222 9,849 9,630 9,977 39,678
------- ------- ------- ------- --------
EBITDA $53,209 $34,846 $35,859 $39,409 $163,323
======= ======= ======= ======= ========
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 June 30, 2009:
As of
June 30, 2009
-------------
GAAP basis Total debt $369,000
Plus:
Letters of credit outstanding 4,995
-----
Funded debt $373,995
========
Calculation of Funded debt to EBITDA
As of
June 30, 2009
-------------
Funded debt $373,995
EBITDA 163,323
-------
2.29 times
==========
SOURCE Tempur-Pedic International Inc.
http://www.tempurpedic.com
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