Investor Presentation 1Q 2008 Exhibit 99.1 |
2 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, the Company’s expectations regarding increasing slots per store, growing brand awareness, strong cash flow generation, new products, unit share opportunities, new consumer segments, operating margins, research and development and new retail accounts, 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 increase sales productivity within existing retail accounts and to further penetrate the U.S. retail furniture channel; the Company’s dependence on its significant customers; 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; changes in foreign tax rates, and rising commodity costs; the Company’s ability to protect and maintain its intellectual property; the Company’s ability to respond to regulatory requirements; the Company’s ability to retain members of its senior management team; the effects of increased interest rates; the effects of labor relations on business operations and costs; the effects of increased product return rates or a reduction in warranty reserves; 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. |
3 Overview Worldwide leader in Premium Sleep, the fastest growing segment of the ~$13 billion wholesale mattress market Global sales under the “Tempur-Pedic®” and “TEMPUR®” trademarks in >70 countries Products provide greater overall comfort and better quality sleep Solid history of growth Most profitable company in the industry Over 25,000 health care professionals recommend the brand |
4 Tempur-Pedic Swedish Sleep System Pressure & Pain Management – 94% of owners experience a reduction in painful pressure points Open Cell Technology Body Conforming & Support – 92% of owners sleep better and wake more refreshed Safe and Healthy Maintenance Free Source: Independent survey commissioned by Tempur-Pedic |
5 Seasoned Management Team Executive team has ~130 years managing large international businesses Name Position Prior Experience Consumer Products Inter'l Tom Bryant President & CEO CEO, Stairmaster Sports & Medical Products President, Dunlop Maxfli Johnson & Johnson Rick Anderson EVP and President, VP, Gillette North America Gillette/P&G David Montgomery EVP and President, President, Rubbermaid Europe International VP, Black & Decker Europe, Middle East, Africa Matt Clift EVP, Global Operations VP/GM Lexmark International Lexmark/IBM Dale Williams EVP & CFO CFO, Honeywell Control Products CFO, Saga Systems CFO, GE Information Services Prior Experience |
6 Global Presence International Subsidiary International Third Party Domestic Subsidiary Domestic Third Party |
7 Domestic Sales Healthcare 2% Direct 10% Retail 86% Third Party 2% Mattress 74% Pillow 9% Other 17% 1. Data represents results of full year 2007. Domestic represents ~66% of total sales with long-term growth prospects Products sold through four channels with focus on established retail accounts and new opportunities for growth US-based R&D center focused on product development and targeting new consumer segments Brand building via advertising campaign to drive market share gains |
8 International Sales Direct 3% Healthcare 9% Third Party 11% Retail 77% Mattress 61% Pillow 19% Other 20% International represents ~34% of total sales with long-term growth prospects Products sold through four channels Products designed for unique, regional preferences at European- based R&D center Building brand with large advertising commitment 1. Data represents results of full year 2007. |
9 Vertically Integrated |
10 Denmark (500K sq ft) Duffield, VA (500K sq ft) Albuquerque, NM (800K sq ft) Manufacturing Facilities Global, vertically integrated manufacturer State of the art, highly automated, ISO- certified plants > $200 million invested Goal: Improve output capacity every year without significant new capital investment 1. Albuquerque facility is in the process of ISO certification |
11 Building Brand Equity |
12 “Welcome To Bed” Marketing Campaign |
13 Increasing Brand Awareness 86% 78% 73% 60% 44% 26% 20% 30% 40% 50% 60% 70% 80% 90% 2002 2003 2004 2005 2006 2007 Awareness % 1. Total Brand Awareness for mattresses based on study commissioned by Tempur-Pedic and completed in the first quarter of each year 2. Advertising and trade expenses FY 2002 through 3Q07. For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q07 results and the Company’s prior 10K and 10Q filings. Global Marketing Investment >$500 million (since 2002) |
14 Source: Independent survey commissioned by Tempur-Pedic ~95% Tempur-Pedic® consumers recommend the product ~65% of consumers recommended Tempur-Pedic up to 5 times 42% of consumers report someone purchased a Tempur-Pedic mattress as a result of their recommendation Consumer Passion 95% 65% 18% 17% 42% 0% 20% 40% 60% 80% 100% Recommend Tempur-Pedic 1-5 times 6-10 times 11+ times Purchase resulted from recommendation |
15 Significant Unit Share Opportunity – Only represent ~2.3% of U.S. mattress units (‘07 est.) Slots Very Low Versus % of Retail Sales – Gaining “slots” with new models, key price points Investing in Marketing and Expanding Brand Awareness Targeting Key New Consumer Segments – BellaSonna “Traditionalist” consumers Targeting 77 Million Baby-Boomers Selectively Adding New Retail Accounts Growth Opportunities |
16 Worldwide Mattress Net Sales Growing brand awareness Excellent profit for retailers Targeted new stores New products Increasing slots per store High volume per slot 1. For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q07 results and the Company’s prior 10K and 10Q filings.. ($ in millions) $117 $156 $268 $433 $566 $769 $652 $0 $100 $200 $300 $400 $500 $600 $700 $800 2001 2002 2003 2004 2005 2006 2007 |
17 Worldwide Net Sales $222 $298 $479 $685 $837 $1,107 $945 $0 $200 $400 $600 $800 $1,000 $1,200 2001 2002 2003 2004 2005 2006 2007 ($ in millions) Revenue growth led by mattresses Strong growth both Domestically and Internationally Historical growth all organic 1. For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q07 results and the Company’s prior 10K and 10Q filings.. |
18 Gross Margin Channel mix shift has driven gross margin pressure Albuquerque start-up primary margin pressure in 2007 2007 is expected to be the trough year for gross margin 84% 88% 90% 51% 50% 53% 53% 51% 49% 48% 64% 71% 73% 82% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 2001 2002 2003 2004 2005 2006 2007 Domestic Wholesale % Gross Margin % 1. For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q07 results and the Company’s prior 10K and 10Q filings.. |
19 Operating Income & Margins $30 $41 $97 $244 $151 $191 $209 $0 $50 $100 $150 $200 $250 2001 2002 2003 2004 2005 2006 2007 ($ in millions) Operating leverage offsetting most of the prior Gross Margin erosion Operating Margin will improve with Gross Margin stabilization and growth Opportunities for SG&A leverage over the long term 1. For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q07 results and the Company’s prior 10K and 10Q filings.. |
20 $35 $11 $33 $38 $85 $16 $37 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 2001 2002 2003 2004 2005 2006 2007 Completed major capital investments Free cash flow opportunities Cash cycle opportunities ($ in millions) Capital Expenditures & Cash Flow Capital Expenditures 1. For a discussion of the Company’s performance, please refer to the Company’s press release for 4Q07 results and the Company’s prior 10K and 10Q filings.. |
21 Investment Highlights #1 In The Fast Growing Viscoelastic Market 1 #1 In The Fast Growing Premium Mattress Market 1 #1 In The Premium Pillow Market 1 #1 In International Operations of U.S. Bedding Manufacturers 2 #1 In The Industry For Profitability 3 #1 In U.S. Consumer Referrals for Mattresses 4 #1 In Retail Sales And Profit Per Sq Ft 4 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. |
Investor Presentation 1Q 2008 |