Investor Presentation October 2006 Exhibit 99.1 |
1 1 Forward-Looking Statements This presentation may contain “forward-looking statements” which include information concerning the Company’s plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this presentation, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including without limitation, initiatives to increase sales, the rollout and market acceptance of new products, initiatives to generate productivity improvements and reduce costs, our investments to increase our global brand awareness, and management’s expectations regarding its net sales, GAAP net income and capital expenditures for 2006, are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this presentation. Numerous factors, many of which are beyond the Company’s control, could cause actual results to differ materially from those expressed as forward-looking statements. These risk factors include general economic and industry conditions and consumer confidence; uncertainties arising from global events; the effects of changes in foreign exchange rates on the Company’s reported earnings; consumer acceptance of the Company’s products; industry competition; the efficiency and effectiveness of the Company’s advertising campaigns and other marketing programs; the Company’s ability to further penetrate the US retail furniture channel, including the timing of opening or expanding within large retail accounts; the Company’s ability to address issues in certain underperforming international markets; the Company’s ability to continuously improve its product line, maintain efficient, timely and cost-effective production and delivery of its products, and manage its growth; rising commodity costs; the market price for the Company’s common stock prevailing from time to time; and the nature of other investment opportunities presented to the Company from time to time. Additional information concerning these and other risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including without limitation the Company's annual report on Form 10-K under the headings "Special Note Regarding Forward-Looking Statements" and "Risk Factors". Any forward- looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements for any reason, including to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of anticipated or unanticipated events or circumstances. |
2 2 Business Review Business Review Leading producer of premium mattresses and pillows Leading producer of premium mattresses and pillows – – Proprietary formula and manufacturing process Proprietary formula and manufacturing process – – #1 visco-elastic market share #1 visco-elastic market share – – Highest profitability in our industry Highest profitability in our industry Global sales under the “TEMPUR®” Global sales under the “TEMPUR®” and “Tempur-Pedic®” and “Tempur-Pedic®” trademarks trademarks – – Truly international with sales in over 70 countries through 4 diverse channels Truly international with sales in over 70 countries through 4 diverse channels Premium segment (>$1,000) of ~$12 billion global wholesale mattress market Premium segment (>$1,000) of ~$12 billion global wholesale mattress market – – Believe premium represents ~50% of the U.S. market Believe premium represents ~50% of the U.S. market – – Fastest-growing segment Fastest-growing segment Tempur-Pedic products provide greater overall comfort and better quality sleep Tempur-Pedic products provide greater overall comfort and better quality sleep – – Temperature-sensitive and contours more naturally to the body Temperature-sensitive and contours more naturally to the body – – Recommended by more than 25,000 healthcare professionals Recommended by more than 25,000 healthcare professionals |
3 3 Seasoned Management Team Seasoned Management Team Name Position Prior Experience Tom Bryant CEO & President CEO, Stairmaster Sports & Medical Products President, Dunlop Maxfli Johnson & Johnson (13 years) Dale Williams CFO CFO, Honeywell Control Products CFO, Saga Systems CFO, GE Information Services; (15 years at GE) Matt Clift EVP, Operations VP/GM Lexmark International Lexmark/IBM (23 years) Rick Anderson EVP, North America VP, Gillette Gillette/P&G (23 years) David Montgomery EVP, International President, Rubbermaid Europe VP, Black & Decker Europe, Middle East, Africa |
4 4 Product Overview |
5 5 Tempur-Pedic Swedish Sleep System® Tempur-Pedic Swedish Sleep System® Therapeutic Benefits Therapeutic Benefits Excellent Pressure & Pain Management Excellent Pressure & Pain Management – – Manages pressure over the entire mattress surface Manages pressure over the entire mattress surface Open Cell Technology Open Cell Technology – – Unlike water, air and foam products, TEMPUR® Unlike water, air and foam products, TEMPUR® material promotes airflow material promotes airflow Body Conforming & Support Body Conforming & Support – – Neck and spine supported in the correct anatomical position Neck and spine supported in the correct anatomical position Safe and Healthy Safe and Healthy – – Antimicrobial and hypoallergenic Antimicrobial and hypoallergenic – – Resistant to dust mites, household allergens and mold Resistant to dust mites, household allergens and mold Maintenance Free Maintenance Free – – Never needs to be turned or serviced Never needs to be turned or serviced |
6 6 Diversity Across Products Diversity Across Products 9M06 Sales: $121.9 million (18% of Total) 9M06 Sales: $121.9 million (18% of Total) Retail Price: Retail Price: – – Adjustable Beds: $1,300 – Adjustable Beds: $1,300 – $2,800 $2,800 – – Other: $35 – Other: $35 – $150 $150 9M06 Sales: $87.5 million (12% of Total) 9M06 Sales: $87.5 million (12% of Total) Retail Price: $70 – Retail Price: $70 – $165 $165 9M06 Sales: $479.1 million (70% of Total) 9M06 Sales: $479.1 million (70% of Total) Queen Retail Price Point: $1,199 – Queen Retail Price Point: $1,199 – $5,499 $5,499 Pillows Adjustable Beds / Other Mattresses |
7 7 Vertically Integrated Business Model |
8 8 Global, vertically integrated manufacturer State of the art, highly automated, ISO-certified plants >$200 million invested Denmark (500K sq ft) Duffield, VA (500K sq ft) Albuquerque, NM (750K sq ft) Manufacturing Facilities Manufacturing Facilities Note: New Mexico facility under construction and expected to open by year end 2006 |
9 9 Sleep In The News |
10 10 Sleep In The News Sleep In The News Don’t lose sleep buying the perfect mattress –By Janice Lieberman “Companies try to help workers sleep more” Sleep, Snoring and the Blues –By SANJAY GUPTA Sleep Deprivation: New Concerns; Four More Studies Show It Harms Health Who Needs Sleep? When the gods of sleep have deserted you “Sleep for longer if you want to stay healthy” Not getting enough sleep can make you fat –By Madelyn Fernstrom, Ph.D., CNS |
11 11 Sleep In The News Sleep In The News U.S. Sleep Aid Industry Estimated To Be >$3B Annually … And Growing! Note: U.S. Sleep Aid Industry annual market size estimate based on management estimates and publicly available industry estimates for prescription and over-the-counter sleep aids. Tempur-Pedic is not sponsored by, associated with or affiliated with any of the entities depicted above. |
12 12 Better Mattress … Better Mattress … Better Sleep! Better Sleep! – – “Sleep in the News” “Sleep in the News” is Fueling Consumer is Fueling Consumer Interest and Involvement in Sleep Related Interest and Involvement in Sleep Related Products and Categories Products and Categories – – This is having an impact on all consumers, but This is having an impact on all consumers, but especially Baby-Boomers especially Baby-Boomers – – Current Shift to Premium and Specialty Bedding Current Shift to Premium and Specialty Bedding Validates the Higher Level of Involvement Validates the Higher Level of Involvement |
13 13 Brand Building |
14 14 Overview of the Tempur-Pedic® Overview of the Tempur-Pedic® Brand Brand An assertively forward-looking image for innovative technology and products that create customers who are enthusiastic and passionate about our products Positioned as a high-tech superior proprietary product with benefits not provided by conventional bedding Differentiated from the competition – our “less is more” design provides weightless comfort and self-adjustability for every sleeper on a molecular level – not a mechanical or electrical product and no switches, motors, pumps, bladders or hard steel springs Supported with a massive advertising and brand-building program that drives consumer awareness |
15 15 > 80 million “impressions” per month > 600 million “impressions” per month Includes national spots on such shows as: The Radio Factor with Bill O’Reilly, Westwood One, Dr. Laura, Dr. Joy Browne and WOR with John Gambling > 900 million “impressions” per month > 2.8 billion “impressions” per month High profile events: The Apprentice, Oscar’s, Emmy’s, Grammy’s Newspapers Television Radio Magazines Cost Effective Advertising to Build Cost Effective Advertising to Build Global Brand Global Brand Tempur-Pedic’s national advertising campaign drives over 4.3 billion consumer “impressions” per month |
16 16 Continue to Build Global Brand Continue to Build Global Brand Total Brand Awareness: 78% up from 60% in two years ___________________________ Note: Total brand awareness for mattresses based on study commissioned by Tempur-Pedic and completed in the first quarter of each year. |
17 17 Source: Independent survey commissioned by Tempur-Pedic Almost all of our customers have recommended Tempur-Pedic®, with about Almost all of our customers have recommended Tempur-Pedic®, with about two-thirds reporting that they recommended Tempur-Pedic one to five times. two-thirds reporting that they recommended Tempur-Pedic one to five times. 42% of retail customers report that someone purchased a Tempur-Pedic 42% of retail customers report that someone purchased a Tempur-Pedic mattress as a result of their recommendation. mattress as a result of their recommendation. Customer Passion Customer Passion 95% 65% 18% 17% 42% 0% 20% 40% 60% 80% 100% Recommended Tempur-Pedic 1-5 times 6-10 times 11+ times Purchase resulted from recommendation |
$116.8 $156.0 $268.2 $433.3 $566.5 $479.1 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 $550 $600 2004 2004 Mattresses Key Growth Driver Mattresses Key Growth Driver Mattress Revenues 2001 2001 2002 2002 2003 2003 Established Accounts + Targeted Established Accounts + Targeted New Stores New Stores Increasing slots per store Increasing slots per store Growing brand awareness Growing brand awareness 31% Growth in ’05 31% Growth in ’05 ($ in millions) 2005 2005 9M06 9M06 Notes: 1. Growth in the first half of 2005 was much higher than growth in the second half of 2005. 2. For a complete discussion of the Company’s financial performance for 2005, please refer to the Management’s Discussion and Analysis section of the Company’s Form 10K for 2005. For a discussion of the Company’s performance for 9M 2006, please refer to the Company’s press release for the third quarter of 2006. |
Historical Net Sales Historical Operating Income (1) Growing Net Sales and Profitability Growing Net Sales and Profitability $221.5 $298.0 $479.1 $684.9 $836.7 $688.5 $0 $100 $200 $300 $400 $500 $600 $700 $800 Net Sales ($ in millions) $30.4 $39.4 $97.1 $151.0 $190.9 $148.2 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Operating Income ($ in millions) 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 9M06 9M06 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 9M06 9M06 ___________________________ 1. For a complete discussion of the Company’s financial performance for 2005, please refer to the Management’s Discussion and Analysis section of the Company’s Form 10K for 2005. For a discussion of the Company’s performance for 9M 2006, please refer to the Company’s press release for the third quarter of 2006. |
$19.7 $35.1 $47.0 $77.0 $102.2 $133.1 $0 $20 $40 $60 $80 $100 $120 $140 Cash Flow from Operations Cash Flow from Operations Operating Cash Flows Growth of operating cash Growth of operating cash flows flows Business model generates Business model generates significant operating cash significant operating cash flows flows Identified key initiatives to Identified key initiatives to continue to improve cash flow continue to improve cash flow ($ in millions) Note: For a complete discussion of the Company’s financial performance for 2005, please refer to the Management’s Discussion and Analysis section of the Company’s Form 10K for 2005. For a discussion of the Company’s performance for 9M 2006, please refer to the Company’s press release for the third quarter of 2006. 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 9M06 9M06 |
Investment Highlights Investment Highlights #1 #1 In In The The Fast Fast Growing Growing Viscoelastic Viscoelastic Market #1 In The Premium Mattress Market #1 #1 In In The The Premium Premium Pillow Pillow Market #1 #1 In In International International Operations Operations of of All All U.S. U.S. Bedding Bedding Manufactur Manufacturers #1 In The Industry For #1 In The Industry For Profitability #1 #1 In In U.S. U.S. Consumer Consumer Referrals Referrals for for Mattresses Mattresses #1 #1 In In Retail Retail Sales Sales And And Profit Profit Per Per Sq Sq Ft Ft ___________________________ 1. Based on net sales, including management’s estimates of sales by companies that do not publicly report sales of viscoelastic mattresses and pillows, premium mattress and premium pillows. 2. Based on total company-owned foreign operations by U.S. based bedding manufacturers, including management’s estimates for companies that do not publicly report such information. 3. Based on total net income for all publicly reporting US mattress manufacturers. 4. Based on independent survey(s) commissioned by Tempur-Pedic® and management estimates. 1 1 1 3 4 4 2 |
Investor Presentation October 2006 |