Tempur Sealy Q4'13 net income dips 2.55%

07 Feb '14

5 min read

Tempur Sealy International, Inc., the world's largest bedding provider, announced financial results for the fourth quarter and year ended December 31, 2013. The Company also issued financial guidance for 2014.

FOURTH QUARTER FINANCIAL SUMMARY

Earnings per diluted share ("EPS") under U.S. generally accepted accounting principles ("GAAP") in the fourth quarter of 2013 were $0.37 compared to GAAP EPS of $0.39 in the fourth quarter of 2012. The 2013 results reflect transaction and integration costs related to the acquisition of Sealy Corporation ("Sealy").

The Company completed its acquisition of Sealy in March 2013, and results for 2012 do not include Sealy.

Adjusted EPS were $0.66 in the fourth quarter of 2013 as compared to adjusted EPS of $0.60 in the fourth quarter of 2012.

GAAP net income in the fourth quarter of 2013 was $22.9 million as compared to GAAP net income of $23.5 million for the fourth quarter of 2012. The Company reported adjusted net income of $41.1 million for the fourth quarter of 2013 as compared to adjusted net income of $36.4 million for the fourth quarter of 2012.

Total net sales increased 98.8% to $678.1 million in the fourth quarter of 2013 from $341.1 million in the fourth quarter of 2012. The net sales increase was due to the inclusion of $333.5 million of Sealy net sales for the fourth quarter of 2013.

Gross profit margin was 40.2% as compared to 50.0% in the fourth quarter of 2012. The gross profit margin decreased primarily as a result of the inclusion of Sealy, which has lower margins than the Tempur North America and Tempur International segments, and changes in product mix, offset partially by lower sourcing costs.

Operating income was $74.1 million as compared to $51.3 million in the fourth quarter of 2012. Operating income in the fourth quarter of 2013 included $8.2 million of transaction and integration costs related to the Sealy acquisition. The higher operating income reflects the inclusion of Sealy.

EBITDA for the fourth quarter of 2013 was $92.8 million. Adjusted EBITDA (which is a non-GAAP measure) for the fourth quarter of 2013 was $104.2 million.

The Company ended the quarter with consolidated funded debt less qualified cash of $1.8 billion. The ratio of consolidated funded debt less qualified cash to adjusted EBITDA was 4.4 times, calculated on a combined basis for Tempur-Pedic and Sealy in accordance with the Company's new senior secured credit facility.

Tempur Sealy International, Inc. CEO Mark Sarvary commented, "Overall our fourth quarter was in line with our expectations. Sealy's fourth quarter sales were above our expectations and Tempur International returned to growth with sales increases in Europe, Asia and Latin America. Tempur North America showed continued stability with sales down 1% as compared to last year.

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