Tempur-Pedic: Strategic initiatives help improve Q3 results
Tempur-Pedic International Inc., the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, announced financial results for the third quarter ended September 30, 2009. In addition, the Company increased full year 2009 financial guidance.
THIRD QUARTER FINANCIAL SUMMARY
• Earnings per share (EPS) were $0.34 per diluted share in the third quarter of 2009 as compared to $0.32 per diluted share in the third quarter of 2008. The Company reported net income of $25.7 million for the third quarter of 2009 as compared to net income of $24.1 million in the third quarter of 2008.
• Net sales declined 11% to $224.1 million in the third quarter of 2009 from $252.8 million in the third quarter of 2008. On a constant currency basis, net sales declined 10%. Net sales in the domestic segment declined 12%, while international segment net sales declined 10%.On a constant currency basis, international segment net sales declined 7%.
• Mattress sales declined 14% globally. Mattress sales declined 15% in the domestic segment and 13% in the international segment. On a constant currency basis, international mattress sales declined 9%. Pillow sales declined 10% globally. Pillow sales declined 9% domestically and 10% internationally. On a constant currency basis, international pillow sales declined 9%.
• Gross profit margin was 47.6% as compared to 41.7% in the third quarter of 2008. The gross profit margin increased as a result of improved efficiencies in manufacturing, lower commodity costs, and improved pricing, partially offset by fixed cost de-leverage related to lower production volumes.
• Operating profit margin was 19.0% as compared to 17.0% in the third quarter of 2008.
• Reflecting the Company's continued focus on generating cash, the Company generated $55.0 million of operating cash flow in the third quarter of 2009.
• During the quarter, the Company reduced Total debt by $54.0 million to $315.0 million. As of September 30, 2009, the Company's ratio of Funded debt to EBITDA was 1.96 times, well within the covenant in its credit facility, which requires that this ratio not exceed 3.00 times.
Chief Executive Officer Mark Sarvary commented, "Our 2009 strategic initiatives continued to generate improved results during the third quarter. While the macro environment remains challenging, our sales have grown and our margins have improved. Our results continue to demonstrate the Company's strong cash flow. Through the first nine months, we have reduced debt by over $100 million. Our recent product introductions and our new advertising campaign combined with continued productivity improvements will allow us to build on this performance as we move into 2010."
2009 Financial Guidance
Given the Company's improving performance through the first three quarters of 2009 and its continued positive outlook for the year, the Company isincreasing 2009 full year financial guidance. The Company expects EPS to range from $1.00 to $1.05 per diluted share. The Company expects net sales to range from $790 million to $805 million. The Company noted its expectations are based on information available at the time of this release, and are subject to changing conditions, many of which are outside the Company's control.
Tempur-Pedic International Inc. manufactures and distributes mattresses and pillows made from its proprietary TEMPUR pressure-relieving material. It is the worldwide leader in premium and specialty sleep. The Company is focused on developing, manufacturing and marketing advanced sleep surfaces that help improve the quality of life for people around the world.
Tempur-Pedic International Inc