Tempur Sealy Reports Third Quarter Results
Tempur Sealy International (TPX) reported strong Q3 2024 financial results with consolidated sales growth of 1.8% to $1,300.0 million. The company saw a 14.7% increase in net income to $130.0 million and a 14.1% rise in EPS to $0.73. While North America sales decreased by 0.8%, International segment showed robust growth of 12.4%. Gross margin improved to 45.4% compared to 44.9% in Q3 2023. The company generated strong cash flow from operations of $257 million and narrowed its full-year 2024 adjusted EPS guidance to $2.45-$2.55.
Tempur Sealy International (TPX) ha riportato forti risultati finanziari per il terzo trimestre del 2024, con una crescita delle vendite consolidate dell'1,8% a $1.300,0 milioni. L'azienda ha registrato un aumento del 14,7% dell'utile netto, pari a $130,0 milioni, e un aumento del 14,1% nell'EPS, raggiungendo $0,73. Sebbene le vendite in Nord America siano diminuite dello 0,8%, il segmento internazionale ha mostrato una forte crescita del 12,4%. Il margine lordo è migliorato al 45,4% rispetto al 44,9% del terzo trimestre del 2023. L'azienda ha generato un forte flusso di cassa dalle operazioni di $257 milioni e ha ristretto le previsioni per l'EPS rettificato per l'intero anno 2024 a $2,45-$2,55.
Tempur Sealy International (TPX) reportó sólidos resultados financieros para el tercer trimestre de 2024, con un crecimiento en las ventas consolidadas del 1,8% alcanzando los $1.300,0 millones. La compañía vio un aumento del 14,7% en los ingresos netos a $130,0 millones y un aumento del 14,1% en el EPS a $0,73. Aunque las ventas en América del Norte disminuyeron en un 0,8%, el segmento internacional mostró un sólido crecimiento del 12,4%. El margen bruto mejoró al 45,4% en comparación con el 44,9% en el tercer trimestre de 2023. La empresa generó un fuerte flujo de caja operativo de $257 millones y ajustó su guía de EPS para todo el año 2024 a $2,45-$2,55.
템퍼 실리 인터내셔널 (TPX)는 2024년 3분기 강력한 재무 실적을 보고했으며, 통합 매출이 1.8% 증가하여 13억 달러에 도달했습니다. 회사는 순이익이 14.7% 증가하여 1억 3천만 달러에 달하고, 주당순이익(EPS)가 14.1% 상승하여 0.73달러에 도달했습니다. 북미 지역의 매출이 0.8% 감소했지만, 국제 부문은 12.4%의 강력한 성장을 보였습니다. 총 매출 이익률은 2023년 3분기의 44.9%에서 45.4%로 개선되었습니다. 회사는 운영으로부터 2억 5천7백만 달러의 강력한 현금 흐름을 창출했으며, 2024년 전체 연도의 조정된 EPS 가이던스를 2.45달러에서 2.55달러로 좁혔습니다.
Tempur Sealy International (TPX) a annoncé de solides résultats financiers pour le troisième trimestre 2024, avec une croissance des ventes consolidées de 1,8% pour atteindre 1 300,0 millions de dollars. L'entreprise a enregistré une augmentation de 14,7% du bénéfice net à 130,0 millions de dollars et une augmentation de 14,1% du BPA à 0,73 dollar. Bien que les ventes en Amérique du Nord aient diminué de 0,8%, le segment international a montré une forte croissance de 12,4%. La marge brute s'est améliorée à 45,4% par rapport à 44,9% au troisième trimestre 2023. L'entreprise a généré un fort flux de trésorerie issu de ses opérations de 257 millions de dollars et a resserré ses prévisions d'EPS ajusté pour l'année entière 2024 à 2,45-2,55 dollars.
Tempur Sealy International (TPX) hat starke Finanzzahlen für das dritte Quartal 2024 gemeldet, mit einem konsolidierten Umsatzwachstum von 1,8% auf 1.300,0 Millionen Dollar. Das Unternehmen verzeichnete einen 14,7% Anstieg des Nettowins auf 130,0 Millionen Dollar und einen 14,1% Anstieg des EPS auf 0,73 Dollar. Während der Umsatz in Nordamerika um 0,8% sank, zeigte das internationale Segment ein robustes Wachstum von 12,4%. Die Bruttomarge verbesserte sich auf 45,4% im Vergleich zu 44,9% im dritten Quartal 2023. Das Unternehmen erwirtschaftete einen starken operativen Cashflow von 257 Millionen Dollar und verengte die Prognose für das bereinigte EPS für das Gesamtjahr 2024 auf 2,45–2,55 Dollar.
- Net income increased 14.7% to $130.0 million
- International segment sales grew 12.4% to $284.7 million
- Gross margin improved to 45.4% from 44.9% year-over-year
- Operating income increased 10.2% to $201.8 million
- Strong cash flow from operations of $257 million
- Leverage ratio improved to 2.41x from 2.89x year-over-year
- North America sales declined 0.8% to $1,015.3 million
- Company expects 2024 full-year sales to be slightly below prior year
- North America wholesale channel sales decreased by $6.7 million
- North America direct channel sales decreased by 1.2%
Insights
Tempur Sealy's Q3 results demonstrate resilience amid challenging market conditions. The
The company's operational efficiency initiatives are bearing fruit, evidenced by the
The divergence between North American and International performance is noteworthy. While North America faces macroeconomic pressures with a
The OEM business mix impact on North American margins indicates a strategic pivot toward volume growth, though at lower margins. This diversification strategy, combined with operational efficiencies, positions the company well for market share gains when consumer spending normalizes.
- Consolidated Sales Growth of
- Consolidated Gross Margins Expands
- EPS Growth of
- Robust Third Quarter Cash Flow from Operations of
THIRD QUARTER 2024 FINANCIAL SUMMARY
- Total net sales increased
1.8% to$1,300.0 million $1,277.1 million 0.8% in theNorth America business segment and an increase of12.4% in the International business segment. On a constant currency basis(1), total net sales increased1.7% , with a decrease of0.4% in theNorth America business segment and an increase of10.5% in the International business segment. - Gross margin was
45.4% as compared to44.9% in the third quarter of 2023. Adjusted gross margin(1) was46.2% as compared to45.9% in the third quarter of 2023. - Operating income increased
10.2% to$201.8 million $183.2 million 4.2% to$223.7 million $214.7 million - Net income increased
14.7% to$130.0 million $113.3 million 7.1% to$146.5 million $136.8 million - Earnings per diluted share ("EPS") increased
14.1% to$0.73 $0.64 6.5% to$0.82 $0.77 - Leverage based on the ratio of consolidated indebtedness less netted cash(1) to adjusted EBITDA(1) was 2.41 times for the trailing twelve months ended September 30, 2024 compared to 2.89 times for the trailing twelve months ended September 30, 2023.
KEY HIGHLIGHTS | |||||
(in millions, except percentages and per common share amounts) | Three Months Ended | % Reported | |||
September 30, 2024 | September 30, 2023 | ||||
Net sales | $ 1,300.0 | $ 1,277.1 | 1.8 % | ||
Net income | $ 130.0 | $ 113.3 | 14.7 % | ||
Adjusted net income (1) | $ 146.5 | $ 136.8 | 7.1 % | ||
EPS | $ 0.73 | $ 0.64 | 14.1 % | ||
Adjusted EPS (1) | $ 0.82 | $ 0.77 | 6.5 % | ||
Company Chairman and CEO Scott Thompson commented, "We are pleased with our performance in the third quarter. Our global market outperformance, led by double-digit growth in our international segment, resulted in consolidated sales growth year-over-year despite the global bedding industry continuing to perform significantly below historical trends. Sales growth coupled with our operational efficiency initiatives and diverse business platform resulted in solid growth in both adjusted EBITDA and adjusted EPS. We continue to see our investments in product, people, and advertising as foundational to our long-term success."
Business Segment Highlights
The Company's business segments include
International net sales increased
International gross margin improved 70 basis points to
International operating margin was
Corporate operating expense decreased to
Consolidated net income increased
The Company ended the third quarter of 2024 with total debt of
Financial Guidance
For the full year 2024, the Company narrowed its expectations for an adjusted EPS(1) range of
The Company noted that its expectations are based on information available at the time of this release, and are subject to changing conditions and risks, many of which are outside the Company's control. The Company is unable to reconcile forward–looking adjusted EPS, a non–GAAP financial measure, to EPS, its most directly comparable forward–looking GAAP financial measure, without unreasonable efforts, because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact EPS in 2024.
Dividend Declared
The Company's Board of Directors declared a quarterly cash dividend of
Conference Call Information
Tempur Sealy International, Inc. will host a live conference call to discuss financial results today, November 7, 2024, at 8:00 a.m. Eastern Time. The call will be webcast and can be accessed on the Company's investor relations website at investor.tempursealy.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for 30 days.
Non-GAAP Financial Measures and Constant Currency Information
For additional information regarding EBITDA, adjusted EBITDA, adjusted EPS, adjusted net income, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, consolidated indebtedness and consolidated indebtedness less netted cash (all of which are non-GAAP financial measures), 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 statements that may be characterized as "forward-looking" within the meaning of the federal securities laws. Such statements might include information concerning one or more of the Company's plans, guidance, objectives, goals, strategies and other information that is not historical information. When used in this release, the words "assumes," "estimates," "expects," "guidance," "anticipates," "might," "projects," "plans," "proposed," "targets," "intends," "believes," "will," "contemplates" 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 expectations regarding the expected Mattress Firm acquisition including the outcome of the pending litigation with the FTC, expectations regarding post-closing supply agreements, future performance, integration of acquired companies with our business and the ability of the Company to close the Mattress Firm acquisition on the timeline indicated or at all, the Company's expected quarterly results, full year guidance and outperformance relative to the broader industry, the Company's quarterly cash dividend, the Company's expectations regarding geopolitical events (including the war in
Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from any that may be expressed herein as forward-looking statements. These potential risks include risks associated with satisfaction of closing conditions prior to consummation of the Mattress Firm acquisition; Mattress Firm's ongoing operations; the ability to successfully integrate Mattress Firm into Tempur Sealy's operations and realize synergies from the transaction; the possibility that the expected benefits of the acquisition are not realized when expected or at all; general economic, financial and industry conditions, particularly conditions relating to the financial performance and related credit issues present in the retail sector, as well as consumer confidence and the availability of consumer financing; the impact of the macroeconomic environment in both the
About Tempur Sealy International, Inc.
Tempur Sealy is committed to improving the sleep of more people, every night, all around the world. As a leading designer, manufacturer, distributor and retailer of bedding products worldwide, we know how crucial a good night of sleep is to overall health and wellness. Utilizing over a century of knowledge and industry-leading innovation, we deliver award-winning products that provide breakthrough sleep solutions to consumers in over 100 countries.
Our highly recognized brands include Tempur-Pedic®, Sealy® and Stearns & Foster® and our popular non-branded offerings consist of value-focused private label and OEM products. At Tempur Sealy we understand the importance of meeting our customers wherever and however they want to shop and have developed a powerful omni-channel retail strategy. Our products allow for complementary merchandising strategies and are sold through third-party retailers, our over 750 Company-owned stores worldwide and our e-commerce channels. With the range of our offerings and variety of purchasing options, we are dedicated to continuing to turn our mission to improve the sleep of more people, every night, all around the world into a reality.
Importantly, we are committed to carrying out our global responsibility to protect the environment and the communities in which we operate. As part of that commitment, we have established the goal of achieving carbon neutrality for our global wholly owned operations by 2040.
Investor Relations Contact:
Aubrey Moore
Investor Relations
Tempur Sealy International, Inc.
Investor.relations@tempursealy.com
(1) This is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures and Constant Currency Information" below. |
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | Chg % | September 30, | Chg % | ||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Net sales | $ 1,300.0 | $ 1,277.1 | 1.8 % | $ 3,723.0 | $ 3,754.9 | (0.8) % | |||||
Cost of sales | 710.1 | 703.4 | 2,066.3 | 2,139.0 | |||||||
Gross profit | 589.9 | 573.7 | 2.8 % | 1,656.7 | 1,615.9 | 2.5 % | |||||
Selling and marketing expenses | 272.0 | 272.9 | 813.2 | 799.8 | |||||||
General, administrative and other expenses | 118.6 | 122.2 | 347.4 | 344.2 | |||||||
Equity income in earnings of unconsolidated affiliates | (2.5) | (4.6) | (10.5) | (13.4) | |||||||
Operating income | 201.8 | 183.2 | 10.2 % | 506.6 | 485.3 | 4.4 % | |||||
Other expense, net: | |||||||||||
Interest expense, net | 30.8 | 32.6 | 98.5 | 99.0 | |||||||
Other expense (income), net | 0.4 | (0.1) | (0.5) | (0.2) | |||||||
Total other expense, net | 31.2 | 32.5 | 98.0 | 98.8 | |||||||
Income before income taxes | 170.6 | 150.7 | 13.2 % | 408.6 | 386.5 | 5.7 % | |||||
Income tax provision | (40.8) | (36.8) | (95.5) | (93.5) | |||||||
Net income before non-controlling interest | 129.8 | 113.9 | 14.0 % | 313.1 | 293.0 | 6.9 % | |||||
Less: Net (loss) income attributable to non-controlling interest | (0.2) | 0.6 | 0.7 | 2.0 | |||||||
Net income attributable to Tempur Sealy International, Inc. | $ 130.0 | $ 113.3 | 14.7 % | $ 312.4 | $ 291.0 | 7.4 % | |||||
Earnings per common share: | |||||||||||
Basic | $ 0.75 | $ 0.66 | 13.6 % | $ 1.80 | $ 1.69 | 6.5 % | |||||
Diluted | $ 0.73 | $ 0.64 | 14.1 % | $ 1.75 | $ 1.64 | 6.7 % | |||||
Weighted average common shares outstanding: | |||||||||||
Basic | 173.7 | 172.2 | 173.6 | 172.1 | |||||||
Diluted | 178.2 | 177.6 | 178.1 | 177.0 | |||||||
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES | |||
September 30, 2024 | December 31, 2023 | ||
ASSETS | (unaudited) | ||
Current Assets: | |||
Cash and cash equivalents | $ 104.2 | $ 74.9 | |
Accounts receivable, net | 467.6 | 431.4 | |
Inventories | 496.2 | 483.1 | |
Prepaid expenses and other current assets | 87.3 | 113.8 | |
Total Current Assets | 1,155.3 | 1,103.2 | |
Property, plant and equipment, net | 843.8 | 878.3 | |
Goodwill | 1,097.3 | 1,083.3 | |
Other intangible assets, net | 714.6 | 714.8 | |
Operating lease right-of-use assets | 617.6 | 636.5 | |
Deferred income taxes | 14.2 | 15.6 | |
Other non-current assets | 125.2 | 122.2 | |
Total Assets | $ 4,568.0 | $ 4,553.9 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Accounts payable | $ 346.8 | $ 311.3 | |
Accrued expenses and other current liabilities | 466.8 | 427.1 | |
Short-term operating lease obligations | 129.9 | 119.6 | |
Current portion of long-term debt | 46.4 | 44.9 | |
Income taxes payable | 21.9 | 5.3 | |
Total Current Liabilities | 1,011.8 | 908.2 | |
Long-term debt, net | 2,227.1 | 2,527.0 | |
Long-term operating lease obligations | 548.7 | 574.8 | |
Deferred income taxes | 128.9 | 127.9 | |
Other non-current liabilities | 78.3 | 82.6 | |
Total Liabilities | 3,994.8 | 4,220.5 | |
Redeemable non-controlling interest | 8.7 | 10.0 | |
Total Stockholders' Equity | 564.5 | 323.4 | |
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | $ 4,568.0 | $ 4,553.9 | |
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES | |||
Nine Months Ended | |||
September 30, | |||
2024 | 2023 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income before non-controlling interest | $ 313.1 | $ 293.0 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 121.9 | 99.6 | |
Amortization of stock-based compensation | 27.3 | 35.9 | |
Amortization of deferred financing costs | 2.8 | 2.9 | |
Bad debt expense | 9.9 | 7.1 | |
Deferred income taxes | 0.6 | 0.5 | |
Dividends received from unconsolidated affiliates | 23.4 | 18.1 | |
Equity income in earnings of unconsolidated affiliates | (10.5) | (13.4) | |
Foreign currency adjustments and other | 0.9 | (1.9) | |
Changes in operating assets and liabilities | 48.0 | 37.4 | |
Net cash provided by operating activities | 537.4 | 479.2 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property, plant and equipment | (76.4) | (153.3) | |
Other | 0.5 | 0.5 | |
Net cash used in investing activities | (75.9) | (152.8) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from borrowings under long-term debt obligations | 1,165.3 | 1,491.5 | |
Repayments of borrowings under long-term debt obligations | (1,472.6) | (1,689.9) | |
Proceeds from exercise of stock options | 0.3 | 2.8 | |
Treasury stock repurchased | (43.8) | (36.0) | |
Dividends paid | (70.1) | (58.8) | |
Repayments of finance lease obligations and other | (14.8) | (12.8) | |
Net cash used in financing activities | (435.7) | (303.2) | |
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 3.5 | (1.0) | |
Increase in cash and cash equivalents | 29.3 | 22.2 | |
CASH AND CASH EQUIVALENTS, beginning of period | 74.9 | 69.4 | |
CASH AND CASH EQUIVALENTS, end of period | $ 104.2 | $ 91.6 | |
Summary of Channel Sales
The following table highlights net sales information, by channel and by business segment, for the three months ended September 30, 2024 and 2023:
Three Months Ended September 30, | |||||||||||
(in millions) | Consolidated | International | |||||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||
Wholesale (a) | $ 981.8 | $ 974.6 | $ 878.4 | $ 885.1 | $ 103.4 | $ 89.5 | |||||
Direct (b) | 318.2 | 302.5 | 136.9 | 138.6 | 181.3 | 163.9 | |||||
$ 1,300.0 | $ 1,277.1 | $ 1,015.3 | $ 1,023.7 | $ 284.7 | $ 253.4 | ||||||
(a) | The Wholesale channel includes all third party retailers, including third party distribution, hospitality and healthcare. |
(b) | The Direct channel includes company-owned stores, online and call centers. |
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(in millions, except percentages, ratios and per common share amounts)
The Company provides information regarding adjusted net income, EBITDA, adjusted EBITDA, adjusted EPS, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, consolidated indebtedness and consolidated indebtedness less netted cash, which are not recognized terms under GAAP and do not purport to be alternatives to net income, earnings per share, gross profit, gross margin, operating income (expense) and operating margin as a measure of operating performance, or an alternative to total debt as a measure of liquidity. The Company believes these non-GAAP financial measures provide investors with performance measures that better reflect the Company's underlying operations and trends, providing a perspective not immediately apparent from net income, gross profit, gross margin, operating income (expense) and operating margin. The adjustments management makes to derive the non-GAAP financial measures include adjustments to exclude items that may cause short-term fluctuations in the nearest GAAP financial measure, but which management does not consider to be the fundamental attributes or primary drivers of the Company's business.
The Company believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying results from 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 financial measures include that these measures do not present all of the amounts associated with the Company's results as determined in accordance with GAAP. These non-GAAP financial measures should be considered supplemental in nature and should not be construed as more significant than comparable financial 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 financial measures and a reconciliation to the nearest GAAP financial 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, 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.
Adjusted Net Income and Adjusted EPS
A reconciliation of reported net income to adjusted net income and the calculation of adjusted EPS are provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release.
The following table sets forth the reconciliation of the Company's reported net income to adjusted net income and the calculation of adjusted EPS for the three months ended September 30, 2024 and 2023:
Three Months Ended | |||
(in millions, except per share amounts) | September 30, 2024 | September 30, 2023 | |
Net income | $ 130.0 | $ 113.3 | |
Transaction costs (1) | 13.7 | 15.7 | |
Supply chain transition costs (2) | 8.2 | — | |
Cybersecurity event (3) | — | 13.5 | |
Operational start-up costs (4) | — | 2.3 | |
Adjusted income tax provision (5) | (5.4) | (8.0) | |
Adjusted net income | $ 146.5 | $ 136.8 | |
Adjusted earnings per common share, diluted | $ 0.82 | $ 0.77 | |
Diluted shares outstanding | 178.2 | 177.6 | |
Please refer to Footnotes at the end of this release. |
Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income (Expense) and Adjusted Operating Margin
A reconciliation of gross profit and gross margin to adjusted gross profit and adjusted gross margin, respectively, and operating income (expense) and operating margin to adjusted operating income (expense) and adjusted operating margin, respectively, are provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release.
The following table sets forth the reconciliation of the Company's reported gross profit and operating income (expense) to the calculation of adjusted gross profit and adjusted operating income (expense) for the three months ended September 30, 2024.
3Q 2024 | |||||||||||||
(in millions, except percentages) | Consolidated | Margin | North | Margin | International | Margin | Corporate | ||||||
Net sales | $ 1,300.0 | $ 1,015.3 | $ 284.7 | $ — | |||||||||
Gross profit | $ 589.9 | 45.4 % | $ 426.7 | 42.0 % | $ 163.2 | 57.3 % | $ — | ||||||
Adjustments: | |||||||||||||
Supply chain transition costs (2) | 8.0 | 8.0 | — | — | |||||||||
Transaction costs (1) | 2.4 | 2.4 | — | — | |||||||||
Total adjustments | 10.4 | 10.4 | — | — | |||||||||
Adjusted gross profit | $ 600.3 | 46.2 % | $ 437.1 | 43.1 % | $ 163.2 | 57.3 % | $ — | ||||||
Operating income (expense) | $ 201.8 | 15.5 % | $ 193.3 | 19.0 % | $ 51.7 | 18.2 % | $ (43.2) | ||||||
Adjustments: | |||||||||||||
Transaction costs (1) | 13.7 | 2.5 | — | 11.2 | |||||||||
Supply chain transition costs (2) | 8.2 | 8.2 | — | — | |||||||||
Total adjustments | 21.9 | 10.7 | — | 11.2 | |||||||||
Adjusted operating income (expense) | $ 223.7 | 17.2 % | $ 204.0 | 20.1 % | $ 51.7 | 18.2 % | $ (32.0) | ||||||
Please refer to Footnotes at the end of this release. |
The following table sets forth the reconciliation of the Company's reported gross profit and operating income (expense) to the calculation of adjusted gross profit and adjusted operating income (expense) for the three months ended September 30, 2023:
3Q 2023 | |||||||||||||
(in millions, except percentages) | Consolidated | Margin | North | Margin | International | Margin | Corporate | ||||||
Net sales | $ 1,277.1 | $ 1,023.7 | $ 253.4 | $ — | |||||||||
Gross profit | $ 573.7 | 44.9 % | $ 430.4 | 42.0 % | $ 143.3 | 56.6 % | $ — | ||||||
Adjustments: | |||||||||||||
Cybersecurity event (3) | 9.6 | 9.6 | — | — | |||||||||
Operational start-up costs (4) | 2.3 | 2.3 | — | — | |||||||||
Total adjustments | 11.9 | 11.9 | — | — | |||||||||
Adjusted gross profit | $ 585.6 | 45.9 % | $ 442.3 | 43.2 % | $ 143.3 | 56.6 % | $ — | ||||||
Operating income (expense) | $ 183.2 | 14.3 % | $ 195.5 | 19.1 % | $ 40.0 | 15.8 % | $ (52.3) | ||||||
Adjustments: | |||||||||||||
Transaction costs (1) | 15.7 | — | — | 15.7 | |||||||||
Cybersecurity event (3) | 13.5 | 10.0 | 1.1 | 2.4 | |||||||||
Operational start-up costs (4) | 2.3 | 2.3 | — | — | |||||||||
Total adjustments | 31.5 | 12.3 | 1.1 | 18.1 | |||||||||
Adjusted operating income (expense) | $ 214.7 | 16.8 % | $ 207.8 | 20.3 % | $ 41.1 | 16.2 % | $ (34.2) | ||||||
Please refer to Footnotes at the end of this release. |
EBITDA, Adjusted EBITDA and Consolidated Indebtedness less Netted Cash
The following reconciliations are provided below:
- Net income to EBITDA and adjusted EBITDA
- Ratio of consolidated indebtedness less netted cash to adjusted EBITDA
- Total debt, net to consolidated indebtedness less netted cash
Management believes that presenting these non-GAAP measures provides investors with useful information with respect to the Company's operating performance, cash flow generation and comparisons from period to period, as well as general information about the Company's leverage.
The Company's credit agreement (the "2023 Credit Agreement") provides the definition of adjusted EBITDA. Accordingly, the Company presents adjusted EBITDA to provide information regarding the Company's compliance with requirements under the 2023 Credit Agreement.
The following table sets forth the reconciliation of the Company's reported net income to the calculations of EBITDA and adjusted EBITDA for the three months ended September 30, 2024 and 2023:
Three Months Ended | |||
(in millions) | September 30, 2024 | September 30, 2023 | |
Net income | $ 130.0 | $ 113.3 | |
Interest expense, net | 30.8 | 32.6 | |
Income taxes | 40.8 | 36.8 | |
Depreciation and amortization | 51.3 | 45.5 | |
EBITDA | $ 252.9 | $ 228.2 | |
Adjustments: | |||
Transaction costs (1) | 13.7 | 15.7 | |
Supply chain transition costs (2) | 8.2 | — | |
Cybersecurity event (3) | — | 13.5 | |
Operational start-up costs (4) | — | 2.3 | |
Adjusted EBITDA | $ 274.8 | $ 259.7 | |
Please refer to Footnotes at the end of this release. |
The following table sets forth the reconciliation of the Company's net income to the calculations of EBITDA and adjusted EBITDA for the trailing twelve months ended September 30, 2024:
Trailing Twelve Months Ended | |
(in millions) | September 30, 2024 |
Net income | $ 389.5 |
Interest expense, net | 129.4 |
Loss on extinguishment of debt (6) | 3.2 |
Income tax provision | 105.4 |
Depreciation and amortization | 198.9 |
EBITDA | $ 826.4 |
Adjustments: | |
Transaction costs (1) | 53.3 |
Fair value remeasurement (7) | 11.0 |
Supply chain transition costs (2) | 8.2 |
Operational start-up costs (4) | 7.1 |
Cybersecurity event (3) | 0.8 |
Adjusted EBITDA | $ 906.8 |
Consolidated indebtedness less netted cash | $ 2,183.6 |
Ratio of consolidated indebtedness less netted cash to adjusted EBITDA | 2.41 times |
Under the 2023 Credit Agreement, the definition of adjusted EBITDA contains certain restrictions that limit adjustments to net income when calculating adjusted EBITDA. For the trailing twelve months ended September 30, 2024, the Company's adjustments to net income when calculating adjusted EBITDA did not exceed the allowable amount under the 2023 Credit Agreement.
The ratio of consolidated indebtedness less netted cash to adjusted EBITDA is 2.41 times for the trailing twelve months ended September 30, 2024. The 2023 Credit Agreement requires the Company to maintain a ratio of consolidated indebtedness less netted cash to adjusted EBITDA of less than 5.00 times.
The following table sets forth the reconciliation of the Company's reported total debt to the calculation of consolidated indebtedness less netted cash as of September 30, 2024. "Consolidated Indebtedness" and "Netted Cash" are terms used in the 2023 Credit Agreement for purposes of certain financial covenants.
(in millions) | September 30, 2024 |
Total debt, net | $ 2,273.5 |
Plus: Deferred financing costs (8) | 14.3 |
Consolidated indebtedness | 2,287.8 |
Less: Netted cash (9) | 104.2 |
Consolidated indebtedness less netted cash | $ 2,183.6 |
Please refer to Footnotes at the end of this release. |
Footnotes:
(1) | In the third quarter of 2024, the Company recorded |
(2) | In the third quarter of 2024, the Company recorded |
(3) | In the third quarter of 2023, the Company recorded |
(4) | In the third quarter of 2023, the Company recorded |
(5) | Adjusted income tax provision represents the tax effects associated with the aforementioned items. |
(6) | In the trailing twelve months ended September 30, 2024, the Company recognized |
(7) | In the trailing twelve months ended September 30, 2024, the Company recorded a fair value remeasurement of |
(8) | The Company presents deferred financing costs as a direct reduction from the carrying amount of the related debt in the Condensed Consolidated Balance Sheets. For purposes of determining total debt for financial covenant purposes, the Company has added these costs back to total debt, net as calculated per the Condensed Consolidated Balance Sheets. |
(9) | Netted cash includes cash and cash equivalents for domestic and foreign subsidiaries designated as restricted subsidiaries in the 2023 Credit Agreement. |
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SOURCE Tempur Sealy International, Inc.
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