Tempur-Pedic Chief pleased with Q2 performance

30 Jul '11

4 min read

Tempur-Pedic International Inc announced financial results for the second quarter ended June 30, 2011. The Company also increased full year 2011 financial guidance and announced a new share repurchase authorization.

Financial Summary
Earnings per diluted share (EPS) were $0.76 in the second quarter of 2011 as compared to $0.46 in the second quarter of 2010. The Company reported net income of $53.1 million in the second quarter of 2011 as compared to $33.5 million in the second quarter of 2010.

Net sales increased 30% to $342.2 million in the second quarter of 2011 from $263.0 million in the second quarter of 2010. On a constant currency basis, net sales increased 25%. Net sales in the North American segment increased 29%, while International segment net sales increased 34%. On a constant currency basis, International segment net sales increased 18%.

Mattress sales increased 30% globally. Mattress sales increased 28% in the North American segment and 37% in the International segment. On a constant currency basis, International mattress sales increased 20%. Pillow sales increased 25% globally. Pillow sales increased 19% in North America and 31% in the International segment. On a constant currency basis, International pillow sales increased 15%.

Gross profit margin was 52.9% as compared to 48.7% in the second quarter of 2010. The gross profit margin increased as a result of favorable mix, improved efficiencies in manufacturing and fixed cost leverage related to higher production volumes, partially offset by higher commodity costs and new product launches.

Operating profit margin was 24.2% as compared to 20.5% in the second quarter of 2010. The increase was driven by improved gross profit margin, partially offset by increased marketing investments.

The Company generated $48.2 million of operating cash flow in the second quarter of 2011 as compared to $44.5 million in the second quarter of 2010.

Chief Executive Officer Mark Sarvary commented, "We are pleased with our second quarter performance. We executed well on new product rollouts across the globe, broadening our appeal to consumers. Productivity programs continue to expand our margins, and our strategic investments in advertising are driving awareness and are already driving growth."

Share Repurchase Program
During the second quarter of 2011, the Company purchased 1.59 million shares of its common stock at an average price of $61.19 for a total cost of $97.5 million. During the first half of 2011, the Company purchased 2.91 million shares of its common stock at an average price of $54.92 for a total cost of $160.0 million.

The Company announced the Board of Directors has authorized a new share repurchase program, of up to $200 million. This share repurchase program replaces the Company's prior share repurchase authorization, and may be limited, suspended or terminated at any time without prior notice. Stock repurchases under this program may be made through open market transactions, negotiated purchases or otherwise, at times and in such amounts as management and a committee of the Board deem appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, financing and regulatory requirements and other market conditions. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws.

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