The Urethane Blog

Tempur Sealy Outlook Improves

Tempur Sealy Provides Market Update

Wed December 9, 2020 6:45 AM|PR Newswire|About: TPX

– Improved Fourth Quarter Adjusted EBITDA Outlook

– Provides Details on Capital Allocation Plan

PR Newswire

LEXINGTON, Ky., Dec. 9, 2020 /PRNewswire/ — Tempur Sealy International, Inc. (TPX) (NYSE: TPX, “Tempur Sealy” or “Company”) today announced that fourth quarter product demand continues to be strong around the world. Management has an improved profitability outlook for the fourth quarter of 2020 compared to the same period last year, and now expects adjusted EBITDA growth of approximately 30% on low double-digit net sales growth. The improvement is driven by stronger than expected U.S. e-commerce and international sales, combined with favorable company-wide margins. The supply constraints that continue to impact the Company’s U.S. Sealy and Sherwood production have been greater than expected.

Tempur Sealy Chairman and CEO Scott Thompson stated, “Tempur Sealy’s global operating scale provides significant cost and sourcing advantages that have helped the team manage the robust sales environment and the industry’s challenged supply chain. Our well-established omni-channel marketing approach has served us well as our online direct-to-consumer Tempur-Pedic and Cocoon by Sealy businesses are experiencing triple-digit sales growth over the comparable prior-year quarter.”

Capital Allocation

The Company’s long-term capital allocation strategy focuses on four areas: repurchasing shares, debt management, investing in operations and accretive acquisitions. The Company today shared additional details on its plan.

The Company is:

  • Targeting share repurchases of approximately $280 million for 2020, including approximately $100 million in share repurchases in the fourth quarter.
  • Intending to redeem in the first quarter of 2021 $125 million of the $250 million outstanding on the Company’s Senior Notes due 2023, funded by lower cost long-term debt.
  • Planning to invest an incremental $150 million over the next three years to support growth initiatives. The Company plans to expand its three existing foam facilities and open one new state-of-the-art foam facility in the U.S. This initiative is expected to increase U.S. pouring capacity for Tempur material and base foam by approximately 50%.

Thompson continued, “Our commitment to serving consumers wherever and however they want to shop with the highest quality products and service has fueled strong demand for our industry leading Tempur-Pedic and Sealy brands and our rapidly growing OEM business. We expect the industry, and specifically the Company’s business, to continue to expand. The new capacity will ensure that we can fully meet the consumer’s demand for our products across the multitude of channels we serve: wholesale, direct to consumer, and OEM.