Tempur Sealy Reports First Quarter 2019 Results

Thu May 2, 2019 6:45 AM|PR Newswire|About: TPX

– Direct Sales Increased 38%, North America Direct Sales Increased 36%

– Net Income Increased 23%, EPS Increased 21%

– Increased Full Year 2019 Guidance

PR NewswireLEXINGTON, Ky., May 2, 2019 /PRNewswire/ — Tempur Sealy International, Inc. (TPX) announced financial results for the first quarter ended March 31, 2019. The Company also revised its financial guidance for the full year 2019.

FIRST QUARTER 2019 FINANCIAL SUMMARY⁽¹⁾

Total net sales increased 8.4% to $690.9 million as compared to $637.4 million in the first quarter of 2018. On a constant currency basis⁽²⁾, total net sales increased 10.4%, with an increase of 12.7% in the North America business segment and an increase of 3.0% in the International business segment.
Gross margin under U.S. generally accepted accounting principles (“GAAP”) was 40.8% as compared to 41.5% in the first quarter of 2018.
GAAP operating income increased 8.6% to $60.5 million as compared to $55.7 million in the first quarter of 2018. Operating income in the first quarter of 2019 included $3.3 million of acquisition-related and other costs. Adjusted operating income⁽²⁾ increased 14.5% to $63.8 million as compared to $55.7 million in the first quarter of 2018. The Company had no adjustments to operating income in the first quarter of 2018.
GAAP net income increased 22.9% to $28.4 million as compared to $23.1 million in the first quarter of 2018. Adjusted net income⁽²⁾ increased 18.7% to $29.8 million as compared to $25.1 million in the first quarter of 2018.
Earnings before interest, tax, depreciation and amortization (“EBITDA”)⁽²⁾increased 16.2% to $96.3 million as compared to $82.9 million for the first quarter of 2018. Adjusted EBITDA⁽²⁾ increased 8.3% to $92.8 million as compared to $85.7 million in the first quarter of 2018. In the first quarter of 2019, EBITDA⁽²⁾ included other income of $7.2 million related to the sale of a certain interest in the Company’s Asia-Pacific joint venture. EBITDA⁽²⁾ also included transaction costs of $3.3 million in the first quarter of 2019.
GAAP earnings per diluted share (“EPS”) increased 21.4% to $0.51 as compared to $0.42 in the first quarter of 2018. Adjusted EPS⁽²⁾ increased 17.4% to $0.54 as compared to $0.46 in the first quarter of 2018.

KEY HIGHLIGHTS

(in millions, except percentages and per common share amounts)	Three Months Ended				% Reported Change		% Constant Currency Change⁽²⁾
	March 31, 2019		March 31, 2018		% Reported Change		% Constant Currency Change⁽²⁾
Net sales	$	690.9	$	637.4	8.4	%	10.4	%
Net income	28.4		23.1		22.9	%	34.6	%
EBITDA ⁽²⁾	96.3		82.9		16.2	%	21.1	%
Adjusted EBITDA ⁽²⁾	92.8		85.7		8.3	%	13.1	%
EPS	0.51		0.42		21.4	%	33.3	%
Adjusted EPS ⁽²⁾	0.54		0.46		17.4	%	28.3	%

Tempur Sealy International, Inc. Chairman and CEO Scott Thompson commented, “The strength of our brands and product, supported by the power of our world-wide omni-distribution strategy, drove our operating results. North America was a major highlight with outstanding growth in our Tempur-Pedic products and a solid performance by Sealy and Stearns & Foster products. While we recently introduced the most innovative product suite in our company’s history, we will be in market testing new revolutionary products that we expect will extend our leadership position. This aligns to our initiative to provide the most innovative bedding solutions in the world. Additionally, we continue to make progress toward optimizing our omni-distribution model, as we expanded both in wholesale and direct channels. A highlight for the quarter was global direct to consumer which grew to a record $75 million in the quarter while expanding margin. This channel represented 11% of global revenues.”

(1) All amounts presented for 2018 reflect reclassifications to previously reported amounts to adjust for discontinued operations.
(2) This is a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures and Constant Currency Information” below.

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 12.2% to $544.0 million as compared to $485.0 million in the first quarter of 2018. On a constant currency basis⁽²⁾, North America net sales increased 12.7% as compared to the first quarter of 2018. GAAP gross margin was 37.6% as compared to 37.9% in the first quarter of 2018. GAAP operating margin was 11.8% as compared to 11.1% in the first quarter of 2018.

North America net sales through the wholesale channel increased $47.8 million, or 10.5%, to $501.8 million as compared to the first quarter of 2018. North America net sales through the direct channel increased $11.2 million, or 36.1%, to $42.2 million, as compared to the first quarter of 2018, driven primarily by growth from expanded retail stores.

North America gross margin declined 30 basis points as compared to the first quarter of 2018. The decline was primarily driven by commodity cost inflation, increased floor model expenses and unfavorable merchandising mix. These were partially offset by brand mix and favorable pricing. North America operating margin improved 70 basis points as compared to the first quarter of 2018. The improvement in operating margin was driven by operating expense leverage, which was partially offset by the decline in gross margin.

International net sales decreased 3.6% to $146.9 million as compared to $152.4 million in the first quarter of 2018. On a constant currency basis⁽²⁾, International net sales increased 3.0% as compared to the first quarter of 2018. GAAP gross margin was 52.7% as compared to 53.0% in the first quarter of 2018. GAAP operating margin was 17.2% as compared to 18.8% in the first quarter of 2018.

International net sales through the wholesale channel decreased $15.0 million, or 11.6%, to $114.1 million as compared to the first quarter of 2018. International net sales through the direct channel increased $9.5 million, or 40.8%, to $32.8 million as compared to the first quarter of 2018.

International gross margin declined 30 basis points as compared to gross margin for the first quarter of 2018. The decline in gross margin was primarily driven by unfavorable foreign exchange. The decline was partially offset by operational improvements. International adjusted operating margin⁽²⁾ declined 140 basis points as compared to operating margin in the first quarter of 2018. The decline was driven by operating expense deleverage, unfavorable performance in the Asia-Pacific joint venture and the decline in gross margin.

Corporate operating expense increased to $29.0 million as compared to $27.0 million in the first quarter of 2018. Corporate adjusted operating expense ⁽²⁾decreased to $26.0 million as compared to corporate operating expense of $27.0 million in the first quarter of 2018.

https://seekingalpha.com/pr/17496707-tempur-sealy-reports-first-quarter-2019-results

May 3, 2019

BASF Results

BASF Group increases sales; earnings below prior-year quarter, in line with expectations

First Quarter 2019:

Sales of €16.2 billion (plus 3%)
EBIT before special items of €1.7 billion (minus 24%)
Earnings decline primarily due to lower contributions from Materials and Chemicals segments
Strong earnings development in Agricultural Solutions segment

Outlook for 2019 confirmed:

Slight sales growth
Slight year-on-year increase in EBIT before special items

“In the first quarter of 2019, BASF Group sales rose by 3% year on year to €16.2 billion,” said Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, at the company’s Annual Shareholders’ Meeting held at Congress Center Rosengarten in Mannheim, Germany. Compared with the first quarter of 2018, income from operations (EBIT) before special items declined by €549 million to €1.7 billion. “As expected, this is primarily due to the considerably lower contributions from the Materials and Chemicals segments. In these segments, we had exceptionally high isocyanates margins and strong cracker margins in the first quarter of the previous year,” said Brudermüller. EBIT before special items also declined considerably in Other and the Nutrition & Care segment, while earnings matched the level of the previous first quarter in the Surface Technologies segment. By contrast, the Agricultural Solutions and Industrial Solutions segments recorded a considerable improvement in earnings.

Global economic growth in the first quarter of 2019 was shaped by geopolitical developments and trade conflicts, especially between the United States and China. The generally subdued market sentiment was reflected in the wait-and-see attitude of many customers. Consequently, BASF Group experienced weakening demand from key customer industries, especially the automotive sector.

Prices declined by 2% compared with the prior first quarter, which was attributable mainly to the businesses with isocyanates and cracker products. Higher prices in the Surface Technologies, Agricultural Solutions and Industrial Solutions segments could only partially offset the expected price decline in the Materials and Chemicals segments. Owing to the overall cautious ordering behavior of customers, sales volumes at the BASF Group were down by 4%. The sales growth was mainly driven by portfolio effects in the Agricultural Solutions segment resulting from the acquisition of significant businesses and assets from Bayer in August 2018. Currency effects also had a positive impact on sales in all segments.

At €26 million, special items in EBIT were positive overall in the first quarter of 2019, compared with minus €18 million in the prior-year quarter. Special income from divestitures in the Agricultural Solutions and Industrial Solutions segments exceeded integration costs, special charges from restructuring measures and other charges.

EBIT declined by €505 million compared with the first quarter of 2018 to €1.8 billion. Income before income taxes decreased by €520 million to €1.6 billion. The tax rate increased from 24.1% to 25.4%.

Income after taxes from continuing operations declined by €415 million to €1.2 billion. Income after taxes from discontinued operations, which comprise BASF’s oil and gas activities, rose by €97 million to €274 million. This was largely attributable to significant volumes growth, especially in Russia, as well as the suspension of depreciation and amortization since the recognition of the disposal group in the third quarter of 2018.

Net income declined by €273 million to €1.4 billion. Earnings per share amounted to €1.53 in the first quarter of 2019 (first quarter of 2018: €1.83). Earnings per share adjusted for special items and amortization of intangible assets amounted to €1.65 (first quarter of 2018: €1.93).

In the first quarter of 2019, cash flows from operating activities amounted to €373 million, €858 million below the figure for the prior-year quarter. Free cash flow declined from €604 million in the prior-year quarter to minus €368 million, mainly as a result of lower cash flows from operating activities.

https://www.basf.com/global/en/media/news-releases/2019/05/p-19-191.html

May 3, 2019

BASF Results

BASF Group increases sales; earnings below prior-year quarter, in line with expectations

First Quarter 2019:

Sales of €16.2 billion (plus 3%)
EBIT before special items of €1.7 billion (minus 24%)
Earnings decline primarily due to lower contributions from Materials and Chemicals segments
Strong earnings development in Agricultural Solutions segment

Outlook for 2019 confirmed:

Slight sales growth
Slight year-on-year increase in EBIT before special items