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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tempur Sealy International Inc | NYSE:TPX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.04 | -0.08% | 50.38 | 51.97 | 50.29 | 51.50 | 1,444,079 | 01:00:00 |
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
33-1022198
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of exchange on which registered
|
Common Stock, $0.01 par value
|
TPX
|
New York Stock Exchange
|
Large accelerated filer
|
Accelerated filer
|
Non-accelerated filer
|
Smaller reporting company
|
Emerging Growth Company
|
x
|
o
|
o
|
☐
|
☐
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Page
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|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net sales
|
$
|
722.8
|
|
|
$
|
659.9
|
|
|
$
|
1,413.7
|
|
|
$
|
1,297.3
|
|
Cost of sales
|
409.4
|
|
|
387.1
|
|
|
818.5
|
|
|
759.8
|
|
||||
Gross profit
|
313.4
|
|
|
272.8
|
|
|
595.2
|
|
|
537.5
|
|
||||
Selling and marketing expenses
|
163.3
|
|
|
153.3
|
|
|
316.8
|
|
|
298.7
|
|
||||
General, administrative and other expenses
|
72.7
|
|
|
65.3
|
|
|
143.4
|
|
|
132.8
|
|
||||
Equity income in earnings of unconsolidated affiliates
|
(3.6
|
)
|
|
(3.8
|
)
|
|
(6.5
|
)
|
|
(7.7
|
)
|
||||
Operating income
|
81.0
|
|
|
58.0
|
|
|
141.5
|
|
|
113.7
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other expense, net:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
22.5
|
|
|
23.2
|
|
|
44.9
|
|
|
45.9
|
|
||||
Other income, net
|
—
|
|
|
(0.6
|
)
|
|
(7.8
|
)
|
|
(3.2
|
)
|
||||
Total other expense, net
|
22.5
|
|
|
22.6
|
|
|
37.1
|
|
|
42.7
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations before income taxes
|
58.5
|
|
|
35.4
|
|
|
104.4
|
|
|
71.0
|
|
||||
Income tax provision
|
(15.8
|
)
|
|
(8.8
|
)
|
|
(32.7
|
)
|
|
(18.8
|
)
|
||||
Income from continuing operations
|
42.7
|
|
|
26.6
|
|
|
71.7
|
|
|
52.2
|
|
||||
Loss from discontinued operations, net of tax
|
(1.2
|
)
|
|
(5.4
|
)
|
|
(1.6
|
)
|
|
(8.2
|
)
|
||||
Net income before non-controlling interest
|
41.5
|
|
|
21.2
|
|
|
70.1
|
|
|
44.0
|
|
||||
Less: Net (loss) income attributable to non-controlling interest
|
(0.1
|
)
|
|
(1.6
|
)
|
|
0.1
|
|
|
(1.9
|
)
|
||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
41.6
|
|
|
$
|
22.8
|
|
|
$
|
70.0
|
|
|
$
|
45.9
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
|
|
|
|
|
|
||||||||
Earnings per share for continuing operations
|
$
|
0.78
|
|
|
$
|
0.52
|
|
|
$
|
1.31
|
|
|
$
|
0.99
|
|
Loss per share for discontinued operations
|
(0.02
|
)
|
|
(0.10
|
)
|
|
(0.03
|
)
|
|
(0.15
|
)
|
||||
Earnings per share
|
$
|
0.76
|
|
|
$
|
0.42
|
|
|
$
|
1.28
|
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted
|
|
|
|
|
|
|
|
||||||||
Earnings per share for continuing operations
|
$
|
0.76
|
|
|
$
|
0.52
|
|
|
$
|
1.29
|
|
|
$
|
0.98
|
|
Loss per share for discontinued operations
|
(0.02
|
)
|
|
(0.10
|
)
|
|
(0.03
|
)
|
|
(0.15
|
)
|
||||
Earnings per share
|
$
|
0.74
|
|
|
$
|
0.42
|
|
|
$
|
1.26
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
54.7
|
|
|
54.4
|
|
|
54.7
|
|
|
54.4
|
|
||||
Diluted
|
56.0
|
|
|
54.9
|
|
|
55.6
|
|
|
55.0
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income before non-controlling interest
|
$
|
41.5
|
|
|
$
|
21.2
|
|
|
$
|
70.1
|
|
|
$
|
44.0
|
|
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
3.0
|
|
|
(16.1
|
)
|
|
7.0
|
|
|
(11.1
|
)
|
||||
Pension benefits loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
||||
Other comprehensive income, net of tax
|
3.0
|
|
|
(16.1
|
)
|
|
7.0
|
|
|
(11.7
|
)
|
||||
Comprehensive income
|
44.5
|
|
|
5.1
|
|
|
77.1
|
|
|
32.3
|
|
||||
Less: Comprehensive (loss) income attributable to non-controlling interest
|
(0.1
|
)
|
|
(1.6
|
)
|
|
0.1
|
|
|
(1.9
|
)
|
||||
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
44.6
|
|
|
$
|
6.7
|
|
|
$
|
77.0
|
|
|
$
|
34.2
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
(Unaudited)
|
|
|
||||
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
38.3
|
|
|
$
|
45.8
|
|
Accounts receivable, net
|
386.3
|
|
|
321.5
|
|
||
Inventories
|
243.1
|
|
|
222.3
|
|
||
Prepaid expenses and other current assets
|
224.0
|
|
|
215.8
|
|
||
Total Current Assets
|
891.7
|
|
|
805.4
|
|
||
Property, plant and equipment, net
|
430.0
|
|
|
420.8
|
|
||
Goodwill
|
732.3
|
|
|
723.0
|
|
||
Other intangible assets, net
|
650.6
|
|
|
649.3
|
|
||
Operating lease right-of-use assets
|
228.1
|
|
|
—
|
|
||
Deferred income taxes
|
12.5
|
|
|
22.6
|
|
||
Other non-current assets
|
101.5
|
|
|
94.3
|
|
||
Total Assets
|
$
|
3,046.7
|
|
|
$
|
2,715.4
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
|
|
|
|
||||
Current Liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
235.5
|
|
|
$
|
253.0
|
|
Accrued expenses and other current liabilities
|
436.4
|
|
|
359.2
|
|
||
Current portion of long-term debt
|
60.1
|
|
|
47.1
|
|
||
Income taxes payable
|
6.7
|
|
|
9.7
|
|
||
Total Current Liabilities
|
738.7
|
|
|
669.0
|
|
||
Long-term debt, net
|
1,585.5
|
|
|
1,599.1
|
|
||
Long-term operating lease obligations
|
186.7
|
|
|
—
|
|
||
Deferred income taxes
|
117.0
|
|
|
117.5
|
|
||
Other non-current liabilities
|
112.9
|
|
|
112.3
|
|
||
Total Liabilities
|
2,740.8
|
|
|
2,497.9
|
|
||
|
|
|
|
||||
Commitments and contingencies—see Note 12
|
|
|
|
|
|
||
|
|
|
|
||||
Total Stockholders' Equity
|
305.9
|
|
|
217.5
|
|
||
Total Liabilities and Stockholders' Equity
|
$
|
3,046.7
|
|
|
$
|
2,715.4
|
|
|
|
|
Tempur Sealy International, Inc. Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||
|
Redeemable
Non-controlling Interest
|
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Non-controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||||
|
|
Shares Issued
|
|
At Par
|
|
Shares Issued
|
|
At Cost
|
|
Additional Paid in Capital
|
|
Retained Earnings
|
|
|
|
||||||||||||||||||||||
Balance as of March 31, 2019
|
$
|
—
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
44.5
|
|
|
$
|
(1,736.7
|
)
|
|
$
|
537.1
|
|
|
$
|
1,542.2
|
|
|
$
|
(91.3
|
)
|
|
$
|
1.2
|
|
|
$
|
253.5
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
41.6
|
|
|
|
|
|
|
41.6
|
|
||||||||||||||||
Net loss attributable to non-controlling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||||||||||||
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.0
|
|
|
|
|
3.0
|
|
||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
(0.1
|
)
|
|
0.9
|
|
|
2.2
|
|
|
|
|
|
|
|
|
3.1
|
|
||||||||||||||
Issuances of PRSUs, RSUs, and DSUs
|
|
|
|
|
|
|
—
|
|
|
0.3
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Treasury stock repurchased
|
|
|
|
|
|
|
—
|
|
|
(1.8
|
)
|
|
|
|
|
|
|
|
|
|
(1.8
|
)
|
|||||||||||||||
Amortization of unearned stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
6.6
|
|
|
|
|
|
|
|
|
6.6
|
|
||||||||||||||||
Balance, June 30, 2019
|
$
|
—
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
44.4
|
|
|
$
|
(1,737.3
|
)
|
|
$
|
545.6
|
|
|
$
|
1,583.8
|
|
|
$
|
(88.3
|
)
|
|
$
|
1.1
|
|
|
$
|
305.9
|
|
|
|
|
Tempur Sealy International, Inc. Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||
|
Redeemable
Non-controlling Interest
|
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Non-controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||||
|
|
Shares Issued
|
|
At Par
|
|
Shares Issued
|
|
At Cost
|
|
Additional Paid in Capital
|
|
Retained Earnings
|
|
|
|
||||||||||||||||||||||
Balance as of March 31, 2018
|
$
|
1.9
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
45.0
|
|
|
$
|
(1,737.5
|
)
|
|
$
|
513.6
|
|
|
$
|
1,436.4
|
|
|
$
|
(71.1
|
)
|
|
$
|
—
|
|
|
$
|
142.4
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
22.8
|
|
|
|
|
|
|
22.8
|
|
||||||||||||||||
Net loss attributable to non-controlling interest
|
(1.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||||||||||||||
Acquisition of non-controlling interest in subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.3
|
|
|
1.3
|
|
||||||||||||||||
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16.1
|
)
|
|
|
|
(16.1
|
)
|
||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
(0.1
|
)
|
|
0.4
|
|
|
0.3
|
|
|
|
|
|
|
|
|
0.7
|
|
||||||||||||||
Issuances of PRSUs, RSUs, and DSUs
|
|
|
|
|
|
|
—
|
|
|
0.3
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Treasury stock repurchased
|
|
|
|
|
|
|
—
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|||||||||||||||
Amortization of unearned stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
6.8
|
|
|
|
|
|
|
|
|
6.8
|
|
||||||||||||||||
Balance, June 30, 2018
|
$
|
0.4
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
44.9
|
|
|
$
|
(1,736.9
|
)
|
|
$
|
520.4
|
|
|
$
|
1,459.2
|
|
|
$
|
(87.2
|
)
|
|
$
|
1.2
|
|
|
$
|
157.7
|
|
|
|
|
Tempur Sealy International, Inc. Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||
|
Redeemable
Non-controlling Interest
|
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Non-controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||||
|
|
Shares Issued
|
|
At Par
|
|
Shares Issued
|
|
At Cost
|
|
Additional Paid in Capital
|
|
Retained Earnings
|
|
|
|
||||||||||||||||||||||
Balance as of December 31, 2018
|
$
|
—
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
44.7
|
|
|
$
|
(1,737.0
|
)
|
|
$
|
532.1
|
|
|
$
|
1,513.8
|
|
|
$
|
(95.3
|
)
|
|
$
|
2.9
|
|
|
$
|
217.5
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
70.0
|
|
|
|
|
|
|
70.0
|
|
||||||||||||||||
Net income attributable to non-controlling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
0.1
|
|
||||||||||||||||
Repurchase of interest in subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.9
|
)
|
|
(1.9
|
)
|
||||||||||||||||
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.0
|
|
|
|
|
7.0
|
|
||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
(0.2
|
)
|
|
1.7
|
|
|
3.8
|
|
|
|
|
|
|
|
|
5.5
|
|
||||||||||||||
Issuances of PRSUs, RSUs, and DSUs
|
|
|
|
|
|
|
(0.2
|
)
|
|
3.5
|
|
|
(3.5
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Treasury stock repurchased
|
|
|
|
|
|
|
0.1
|
|
|
(5.5
|
)
|
|
|
|
|
|
|
|
|
|
(5.5
|
)
|
|||||||||||||||
Amortization of unearned stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
13.2
|
|
|
|
|
|
|
|
|
13.2
|
|
||||||||||||||||
Balance, June 30, 2019
|
$
|
—
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
44.4
|
|
|
$
|
(1,737.3
|
)
|
|
$
|
545.6
|
|
|
$
|
1,583.8
|
|
|
$
|
(88.3
|
)
|
|
$
|
1.1
|
|
|
$
|
305.9
|
|
|
|
|
Tempur Sealy International, Inc. Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||
|
Redeemable
Non-controlling Interest
|
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Non-controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||||
|
|
Shares Issued
|
|
At Par
|
|
Shares Issued
|
|
At Cost
|
|
Additional Paid in Capital
|
|
Retained Earnings
|
|
|
|
||||||||||||||||||||||
Balance as of December 31, 2017
|
$
|
2.2
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
45.0
|
|
|
$
|
(1,737.2
|
)
|
|
$
|
508.0
|
|
|
$
|
1,416.2
|
|
|
$
|
(75.5
|
)
|
|
$
|
—
|
|
|
$
|
112.5
|
|
Adoption of accounting standards effective January 1, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.9
|
)
|
|
(0.5
|
)
|
|
|
|
(3.4
|
)
|
|||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
45.9
|
|
|
|
|
|
|
45.9
|
|
||||||||||||||||
Net loss attributable to non-controlling interest
|
(1.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||||||||||||||
Acquisition of non-controlling interest in subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.3
|
|
|
1.3
|
|
||||||||||||||||
Adjustment to pension liability, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
(0.1
|
)
|
||||||||||||||||
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11.1
|
)
|
|
|
|
(11.1
|
)
|
||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
(0.1
|
)
|
|
1.0
|
|
|
1.6
|
|
|
|
|
|
|
|
|
2.6
|
|
||||||||||||||
Issuances of PRSUs, RSUs, and DSUs
|
|
|
|
|
|
|
(0.1
|
)
|
|
2.3
|
|
|
(2.3
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Treasury stock repurchased
|
|
|
|
|
|
|
0.1
|
|
|
(3.0
|
)
|
|
|
|
|
|
|
|
|
|
(3.0
|
)
|
|||||||||||||||
Amortization of unearned stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
13.1
|
|
|
|
|
|
|
|
|
13.1
|
|
||||||||||||||||
Balance, June 30, 2018
|
$
|
0.4
|
|
|
99.2
|
|
|
$
|
1.0
|
|
|
44.9
|
|
|
$
|
(1,736.9
|
)
|
|
$
|
520.4
|
|
|
$
|
1,459.2
|
|
|
$
|
(87.2
|
)
|
|
$
|
1.2
|
|
|
$
|
157.7
|
|
|
June 30,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
Finished goods
|
$
|
143.4
|
|
|
$
|
148.9
|
|
Work-in-process
|
11.0
|
|
|
11.8
|
|
||
Raw materials and supplies
|
88.7
|
|
|
61.6
|
|
||
|
$
|
243.1
|
|
|
$
|
222.3
|
|
(in millions)
|
|
||
Balance as of December 31, 2018
|
$
|
34.3
|
|
Amounts accrued
|
52.0
|
|
|
Returns charged to accrual
|
(49.4
|
)
|
|
Balance as of June 30, 2019
|
$
|
36.9
|
|
(in millions)
|
|
||
Balance as of December 31, 2018
|
$
|
36.4
|
|
Amounts accrued
|
14.3
|
|
|
Warranties charged to accrual
|
(13.1
|
)
|
|
Balance as of June 30, 2019
|
$
|
37.6
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||
(in millions)
|
North America
|
|
International
|
|
Consolidated
|
|
North America
|
|
International
|
|
Consolidated
|
||||||||||||
Channel
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wholesale
|
$
|
528.5
|
|
|
$
|
103.7
|
|
|
$
|
632.2
|
|
|
$
|
1,030.3
|
|
|
$
|
217.8
|
|
|
$
|
1,248.1
|
|
Direct
|
59.6
|
|
|
31.0
|
|
|
90.6
|
|
|
101.8
|
|
|
63.8
|
|
|
165.6
|
|
||||||
Net sales
|
$
|
588.1
|
|
|
$
|
134.7
|
|
|
$
|
722.8
|
|
|
$
|
1,132.1
|
|
|
$
|
281.6
|
|
|
$
|
1,413.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
North America
|
|
International
|
|
Consolidated
|
|
North America
|
|
International
|
|
Consolidated
|
||||||||||||
Product
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Bedding products
|
$
|
554.2
|
|
|
$
|
108.4
|
|
|
$
|
662.6
|
|
|
$
|
1,068.6
|
|
|
$
|
223.8
|
|
|
$
|
1,292.4
|
|
Other products
|
33.9
|
|
|
26.3
|
|
|
60.2
|
|
|
63.5
|
|
|
57.8
|
|
|
121.3
|
|
||||||
Net sales
|
$
|
588.1
|
|
|
$
|
134.7
|
|
|
$
|
722.8
|
|
|
$
|
1,132.1
|
|
|
$
|
281.6
|
|
|
$
|
1,413.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
North America
|
|
International
|
|
Consolidated
|
|
North America
|
|
International
|
|
Consolidated
|
||||||||||||
Geographical region
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
$
|
533.7
|
|
|
$
|
—
|
|
|
$
|
533.7
|
|
|
$
|
1,030.9
|
|
|
$
|
—
|
|
|
$
|
1,030.9
|
|
Canada
|
54.4
|
|
|
—
|
|
|
54.4
|
|
|
101.2
|
|
|
—
|
|
|
101.2
|
|
||||||
International
|
—
|
|
|
134.7
|
|
|
134.7
|
|
|
—
|
|
|
281.6
|
|
|
281.6
|
|
||||||
Net sales
|
$
|
588.1
|
|
|
$
|
134.7
|
|
|
$
|
722.8
|
|
|
$
|
1,132.1
|
|
|
$
|
281.6
|
|
|
$
|
1,413.7
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
(in millions)
|
North America
|
|
International
|
|
Consolidated
|
|
North America
|
|
International
|
|
Consolidated
|
||||||||||||
Channel
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wholesale
|
$
|
494.3
|
|
|
$
|
107.3
|
|
|
$
|
601.6
|
|
|
$
|
948.3
|
|
|
$
|
236.4
|
|
|
$
|
1,184.7
|
|
Direct
|
33.5
|
|
|
24.8
|
|
|
58.3
|
|
|
64.5
|
|
|
48.1
|
|
|
112.6
|
|
||||||
Net sales
|
$
|
527.8
|
|
|
$
|
132.1
|
|
|
$
|
659.9
|
|
|
$
|
1,012.8
|
|
|
$
|
284.5
|
|
|
$
|
1,297.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
North America
|
|
International
|
|
Consolidated
|
|
North America
|
|
International
|
|
Consolidated
|
||||||||||||
Product
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Bedding products
|
$
|
497.4
|
|
|
$
|
103.9
|
|
|
$
|
601.3
|
|
|
$
|
949.7
|
|
|
$
|
227.6
|
|
|
$
|
1,177.3
|
|
Other products
|
30.4
|
|
|
28.2
|
|
|
58.6
|
|
|
63.1
|
|
|
56.9
|
|
|
120.0
|
|
||||||
Net sales
|
$
|
527.8
|
|
|
$
|
132.1
|
|
|
$
|
659.9
|
|
|
$
|
1,012.8
|
|
|
$
|
284.5
|
|
|
$
|
1,297.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
North America
|
|
International
|
|
Consolidated
|
|
North America
|
|
International
|
|
Consolidated
|
||||||||||||
Geographical region
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
$
|
477.7
|
|
|
$
|
—
|
|
|
$
|
477.7
|
|
|
$
|
917.9
|
|
|
$
|
—
|
|
|
$
|
917.9
|
|
Canada
|
50.1
|
|
|
—
|
|
|
50.1
|
|
|
94.9
|
|
|
—
|
|
|
94.9
|
|
||||||
International
|
—
|
|
|
132.1
|
|
|
132.1
|
|
|
—
|
|
|
284.5
|
|
|
284.5
|
|
||||||
Net sales
|
$
|
527.8
|
|
|
$
|
132.1
|
|
|
$
|
659.9
|
|
|
$
|
1,012.8
|
|
|
$
|
284.5
|
|
|
$
|
1,297.3
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
9.8
|
|
|
$
|
0.2
|
|
|
$
|
20.4
|
|
Cost of sales
|
—
|
|
|
6.5
|
|
|
0.2
|
|
|
13.9
|
|
||||
Gross profit
|
—
|
|
|
3.3
|
|
|
—
|
|
|
6.5
|
|
||||
Selling and marketing expenses
|
—
|
|
|
4.1
|
|
|
0.1
|
|
|
7.6
|
|
||||
General, administrative and other expenses
|
1.2
|
|
|
1.7
|
|
|
1.8
|
|
|
3.2
|
|
||||
Operating loss
|
(1.2
|
)
|
|
(2.5
|
)
|
|
(1.9
|
)
|
|
(4.3
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense (income), net and other
|
—
|
|
|
3.1
|
|
|
(0.3
|
)
|
|
4.1
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from discontinued operations before income taxes
|
(1.2
|
)
|
|
(5.6
|
)
|
|
(1.6
|
)
|
|
(8.4
|
)
|
||||
Income tax provision
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
||||
Net loss from discontinued operations, net of tax
|
$
|
(1.2
|
)
|
|
$
|
(5.4
|
)
|
|
$
|
(1.6
|
)
|
|
$
|
(8.2
|
)
|
(in millions)
|
North America
|
|
International
|
|
Consolidated
|
||||||
Balance as of December 31, 2018
|
$
|
571.1
|
|
|
151.9
|
|
|
$
|
723.0
|
|
|
Goodwill resulting from acquisitions
|
2.1
|
|
|
5.4
|
|
|
7.5
|
|
|||
Foreign currency translation and other
|
2.5
|
|
|
(0.7
|
)
|
|
1.8
|
|
|||
Balance as of June 30, 2019
|
$
|
575.7
|
|
|
$
|
156.6
|
|
|
$
|
732.3
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|
|
||||||||
(in millions, except percentages)
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Maturity Date
|
||||
2016 Credit Agreement
|
|
|
|
|
|
|
|
|
|
||||
Term A Facility
|
$
|
435.0
|
|
|
(1)
|
|
$
|
525.0
|
|
|
(2)
|
|
April 6, 2021
|
Revolver
|
—
|
|
|
(1)
|
|
—
|
|
|
(2)
|
|
April 6, 2021
|
||
2026 Senior Notes
|
600.0
|
|
|
5.500%
|
|
600.0
|
|
|
5.500%
|
|
June 15, 2026
|
||
2023 Senior Notes
|
450.0
|
|
|
5.625%
|
|
450.0
|
|
|
5.625%
|
|
October 15, 2023
|
||
Securitized debt
|
93.9
|
|
|
(3)
|
|
9.1
|
|
|
(3)
|
|
April 6, 2021
|
||
Finance/capital lease obligations
(4)
|
65.9
|
|
|
|
|
66.7
|
|
|
|
|
Various
|
||
Other
|
7.7
|
|
|
|
|
3.0
|
|
|
|
|
Various
|
||
Total debt
|
1,652.5
|
|
|
|
|
1,653.8
|
|
|
|
|
|
||
Less: deferred financing costs
|
6.9
|
|
|
|
|
7.6
|
|
|
|
|
|
||
Total debt, net
|
1,645.6
|
|
|
|
|
1,646.2
|
|
|
|
|
|
||
Less: current portion
|
60.1
|
|
|
|
|
47.1
|
|
|
|
|
|
||
Total long-term debt, net
|
$
|
1,585.5
|
|
|
|
|
$
|
1,599.1
|
|
|
|
|
|
(1)
|
Interest at LIBOR plus applicable margin of 1.75% as of June 30, 2019.
|
(2)
|
Interest at LIBOR plus applicable margin of 2.00% as of December 31, 2018.
|
(3)
|
Interest at one month LIBOR index plus 80 basis points.
|
(4)
|
Finance/capital lease obligations are a non-cash financing activity.
|
|
|
Fair Value
|
||||||
(in millions)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
2023 Senior Notes
|
|
$
|
466.2
|
|
|
$
|
435.6
|
|
2026 Senior Notes
|
|
623.4
|
|
|
549.3
|
|
(in millions)
|
|
|
|
June 30, 2019
|
||
Assets
|
|
|
|
|
||
Operating lease assets
|
|
Operating lease right-of-use assets
|
|
$
|
228.1
|
|
Finance lease assets
|
|
Property, plant and equipment, net
|
|
57.3
|
|
|
Total leased assets
|
|
|
|
$
|
285.4
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
||
Short-term:
|
|
|
|
|
||
Operating lease obligations
|
|
Accrued expenses and other current liabilities
|
|
$
|
49.0
|
|
Finance lease obligations
|
|
Current portion of long-term debt
|
|
7.5
|
|
|
Long-term:
|
|
|
|
|
||
Operating lease obligations
|
|
Long-term operating lease obligations
|
|
186.7
|
|
|
Finance lease obligations
|
|
Long-term debt, net
|
|
58.4
|
|
|
Total lease obligations
|
|
|
|
$
|
301.6
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
(in millions)
|
|
June 30, 2019
|
|
June 30, 2019
|
||||
Operating lease expense
(1)
|
|
$
|
22.2
|
|
|
$
|
41.2
|
|
Finance lease expense:
|
|
|
|
|
||||
Amortization of right-of-use assets
|
|
2.3
|
|
|
4.2
|
|
||
Interest on lease obligations
|
|
1.2
|
|
|
2.4
|
|
||
Total lease expense
|
|
$
|
25.7
|
|
|
$
|
47.8
|
|
(1)
|
Includes short-term leases and variable lease expenses, which are immaterial.
|
(in millions)
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
Year Ended December 31,
|
|
|
|
|
|
|
||||||
2019 (excluding the six months ended June 30, 2019)
|
|
$
|
32.1
|
|
|
$
|
5.8
|
|
|
$
|
37.9
|
|
2020
|
|
56.0
|
|
|
11.7
|
|
|
67.7
|
|
|||
2021
|
|
47.3
|
|
|
11.4
|
|
|
58.7
|
|
|||
2022
|
|
39.9
|
|
|
9.5
|
|
|
49.4
|
|
|||
2023
|
|
31.0
|
|
|
7.6
|
|
|
38.6
|
|
|||
Thereafter
|
|
75.9
|
|
|
43.3
|
|
|
119.2
|
|
|||
Total lease payments
|
|
282.2
|
|
|
89.3
|
|
|
371.5
|
|
|||
Less: Interest
|
|
46.5
|
|
|
23.4
|
|
|
69.9
|
|
|||
Present value of lease obligations
|
|
$
|
235.7
|
|
|
$
|
65.9
|
|
|
$
|
301.6
|
|
|
|
June 30, 2019
|
|
Weighted average remaining lease term (years):
|
|
|
|
Operating leases
|
|
6.29
|
|
Finance leases
|
|
9.63
|
|
|
|
|
|
Weighted average discount rate:
|
|
|
|
Operating leases
|
|
5.50
|
%
|
Finance leases
|
|
6.32
|
%
|
|
|
Six Months Ended
|
||
(in millions)
|
|
June 30, 2019
|
||
Cash paid for amounts included in the measurement of lease obligations:
|
|
|
||
Operating cash flows paid for operating leases
|
|
$
|
27.8
|
|
Financing cash flows paid for finance leases
|
|
3.3
|
|
|
|
|
|
||
Right-of-use assets obtained in exchange for new operating lease obligations
|
|
$
|
55.0
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Foreign Currency Translation
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
(87.7
|
)
|
|
$
|
(67.8
|
)
|
|
$
|
(91.7
|
)
|
|
$
|
(72.8
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
(1)
|
3.0
|
|
|
(16.1
|
)
|
|
7.0
|
|
|
(11.1
|
)
|
||||
Balance at end of period
|
$
|
(84.7
|
)
|
|
$
|
(83.9
|
)
|
|
$
|
(84.7
|
)
|
|
$
|
(83.9
|
)
|
|
|
|
|
|
|
|
|
||||||||
Pensions
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
(3.6
|
)
|
|
$
|
(3.3
|
)
|
|
$
|
(3.6
|
)
|
|
$
|
(2.7
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Net change from period revaluations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Tax expense
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total other comprehensive income before reclassifications, net of tax
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net amount reclassified to earnings
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
U.S. tax reform - reclassification to retained earnings upon adoption of ASU No. 2018-02
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
||||
Tax benefit
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||
Total amount reclassified from accumulated other comprehensive loss, net of tax
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
||||
Balance at end of period
|
$
|
(3.6
|
)
|
|
$
|
(3.3
|
)
|
|
$
|
(3.6
|
)
|
|
$
|
(3.3
|
)
|
(1)
|
In 2019 and 2018, there were no tax impacts related to foreign currency translation adjustments and no amounts were reclassified to earnings.
|
(2)
|
These amounts were included in the income tax provision in the accompanying Condensed Consolidated Statements of Income.
|
(in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||
Taxes
|
$
|
135.5
|
|
|
$
|
136.8
|
|
Advertising
|
57.3
|
|
|
46.1
|
|
||
Wages and benefits
|
54.3
|
|
|
43.7
|
|
||
Operating lease obligations
|
49.0
|
|
|
—
|
|
||
Sales returns
|
24.6
|
|
|
22.0
|
|
||
Warranty
|
15.5
|
|
|
14.9
|
|
||
Rebates
|
9.2
|
|
|
11.6
|
|
||
Other
|
91.0
|
|
|
84.1
|
|
||
|
$
|
436.4
|
|
|
$
|
359.2
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
PRSU expense
|
$
|
0.4
|
|
|
$
|
0.7
|
|
|
$
|
0.7
|
|
|
$
|
1.5
|
|
Option expense
|
1.2
|
|
|
1.9
|
|
|
2.4
|
|
|
3.8
|
|
||||
RSU/DSU expense
|
5.0
|
|
|
4.2
|
|
|
10.1
|
|
|
7.8
|
|
||||
Total stock-based compensation expense
|
$
|
6.6
|
|
|
$
|
6.8
|
|
|
$
|
13.2
|
|
|
$
|
13.1
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
(in millions, except per common share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations, net of loss attributable to non-controlling interest
|
$
|
42.8
|
|
|
$
|
28.2
|
|
|
$
|
71.6
|
|
|
$
|
54.1
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|||||
Denominator for basic earnings per common share-weighted average shares
|
54.7
|
|
|
54.4
|
|
|
54.7
|
|
|
54.4
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Employee stock-based compensation
|
1.3
|
|
|
0.5
|
|
|
0.9
|
|
|
0.6
|
|
||||
Denominator for diluted earnings per common share-adjusted weighted average shares
|
56.0
|
|
|
54.9
|
|
|
55.6
|
|
|
55.0
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share for continuing operations
|
$
|
0.78
|
|
|
$
|
0.52
|
|
|
$
|
1.31
|
|
|
$
|
0.99
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per common share for continuing operations
|
$
|
0.76
|
|
|
$
|
0.52
|
|
|
$
|
1.29
|
|
|
$
|
0.98
|
|
(in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||
North America
|
$
|
3,129.5
|
|
|
$
|
2,788.1
|
|
International
|
631.2
|
|
|
604.8
|
|
||
Corporate
|
$
|
525.7
|
|
|
$
|
569.0
|
|
Inter-segment eliminations
|
(1,239.7
|
)
|
|
(1,246.5
|
)
|
||
Total assets
|
$
|
3,046.7
|
|
|
$
|
2,715.4
|
|
(in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||
North America
|
$
|
324.3
|
|
|
$
|
317.5
|
|
International
|
52.9
|
|
|
51.1
|
|
||
Corporate
|
52.8
|
|
|
52.2
|
|
||
Total property, plant and equipment, net
|
$
|
430.0
|
|
|
$
|
420.8
|
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
588.1
|
|
|
$
|
134.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
722.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
0.9
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
(1.0
|
)
|
|
$
|
—
|
|
Inter-segment royalty expense (income)
|
1.0
|
|
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gross profit
|
240.0
|
|
|
73.4
|
|
|
—
|
|
|
—
|
|
|
313.4
|
|
|||||
Operating income (loss)
|
80.1
|
|
|
27.4
|
|
|
(26.5
|
)
|
|
—
|
|
|
81.0
|
|
|||||
Income (loss) from continuing operations before income taxes
|
78.6
|
|
|
23.2
|
|
|
(43.3
|
)
|
|
—
|
|
|
58.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
(1)
|
$
|
15.6
|
|
|
$
|
3.5
|
|
|
$
|
9.5
|
|
|
$
|
—
|
|
|
$
|
28.6
|
|
Capital expenditures
|
14.4
|
|
|
3.1
|
|
|
3.3
|
|
|
—
|
|
|
20.8
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
527.8
|
|
|
$
|
132.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
659.9
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
|
$
|
—
|
|
Inter-segment royalty expense (income)
|
0.8
|
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gross profit
|
203.4
|
|
|
69.4
|
|
|
—
|
|
|
—
|
|
|
272.8
|
|
|||||
Operating income (loss)
|
64.2
|
|
|
20.9
|
|
|
(27.1
|
)
|
|
—
|
|
|
58.0
|
|
|||||
Income (loss) from continuing operations before income taxes
|
63.4
|
|
|
18.3
|
|
|
(46.3
|
)
|
|
—
|
|
|
35.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
(1)
|
$
|
13.8
|
|
|
$
|
3.3
|
|
|
$
|
10.7
|
|
|
$
|
—
|
|
|
$
|
27.8
|
|
Capital expenditures
|
14.1
|
|
|
3.1
|
|
|
1.5
|
|
|
—
|
|
|
18.7
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
1,132.1
|
|
|
$
|
281.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,413.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
1.9
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
(2.3
|
)
|
|
$
|
—
|
|
Inter-segment royalty expense (income)
|
2.0
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gross profit
|
444.4
|
|
|
150.8
|
|
|
—
|
|
|
—
|
|
|
595.2
|
|
|||||
Operating income (loss)
|
144.4
|
|
|
52.6
|
|
|
(55.5
|
)
|
|
—
|
|
|
141.5
|
|
|||||
Income (loss) from continuing operations before income taxes
|
141.0
|
|
|
53.0
|
|
|
(89.6
|
)
|
|
—
|
|
|
104.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
(1)
|
$
|
30.6
|
|
|
$
|
6.8
|
|
|
$
|
19.3
|
|
|
$
|
—
|
|
|
$
|
56.7
|
|
Capital expenditures
|
27.3
|
|
|
6.0
|
|
|
6.6
|
|
|
—
|
|
|
39.9
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
(in millions)
|
North America
|
|
International
|
|
Corporate
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
1,012.8
|
|
|
$
|
284.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,297.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Inter-segment sales
|
$
|
1.2
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
(1.4
|
)
|
|
$
|
—
|
|
Inter-segment royalty expense (income)
|
1.3
|
|
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gross profit
|
387.4
|
|
|
150.1
|
|
|
—
|
|
|
—
|
|
|
537.5
|
|
|||||
Operating income (loss)
|
118.1
|
|
|
49.7
|
|
|
(54.1
|
)
|
|
—
|
|
|
113.7
|
|
|||||
Income (loss) from continuing operations before income taxes
|
115.2
|
|
|
47.6
|
|
|
(91.8
|
)
|
|
—
|
|
|
71.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
(1)
|
$
|
27.2
|
|
|
$
|
6.9
|
|
|
$
|
20.8
|
|
|
$
|
—
|
|
|
$
|
54.9
|
|
Capital expenditures
|
30.9
|
|
|
6.0
|
|
|
3.6
|
|
|
—
|
|
|
40.5
|
|
(1)
|
Depreciation and amortization includes stock-based compensation amortization expense.
|
(in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||
United States
|
$
|
358.4
|
|
|
$
|
350.7
|
|
Canada
|
18.7
|
|
|
19.1
|
|
||
Other International
|
52.9
|
|
|
51.0
|
|
||
Total property, plant and equipment, net
|
$
|
430.0
|
|
|
$
|
420.8
|
|
Total International
|
$
|
71.6
|
|
|
$
|
70.1
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
United States
|
$
|
533.7
|
|
|
$
|
477.7
|
|
|
$
|
1,030.9
|
|
|
$
|
917.9
|
|
Canada
|
54.4
|
|
|
50.1
|
|
|
101.2
|
|
|
94.9
|
|
||||
Other International
|
134.7
|
|
|
132.1
|
|
|
281.6
|
|
|
284.5
|
|
||||
Total net sales
|
$
|
722.8
|
|
|
$
|
659.9
|
|
|
$
|
1,413.7
|
|
|
$
|
1,297.3
|
|
Total International
|
$
|
189.1
|
|
|
$
|
182.2
|
|
|
$
|
382.8
|
|
|
$
|
379.4
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Reclassifications and Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
550.3
|
|
|
$
|
187.9
|
|
|
$
|
(15.4
|
)
|
|
$
|
722.8
|
|
Cost of sales
|
—
|
|
|
318.0
|
|
|
106.8
|
|
|
(15.4
|
)
|
|
409.4
|
|
|||||
Gross profit
|
—
|
|
|
232.3
|
|
|
81.1
|
|
|
—
|
|
|
313.4
|
|
|||||
Selling and marketing expenses
|
2.7
|
|
|
114.8
|
|
|
45.8
|
|
|
—
|
|
|
163.3
|
|
|||||
General, administrative and other expenses
|
4.2
|
|
|
55.8
|
|
|
13.9
|
|
|
(1.2
|
)
|
|
72.7
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|
—
|
|
|
(3.6
|
)
|
|||||
Operating (loss) income
|
(6.9
|
)
|
|
61.7
|
|
|
25.0
|
|
|
1.2
|
|
|
81.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Third party interest expense, net
|
14.1
|
|
|
6.9
|
|
|
1.5
|
|
|
—
|
|
|
22.5
|
|
|||||
Intercompany interest (income) expense, net
|
(2.5
|
)
|
|
3.2
|
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|||||
Interest expense, net
|
11.6
|
|
|
10.1
|
|
|
0.8
|
|
|
—
|
|
|
22.5
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(3.7
|
)
|
|
3.7
|
|
|
—
|
|
|
—
|
|
|||||
Total other expense, net
|
11.6
|
|
|
6.4
|
|
|
4.5
|
|
|
—
|
|
|
22.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
56.3
|
|
|
14.3
|
|
|
—
|
|
|
(70.6
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
37.8
|
|
|
69.6
|
|
|
20.5
|
|
|
(69.4
|
)
|
|
58.5
|
|
|||||
Income tax benefit (provision)
|
3.7
|
|
|
(13.3
|
)
|
|
(6.2
|
)
|
|
—
|
|
|
(15.8
|
)
|
|||||
Income from continuing operations
|
41.5
|
|
|
56.3
|
|
|
14.3
|
|
|
(69.4
|
)
|
|
42.7
|
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
(1.2
|
)
|
|||||
Net income before non-controlling interest
|
41.5
|
|
|
56.3
|
|
|
14.3
|
|
|
(70.6
|
)
|
|
41.5
|
|
|||||
Less: Net income attributable to non-controlling interest
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
(0.1
|
)
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
41.6
|
|
|
$
|
56.3
|
|
|
$
|
14.4
|
|
|
$
|
(70.7
|
)
|
|
$
|
41.6
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
44.6
|
|
|
$
|
55.5
|
|
|
$
|
18.2
|
|
|
$
|
(73.7
|
)
|
|
$
|
44.6
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Reclassifications and Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
482.7
|
|
|
$
|
202.9
|
|
|
$
|
(25.7
|
)
|
|
$
|
659.9
|
|
Cost of sales
|
—
|
|
|
289.4
|
|
|
120.1
|
|
|
(22.4
|
)
|
|
387.1
|
|
|||||
Gross profit
|
—
|
|
|
193.3
|
|
|
82.8
|
|
|
(3.3
|
)
|
|
272.8
|
|
|||||
Selling and marketing expenses
|
2.1
|
|
|
103.5
|
|
|
51.8
|
|
|
(4.1
|
)
|
|
153.3
|
|
|||||
General, administrative and other expenses
|
5.0
|
|
|
45.6
|
|
|
16.4
|
|
|
(1.7
|
)
|
|
65.3
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
(3.8
|
)
|
|||||
Operating (loss) income
|
(7.1
|
)
|
|
44.2
|
|
|
18.4
|
|
|
2.5
|
|
|
58.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Third party interest expense, net
|
14.9
|
|
|
7.5
|
|
|
2.1
|
|
|
(1.3
|
)
|
|
23.2
|
|
|||||
Intercompany interest (income) expense, net
|
(1.7
|
)
|
|
2.1
|
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|||||
Interest expense, net
|
13.2
|
|
|
9.6
|
|
|
1.7
|
|
|
(1.3
|
)
|
|
23.2
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(3.5
|
)
|
|
4.7
|
|
|
(1.8
|
)
|
|
(0.6
|
)
|
|||||
Total other expense, net
|
13.2
|
|
|
6.1
|
|
|
6.4
|
|
|
(3.1
|
)
|
|
22.6
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
37.2
|
|
|
7.8
|
|
|
—
|
|
|
(45.0
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
16.9
|
|
|
45.9
|
|
|
12.0
|
|
|
(39.4
|
)
|
|
35.4
|
|
|||||
Income tax benefit (provision)
|
4.3
|
|
|
(8.7
|
)
|
|
(4.2
|
)
|
|
(0.2
|
)
|
|
(8.8
|
)
|
|||||
Income from continuing operations
|
21.2
|
|
|
37.2
|
|
|
7.8
|
|
|
(39.6
|
)
|
|
26.6
|
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.4
|
)
|
|
(5.4
|
)
|
|||||
Net income before non-controlling interest
|
21.2
|
|
|
37.2
|
|
|
7.8
|
|
|
(45.0
|
)
|
|
21.2
|
|
|||||
Less: Net loss attributable to non-controlling interest
|
(1.6
|
)
|
|
—
|
|
|
(1.6
|
)
|
|
1.6
|
|
|
(1.6
|
)
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
22.8
|
|
|
$
|
37.2
|
|
|
$
|
9.4
|
|
|
$
|
(46.6
|
)
|
|
$
|
22.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
6.7
|
|
|
$
|
36.9
|
|
|
$
|
(6.7
|
)
|
|
$
|
(30.2
|
)
|
|
$
|
6.7
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Reclassifications and Eliminations
|
|
Consolidated
|
|||||||||||
Net sales
|
$
|
—
|
|
|
$
|
1,064.2
|
|
|
$
|
381.2
|
|
|
$
|
(31.7
|
)
|
|
$
|
1,413.7
|
|
|
Cost of sales
|
—
|
|
|
634.3
|
|
|
215.9
|
|
|
(31.7
|
)
|
|
818.5
|
|
||||||
Gross profit
|
—
|
|
|
429.9
|
|
|
165.3
|
|
|
—
|
|
|
595.2
|
|
||||||
Selling and marketing expenses
|
5.5
|
|
|
216.1
|
|
|
95.3
|
|
|
(0.1
|
)
|
|
316.8
|
|
||||||
General, administrative and other expenses
|
8.5
|
|
|
108.5
|
|
|
28.2
|
|
|
(1.8
|
)
|
|
143.4
|
|
||||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(6.5
|
)
|
|
—
|
|
|
(6.5
|
)
|
||||||
Operating (loss) income
|
(14.0
|
)
|
|
105.3
|
|
|
48.3
|
|
|
1.9
|
|
|
141.5
|
|
||||||
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Third party interest expense, net
|
28.2
|
|
|
14.5
|
|
|
2.2
|
|
|
—
|
|
|
44.9
|
|
||||||
Intercompany interest (income) expense, net
|
(5.1
|
)
|
|
5.4
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
||||||
Interest expense, net
|
23.1
|
|
|
19.9
|
|
|
1.9
|
|
|
—
|
|
|
44.9
|
|
||||||
Other income, net
|
—
|
|
|
(6.6
|
)
|
|
(1.5
|
)
|
|
0.3
|
|
—
|
|
(7.8
|
)
|
|||||
Total other expense, net
|
23.1
|
|
|
13.3
|
|
|
0.4
|
|
|
0.3
|
|
|
37.1
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income from equity investees
|
100.5
|
|
|
36.4
|
|
|
—
|
|
|
(136.9
|
)
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income from continuing operations before income taxes
|
63.4
|
|
|
128.4
|
|
|
47.9
|
|
|
(135.3
|
)
|
|
104.4
|
|
||||||
Income tax benefit (provision)
|
6.7
|
|
|
(27.9
|
)
|
|
(11.5
|
)
|
|
—
|
|
|
(32.7
|
)
|
||||||
Income from continuing operations
|
70.1
|
|
|
100.5
|
|
|
36.4
|
|
|
(135.3
|
)
|
|
71.7
|
|
||||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
(1.6
|
)
|
||||||
Net income before non-controlling interest
|
70.1
|
|
|
100.5
|
|
|
36.4
|
|
|
(136.9
|
)
|
|
70.1
|
|
||||||
Less: Net income attributable to non-controlling interest
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
0.1
|
|
||||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
70.0
|
|
|
$
|
100.5
|
|
|
$
|
36.3
|
|
|
$
|
(136.8
|
)
|
|
$
|
70.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
77.0
|
|
|
$
|
102.0
|
|
|
$
|
41.8
|
|
|
$
|
(143.8
|
)
|
|
$
|
77.0
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Reclassifications and Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
923.3
|
|
|
$
|
427.7
|
|
|
$
|
(53.7
|
)
|
|
$
|
1,297.3
|
|
Cost of sales
|
—
|
|
|
555.8
|
|
|
251.2
|
|
|
(47.2
|
)
|
|
759.8
|
|
|||||
Gross profit
|
—
|
|
|
367.5
|
|
|
176.5
|
|
|
(6.5
|
)
|
|
537.5
|
|
|||||
Selling and marketing expenses
|
4.0
|
|
|
196.6
|
|
|
105.7
|
|
|
(7.6
|
)
|
|
298.7
|
|
|||||
General, administrative and other expenses
|
9.7
|
|
|
93.0
|
|
|
33.3
|
|
|
(3.2
|
)
|
|
132.8
|
|
|||||
Equity income in earnings of unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(7.7
|
)
|
|
—
|
|
|
(7.7
|
)
|
|||||
Operating (loss) income
|
(13.7
|
)
|
|
77.9
|
|
|
45.2
|
|
|
4.3
|
|
|
113.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Third party interest expense, net
|
29.9
|
|
|
14.5
|
|
|
3.0
|
|
|
(1.5
|
)
|
|
45.9
|
|
|||||
Intercompany interest (income) expense, net
|
(3.6
|
)
|
|
3.9
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|||||
Interest expense, net
|
26.3
|
|
|
18.4
|
|
|
2.7
|
|
|
(1.5
|
)
|
|
45.9
|
|
|||||
Other (income) expense, net
|
—
|
|
|
(5.8
|
)
|
|
5.2
|
|
|
(2.6
|
)
|
|
(3.2
|
)
|
|||||
Total other expense, net
|
26.3
|
|
|
12.6
|
|
|
7.9
|
|
|
(4.1
|
)
|
|
42.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from equity investees
|
76.3
|
|
|
26.8
|
|
|
—
|
|
|
(103.1
|
)
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
36.3
|
|
|
92.1
|
|
|
37.3
|
|
|
(94.7
|
)
|
|
71.0
|
|
|||||
Income tax benefit (provision)
|
7.7
|
|
|
(15.8
|
)
|
|
(10.5
|
)
|
|
(0.2
|
)
|
|
(18.8
|
)
|
|||||
Income from continuing operations
|
44.0
|
|
|
76.3
|
|
|
26.8
|
|
|
(94.9
|
)
|
|
52.2
|
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.2
|
)
|
|
(8.2
|
)
|
|||||
Net income before non-controlling interest
|
44.0
|
|
|
76.3
|
|
|
26.8
|
|
|
(103.1
|
)
|
|
44.0
|
|
|||||
Less: Net loss attributable to non-controlling interest
|
(1.9
|
)
|
|
—
|
|
|
(1.9
|
)
|
|
1.9
|
|
|
(1.9
|
)
|
|||||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
45.9
|
|
|
$
|
76.3
|
|
|
$
|
28.7
|
|
|
$
|
(105.0
|
)
|
|
$
|
45.9
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income attributable to Tempur Sealy International, Inc.
|
$
|
34.2
|
|
|
$
|
75.4
|
|
|
$
|
17.6
|
|
|
$
|
(93.0
|
)
|
|
$
|
34.2
|
|
|
Tempur Sealy International, Inc. (Ultimate Parent)
|
|
Combined Guarantor Subsidiaries
|
|
Combined Non-Guarantor Subsidiaries
|
|
Reclassifications and Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
13.5
|
|
|
$
|
24.8
|
|
|
$
|
—
|
|
|
$
|
38.3
|
|
Accounts receivable, net
|
0.1
|
|
|
17.0
|
|
|
310.2
|
|
|
59.0
|
|
|
386.3
|
|
|||||
Inventories
|
—
|
|
|
180.2
|
|
|
62.9
|
|
|
—
|
|
|
243.1
|
|
|||||
Prepaid expenses and other current assets
|
286.3
|
|
|
61.1
|
|
|
159.3
|
|
|
(282.7
|
)
|
|
224.0
|
|
|||||
Total Current Assets
|
286.4
|
|
|
271.8
|
|
|
557.2
|
|
|
(223.7
|
)
|
|
891.7
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
358.4
|
|
|
71.6
|
|
|
—
|
|
|
430.0
|
|
|||||
Goodwill
|
—
|
|
|
510.9
|
|
|
221.4
|
|
|
—
|
|
|
732.3
|
|
|||||
Other intangible assets, net
|
—
|
|
|
570.8
|
|
|
79.8
|
|
|
—
|
|
|
650.6
|
|
|||||
Operating lease right-of-use assets
|
—
|
|
|
179.7
|
|
|
48.4
|
|
|
—
|
|
|
228.1
|
|
|||||
Deferred income taxes
|
14.1
|
|
|
—
|
|
|
12.6
|
|
|
(14.2
|
)
|
|
12.5
|
|
|||||
Other non-current assets
|
—
|
|
|
53.9
|
|
|
47.6
|
|
|
—
|
|
|
101.5
|
|
|||||
Net investment in subsidiaries
|
752.7
|
|
|
184.2
|
|
|
—
|
|
|
(936.9
|
)
|
|
—
|
|
|||||
Due from affiliates
|
423.0
|
|
|
152.8
|
|
|
13.2
|
|
|
(589.0
|
)
|
|
—
|
|
|||||
Total Assets
|
$
|
1,476.2
|
|
|
$
|
2,282.5
|
|
|
$
|
1,051.8
|
|
|
$
|
(1,763.8
|
)
|
|
$
|
3,046.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable
|
$
|
—
|
|
|
$
|
126.2
|
|
|
$
|
50.3
|
|
|
$
|
59.0
|
|
|
$
|
235.5
|
|
Accrued expenses and other current liabilities
|
6.8
|
|
|
217.2
|
|
|
212.4
|
|
|
—
|
|
|
436.4
|
|
|||||
Current portion of long-term debt
|
—
|
|
|
52.4
|
|
|
7.7
|
|
|
—
|
|
|
60.1
|
|
|||||
Income taxes payable
|
—
|
|
|
279.9
|
|
|
9.5
|
|
|
(282.7
|
)
|
|
6.7
|
|
|||||
Total Current Liabilities
|
6.8
|
|
|
675.7
|
|
|
279.9
|
|
|
(223.7
|
)
|
|
738.7
|
|
|||||
Long-term debt, net
|
1,043.7
|
|
|
447.7
|
|
|
94.1
|
|
|
—
|
|
|
1,585.5
|
|
|||||
Long-term operating lease obligations
|
—
|
|
|
153.3
|
|
|
33.4
|
|
|
—
|
|
|
186.7
|
|
|||||
Deferred income taxes
|
—
|
|
|
115.2
|
|
|
16.0
|
|
|
(14.2
|
)
|
|
117.0
|
|
|||||
Other non-current liabilities
|
1.3
|
|
|
56.5
|
|
|
55.1
|
|
|
—
|
|
|
112.9
|
|
|||||
Due to affiliates
|
118.5
|
|
|
81.4
|
|
|
389.1
|
|
|
(589.0
|
)
|
|
—
|
|
|||||
Total Liabilities
|
1,170.3
|
|
|
1,529.8
|
|
|
867.6
|
|
|
(826.9
|
)
|
|
2,740.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Stockholders' Equity
|
305.9
|
|
|
752.7
|
|
|
184.2
|
|
|
(936.9
|
)
|
|
305.9
|
|
|||||
Total Liabilities and Stockholders’ Equity
|
$
|
1,476.2
|
|
|
$
|
2,282.5
|
|
|
$
|
1,051.8
|
|
|
$
|
(1,763.8
|
)
|
|
$
|
3,046.7
|
|
•
|
an overview of our business;
|
•
|
factors impacting results of operations;
|
•
|
results of operations including our net sales and costs in the periods presented as well as changes between periods;
|
•
|
expected sources of liquidity for future operations; and
|
•
|
our use of certain non-GAAP financial measures.
|
•
|
Total net sales
increased
9.5%
to
$722.8 million
from
$659.9 million
in the
second
quarter of
2018
. On a constant currency basis, which is a non-GAAP financial measure, total net sales
increased
10.8%
, with an
increase
of
11.8%
in the North America business segment and an
increase
of
6.9%
in the International business segment.
|
•
|
Gross margin was
43.4%
as compared to
41.3%
in the
second
quarter of
2018
.
|
•
|
Operating income
increased
39.7%
to
$81.0 million
as compared to
$58.0 million
in the
second
quarter of
2018
. Adjusted operating income, which is a non-GAAP financial measure,
increased
32.2%
to
$83.8 million
as compared to
$63.4 million
in the
second
quarter of
2018
.
|
•
|
Net income
increased
82.5%
to
$41.6 million
as compared to
$22.8 million
in the
second
quarter of
2018
. Adjusted net income, which is a non-GAAP financial measure,
increased
41.1%
to
$44.3 million
as compared to
$31.4 million
in the
second
quarter of
2018
.
|
•
|
Earnings before interest, tax, depreciation and amortization ("EBITDA"), which is a non-GAAP financial measure,
increased
32.0%
to
$109.0 million
as compared to
$82.6 million
for the
second
quarter of
2018
. Adjusted EBITDA, which is a non-GAAP financial measure,
increased
21.0%
to
$113.0 million
as compared to
$93.4 million
in the
second
quarter of
2018
.
|
•
|
Earnings per diluted share ("EPS")
increased
76.2%
to
$0.74
as compared to
$0.42
in the
second
quarter of
2018
. Adjusted EPS, which is a non-GAAP financial measure,
increased
38.6%
to
$0.79
as compared to
$0.57
in the
second
quarter of
2018
.
|
|
Three Months Ended June 30,
|
||||||||||||
(in millions, except percentages and per share amounts)
|
2019
|
|
2018
|
||||||||||
Net sales
|
$
|
722.8
|
|
|
100.0
|
%
|
|
$
|
659.9
|
|
|
100.0
|
%
|
Cost of sales
|
409.4
|
|
|
56.6
|
|
|
387.1
|
|
|
58.7
|
|
||
Gross profit
|
313.4
|
|
|
43.4
|
|
|
272.8
|
|
|
41.3
|
|
||
Selling and marketing expenses
|
163.3
|
|
|
22.6
|
|
|
153.3
|
|
|
23.2
|
|
||
General, administrative and other expenses
|
72.7
|
|
|
10.1
|
|
|
65.3
|
|
|
9.9
|
|
||
Equity income in earnings of unconsolidated affiliates
|
(3.6
|
)
|
|
(0.5
|
)
|
|
(3.8
|
)
|
|
(0.6
|
)
|
||
Operating income
|
81.0
|
|
|
11.2
|
|
|
58.0
|
|
|
8.8
|
|
||
|
|
|
|
|
|
|
|
||||||
Other expense, net:
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
22.5
|
|
|
3.1
|
|
|
23.2
|
|
|
3.5
|
|
||
Other income, net
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
(0.1
|
)
|
||
Total other expense, net
|
22.5
|
|
|
3.1
|
|
|
22.6
|
|
|
3.4
|
|
||
|
|
|
|
|
|
|
|
||||||
Income from continuing operations before income taxes
|
58.5
|
|
|
8.1
|
|
|
35.4
|
|
|
5.4
|
|
||
Income tax provision
|
(15.8
|
)
|
|
(2.2
|
)
|
|
(8.8
|
)
|
|
(1.3
|
)
|
||
Income from continuing operations
|
42.7
|
|
|
5.9
|
|
|
26.6
|
|
|
4.0
|
|
||
Loss from discontinued operations, net of tax
|
(1.2
|
)
|
|
(0.2
|
)
|
|
(5.4
|
)
|
|
(0.8
|
)
|
||
Net income before non-controlling interest
|
41.5
|
|
|
5.7
|
|
|
21.2
|
|
|
3.2
|
|
||
Less: Net loss attributable to non-controlling interest
|
(0.1
|
)
|
|
—
|
|
|
(1.6
|
)
|
|
(0.2
|
)
|
||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
41.6
|
|
|
5.8
|
%
|
|
$
|
22.8
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
Basic
|
|
|
|
|
|
|
|
||||||
Earnings per share for continuing operations
|
$
|
0.78
|
|
|
|
|
$
|
0.52
|
|
|
|
||
Loss per share for discontinued operations
|
(0.02
|
)
|
|
|
|
(0.10
|
)
|
|
|
||||
Earnings per share
|
$
|
0.76
|
|
|
|
|
$
|
0.42
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
|
|
||||||
Earnings per share for continuing operations
|
$
|
0.76
|
|
|
|
|
$
|
0.52
|
|
|
|
||
Loss per share for discontinued operations
|
(0.02
|
)
|
|
|
|
(0.10
|
)
|
|
|
||||
Earnings per share
|
$
|
0.74
|
|
|
|
|
$
|
0.42
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||
Basic
|
54.7
|
|
|
|
|
54.4
|
|
|
|
||||
Diluted
|
56.0
|
|
|
|
|
54.9
|
|
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
||||||||||||||||||
Net sales by channel
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wholesale channel
|
$
|
632.2
|
|
|
$
|
601.6
|
|
|
$
|
528.5
|
|
|
$
|
494.3
|
|
|
$
|
103.7
|
|
|
$
|
107.3
|
|
Direct channel
|
90.6
|
|
|
58.3
|
|
|
59.6
|
|
|
33.5
|
|
|
31.0
|
|
|
24.8
|
|
||||||
Total net sales
|
$
|
722.8
|
|
|
$
|
659.9
|
|
|
$
|
588.1
|
|
|
$
|
527.8
|
|
|
$
|
134.7
|
|
|
$
|
132.1
|
|
•
|
North America
net sales
increased
$60.3 million
, or
11.4%
. Net sales in the Wholesale channel
increased
$34.2 million
, or
6.9%
, driven by new Tempur product introductions. Net sales in our Direct channel increased
$26.1 million
, or
77.9%
, primarily driven by growth from our company-owned stores, including the Sleep Outfitters Acquisition, and our e-commerce business. On a constant currency basis, North America net sales
increased
11.8%
.
|
•
|
International
net sales
increased
$2.6 million
, or
2.0%
. On a constant currency basis, International net sales
increased
6.9%
, driven primarily by Direct channel growth. Net sales in the Wholesale channel
increased
1.2%
on a constant currency basis. Net sales in the Direct channel
increased
31.5%
on a constant currency basis, primarily driven by growth from company-owned stores.
|
|
|
Three Months Ended June 30,
|
|
|
|||||||||||||
|
|
2019
|
|
2018
|
|
|
|||||||||||
(in millions, except percentages)
|
|
Gross Profit
|
|
Gross Margin
|
|
Gross Profit
|
|
Gross Margin
|
|
Margin Change
|
|||||||
North America
|
|
$
|
240.0
|
|
|
40.8
|
%
|
|
$
|
203.4
|
|
|
38.5
|
%
|
|
2.3
|
%
|
International
|
|
73.4
|
|
|
54.5
|
%
|
|
69.4
|
|
|
52.5
|
%
|
|
2.0
|
%
|
||
Consolidated gross margin
|
|
$
|
313.4
|
|
|
43.4
|
%
|
|
$
|
272.8
|
|
|
41.3
|
%
|
|
2.1
|
%
|
•
|
North America
gross margin
improved
230
basis points. The improvement in gross margin was primarily driven by favorable product and brand mix of 140 basis points, favorable pricing of 120 basis points and decreased floor model expenses. These improvements were partially offset by incremental overtime costs at our manufacturing plants due to the higher than expected demand for Sealy products.
|
•
|
International
gross margin
improved
200
basis points. The improvement in gross margin was primarily driven by favorable foreign exchange country mix.
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
|
Corporate
|
||||||||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Advertising expenses
|
$
|
65.4
|
|
|
$
|
66.8
|
|
|
$
|
58.3
|
|
|
$
|
58.4
|
|
|
$
|
7.1
|
|
|
$
|
8.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other selling and marketing expenses
|
97.9
|
|
|
86.5
|
|
|
63.5
|
|
|
51.5
|
|
|
31.7
|
|
|
32.8
|
|
|
2.7
|
|
|
2.2
|
|
||||||||
General, administrative and other expenses
|
72.7
|
|
|
65.3
|
|
|
38.1
|
|
|
29.3
|
|
|
10.8
|
|
|
11.1
|
|
|
23.8
|
|
|
24.9
|
|
||||||||
Total operating expenses
|
$
|
236.0
|
|
|
$
|
218.6
|
|
|
$
|
159.9
|
|
|
$
|
139.2
|
|
|
$
|
49.6
|
|
|
$
|
52.3
|
|
|
$
|
26.5
|
|
|
$
|
27.1
|
|
•
|
North America
operating expenses
increased
$20.7 million
, or
14.9%
, and
increased
80
basis points as a percentage of net sales. Operating expenses increased primarily due to selling and marketing investments, variable compensation expense and incremental operating expense associated with a higher number of company-owned stores. Additionally, we recorded
$1.7 million
of acquisition-related and other costs primarily related to the Sleep Outfitters Acquisition. We expect advertising expenses to increase in subsequent quarters of 2019 now that the Tempur and Stearns & Foster product launches are complete.
|
•
|
International
operating expenses
decreased
$2.7 million
, or
5.2%
, and
decreased
280
basis points as a percentage of net sales. The decrease in operating expenses was primarily driven by decreased advertising costs, offset by an increase in variable compensation expense. Additionally, in the second quarter of 2018, we recognized $3.4 million of costs associated with our International simplification efforts, including headcount reduction, professional fees and store closures, which was not repeated in the same period in 2019.
|
•
|
Corporate
operating expenses
decreased
$0.6 million
, or
2.2%
.
|
|
|
Three Months Ended June 30,
|
|
|
|||||||||||||
|
|
2019
|
|
2018
|
|
|
|||||||||||
(in millions, except percentages)
|
|
Operating Income
|
|
Operating Margin
|
|
Operating Income
|
|
Operating Margin
|
|
Margin Change
|
|||||||
North America
|
|
$
|
80.1
|
|
|
13.6
|
%
|
|
$
|
64.2
|
|
|
12.2
|
%
|
|
1.4
|
%
|
International
|
|
27.4
|
|
|
20.3
|
%
|
|
20.9
|
|
|
15.8
|
%
|
|
4.5
|
%
|
||
|
|
107.5
|
|
|
|
|
85.1
|
|
|
|
|
|
|||||
Corporate expenses
|
|
(26.5
|
)
|
|
|
|
(27.1
|
)
|
|
|
|
|
|||||
Total operating income
|
|
$
|
81.0
|
|
|
11.2
|
%
|
|
$
|
58.0
|
|
|
8.8
|
%
|
|
2.4
|
%
|
•
|
North America
operating income
increased
$15.9 million
and operating margin
improved
140
basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 230 basis points, which was partially offset by incremental operating expense associated with a higher number of company-owned stores.
|
•
|
International
operating income
increased
$6.5 million
and operating margin
improved
450
basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 200 basis points and advertising expense leverage. Additionally, in the second quarter of 2018, we recognized
$3.4 million
of costs associated with our International simplification efforts, including headcount reduction, professional fees and store closures, which was not repeated in the same period in 2019.
|
•
|
Corporate
operating expenses
decreased
$0.6 million
, which
positively
impacted our consolidated operating margin by
10
basis points.
|
|
Three Months Ended June 30,
|
|||||||||
(in millions, except percentages)
|
2019
|
|
2018
|
|
% Change
|
|||||
Interest expense, net
|
$
|
22.5
|
|
|
$
|
23.2
|
|
|
(3.0
|
)%
|
|
|
Three Months Ended June 30,
|
|||||||||
(in millions, except percentages)
|
|
2019
|
|
2018
|
|
% Change
|
|||||
Income tax provision
|
|
$
|
15.8
|
|
|
$
|
8.8
|
|
|
79.5
|
%
|
Effective tax rate
|
|
27.0
|
%
|
|
24.9
|
%
|
|
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions, except percentages and per share amounts)
|
2019
|
|
2018
|
||||||||||
Net sales
|
$
|
1,413.7
|
|
|
100.0
|
%
|
|
$
|
1,297.3
|
|
|
100.0
|
%
|
Cost of sales
|
818.5
|
|
|
57.9
|
|
|
759.8
|
|
|
58.6
|
|
||
Gross profit
|
595.2
|
|
|
42.1
|
|
|
537.5
|
|
|
41.4
|
|
||
Selling and marketing expenses
|
316.8
|
|
|
22.4
|
|
|
298.7
|
|
|
23.0
|
|
||
General, administrative and other expenses
|
143.4
|
|
|
10.1
|
|
|
132.8
|
|
|
10.2
|
|
||
Equity income in earnings of unconsolidated affiliates
|
(6.5
|
)
|
|
(0.5
|
)
|
|
(7.7
|
)
|
|
(0.6
|
)
|
||
Operating income
|
141.5
|
|
|
10.0
|
|
|
113.7
|
|
|
8.8
|
|
||
|
|
|
|
|
|
|
|
|
|||||
Other expense, net:
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
44.9
|
|
|
3.2
|
|
|
45.9
|
|
|
3.5
|
|
||
Other income, net
|
(7.8
|
)
|
|
(0.6
|
)
|
|
(3.2
|
)
|
|
(0.2
|
)
|
||
Total other expense, net
|
37.1
|
|
|
2.6
|
|
|
42.7
|
|
|
3.3
|
|
||
|
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations before income taxes
|
104.4
|
|
|
7.4
|
|
|
71.0
|
|
|
5.5
|
|
||
Income tax provision
|
(32.7
|
)
|
|
(2.3
|
)
|
|
(18.8
|
)
|
|
(1.4
|
)
|
||
Income from continuing operations
|
71.7
|
|
|
5.1
|
|
|
52.2
|
|
|
4.0
|
|
||
Loss from discontinued operations, net of tax
|
(1.6
|
)
|
|
(0.1
|
)
|
|
(8.2
|
)
|
|
(0.6
|
)
|
||
Net income before non-controlling interest
|
70.1
|
|
|
5.0
|
|
|
44.0
|
|
|
3.4
|
|
||
Less: Net income (loss) attributable to non-controlling interest
|
0.1
|
|
|
—
|
|
|
(1.9
|
)
|
|
(0.1
|
)
|
||
Net income attributable to Tempur Sealy International, Inc.
|
$
|
70.0
|
|
|
5.0
|
%
|
|
$
|
45.9
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
Basic
|
|
|
|
|
|
|
|
||||||
Earnings per share for continuing operations
|
$
|
1.31
|
|
|
|
|
$
|
0.99
|
|
|
|
||
Loss per share for discontinued operations
|
$
|
(0.03
|
)
|
|
|
|
$
|
(0.15
|
)
|
|
|
||
Earnings per share
|
$
|
1.28
|
|
|
|
|
$
|
0.84
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
|
|
||||||
Earnings per share for continuing operations
|
$
|
1.29
|
|
|
|
|
$
|
0.98
|
|
|
|
||
Loss per share for discontinued operations
|
$
|
(0.03
|
)
|
|
|
|
$
|
(0.15
|
)
|
|
|
||
Earnings per share
|
$
|
1.26
|
|
|
|
|
$
|
0.83
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||
Basic
|
54.7
|
|
|
|
|
54.4
|
|
|
|
||||
Diluted
|
55.6
|
|
|
|
|
55.0
|
|
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
||||||||||||||||||
Net sales by channel
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wholesale channel
|
$
|
1,248.1
|
|
|
$
|
1,184.7
|
|
|
$
|
1,030.3
|
|
|
$
|
948.3
|
|
|
$
|
217.8
|
|
|
$
|
236.4
|
|
Direct channel
|
165.6
|
|
|
112.6
|
|
|
101.8
|
|
|
64.5
|
|
|
63.8
|
|
|
48.1
|
|
||||||
Total net sales
|
$
|
1,413.7
|
|
|
$
|
1,297.3
|
|
|
$
|
1,132.1
|
|
|
$
|
1,012.8
|
|
|
$
|
281.6
|
|
|
$
|
284.5
|
|
•
|
North America
net sales
increased
$119.3 million
, or
11.8%
. Net sales in the Wholesale channel
increased
$82.0 million
, or
8.6%
, driven primarily by new Tempur product introductions. Net sales in our Direct channel
increased
$37.3 million
, or
57.8%
, primarily driven by growth from a higher number of company-owned stores, including the Sleep Outfitters Acquisition, and our e-commerce business. On a constant currency basis, North America net sales
increased
12.2%
.
|
•
|
International
net sales
decreased
$2.9 million
, or
1.0%
. On a constant currency basis, International net sales
increased
4.7%
, driven primarily by Direct channel growth. Net sales in the Wholesale channel
decreased
2.5%
on a constant currency basis, primarily driven by macroeconomic slowdown in Europe. Net sales in the Direct channel
increased
40.1%
on a constant currency basis, primarily driven by growth from company-owned stores.
|
|
|
Six Months Ended June 30,
|
|
|
|||||||||||||
|
|
2019
|
|
2018
|
|
|
|||||||||||
(in millions, except percentages)
|
|
Gross Profit
|
|
Gross Margin
|
|
Gross Profit
|
|
Gross Margin
|
|
Margin Change
|
|||||||
North America
|
|
$
|
444.4
|
|
|
39.3
|
%
|
|
$
|
387.4
|
|
|
38.3
|
%
|
|
1.0
|
%
|
International
|
|
150.8
|
|
|
53.6
|
%
|
|
150.1
|
|
|
52.8
|
%
|
|
0.8
|
%
|
||
Consolidated gross margin
|
|
$
|
595.2
|
|
|
42.1
|
%
|
|
$
|
537.5
|
|
|
41.4
|
%
|
|
0.7
|
%
|
•
|
North America
gross margin
improved
100
basis points. The improvement in gross margin was primarily driven by favorable product and brand mix of 130 basis points and favorable pricing of 120 basis points. These improvements were partially offset by commodity cost inflation, unfavorable channel mix and increased floor model expenses.
|
•
|
International
gross margin
improved
80
basis points. The improvement in gross margin was primarily driven by lower commodity costs.
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
(in millions)
|
Consolidated
|
|
North America
|
|
International
|
|
Corporate
|
||||||||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Advertising expenses
|
$
|
128.0
|
|
|
$
|
129.7
|
|
|
$
|
108.8
|
|
|
$
|
108.5
|
|
|
$
|
19.2
|
|
|
$
|
21.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other selling and marketing expenses
|
188.8
|
|
|
169.0
|
|
|
120.1
|
|
|
100.2
|
|
|
63.2
|
|
|
64.7
|
|
|
5.5
|
|
|
4.1
|
|
||||||||
General, administrative and other expenses
|
143.4
|
|
|
132.8
|
|
|
71.1
|
|
|
60.6
|
|
|
22.3
|
|
|
22.2
|
|
|
50.0
|
|
|
50.0
|
|
||||||||
Total operating expenses
|
$
|
460.2
|
|
|
$
|
431.5
|
|
|
$
|
300.0
|
|
|
$
|
269.3
|
|
|
$
|
104.7
|
|
|
$
|
108.1
|
|
|
$
|
55.5
|
|
|
$
|
54.1
|
|
•
|
North America
operating expenses
increased
$30.7 million
, or
11.4%
, and
decreased
10
basis points as a percentage of net sales. Operating expenses increased primarily due to selling and marketing investments, variable compensation expense and incremental operating expense associated with a higher number of company-owned stores. We expect advertising expenses to increase in subsequent quarters of 2019 now that the Tempur and Stearns & Foster product launches are complete.
|
•
|
International
operating expenses
decreased
$3.4 million
, or
3.1%
and
decreased
80
basis points as a percentage of net sales. The decrease in operating expenses was primarily driven by decreased advertising costs, offset by an increase in variable compensation expense. Additionally, in the second quarter of 2018, we recognized
$3.4 million
of costs associated with our International simplification efforts, including headcount reduction, professional fees and store closures, which were not repeated in the same period in 2019.
|
•
|
Corporate
operating expenses
increased
$1.4 million
, or
2.6%
. The increase in operating expenses is primarily driven by $4.1 million of professional fees primarily related to the Sleep Outfitters Acquisition. Additionally, in the second quarter of 2018, we recorded
$2.0 million
of professional fees associated with our International simplification efforts, which were not repeated in the same period in 2019.
|
|
|
Six Months Ended June 30,
|
|
|
|||||||||||||
|
|
2019
|
|
2018
|
|
|
|||||||||||
(in millions, except percentages)
|
|
Operating Income
|
|
Operating Margin
|
|
Operating Income
|
|
Operating Margin
|
|
Margin Change
|
|||||||
North America
|
|
$
|
144.4
|
|
|
12.8
|
%
|
|
$
|
118.1
|
|
|
11.7
|
%
|
|
1.1
|
%
|
International
|
|
52.6
|
|
|
18.7
|
%
|
|
49.7
|
|
|
17.5
|
%
|
|
1.2
|
%
|
||
|
|
197.0
|
|
|
|
|
167.8
|
|
|
|
|
|
|||||
Corporate expenses
|
|
(55.5
|
)
|
|
|
|
(54.1
|
)
|
|
|
|
|
|||||
Total operating income
|
|
$
|
141.5
|
|
|
10.0
|
%
|
|
$
|
113.7
|
|
|
8.8
|
%
|
|
1.2
|
%
|
•
|
North America
operating income
increased
$26.3 million
and operating margin
improved
110
basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 100 basis points.
|
•
|
International
operating income
increased
$2.9 million
and operating margin
improved
120
basis points. The improvement in operating margin was driven by the improvement in gross margin of 70 basis points. Additionally, in the second quarter of 2018, we recognized
$3.4 million
of costs associated with our International simplification efforts, including headcount reduction, professional fees and store closures, which were not repeated in the same period in 2019.
|
•
|
Corporate
operating expenses
increased
$1.4 million
, which
negatively
impacted our consolidated operating margin by
10
basis points.
|
|
|
Six Months Ended June 30,
|
|||||||||
(in millions, except percentages)
|
|
2019
|
|
2018
|
|
% Change
|
|||||
Interest expense, net
|
|
$
|
44.9
|
|
|
$
|
45.9
|
|
|
(2.2
|
)%
|
|
|
Six Months Ended June 30,
|
|||||||||
(in millions, except percentages)
|
|
2019
|
|
2018
|
|
% Change
|
|||||
Income tax provision
|
|
$
|
32.7
|
|
|
$
|
18.8
|
|
|
73.9
|
%
|
Effective tax rate
|
|
31.3
|
%
|
|
26.5
|
%
|
|
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Net cash provided by (used in) continuing operations:
|
|
|
|
|
||||
Operating activities
|
|
$
|
45.9
|
|
|
$
|
17.4
|
|
Investing activities
|
|
(46.7
|
)
|
|
(39.9
|
)
|
||
Financing activities
|
|
(4.0
|
)
|
|
30.6
|
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Net cash used in discontinued operations:
|
|
|
|
|
||||
Operating activities
|
|
$
|
(2.0
|
)
|
|
$
|
(15.8
|
)
|
Investing activities
|
|
—
|
|
|
(0.1
|
)
|
||
Financing activities
|
|
—
|
|
|
—
|
|
|
Three Months Ended
|
||||||
(in millions, except per share amounts)
|
June 30, 2019
|
|
June 30, 2018
|
||||
GAAP net income
|
$
|
41.6
|
|
|
$
|
22.8
|
|
Loss from discontinued operations, net of tax
(1)
|
1.2
|
|
|
5.4
|
|
||
Acquisition-related costs and other
(2)
|
2.8
|
|
|
—
|
|
||
Other income
(3)
|
—
|
|
|
5.4
|
|
||
Tax adjustments
(4)
|
(1.3
|
)
|
|
(2.2
|
)
|
||
Adjusted net income
|
$
|
44.3
|
|
|
$
|
31.4
|
|
|
|
|
|
||||
Adjusted earnings per common share, diluted
|
$
|
0.79
|
|
|
$
|
0.57
|
|
|
|
|
|
||||
Diluted shares outstanding
|
56.0
|
|
|
54.9
|
|
(1)
|
Certain subsidiaries in the International business segment are accounted for as discontinued operations and have been designated as unrestricted subsidiaries in the 2016 Credit Agreement. Therefore, these subsidiaries are excluded from our adjusted financial measures for covenant compliance purposes.
|
(2)
|
In the second quarter of 2019, we recorded $2.8 million of acquisition-related and other costs, primarily related to post acquisition restructuring charges and professional fees incurred in the Sleep Outfitters Acquisition. In the first quarter of 2019, we recorded $3.3 million of costs, primarily related to professional fees associated with the Sleep Outfitters Acquisition.
|
(3)
|
In the second quarter of 2018, we incurred $5.4 million of restructuring costs associated with International business segment simplification efforts, including headcount reduction, professional fees and store closures.
|
(4)
|
Tax adjustments represent adjustments associated with the aforementioned items and other discrete income tax events.
|
|
Three Months Ended June 30, 2019
|
|||||||||||||||||||||||
(in millions, except percentages)
|
Consolidated
|
|
Margin
|
|
North America
|
|
Margin
|
|
International
|
|
Margin
|
|
Corporate
|
|||||||||||
Net sales
|
$
|
722.8
|
|
|
|
|
$
|
588.1
|
|
|
|
|
$
|
134.7
|
|
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
$
|
313.4
|
|
|
43.4
|
%
|
|
$
|
240.0
|
|
|
40.8
|
%
|
|
$
|
73.4
|
|
|
54.5
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (expense)
|
$
|
81.0
|
|
|
11.2
|
%
|
|
$
|
80.1
|
|
|
13.6
|
%
|
|
$
|
27.4
|
|
|
20.3
|
%
|
|
$
|
(26.5
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Acquisition-related costs and other
(1)
|
2.8
|
|
|
|
|
1.7
|
|
|
|
|
—
|
|
|
|
|
1.1
|
|
|||||||
Adjusted operating income (expense)
|
$
|
83.8
|
|
|
11.6
|
%
|
|
$
|
81.8
|
|
|
13.9
|
%
|
|
$
|
27.4
|
|
|
20.3
|
%
|
|
$
|
(25.4
|
)
|
(1)
|
In the second quarter of 2019, we recorded $2.8 million of acquisition-related and other costs, primarily related to post acquisition restructuring charges and professional fees incurred in the Sleep Outfitters Acquisition. In the first quarter of 2019, we recorded $3.3 million of costs, primarily related to professional fees associated with the Sleep Outfitters Acquisition.
|
|
Three Months Ended June 30, 2018
|
|||||||||||||||||||||||
(in millions, except percentages)
|
Consolidated
|
|
Margin
|
|
North America
|
|
Margin
|
|
International
|
|
Margin
|
|
Corporate
|
|||||||||||
Net sales
|
$
|
659.9
|
|
|
|
|
$
|
527.8
|
|
|
|
|
$
|
132.1
|
|
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
$
|
272.8
|
|
|
41.3
|
%
|
|
$
|
203.4
|
|
|
38.5
|
%
|
|
$
|
69.4
|
|
|
52.5
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (expense)
|
$
|
58.0
|
|
|
8.8
|
%
|
|
$
|
64.2
|
|
|
12.2
|
%
|
|
$
|
20.9
|
|
|
15.8
|
%
|
|
$
|
(27.1
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restructuring costs
(1)
|
5.4
|
|
|
|
|
—
|
|
|
|
|
3.4
|
|
|
|
|
2.0
|
|
|||||||
Adjusted operating income (expense)
|
$
|
63.4
|
|
|
9.6
|
%
|
|
$
|
64.2
|
|
|
12.2
|
%
|
|
$
|
24.3
|
|
|
18.4
|
%
|
|
$
|
(25.1
|
)
|
(1)
|
In the second quarter of 2018, we incurred $5.4 million of restructuring costs associated with International business segment simplification efforts, including headcount reduction, professional fees and store closures.
|
•
|
GAAP net income to EBITDA and Adjusted EBITDA
|
•
|
Ratio of consolidated funded debt less qualified cash to Adjusted EBITDA
|
•
|
Total debt to consolidated funded debt less qualified cash
|
|
Three Months Ended
|
||||||
(in millions)
|
June 30, 2019
|
|
June 30, 2018
|
||||
GAAP net income
|
$
|
41.6
|
|
|
$
|
22.8
|
|
Interest expense, net
|
22.5
|
|
|
23.2
|
|
||
Income taxes
|
15.8
|
|
|
8.8
|
|
||
Depreciation and amortization
|
29.1
|
|
|
27.8
|
|
||
EBITDA
|
$
|
109.0
|
|
|
$
|
82.6
|
|
Adjustments:
|
|
|
|
||||
Loss from discontinued operations, net of tax
(1)
|
$
|
1.2
|
|
|
$
|
5.4
|
|
Acquisition-related costs and other
(2)
|
2.8
|
|
|
—
|
|
||
Restructuring costs
(3)
|
—
|
|
|
5.4
|
|
||
Adjusted EBITDA
|
$
|
113.0
|
|
|
$
|
93.4
|
|
(1)
|
Certain subsidiaries in the International business segment are accounted for as discontinued operations and have been designated as unrestricted subsidiaries in the 2016 Credit Agreement. Therefore, these subsidiaries are excluded from our adjusted financial measures for covenant compliance purposes.
|
(2)
|
In the second quarter of 2019, we recorded $2.8 million of acquisition-related and other costs, primarily related to post acquisition restructuring charges and professional fees incurred in the Sleep Outfitters Acquisition. In the first quarter of 2019, we recorded $3.3 million of costs, primarily related to professional fees associated with the Sleep Outfitters Acquisition.
|
(3)
|
In the second quarter of 2018, we incurred $5.4 million of restructuring costs associated with International business segment simplification efforts, including headcount reduction, professional fees and store closures.
|
|
|
Trailing Twelve Months Ended
|
||
(in millions)
|
|
June 30, 2019
|
||
GAAP net income
|
|
$
|
124.6
|
|
Interest expense, net
|
|
91.3
|
|
|
Income taxes
|
|
63.5
|
|
|
Depreciation and amortization
|
|
116.5
|
|
|
EBITDA
|
|
$
|
395.9
|
|
Adjustments:
|
|
|
||
Loss from discontinued operations, net of tax
(1)
|
|
11.2
|
|
|
Customer-related charges
(2)
|
|
21.2
|
|
|
Restructuring costs
(3)
|
|
16.9
|
|
|
Supply chain transition costs
(4)
|
|
7.3
|
|
|
Acquisition-related costs and other
(5)
|
|
6.1
|
|
|
Other income
(6)
|
|
(7.2
|
)
|
|
Adjusted EBITDA
|
|
$
|
451.4
|
|
|
|
|
||
Consolidated funded debt less qualified cash
|
|
$
|
1,645.6
|
|
|
|
|
||
Ratio of consolidated funded debt less qualified cash to Adjusted EBITDA
|
|
3.65 times
|
(1)
|
Certain subsidiaries in the International business segment are accounted for as discontinued operations and have been designated as unrestricted subsidiaries in the 2016 Credit Agreement. Therefore, these subsidiaries are excluded from our adjusted financial measures for covenant compliance purposes.
|
(2)
|
On January 11, 2019, iMS, a customer, prior to its April 1, 2019 acquisition, filed a voluntary petition in U.S. Bankruptcy Court for the Eastern District of Kentucky seeking relief under Chapter 11 of the U.S. Bankruptcy Code. In the fourth quarter of 2018, we recorded charges of $21.2 million associated with certain iMS-related assets on our Consolidated Balance Sheet as of December 31, 2018, primarily made up of trade and other receivables, to fully reserve this account at that time.
|
(3)
|
In the second half of 2018, we recorded $19.5 million of restructuring costs, including $2.6 million of depreciation expense. These costs included $11.5 million of charges related to the operational alignment of a joint venture that was wholly acquired in the North America business segment, including $2.6 million of depreciation expense and $1.3 million of other expense, net. Restructuring costs also included $3.1 million of expenses in the International business segment related to International simplification efforts, including headcount reduction, professional fees and store closures, and $4.9 million of Corporate professional fees related to restructuring activities.
|
(4)
|
In 2018, we recorded $7.3 million of supply chain transition costs which represent charges incurred to consolidate certain manufacturing and distribution facilities, including $0.8 million of other expense.
|
(5)
|
In the second quarter of 2019, we recorded $2.8 million of acquisition-related and other costs, primarily related to post acquisition restructuring charges and professional fees incurred in the Sleep Outfitters Acquisition. In the first quarter of 2019, we recorded $3.3 million of costs, primarily related to professional fees associated with the Sleep Outfitters Acquisition.
|
(6)
|
We recorded $7.2 million of other income related to the sale of its interest in a subsidiary of the Asia-Pacific joint venture.
|
(in millions)
|
June 30, 2019
|
||
Total debt, net
|
$
|
1,645.6
|
|
Plus: Deferred financing costs
(1)
|
6.9
|
|
|
Total debt
|
1,652.5
|
|
|
Plus: Letters of credit outstanding
|
23.2
|
|
|
Consolidated funded debt
|
$
|
1,675.7
|
|
Less:
|
|
||
Domestic qualified cash
(2)
|
20.7
|
|
|
Foreign qualified cash
(2)
|
9.4
|
|
|
Consolidated funded debt less qualified cash
|
$
|
1,645.6
|
|
(1)
|
We present deferred financing costs as a direct reduction from the carrying amount of the related debt in the Condensed Consolidated Balance Sheets. For purposes of determining total debt for financial covenant purposes, we have added these costs back to total debt, net as calculated per the Condensed Consolidated Balance Sheets.
|
(2)
|
Qualified cash as defined in the 2016 Credit Agreement equals 100.0% of unrestricted domestic cash plus 60.0% of unrestricted foreign cash. For purposes of calculating leverage ratios, qualified cash is capped at $150.0 million.
|
Period
|
|
(a) Total number of shares purchased
|
|
(b) Average Price Paid per Share
|
|
(c) Total number of shares purchased as part of publicly announced plans or programs
|
|
(d) Maximum number of shares (or approximate dollar value of shares) that may yet be purchased under the plans or programs
(in millions)
|
April 1, 2019 - April 30, 2019
|
|
18,020
|
(1)
|
$58.59
|
|
18,020
|
|
$225.0
|
May 1, 2019 - May 31, 2019
|
|
8,483
|
(1)
|
$61.33
|
|
6,150
|
|
$224.6
|
June 1, 2019 - June 30, 2019
|
|
1,185
|
(1)
|
$68.48
|
|
—
|
|
$224.6
|
Total
|
|
27,688
|
|
|
|
24,170
|
|
|
(1)
|
Includes shares withheld upon the vesting of certain equity awards to satisfy tax withholding obligations. The shares withheld were valued at the closing price of the common stock on the New York Stock Exchange on the vesting date or prior business day.
|
*
|
This exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78r), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
|
|
TEMPUR SEALY INTERNATIONAL, INC.
|
|
|
|
|
Date: August 1, 2019
|
By:
|
/s/ BHASKAR RAO
|
|
|
Bhaskar Rao
|
|
|
Executive Vice President and Chief Financial Officer
|
1 Year Tempur Sealy Chart |
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