PR NewswireLEXINGTON, Ky., Feb. 16, 2017 /PRNewswire/ — Tempur Sealy International, Inc. (TPX) (NYSE: TPX) today announced financial results for the fourth quarter and year ended December 31, 2016. The Company also issued financial guidance for the full year 2017.

KEY HIGHLIGHTS

	Three Months Ended December 31,														Year Ended December 31,
(in millions, except percentages and per common share amounts)	2016				2015				% Change			% Change Constant Currency(1)			2016				2015				% Change			% Change Constant Currency(1)
Net sales	$	769.5			$	767.3			0.3	%		1.7	%		$	3,127.3			$	3,151.2			(0.8)	%		0.7	%
Net income (loss)	63.4				(11.3)				661.1	%		671.7	%		202.1				73.5				175.0	%		184.4	%
EPS	1.12				(0.18)				722.2	%		733.3	%		3.38				1.17				188.9	%		199.1	%
Adjusted EPS(1)	1.18				0.99				19.2	%		21.2	%		4.05				3.19				27.0	%		30.7	%
EBITDA(1)	130.1				115.1				13.0	%		14.6	%		510.8				388.9				31.3	%		34.1	%
Adjusted EBITDA(1)	137.9				132.7				3.9	%		5.3	%		521.6				455.8				14.4	%		16.8	%

 

FOURTH QUARTER 2016 FINANCIAL SUMMARY

• Total net sales increased 0.3% to $769.5 million from $767.3 million in the fourth quarter of 2015. On a constant currency basis⁽¹⁾, total net sales increased 1.7%, with an increase of 1.9% in the North America business segment and an increase of 0.9% in the International business segment.
• Gross margin under U.S. generally accepted accounting principles (“GAAP”) was 41.5% as compared to 40.8% in the fourth quarter of 2015.
• GAAP net income was $63.4 million as compared to a net loss of $(11.3) million for the fourth quarter of 2015. In the fourth quarter of 2015, the Company recorded a $60.7 million tax charge related to its Danish tax matter. Adjusted net income⁽¹⁾ increased 6.1% to $66.5 million as compared to adjusted net income of $62.7 million in the fourth quarter of 2015.
• Earnings before interest, tax, depreciation and amortization (“EBITDA”)⁽¹⁾ increased 13.0% to $130.1 million as compared to $115.1 million for the fourth quarter of 2015. Adjusted EBITDA⁽¹⁾ increased 3.9% to a record $137.9 million as compared to adjusted EBITDA⁽¹⁾ of $132.7 million in the fourth quarter of 2015.
• GAAP operating income increased 17.1% to $107.5 million, or 14.0% of net sales, as compared to $91.8 million, or 12.0% of net sales, in the fourth quarter of 2015. Operating income in the fourth quarter of 2016 included $8.3 million of restructuring costs and $3.8 million of benefit related to performance-based stock compensation. Operating income in the fourth quarter of 2015 included $19.4 million of restructuring costs, executive management transition, integration and other costs. Adjusted operating income⁽¹⁾ was $112.0 million, or 14.6% of net sales, as compared to adjusted operating income of $111.2 million, or 14.5% of net sales, in the fourth quarter of 2015.
• GAAP earnings per diluted share (“EPS”) was $1.12 as compared to a loss of $(0.18) in the fourth quarter of 2015. Adjusted EPS⁽¹⁾ increased 19.2% to $1.18, as compared to adjusted EPS of $0.99 in the fourth quarter of 2015.
• During the fourth quarter of 2016, the Company repurchased 3.5 million shares of its common stock for a total cost of $215.3 million. As of December 31, 2016, the Company had approximately $67 million available under its existing share repurchase authorization.
• The Company ended the fourth quarter of 2016 with consolidated funded debt less qualified cash⁽¹⁾ of $1.9 billion. In addition, leverage based on the ratio of consolidated funded debt less qualified cash to adjusted EBITDA⁽¹⁾ was 3.60 times, with no significant off balance sheet liability.

Tempur Sealy International, Inc. Chairman and CEO Scott Thompson commented, “Overall the worldwide markets for our products are solid and the Team remains focused on our long-term initiatives. Our fourth quarter adjusted EPS growth of 19% is evidence of the strength of Company’s Brands, and business model, even against a relatively muted bedding industry.”

⁽¹⁾ This is a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures and Constant Currency Information” below.

FULL YEAR 2016 FINANCIAL SUMMARY

• Total net sales decreased 0.8% to $3,127.3 million from $3,151.2 million in 2015. On a constant currency basis⁽¹⁾, total net sales increased 0.7%, with growth in both the North America and International business segments.
• GAAP gross margin was 41.9% as compared to 39.6% in 2015. Adjusted gross margin⁽¹⁾ was 41.9% as compared to 40.1% in 2015.
• GAAP net income was $202.1 million as compared to $73.5 million in 2015. Adjusted net income⁽¹⁾ was $242.4 million as compared to $199.9 million in 2015.
• EBITDA⁽¹⁾ increased 31.3% to $510.8 million as compared to $388.9 million in 2015. Adjusted EBITDA⁽¹⁾ increased 14.4% to a record $521.6 million as compared to $455.8 million in 2015.
• GAAP operating income increased 34.4% to $415.5 million, as compared to $309.1 million in 2015. Adjusted operating income⁽¹⁾ was $425.0 million, or 13.6% of net sales, as compared to $373.8 million, or 11.9% of net sales, in 2015.
• GAAP EPS was $3.38 as compared to $1.17 in 2015. Adjusted EPS⁽¹⁾ increased 27.0% to a record $4.05 as compared to adjusted EPS of $3.19 in 2015. On a constant currency basis, adjusted EPS increased 30.7%.
• Operating cash flow for the full year 2016 was $165.5 million compared to $234.2 million in 2015.

Fourth Quarter 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 1.9% to $623.4 million from $611.6 million in the fourth quarter of 2015. On a constant currency basis⁽¹⁾, North America net sales increased 1.9%. GAAP gross margin was 39.4% as compared to 38.7% in the fourth quarter of 2015. GAAP operating margin was 16.5% as compared to 15.5% in the fourth quarter of 2015, driven primarily by gross margin improvement.

North America adjusted gross margin⁽¹⁾ improved 60 basis points to 39.5% as compared to 38.9% in the fourth quarter of 2015. Gross margin improvements were primarily driven by operational improvements, pricing actions, and favorable mix, partially offset by product launch costs. North America adjusted operating margin⁽¹⁾ declined to 16.7% as compared to 16.8% in the fourth quarter of 2015 primarily driven by increased product launch expense.

International net sales decreased 6.2% to $146.1 million from $155.7 million in the fourth quarter of 2015. On a constant currency basis⁽¹⁾, International net sales increased 0.9%. GAAP gross margin was 50.6% as compared to 49.3% in the fourth quarter of 2015. GAAP operating margin was 18.2% as compared to 17.3% in the fourth quarter 2015, driven primarily by the increase in gross margin.

International adjusted gross margin⁽¹⁾ increased 150 basis points to 51.3% as compared to 49.8% in the fourth quarter of 2015. The increase in gross margin was primarily driven by operational improvements and channel mix. International adjusted operating margin⁽¹⁾ increased to 22.2% as compared to 20.0% in the fourth quarter of 2015, primarily driven by improved gross margin and lower operating expenses.

http://seekingalpha.com/pr/16744494-tempur-sealy-reports-record-fourth-quarter-full-year-2016-results