™ Exhibit 99.1 |
2 Mark Rupe Vice President |
3 Agenda Webcast participants may email questions to: investor.relations@tempurpedic.com February 22, 2012 Welcome / Agenda Mark Rupe Overview & Growth Initiatives Mark Sarvary Financial Overview Dale Williams Q&A |
Forward-Looking Statements Note Regarding Trademarks, Trade Names and Service Marks: Tempur, Tempur-Pedic, The TEMPUR-Cloud Supreme, The TEMPUR-Cloud, The RhapsodyBed by Tempur-Pedic, The TEMPUR-CloudPillow, The TEMPUR-Cloud Luxe, TEMPUR Advanced Ergo System, The AlluraBed by Tempur-Pedic, The Sensation Mattress by Tempur, The NeckPillow by Tempur-Pedic, The SymphonyPillow by Tempur-Pedic, The ComfortPillow by Tempur-Pedic, The RhapsodyPillow by Tempur-Pedic, The TEMPUR-Contour Collection, The TEMPUR- Contour, The TEMPUR-Contour Signature, The TEMPUR-Contour Select, The TEMPUR-Simplicity Collection, and The TEMPUR-Traditional Pillow are trademarks, trade names or service marks of Tempur-Pedic International Inc. and its subsidiaries. All other trademarks, trade names and service marks in this presentation are the property of the respective owners. 4 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, particularly in the retail sector, as well as consumer confidence and availability of consumer financing; 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 and expand distribution channels; 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; the effects of strategic investments on the Company’s operations; changes in foreign tax rates; rising commodity costs; the Company’s ability to retain members of its senior management team; the effects of increased interest rates; 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. This presentation may contain “forward-looking statements,” within the meaning of federal securities laws, which include information concerning the Company’s plans, objectives, goals, strategies, future revenues or performance, 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 improving the quality and range of existing products; increasing brand awareness and brand consideration; the impact of the introduction of new products, including the TEMPUR-Cloud® line and TEMPUR-Simplicity Collection; international and domestic growth opportunities; increasing market share; improving gross margin; expanding and improving distribution channels; manufacturing capacity and utilization; consumer preferences and behavior; the effectiveness of new cost structures; meeting financial obligations; cost and operating expense reductions and cash flow generation; and the Company’s enhanced earnings power 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. |
5 Mark Sarvary President & Chief Executive Officer |
6 Tempur-Pedic Overview Macro-Industry Update Tempur-Pedic Growth Strategies & Initiatives Key Topics |
7 Tempur-Pedic Overview |
8 Company Thesis Established: Leader in the $6B premium segment of the $20B global mattress and pillow market Differentiated: Most highly recommended brand by owners, most desired brand for non-owners Industry-leading brand advertising, nearly $1B over past decade Innovative: Systematic proven track record of delivering successful new products (Sensation, Cloud, Contour) Profitable: Growing: 3% US mattress unit market share Management estimates leader in non-spring mattresses and premium mattresses preferred, branded product line Uniquely consumer focused and marketed product Industry-leading margins and cash flows Significant top line growth opportunity Consumer Worldwide Simplicity and International Cloud/Original in 2012, and backlog of 2 years of new products |
9 Tempur Vision People who sleep on Tempur sleep better than those who don’t Our goal is to become the world’s favorite mattress and pillow brand To achieve our goal we will: 1. Make sure everyone knows they would sleep better on Tempur 2. Make sure there is a Tempur mattress and pillow that appeals to everyone 3. Make sure that Tempur is available to everyone 4. Make sure Tempur continues to deliver the best sleep Make sure our cost structure is optimized to enable marketing and product investments |
10 In 2009, We Introduced Our 5-Year (2014) Goal Note 1: Management estimates Note 2: For a discussion of the Company’s performance, please refer to the 2009 10K filing. 2009 Actual 2014 Goal Sales $831M $2B Gross Margin 47.4% 50.0% Operating Margin 17.4% 25.0% 2009 Investor Day |
We Are Well On Our Way To Achieving The 2014 Goal 11 Note 1: Management estimates Note 2: For a discussion of the Company’s performance, please refer to the 2011 10K filing. 2011 Actual 2014 Goal Sales $1.4B $2B Gross Margin 52.4% 50.0% Operating Margin 24.0% 25.0% |
12 2011 Performance For a discussion of the Company’s performance, please refer to the 2011 10K filing. 2011 Actual Y/Y Chg Sales $1.4 B +28% Gross Margin 52.4% +220 bps Operating Margin 24.0% +180 bps EBITDA $391 M +35% Net Income $220 M +40% EPS $3.18 +47% |
13 Tempur-Pedic Range Of Products The ComfortPillow by Tempur-Pedic ® The NeckPillow by Tempur-Pedic ™ The TEMPUR-Cloud ™ Supreme The Sensation Mattress by Tempur ® The Advanced Ergo Adjustable Base by Tempur-Pedic ™ TEMPUR-Traditional ™ Pillow The TEMPUR-Simplicity™ Medium The TEMPUR-Contour™ Select The CloudPillow by Tempur-Pedic ® |
14 Tempur Products For a discussion of the Company’s performance, please refer to the 2009 10K filing. ($ in billions) Sales $0.8 2009 Tempur Tempur-HD |
15 Tempur Products For a discussion of the Company’s performance, please refer to the Company’s 10K filings. ($ in billions) Sales $0.8 2009 Tempur Tempur-HD $1.1 $1.4 2010 Tempur Tempur-HD Cloud 2011 Tempur Tempur-HD Cloud |
16 Tempur Products Note 1: Management estimates Note 2: For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
17 Tempur Products Note 1: Management estimates Note 2: For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
Introducing Our New 5-Year Goal 18 Sales $3B EPS $8 2016 Goal Management estimates ™ |
Introducing Our New 5-Year Goal 19 Sales $3B EPS $8 2016 Goal the World. Management estimates |
20 Global Manufacturing Presence Denmark (500K sq ft) New Mexico (800K sq ft) > $2.5B of sales capacity across three existing manufacturing facilities Capacity utilization approximately 50% Opportunity to expand New Mexico capacity with relatively low amount of capital deployment Management estimates Virginia (500K sq ft) |
21 State-of-the-Art Research & Development Multi-faceted R&D facilities in Denmark and Virginia: >50 Employees – PhDs, Advanced Degrees… Chemistry and process research, development and testing Commercialization and product development Product testing |
22 Strong, Established Management Team Prior Experience Years Name Position Prior Experience Consumer Products Inter'l with Tempur Mark Sarvary President and CEO President, Campbell Soup North America CEO, J. Crew Group 4 President, Stouffer's Frozen Food Division at Nestle Rick Anderson EVP and President, VP, Gillette North America Gillette / P&G 6 Matt Clift EVP, Global Operations VP / GM Lexmark International Lexmark / IBM 7 Lou Jones EVP and General Counsel General Counsel, Papa John's International SVP, Blockbuster, Inc. 3 David Montgomery EVP and President, President, Rubbermaid Europe International VP, Black & Decker Europe, Middle East, Africa 9 Brad Patrick EVP, Human Resources SVP, Sara Lee Corporation Gillette / P&G 1 Delta Air Lines Dale Williams EVP and CFO CFO, Honeywell Control Products CFO, Saga Systems 9 CFO, GE Information Systems |
23 Macro-Industry Update |
24 Global Bedding Industry is Large and Growing Note 1: Includes mattresses, foundations, and pillows Note 2: Management estimates Note 3: 2010 CSIL report Global Market Opportunity Mattresses, Foundations and Pillows |
25 Note 1: 2010 Annual ISPA Report of Sales and Trends Note 2: Non-spring data not available prior to 2004 Note 3: Management estimates US Mattress Unit and Dollar Volume |
26 Tempur-Pedic Growth Strategies & Initiatives |
27 Tempur Vision People who sleep on Tempur sleep better than those who don’t Our goal is to become the world’s favorite mattress and pillow brand To achieve our goal we will: 1. Make sure everyone knows they would sleep better on Tempur 2. Make sure there is a Tempur mattress and pillow that appeals to everyone 3. Make sure that Tempur is available to everyone 4. Make sure Tempur continues to deliver the best sleep Make sure our cost structure is optimized to enable marketing and product investments |
28 Growth Strategy – Overview Introduce New Products to Increase Addressable Market Tempur Brand Advertising Global investment in advertising “Heavy up” local market advertising Dealer integrated advertising Increase Retail Advocacy Global Distribution |
29 New Products |
TEMPUR-Cloud™ 30 Tempur-Cloud has been a major success in North America and Internationally Introduced in North America in November 2009 Introduced in International markets beginning in March 2011 Management estimates |
TEMPUR-Contour 31 Tempur-Contour was a comprehensive line upgrade of the original Tempur offering Introduced in North America in June 2011 Gained incremental distribution and exceeded expectations Management estimates ™ |
Many Others As Well…. 32 Sensation Traditional pillow Opening price point Ergo Adjustable Slippers |
33 2012 Major Initiative: “Fixing the “Barbell” Source: Management estimates based on ISPA and Traqline ($ in Millions) Queen set price at retail |
Introducing 34 ™ |
TEMPUR-Simplicity 35 ™ |
Continuing the Revolution in Consumer Research 36 15 months of consumer research and development 2,500 total consumers 12 rounds of consumer testing on three models for three feels 14,000+ prototype evaluations |
Source: Third Party Research, 2011 TEMPUR-Simplicity Consumer Testing Results 37 TEMPUR-Simplicity Collection Competitor 1 Competitor 2 Competitor 3 Competitor 4 ™ |
38 New Proprietary Tempur-Pedic Technology New TEMPUR ® formulations Firm, medium and soft options for every sleep preference Absorbs motion so partner movement is less likely to disturb sleep 10-year full warranty |
39 Growing Appeal Prices effective 4/3/12. Queen size sets featured. |
Growing Appeal 40 More new products to come… |
41 Brand Advertising |
Tempur Relative Ad Spend 42 Note 1: Based on Kantar Media, 2011 (through October 2011) based on rate card value not negotiated rates; digital spending and co-op spending not included. Note 2: Management estimates US Consumer Advertising Tempur-Pedic 94% The 3 "S's" Total 6% |
Accelerating Ad Spend in 2012 43 Cumulative ad spend of nearly $1B over past decade Tempur Global Advertising Spend Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K filings. Note 2: Management estimates |
Investing to Build an Iconic Brand 44 Ad Spend Ratio Note 1: Based on 2010 Ad Age Top 50 U.S. Ad Spend Note 2: For a discussion of the Company’s performance, please refer to the 2011 10K filing. Note 3: Management estimates |
Continue To Advertise 45 ™ |
46 Ask Me Brand Campaign |
47 Heavy Up Media – Test Market Results Heavy up advertising - tested over 2 years Yielded almost double the growth Will expand in 2012 Prime time network heavy up Management estimates |
Media Highlights – February 2012 48 Management estimates |
49 Retailer Advertising |
50 Advertising Spend by Retailers Note 1: Based on 2010 Ad Age Top 50 U.S. Ad Spend Note 2: Management estimates |
51 Industry Campaigns |
52 Industry Campaigns |
53 Tempur Introduces: Integrated Advertising Fund Program Retailer ad directly integrated with Tempur consumer communication Exclusively features Tempur and is consistent with guidelines Tempur contributes modestly to help fund integrated ad Tested in 2010 and 2011, expanded in 2012 |
Integrated Advertising Tempur National Ad Retailer Integrated Tempur Ad 54 |
55 Dealer Advocacy |
Dealer Advocacy Programs Consumer Education Dealer Profitability Retail Associate Support 56 |
Direct Consumer Education 57 9 million US website visits – up 50% in 2011 5 million International website visits – up 58% in 2011 Management estimates |
Dealer Profitability - Industry AUSP Growth 58 (Average Mattress Unit Selling Price at Retail) Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K filings. Note 2: 2010 Annual ISPA Report of Sales and Trends Note 3: Management estimates |
Dealer Profitability - Dealer Margin Growth 59 Management estimates 0% 5% 7% 8% 11% 15% 0% 2% 4% 6% 8% 10% 12% 14% 16% 2005 2009 2012 Baseline Lowest Margin Model Highest Lowest Highest Lowest Highest +800bps +500bps +1,100bps +700bps +1,500bps 2005 2009 2012 Dealer Margin vs 2005 Baseline |
Retail Salesforce Training & Support • Doubled sales force since 2009 • Tempur Mobile • Sophisticated systems 60 |
Tempur-Pedic ® Elite Retailer 61 Elite Retailer is a powerful program that identifies and differentiates premier dealers to consumers, and directs Tempur website visitors to shop with them |
62 International |
63 International International segment is 30% of sales and more profitable than North America Low share of $13B international market Australia, Austria, New Zealand, China, South Korea, and Canada acquired since 2006 Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
International Collections 64 Original Sensation Cloud Collection Collection Collection Firmer feel Traditional feel Softer feel Basic 19, 21, 25 19, 21, 25 19, 21, 25 Deluxe 22, 27 22, 27 22, 27 Royal 25 Supreme 30 Tempur Collection – offers retailers differentiated range Very successful Sensation and Cloud introductions – gained incremental distribution Management estimates |
International Distribution 65 Extensive distribution with significant opportunity for future growth Increased slot presence within stores equally important – Sensation/Cloud Company-owned flagships China Japan Holland Singapore Norway Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
International Advertising Markets 66 Weightless campaign Limited but growing awareness – in strategic markets awareness increased meaningfully 26% 13% 0% 5% 10% 15% 20% 25% 30% Advertised Markets All Other International 2011 International Net Sales Growth Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K filings. Note 2: Management estimates |
Weightless Brand Campaign 67 |
68 Weightless Brand Campaign |
69 Summary |
70 Summary Established: Industry leader of a $20B growing global market Differentiated: Unique, preferred product with strong brand supported by ubiquitous advertising Innovative: Proven track record of introducing multi-$100M new product lines Profitable: Industry-leading profitability, and clear path to improvement Growing: Well on track to achieve 5 year goal, now targeting $3B, 2x current size, by 2016 Management estimates |
71 Dale Williams Executive Vice President & Chief Financial Officer |
72 Financial Overview |
73 Net Sales 2011 Net Sales increased 28% +30% in North America +24% Internationally, +16% constant currency basis ($ in millions) For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
74 Sales Growth Trajectory – Geographic Segments Note 1: International Sales Growth on Constant Currency basis. Note 2: For a discussion of the Company’s performance, please refer to the Company’s 10K and 10Q filings. (28%) (19%) (12%) 40% 56% 59% 47% 31% 37% 29% 30% 26% (17%) (19%) (7%) 3% 15% 15% 11% 6% 9% 18% 17% 24% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2009 2010 2011 Year on Year Growth/Decline North America International (Constant Currency) |
75 Mattresses Drive Global Business International North America 2011 Net Sales North America revenue up 30% in 2011, driven by Cloud and Contour collections and improved Ergo attach rates International revenue up 24% in 2011, driven by Cloud introduction and advertising For a discussion of the Company’s performance, please refer to the Company’s 2011 10K filing. |
76 Gross Margin Considerable margin opportunity related to ongoing productivity program, engineering and volume leverage For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
77 Gross Margin Drivers Management estimates + Productivity program + Productivity program + Volume leverage + Volume leverage + Price/mix Price/mix - Commodities - Commodities - Floor model discounts ? Geographic mix - Geographic mix +500bps 2012 - Future 2009 - 2011 |
78 Significant Opportunity To Continue Cost Reduction Management estimates Strong visibility in productivity program delivering 175 bps per year of cost reduction over the next 5 years Focus Area Operational Excellence Yield LEAN / Six Sigma Productivity Direct Costing Sourcing Competition Supplier Managed Inventory Co-Engineering Contract Terms Engineering Process Enhancements Returns / Warranty Reduction Supply Chain Strategy Truckload Utilization Demand Driven Supply Chain Direct Ship LEAN Supply Chain Network Optimization Home Delivery Efficiencies New Product Development Design for Manufacturability Material / Process Development Fixed Cost Leverage Product Breadth Appropriate Capital Investment Project Examples |
Operating Margin Operating margin increased 180 bps in 2011, while expanding advertising investment to approximately 10.5% of sales (+175 bps) 79 For a discussion of the Company’s performance, please refer to the Company’s prior 10K filings. |
Excellent Cash Flow Dynamics With Significant Growth Potential 80 In 2011, we repurchased 6.5 million shares for $368 million Repurchased $1.2 billion since 2005 ($ in millions) For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
81 Depreciation & Amortization vs. Capital Expenditures Multi-year add back to net income as D&A should exceed Capex Capex in 2012 includes additional spending for strategic projects, IT systems, and new headquarters ($ in millions) For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
2016 Goal Implies Continued Solid Future Growth 82 Management estimates ($ in billions) |
Introducing Our New 5-Year Goal 83 Sales $3B EPS $8+ 2016 Goal the World. Management estimates |
84 Q&A |
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