Company News

October 31, 2019

Tempur Sealy Posts Strong Quarter

Tempur Sealy Reports Third Quarter 2019 Results

|PR Newswire|About: TPX

– Margins Expanded, Net Income and EPS Up Over 70%

-Financial Guidance Raised

PR NewswireLEXINGTON, Ky., Oct. 31, 2019 /PRNewswire/ — Tempur Sealy International, Inc. (TPX) announced financial results for the third quarter ended September 30, 2019. The Company also raised its financial guidance for the full year 2019.

THIRD QUARTER 2019 FINANCIAL SUMMARY

  • Total net sales increased 12.5% to $821.0 million as compared to $729.5 million in the third quarter of 2018. On a constant currency basis(1), total net sales increased 13.4%, with an increase of 14.6% in the North America business segment and an increase of 8.0% in the International business segment.
  • Gross margin was 43.9% as compared to 41.1% in the third quarter of 2018.
  • Operating income increased 42.4% to $120.6 million as compared to $84.7 million in the third quarter of 2018. Adjusted operating income(1) was $97.8 million in the third quarter of 2018. There were no adjustments to operating income in the third quarter of 2019.
  • Net income increased 73.3% to $73.3 million as compared to $42.3 million in the third quarter of 2018. Adjusted net income(1) increased 29.2% to $72.5 million as compared to $56.1 million in the third quarter of 2018.
  • Earnings before interest, tax, depreciation and amortization (“EBITDA”)(1) increased 33.7% to $150.7 million as compared to $112.7 million for the third quarter of 2018. Adjusted EBITDA(1) increased 17.4% to $149.9 million as compared to $127.7 million in the third quarter of 2018.
  • Earnings per diluted share (“EPS”) increased 70.1% to $1.31 as compared to $0.77 in the third quarter of 2018. Adjusted EPS(1) increased 27.5% to $1.30 as compared to $1.02 in the third quarter of 2018.

 

KEY HIGHLIGHTS
(in millions, except percentages and per common
share amounts)		 Three Months Ended % Reported
Change		 % Constant
Currency Change(1)
September 30, 2019 September 30, 2018
Net sales $ 821.0 $ 729.5 12.5 % 13.4 %
Net income 73.3 42.3 73.3 % 75.4 %
EBITDA (1) 150.7 112.7 33.7 % 34.9 %
Adjusted EBITDA (1) 149.9 127.7 17.4 % 18.5 %
EPS 1.31 0.77 70.1 % 72.7 %
Adjusted EPS (1) 1.30 1.02 27.5 % 29.4 %

 

Tempur Sealy International, Inc. Chairman and CEO Scott Thompson commented, “We are pleased to report double-digit growth in sales of both Tempur-Pedic and Sealy products, with robust sales growth across geographies, brands and price points. It is clear that our investments in innovative products, reliable manufacturing and direct distribution are allowing us to win in the marketplace.  In fact, during the third quarter we recognized the highest gross profit in the company’s history, greater than what was generated previously across a larger presence. Our double-digit growth in operating income and adjusted EBITDA allows us to continue investing in our plants, products and people, while repurchasing our stock and strengthening our balance sheet by reducing our financial leverage.”

Business Segment Highlights

The Company’s business segments include North America and International. Corporate operating expenses are not included in either of the business segments and are presented separately as a reconciling item to consolidated results.

North America net sales increased 14.5% to $682.0 million as compared to $595.8 million in the third quarter of 2018. On a constant currency basis(1), North America net sales increased 14.6% as compared to the third quarter of 2018. Gross margin was 42.1% as compared to 38.5% in the third quarter of 2018. Adjusted gross margin(1) was 39.9% in the third quarter of 2018. Operating margin was 17.6% as compared to 13.7% in the third quarter of 2018. Adjusted operating margin(1) was 15.9% in the third quarter of 2018.

North America net sales through the wholesale channel increased $48.6 million, or 8.8%, to $602.2 million as compared to the third quarter of 2018. North America net sales through the direct channel increased $37.6 million, or 89.1%, to $79.8 million, as compared to the third quarter of 2018, driven primarily by growth from company-owned stores, which includes the acquisition of Sleep Outfitters. North America net sales through the direct channel increased 37%, excluding Sleep Outfitters, as compared to the third quarter of 2018.

North America gross margin improved 220 basis points as compared to adjusted gross margin(1) in the third quarter of 2018. The improvement was primarily driven by Tempur merchandising mix, pricing benefits and lower commodity costs. These improvements were partially offset by inefficiencies associated with new distribution. North America operating margin improved 170 basis points as compared to adjusted operating margin(1) in the third quarter of 2018. The improvement in operating margin was driven by the improvement in gross margin, partially offset by increased variable compensation expense.

International net sales increased 4.0% to $139.0 million as compared to $133.7 million in the third quarter of 2018. On a constant currency basis(1), International net sales increased 8.0% as compared to the third quarter of 2018. Gross margin was 53.1% as compared to 53.0% in the third quarter of 2018. Operating margin was 19.6% as compared to 19.3% in the third quarter of 2018. Adjusted operating margin(1) was 19.6% in the third quarter of 2018.

International net sales through the wholesale channel increased $0.6 million, or 0.6%, to $107.9 million as compared to the third quarter of 2018. International net sales through the direct channel increased $4.7 million, or 17.8%, to $31.1 million as compared to the third quarter of 2018.

International gross margin improved 10 basis points as compared to gross margin in the third quarter of 2018. International operating margin was flat as compared to adjusted operating margin(1) in the third quarter of 2018.

https://seekingalpha.com/pr/17681574-tempur-sealy-reports-third-quarter-2019-results

October 31, 2019

Tempur Sealy Posts Strong Quarter

Tempur Sealy Reports Third Quarter 2019 Results

|PR Newswire|About: TPX

– Margins Expanded, Net Income and EPS Up Over 70%

-Financial Guidance Raised

PR NewswireLEXINGTON, Ky., Oct. 31, 2019 /PRNewswire/ — Tempur Sealy International, Inc. (TPX) announced financial results for the third quarter ended September 30, 2019. The Company also raised its financial guidance for the full year 2019.

THIRD QUARTER 2019 FINANCIAL SUMMARY

  • Total net sales increased 12.5% to $821.0 million as compared to $729.5 million in the third quarter of 2018. On a constant currency basis(1), total net sales increased 13.4%, with an increase of 14.6% in the North America business segment and an increase of 8.0% in the International business segment.
  • Gross margin was 43.9% as compared to 41.1% in the third quarter of 2018.
  • Operating income increased 42.4% to $120.6 million as compared to $84.7 million in the third quarter of 2018. Adjusted operating income(1) was $97.8 million in the third quarter of 2018. There were no adjustments to operating income in the third quarter of 2019.
  • Net income increased 73.3% to $73.3 million as compared to $42.3 million in the third quarter of 2018. Adjusted net income(1) increased 29.2% to $72.5 million as compared to $56.1 million in the third quarter of 2018.
  • Earnings before interest, tax, depreciation and amortization (“EBITDA”)(1) increased 33.7% to $150.7 million as compared to $112.7 million for the third quarter of 2018. Adjusted EBITDA(1) increased 17.4% to $149.9 million as compared to $127.7 million in the third quarter of 2018.
  • Earnings per diluted share (“EPS”) increased 70.1% to $1.31 as compared to $0.77 in the third quarter of 2018. Adjusted EPS(1) increased 27.5% to $1.30 as compared to $1.02 in the third quarter of 2018.

 

KEY HIGHLIGHTS
(in millions, except percentages and per common
share amounts)		 Three Months Ended % Reported
Change		 % Constant
Currency Change(1)
September 30, 2019 September 30, 2018
Net sales $ 821.0 $ 729.5 12.5 % 13.4 %
Net income 73.3 42.3 73.3 % 75.4 %
EBITDA (1) 150.7 112.7 33.7 % 34.9 %
Adjusted EBITDA (1) 149.9 127.7 17.4 % 18.5 %
EPS 1.31 0.77 70.1 % 72.7 %
Adjusted EPS (1) 1.30 1.02 27.5 % 29.4 %

 

Tempur Sealy International, Inc. Chairman and CEO Scott Thompson commented, “We are pleased to report double-digit growth in sales of both Tempur-Pedic and Sealy products, with robust sales growth across geographies, brands and price points. It is clear that our investments in innovative products, reliable manufacturing and direct distribution are allowing us to win in the marketplace.  In fact, during the third quarter we recognized the highest gross profit in the company’s history, greater than what was generated previously across a larger presence. Our double-digit growth in operating income and adjusted EBITDA allows us to continue investing in our plants, products and people, while repurchasing our stock and strengthening our balance sheet by reducing our financial leverage.”

Business Segment Highlights

The Company’s business segments include North America and International. Corporate operating expenses are not included in either of the business segments and are presented separately as a reconciling item to consolidated results.

North America net sales increased 14.5% to $682.0 million as compared to $595.8 million in the third quarter of 2018. On a constant currency basis(1), North America net sales increased 14.6% as compared to the third quarter of 2018. Gross margin was 42.1% as compared to 38.5% in the third quarter of 2018. Adjusted gross margin(1) was 39.9% in the third quarter of 2018. Operating margin was 17.6% as compared to 13.7% in the third quarter of 2018. Adjusted operating margin(1) was 15.9% in the third quarter of 2018.

North America net sales through the wholesale channel increased $48.6 million, or 8.8%, to $602.2 million as compared to the third quarter of 2018. North America net sales through the direct channel increased $37.6 million, or 89.1%, to $79.8 million, as compared to the third quarter of 2018, driven primarily by growth from company-owned stores, which includes the acquisition of Sleep Outfitters. North America net sales through the direct channel increased 37%, excluding Sleep Outfitters, as compared to the third quarter of 2018.

North America gross margin improved 220 basis points as compared to adjusted gross margin(1) in the third quarter of 2018. The improvement was primarily driven by Tempur merchandising mix, pricing benefits and lower commodity costs. These improvements were partially offset by inefficiencies associated with new distribution. North America operating margin improved 170 basis points as compared to adjusted operating margin(1) in the third quarter of 2018. The improvement in operating margin was driven by the improvement in gross margin, partially offset by increased variable compensation expense.

International net sales increased 4.0% to $139.0 million as compared to $133.7 million in the third quarter of 2018. On a constant currency basis(1), International net sales increased 8.0% as compared to the third quarter of 2018. Gross margin was 53.1% as compared to 53.0% in the third quarter of 2018. Operating margin was 19.6% as compared to 19.3% in the third quarter of 2018. Adjusted operating margin(1) was 19.6% in the third quarter of 2018.

International net sales through the wholesale channel increased $0.6 million, or 0.6%, to $107.9 million as compared to the third quarter of 2018. International net sales through the direct channel increased $4.7 million, or 17.8%, to $31.1 million as compared to the third quarter of 2018.

International gross margin improved 10 basis points as compared to gross margin in the third quarter of 2018. International operating margin was flat as compared to adjusted operating margin(1) in the third quarter of 2018.

https://seekingalpha.com/pr/17681574-tempur-sealy-reports-third-quarter-2019-results

October 25, 2019

Huntsman Q3 Results

US Huntsman Q3 financials sharply down as low MDI pricing offsets higher volumes

Author: Jonathan Lopez

2019/10/25

LONDON (ICIS)–Huntsman’s higher sales volumes of methylene diphenyl diisocyanate (MDI) in the third quarter could not offset lower selling prices, with the polyurethanes (PU) division posting lower sales and earnings year on year, the US chemicals major said on Friday.

All other divisions – Performance Products, Advanced Materials, and Textile Effects – also posted lower sales and earnings during the quarter, year on year.

The negative set of results had already been announced by the company in July, when its CEO said full-year earnings could drop as much as 20%.

On Friday, however, Peter Huntsman said: “In spite of an increasingly challenging global economic environment, I have never been more pleased about our mix of businesses and the strength of our balance sheet.”

The company said lower MDI prices were recorded mostly in Europe and China, where the industrial slowdown has been the sharpest (see bottom graph).

As a result, its PU division under which MDI falls posted 12% lower sales ($993m) and sharply lower adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), at $146m.

In China, the company’s MDI volumes rose markedly after it started its new plant in the third quarter of 2018.

The Caojing plant has a production capacity of 240,000 tonnes/year; it is operated as a joint venture along with BASF, Shanghai Hua Yi (Group) Co, Shanghai Chlor-Akali Chemical Co and Sinopec Group Assets Management Corp.

The company said it was on course to close the divestment of its Chemical Intermediates and Surfactants businesses in early 2020, adding proceeds would stand at around $1.6bn.

At the time it announced the sale to Thailand’s major Indorama in August, Huntsman said proceeds would amount to more than $2.0bn.

At the Performance Products division, both sales volumes and selling prices fell on the back of weak markets and lower feedstocks costs passed on to customers.

Advanced Materials also posted lower sales volumes and lower selling prices, suffering from a higher exchange rate for the dollar, against other major currencies, weak markets and customer destocking, the company said.

Textile Effects, Huntsman smallest division, also suffered from weak markets and the US-China trade war, also posting lower volumes and selling prices.

Huntsman Q3 ($/m) Q3 2019 Q3 2018 Change
Sales 1,687 1,968 -14%
Adjusted EBITDA 215 308 -30%

–
MDI pricing US, Europe, China
Click on image to enlarge

–
MDI is consumed mainly in PU foams, which account for about 80% of global consumption.

Rigid foams, the largest outlet for MDI, are used mostly in construction, refrigeration, packaging and insulation.

MDI is also used to make binders, elastomers, adhesives, sealants, coatings and fibres.

Pictured: PU foam
Source: Simon Lees/Future/Shutterstock

Additional reporting by Fergus Jensen

https://www.icis.com/explore/resources/news/2019/10/25/10434838/us-huntsman-q3-financials-sharply-down-as-low-mdi-pricing-offsets-higher-volumes

October 25, 2019

Huntsman Q3 Results

US Huntsman Q3 financials sharply down as low MDI pricing offsets higher volumes

Author: Jonathan Lopez

2019/10/25

LONDON (ICIS)–Huntsman’s higher sales volumes of methylene diphenyl diisocyanate (MDI) in the third quarter could not offset lower selling prices, with the polyurethanes (PU) division posting lower sales and earnings year on year, the US chemicals major said on Friday.

All other divisions – Performance Products, Advanced Materials, and Textile Effects – also posted lower sales and earnings during the quarter, year on year.

The negative set of results had already been announced by the company in July, when its CEO said full-year earnings could drop as much as 20%.

On Friday, however, Peter Huntsman said: “In spite of an increasingly challenging global economic environment, I have never been more pleased about our mix of businesses and the strength of our balance sheet.”

The company said lower MDI prices were recorded mostly in Europe and China, where the industrial slowdown has been the sharpest (see bottom graph).

As a result, its PU division under which MDI falls posted 12% lower sales ($993m) and sharply lower adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), at $146m.

In China, the company’s MDI volumes rose markedly after it started its new plant in the third quarter of 2018.

The Caojing plant has a production capacity of 240,000 tonnes/year; it is operated as a joint venture along with BASF, Shanghai Hua Yi (Group) Co, Shanghai Chlor-Akali Chemical Co and Sinopec Group Assets Management Corp.

The company said it was on course to close the divestment of its Chemical Intermediates and Surfactants businesses in early 2020, adding proceeds would stand at around $1.6bn.

At the time it announced the sale to Thailand’s major Indorama in August, Huntsman said proceeds would amount to more than $2.0bn.

At the Performance Products division, both sales volumes and selling prices fell on the back of weak markets and lower feedstocks costs passed on to customers.

Advanced Materials also posted lower sales volumes and lower selling prices, suffering from a higher exchange rate for the dollar, against other major currencies, weak markets and customer destocking, the company said.

Textile Effects, Huntsman smallest division, also suffered from weak markets and the US-China trade war, also posting lower volumes and selling prices.

Huntsman Q3 ($/m) Q3 2019 Q3 2018 Change
Sales 1,687 1,968 -14%
Adjusted EBITDA 215 308 -30%

–
MDI pricing US, Europe, China
Click on image to enlarge

–
MDI is consumed mainly in PU foams, which account for about 80% of global consumption.

Rigid foams, the largest outlet for MDI, are used mostly in construction, refrigeration, packaging and insulation.

MDI is also used to make binders, elastomers, adhesives, sealants, coatings and fibres.

Pictured: PU foam
Source: Simon Lees/Future/Shutterstock

Additional reporting by Fergus Jensen

https://www.icis.com/explore/resources/news/2019/10/25/10434838/us-huntsman-q3-financials-sharply-down-as-low-mdi-pricing-offsets-higher-volumes

October 24, 2019

Urethane Comments from Dow Investors’ Call

Jim Fitterling

On Slide 5, Industrial Intermediates & Infrastructure operating EBIT declined versus the year ago period primarily due to margin compression in the polyurethanes component and MEG as well as lower demand in industrial end-markets.

In Industrial Solutions, volume declined modestly as a result of lower demand in energy, agriculture and automotive end-markets. This was partly offset by growth in catalyst application and demand in pharma end-markets. The business reported a significant drop in its equity earnings driven by margin compression for MEG at our Kuwait joint ventures.

Polyurethanes & Construction Chemicals sales declined on lower local pricing in all regions led by lower components prices. However, the business achieved volume growth driven by gains in the United States and Canada on improved MDI supply year-over-year as well as continued demand growth in polyurethane systems.

Our growth in systems reflects the businesses focus on driving its downstream agenda and moving the portfolio from merchant component sales to higher value formulated systems. It has been a multiyear journey and the progress we’ve made so far has been impressive. This quarter marked the 25th consecutive quarter of year-over-year volume growth for the systems business.

Vincent Andrews

Thank you and good morning everyone. Could you maybe talk a little bit about MDI and silicones and sort of what you think is going to happen through fourth quarter and into next year are we just going to bounce around these levels? Can MDI volume continue to compound at a mid-single digit rate or do we have to worry about that being a little bit lighter next year? Thank you.

Jim Fitterling

Thanks Vince. MDI and I would say siloxane versus silicones, MDI and siloxanes are bouncing around at pretty low levels, as you mentioned and I would expect them to stay in there. A little bit of term in the industrial side of the sector and in the auto side of the sector will put a pull there that would start to bring that back up, but haven’t seen that yet. With PMI really declining for the last four consecutive quarters, the big delta here is consumer has been really pulling all the volume growth and industrial hasn’t yet. But I do think with inventories being low, I don’t see any speculative activity out there and with downstream investments, like in our systems business downstream and our silicones business which are both continuing to hold up well that’s going to create a pull on that supply demand balance. And with nothing new on the horizon, I think, you’re going to see some steady improvement. We get a deal on trade if we get a phase one trade deal that obviously will be a tailwind. And I think the industry is poised right now for a little tailwind.

Hassan Ahmed

Good morning Jim. Jim, a bit of an interesting sort of quarter. Obviously, we had this incident happen out in Saudi Arabia, which I would imagine limited feedstock supply to a variety of producers out there. And I would imagine Sadara as well. So could you comment on whether or not you guys saw any curtailments in feedstock supply? Has that normalized out in Sadara? And was there any Q3 negative impact from that? And any residual impact we should expect in Q4?

Howard Ungerleider

Thanks Hassan great question. We saw limited a reduction in feedstock supply. We were down about 20% for less than two weeks. So that wasn’t the real drag on Sadara in the third quarter. The bigger drag was we had a industrial gas supplier that supplies into the complex that really had an outage that really costs us on the range of $25 million, $30 million on Sadara EBITDA. And I think that’s the bigger impact.

Sadara is running well right now. I don’t see any long-term issue from that. And really good cooperation and response from Aramco, real solid response.

https://seekingalpha.com/article/4298675-dows-dow-ceo-jim-fitterling-q3-2019-results-earnings-call-transcript?part=single