The Urethane Blog

Tempur Sealy Results

Tempur Sealy Reports Record Third Quarter Results

-Net Sales Increased 20% Compared to the Third Quarter of 2020, Direct Sales Increased 79%
-EPS Increased 52.6% to $0.87, Adjusted EPS Increased 18.9% to $0.88
-Raises 2021 Adjusted EPS Guidance Range to $3.20 to $3.30

LEXINGTON, Ky., Oct. 28, 2021 /PRNewswire/ — Tempur Sealy International, Inc. (NYSE: TPX) announced financial results for the third quarter ended September 30, 2021. The Company also issued updated financial guidance for the full year 2021 that reflects the improved business performance.

THIRD QUARTER 2021 FINANCIAL SUMMARY

  • Total net sales increased 20.0% to $1,358.3 million as compared to $1,132.3 million in the third quarter of 2020. On a constant currency basis(1), total net sales increased 19.2%, with an increase of 11.9% in the North America business segment and an increase of 71.6% in the International business segment.
  • Gross margin was 42.5% as compared to 46.8% in the third quarter of 2020. Adjusted gross margin(1) was 46.9% in the third quarter of 2020. There were no adjustments to gross margin in the third quarter of 2021.
  • Operating income increased 38.6% to $249.8 million as compared to $180.2 million in the third quarter of 2020. Operating income in the third quarter of 2020 included $45.2 million of amortization for aspirational plan stock-based compensation. Adjusted operating income(1) increased 11.0% to $252.1 million as compared to $227.2 million in the third quarter of 2020.
  • Net income increased 46.1% to $177.4 million as compared to $121.4 million in the third quarter of 2020. Adjusted net income(1) increased 15.6% to $179.6 million as compared to $155.4 million in the third quarter of 2020.
  • Earnings before interest, tax, depreciation and amortization (“EBITDA”)(1) increased 5.5% to $295.2 million as compared to $279.9 million in the third quarter of 2020. Adjusted EBITDA(1) increased 6.6% to $297.6 million as compared to $279.3 million in the third quarter of 2020.
  • Earnings per diluted share (“EPS”) increased 52.6% to $0.87 as compared to $0.57 in the third quarter of 2020. Adjusted EPS(1) increased 18.9% to $0.88 as compared to $0.74 in the third quarter of 2020.

KEY HIGHLIGHTS

(in millions, except percentages and per
common share amounts)
Three Months Ended% Reported
Change
% Constant
Currency Change(1)
September 30, 2021September 30, 2020
Net sales$1,358.3$1,132.320.0%19.2%
Net income$177.4$121.446.1%44.2%
Adjusted net income (1)$179.6$155.415.6%14.0%
EBITDA(1)$295.2$279.95.5%4.3%
Adjusted EBITDA(1)$297.6$279.36.6%5.4%
EPS$0.87$0.5752.6%50.9%
Adjusted EPS (1)$0.88$0.7418.9%17.6%

Company Chairman and CEO Scott Thompson commented, “Our strong third quarter sales performance was driven by growth across all brands, products, channels and segments. Our broad-based performance is especially notable given the strong prior year comparative period and our inability to fully meet market demand in the quarter due to continued supply chain constraints. We continue to see opportunity to further grow our business and extend our lead in the design, manufacture and distribution of bedding products over the long term. Our key building blocks to future growth include the meaningful expansion of our total global addressable market via our OEM initiative and our TEMPUR international product launch, our industry-leading innovation capabilities and our balanced capital allocation philosophy. In 2022 and beyond, we expect to leverage these complementary building blocks to deliver double-digit sales and EPS growth.”

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 12.6% to $1,120.0 million as compared to $994.7 million in the third quarter of 2020. On a constant currency basis(1), North America net sales increased 11.9% as compared to the third quarter of 2020. Gross margin was 39.9% as compared to 44.7% in the third quarter of 2020. Adjusted gross margin(1) was 44.8% in the third quarter of 2020. There were no adjustments to gross margin in the third quarter of 2021. Operating margin was 21.2% as compared to 23.6% in the third quarter of 2020. Adjusted operating margin(1) was 23.8% in the third quarter of 2020. There were no adjustments to operating margin in the third quarter of 2021.

North America net sales through the wholesale channel increased $104.1 million, or 11.7%, to $991.2 million, as compared to the third quarter of 2020, primarily driven by broad-based demand across our retail partners. North America net sales through the direct channel increased $21.2 million, or 19.7%, to $128.8 million, primarily driven by strong company-owned stores sales growth, as compared to the third quarter of 2020. 

North America gross margin declined 490 basis points as compared to adjusted gross margin(1) in the third quarter of 2020. The decline was driven by pricing benefit to sales with no improvement in gross margin, operational inefficiencies and unfavorable brand mix driven by supply chain issues. North America operating margin declined 260 basis points as compared to adjusted operating margin(1) in the third quarter of 2020. The decline was primarily driven by gross margin, partially offset by operating expense leverage.

International net sales increased 73.2% to $238.3 million as compared to $137.6 million in the third quarter of 2020. On a constant currency basis(1), International net sales increased 71.6% as compared to the third quarter of 2020. Gross margin was 54.6% as compared to 61.9% in the third quarter of 2020. Operating margin was 21.1% as compared to 29.9% in the third quarter of 2020. Adjusted operating margin(1) was 22.1% as compared to 30.2% in the third quarter of 2020.

International net sales through the wholesale channel increased $7.9 million, or 7.9%, to $108.0 million as compared to the third quarter of 2020. International net sales through the direct channel increased $92.8 million, or 247.5%, to $130.3 million, primarily driven by the acquisition of Dreams Topco Limited (“Dreams”) on August 2, 2021,  as compared to the third quarter of 2020.

International gross margin declined 730 basis points as compared to the third quarter of 2020. The decline was primarily driven by the acquisition of Dreams and pricing benefit to sales with no improvement in gross margin. Dreams’ margin profile is lower than our historical international margins as they sell a variety of products across a range of price points. International adjusted operating margin(1) declined 810 basis points as compared to the third quarter of 2020. The decline was primarily driven by the acquisition of Dreams, the decline in gross margin and operating expense deleverage.

https://investor.tempursealy.com/news-releases/news-release-details/tempur-sealy-reports-record-third-quarter-results-0